Slobodan Adzic

LEADER IN
MARKETING
 LEADER IN MARKETING

Economics Institute • Belgrade

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ISBN 86-7329-054-6

Publisher: Economics Institute, Belgrade, 2004

Reviewers: Prof. dr Janko M. Cvijanovic

Prof dr Milivoj M. Klarin

Editor: Jelena Lazic

Translation: Snjezana Mijatovic

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Contents

ABSTRACT.............................................................................................................................6

INTRODUCTION...................................................................................................................7

I LEADERSHIP...................................................................................................................10

1. DEFINITION OF LEADERSHIP......................................................................................................10
2. LEADERS VS. MANAGERS..........................................................................................................12
3. HUMAN SOCIETY AND LEADERSHIP............................................................................................15
4. LEADERSHIP STYLES.................................................................................................................17
4.1. CLASSIC LEADERSHIP STYLES ...................................................................................................18
4.2. MODERN LEADERSHIP STYLES...................................................................................................21
4.3. BEHAVIORIST THEORIES, SHARED LEADERSHIP AND VIRTUAL LEADERSHIP.........................................26
5. TYPES OF LEADERS..................................................................................................................29
6. JOBS AND CHARACTERISTICS OF LEADERS....................................................................................34
7. DEMOCRACY AND LEADERSHIP..................................................................................................46

II MULTIDISCIPLINARY ASPECT OF LEADERSHIP...............................................49

1. EMOTIONAL INTELLIGENCE AND LEADERSHIP.............................................................................49

2. TYPES OF PERSONALITY AND THE LEADERSHIP...........................................................................61
3. CREATIVITY AND LEADERSHIP...................................................................................................69
4. LEADERSHIP AND NEW SCIENCES...............................................................................................72

III DYNAMIC MARKETING ENVIRONMENT OF THE 21ST CENTURY...............77

1. KOTLER’S MODEL OF MAIN ACTORS AND POWERS IN MARKETING ENVIRONMENT.......................77

2. TRENDS IN MODERN ENVIRONMENT...........................................................................................82
3. CHALLENGES TO THE 21ST CENTURY MANAGEMENT...................................................................85
4. ECOLOGICAL ENVIRONMENT IMPACT ON COMPETITIVENESS........................................................89

IV HIGH PERFORMANCE ORGANIZATION MODEL ..............................................92

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1. “BUSINESS NATURE” EVOLUTION..............................................................................................93

2. DIAGNOSIS OF ORGANIZATIONS AND GETTING FAMILIAR WITH THE HPO MODEL........................98
3. SPHERES OF WORK IN AN HPO...............................................................................................103
4. FROM VISIONS TO PERFORMANCES..........................................................................................107
5. LEADING CHANGE..................................................................................................................113
6. EXAMPLES OF SUCCESSFUL HPO MODEL IMPLEMENTATION.....................................................120
6.1. JOHNSONVILLE SAUSAGE........................................................................................................120
6.2. CHARLESTON NAVAL SHIPYARD.............................................................................................123
6.3. LOCAL GOVERNMENT HPO ..................................................................................................126

V LEADERSHIP IN THE HPO MODEL........................................................................130

1. PHILOSOPHY OF LEADERSHIP...................................................................................................130
2. LEADERSHIP FUNCTIONS.........................................................................................................137
3. LEADERSHIP FORMS...............................................................................................................140
4. HPO LEADERS......................................................................................................................145
5. GOOD IS ENEMY OF GREAT......................................................................................................149
6. PERSONAL LEADERSHIP..........................................................................................................156
7. ELASTICITY...........................................................................................................................161
8. HOW TO BECOME A GREAT LEADER?........................................................................................162

VI CRITICAL ANALYSIS OF THE HPO MODEL......................................................169

1. MODEL CONTRIBUTIONS AND LIMITATIONS..............................................................................169

2. IMPACT OF NATIONAL CULTURES ON THE HPO MODEL APPLICATION......................................173

VII CONCLUSIONS.........................................................................................................177

REFERENCES....................................................................................................................182

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Abstract

THE ROLE OF THE LEADER IN CREATING OF HIGH PERFORMANCE

ORGANIZATION IN THE MARKETING ENVIRONMENT

The necessity of leader management lies in the dynamical

development of the present-day society. Leadership and changes
are synonymous. Management is connected with efficiency, and
leadership with effectiveness and changes. According to the quality
of interpersonal relations between leaders and their followers we
recognize resonant and dissonant leaders. The job of the leader
primarily encompasses the jobs that are important, however not
urgent. The leader necessary for the creation of high performance
organization is a democrat. Democracy, being the only system that
can effectively combat the requirements of the changes in the
modern civilisation, is the basis of HPO. An effective leader has
developed emotional intelligence and emphatic abilities, and as for
the differences between people, he views them as constants and
draws advantages out of them. Dynamical changes of the micro and
macro setting of the marketing environment of enterprises contain
more and more the effects upon business that are the more
dramatic. The organization that survives is HPO, the organization
that changes the strategy, structures and systems of organization
on the basis of philosophy, the function and forms of leadership, as
well as vision and values. The success of HPO is achieving high
performances, namely simultaneous production of quality products
and services, additional values for the consumer and enviable
financial performances. Each of the HPO employees develops their
leader, management, technical and team work skills. An HPO leader
builds effectiveness through paradoxal mixture of personal modesty
and professional strength, he knows that it is good to be an enemy
of the excellent and uses that knowledge in leading enterprises. An
excellent leader develops those qualities that make him above
average to perfection, his philosophy of effectiveness is: reinforce
the qualities that make you strong. The study of HPO models can
contribute to the easier surmounting of oppositions in our national
culture in accepting and implementing the leader concept of
management. Leaders of the 21st century meet with the tasks that
will be successfully accomplished on condition that they realise that
it is the unceasing learning that enables high standards, ambitious
goals and a true feeling of a mission in life.

Key words: leadership, management, organisation, effectiveness,

democracy, performances, environment, multidisciplinarity,
changes, vision.

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INTRODUCTION

Leadership is a relatively new phenomenon. However, this concept

has quickly been acknowledged in the world, with over two
thousand titles on leadership published only in the U.S.A. In Serbia,
to my knowledge, no book could be found in Serbian language
dealing only with business leadership. This is the main reason why I
have chosen this subject. I believe that my modest contribution to
the development of leadership thought will produce effects so that
those interested in this matter would be able to get familiar with the
idea of this brilliant concept.

However, the prime objective of this paper is not only theoretical

aspect of leadership, but first of all a model of HIGH PERFORMANCE
ORGANIZATION (HPO) representing a model of an organization
completely based on leadership approach. At the very beginning,
there is a doubt in how many economic organizations in Serbia
today are ready to accept both the leadership approach and the
HPO model based on it. Their number is probably negligible.
Nevertheless, this should not be a barrier to our intention to discuss
the latest concept of the world theory and practice. On the contrary,
by learning from the best examples it is possible to make big steps
forward, and that is actually what we need in our economy today.

To understand author’s approach, it is necessary to make several

remarks:
• The author is holding a leader’s position in a non-profit sector.
• The author has become familiar with the HPO concept at the
Senior Executive Institute, University of Virginia, one of the
leading courses on leadership designed for city managers in the
U.S.A.
• The literature used has almost exclusively dealt with a profit
sector.

It is important to emphasize because of the author’s vision.

Although the leadership concept is completely the same in both the
profit and the non-profit sector, there are still some distinctions:
• Coming to a leader’s position in the profit sector involves a
longer process; in the non-profit sector, and particularly in the
state administration, it is easier to jump over some of the
“steps”.
• The non-profit organizations “put up with” greater number of
leaders easier than the profit ones, as well as with empowerment

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and alignment concepts which, in their essence, aim at reducing

the number of the hierarchy levels to almost none.

Still, these very specific qualities of the non-profit sector have

aroused greater interest of the science in leadership because, as a
rule, it is much easier to test the concepts within them. Thus, John
P.Kotter, leading expert in leadership, has based his doctoral thesis
on leadership of American mayors in big cities, while Peter
F.Drucker, leading expert in management, has founded the Leader
to Leader Institute the objectives of which are in dealing with
developing leadership in non-profit sector. The author wants to
highlight his own vision of consideration because this paper is, after
all, rather focused on economic organizations and business
leadership.

To begin with, the phenomenon of leadership will be highlighted.

We shall define it, explain difference between a leader and a
manager, show the necessity of division into leaders and followers
conditioned by biological and psychological distinctions of
individuals. Furthermore, main types of leaders and leadership
styles will be shown, as well as what are the tasks and qualities of
leaders. This Chapter will be concluded by linking democracy and
leadership because the democracy is the basis for the type of
leaders required for an HPO.

In the next Chapter the main trends conditioning dynamic changes

of marketing environment will be revealed, and the turbulent
environment “is guilty” for the need of leadership approach in the
modern world.

Since leadership is an economic phenomenon, the multidisciplinary

aspect of leadership, particularly its psychological dimension, will be
discussed in the Chapter to follow. Emotional intelligence and types
of personalities are of critical importance for leadership. The
concept of creativity necessary for new way of leader’s thinking will
also be discussed. Finally, the development of new sciences will be
discussed and they will be linked with leadership. We shall also see
how the concept of quantum physics is particularly appropriate for a
leadership approach in leading organizations.

The subsequent three Chapters will be dedicated to the main

concept – the high performance organization. In the first one we
will explain the basic model, which will be supplemented with the
“prescription” for leading changes and will close it by giving
examples of successful HPO model implementing. In the next one,
we will explain in more detail leadership in then HPO model:
philosophy, functions and forms. Then, we will show that a type of

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leader for the HPO does exist, and that is the HPO leader or level V
leader. We will then proceed with concepts from good to great and
built to last. Furthermore, we will explain a personal leadership
approach, as well as a concept of elasticity. Finally, we will show
how to become a great leader. In the closing Chapter dealing with
the HPO model we will try to highlight its advantages and
limitations.

At the very end, of course, conclusive considerations and references

used in this paper will be given. I would like to express my gratitude
to the team leaders from the University of Virginia who have
recommended me excellent choice of literature based on the subject
of this paper. The material from the course has also been used in
the researches, while without using Internet I would not have all
elements contained in the final version.

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I LEADERSHIP

1. Definition of Leadership
While preparing this paper I have on several occasions discussed
with my friends some of the topics form this paper, which have
drawn my attention. As a rule, the same thing has happened all the
time – until I have not defined the leadership, each of my
observations has been followed by the question: “Quite interesting,
but what has it to do with leadership?” For the science, the
leadership is a new matter, although as a phenomenon, it is very
old. Therefore, it is necessary to define precisely and in detail what
is understood under leadership.

It should be emphasized that leadership as a phenomenon has first

appeared in non-economic social theories. According to these
theories a leader is “a person who, by his words and/or personal
example, distinctively affects the behavior, thinking and/or
emotions of a considerable number of human individuals (followers
or general population)”1. Obviously, these theories do not limit
leadership only to political leadership. Actually, the main division
does not lay on political and business leadership, as might be
thought, but on relation towards the audience: direct leaders
address audience “face to face”, while indirect leaders exert their
influence through their work or deeds they create. This also implies
that influence of a leader may be significant long after his
biologically departure (the “New York Times” editorial staff have
chosen Albert Einstein for the leader of the 20th century).

Six leadership constants, according to Gardner, are2:

1. STORY: A leader must have a central story or message. It must
be effective for a big and heterogeneous group. In crisis, the
story must be told quickly, this resulting in simplifying central
message.
2. AUDIENCE: Each, even the most eloquently told story, has no
effect in the absence of audience.
3. ORGANIZATION: At the beginning a leader directly addresses the
audience and achieves his initial success. For a continual
leadership it is necessary to have an institution based on
organizational basis.

1
Gardner Howard, Laskin Emma, LEADING MINDS, Basic Books, USA, 1996,
PG.8
2
Ibid., pg. 291-95

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4. PERSONIFICATION: The author of the story must in certain

sense be a personification of his story. However, this does not
mean that he should be a saint but that he should not be in
contradiction with his main message.
5. ADDRESSING: Most of creative leaders address indirectly,
through a symbolic product which they creates, while most of the
political leaders address the audience with their stories directly.
Direct addressing bears more risks, however, and particularly for
a short time, it can be more efficient and effective.
6. SKILL: Only persons achieving a high level of expert knowledge
in their work or credibility in their life have a chance to succeed
as leaders. Direct leaders, in principle, lack technical knowledge
while the strength of an indirect leader is actually based on his
knowledge of concrete things.

This paper will primarily deal with leadership in business

organizations and not with political leadership. And this very type of
leadership is in the focus of new science. There is no strictly
adopted definition of this kind of leadership but the emphasis is laid
more on the fact that it is needed in business organizations today,
and even more in the future. The necessity of leader management
primarily lies on a dynamic development of the modern human
society. Today, the overall human knowledge doubled in the period
of 2.5 years. A leader is a person able to lead an organization in the
turbulent environment of today, because he is the one who can
successfully cope with changes. Therefore, leadership and changes
are synonyms when business leadership is concerned. This is a
primary thing. No need to be a superman in order to be a leader,
because one becomes leader by birth but by acquiring knowledge in
addition to his natural predispositions. This is the next axiom. And
finally: the key of good leader is in his relation towards people, the
emotional role of a leader being a primary thing. To simplify, the
task of a leader is in the following3:
• Considering situation, and
• Taking action.

May be Max Depree, great personality of American business world,

has best described a leader: “The first duty of a leader is to define a
situation. The last one is to say thanks.”4

In order to reveal what is between the first and the last duty of a
leader, other aspects of leadership should be highlighted as well.

3
Tichy Noel M. et al., LEADERSHIP ENGINE: BUILDING LEADERS AT EVERY
LEVEL, Pritchett Pub Co., USA, 1996, pg. 11
4
Depree Max, LEADERSHIP IS AN ART, DPT, USA, 1990, pg. 11

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2. Leaders vs. Managers

In American literature the following definition of distinction between
a leader and a manager, which is actually a play of words, is very
popular: leaders make the right things while managers make things
right. Although popular, this definition is neither sufficient nor
complete because it presumes that the positions of leaders and
those of managers are on opposite ends. However, this is certainly
not the case in organizations considering that in every business
environment the work of both a leader and a manager is required.
They are not competitive but complementary. Both are necessary in
an organization for its prosperity. Powerful leadership and weak
management, and vice versa, may easily put the organization in
danger.

The consequences of powerful leadership and weak management in

a complex organization are5:
1. Powerful long-running visions without short-term planning and
budgeting.
2. Almost a cult culture in an organization without much
specialization, structure and rules.
3. Inspired people who use control systems and problem solving
disciplines very little or not at all.

The situation in such organizations often slips out of control. When

business schedule, approved budget and promises given to the
consumers are not obeyed the risks for organization are growing.

The consequences of powerful management and weak leadership in

a complex organization are:
1. Insisting on short terms, details, eliminating risks and ordinary
rationality, with placing little focus on long terms, great images,
strategies including risks, as well as on human values.
2. Powerful focus on specialization; a job is above the people while
they become slaves of rules, and with minimal insisting on
integration, alignment and personal engagement of people.
3. Control and anticipating are in the first plan, while growth,
empowering and inspiration are not.

The situation in such organizations is rigid, non-innovative, and

therefore, organizations are not able to cope with changes on
markets or in technology. If an enterprise has a strong market
position, the performances worsen slowly, while, otherwise, the
performances worsen fast.

5
Kotter John P., A POWER FOR CHANGE, The Free Press, USA, 1990, pg. 141-
42

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Many people even today have stereotypes about positions of leaders

and managers in organizations. The stereotype is in belief that a
leader is a lonely person on the very top level of an organizational
pyramid while the managers managing organizations are below him,
and that on the very bottom, separated with a clear line, are other
collaborators. The reality, as shown in Figure 1, is quite different. In
a complex organization there may be thousands of complex and
linked jobs. They condition different bonds between people so that
great leaders may be found in teams at the lowest level as well. The
same process contributes to diminishing of manager’s role and
position in an organization. People are more often mutually linked
not only because of interdependence of teams within the
organization but are also directly linked with buyers and other
actors from their environment. In such situations a good leadership
is of critical importance for an organization to be successful on
market.

REALI TY STEREOTYPE

Legend:
L = LEADERS
M = MANAGERS
F = FOLLOWERS

Figure 1: Reality and stereotype about positions in an organization

(Source: Kotter John P., POWER AND INFLUENCE,
The Free Press, USA, 1985, pg. 171)

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Management is connected with efficient functioning of organization,

while leadership with changes6. The companies manage the
complexity by planning, while leading an organization
begins with developing visions. While the management
realizes its plans by organizing, the equivalent in leadership
is communication amongst those who are on the road
towards the realization of their visions. Finally, while in
managing the plan is realized by control, in leadership
reaching visions is achieved by inspiration.

In the 20th century Rockefeller III wrote: “Organization is a system

having its own logic based on tradition and inertia. It is in good
direction if the things are done in a proven and tested manner, and
not by risking and searching for new business roads.”7 Rockefeller
would hardly become a rich man with such attitude in the 21st
century.

To highlight the roles of leaders and managers, their different

positions and roles in an organization will be highlighted:8
Manager is an administrator while a leader is an innovator.
Manager is a copy while a leader is an original.
Manager maintains while a leader develops.
Manager is focused on a system while a leader is focused on people.
Manager develops control while a leader develops confidence.
Managers focuses on short-term and a leader on long-term
prospective.
Manager asks how and when while a leader asks what and why.
Manager keeps an eye on final results while a leader on horizon.
Manager is an imitator while manager is an innovator.
Manager accepts status quo while a leader denies it.
Manager is a classical obedient soldier while a leader only his own.
Manager is trained while a leader is educated.
Manager takes care of where you are while a leader leads you to a
new place.
Manager deals with today while a leader deals with the future.
Manager works with the security while leader with probability.
Manager struggles with complexity while a leader struggles with
uncertainty.
Manager is focused on facts while a leader on decisions.
Manager finds answers and solutions while a leader formulates
questions and problems.

6
Kotter John P., What leaders Really Do, HARVARD BUSINESS REVIEW ON
LEADERSHIP, Harvard Business School Press, USA, 1998, pg.37
7
Zaleznik Abraham, Managers and Leaders – Are They Different?, HARVARD
BUSINESS REVIEW ON LEADERSHIP, Harvard Business School Press, USA,
1998, pg. 63
8
Bennis Warren G., ON BECOMING A LEADER: THE LEADERSHIP CLASSIC –
UPDATED AND EXPANDED, Perseus Publishing, USA, 2003, pg. 39-40.

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Manager looks for similarity while a leader looks for difference.

Manager considers that a right solution may be used again in the
future, while a leader asks himself whether a new solution for the
future is required.
Manager is responsible for efficiency while leader is responsible for
effectiveness.

The semantics of verbs to manage and to lead in Serbian language

is quite interesting to be mentioned. While managing means
determining direction, the leading means movement towards the
goal. Determining direction - managing, may be a static quality
because after the direction has been determined the one who has
determined the direction doesn’t necessarily have to move towards
the goal. Moving towards the goal - leading, has necessarily a
dynamic form because the one who leads towards the goal has be
at the head of such change.

The standard situation in current organizations is that they are led

too little and managed too much. Everyday turbulent changes in
environment are a synonym of the need for greater influence of
leadership in management.

Today, it is necessary to have ideas in order to survive on market.

Leaders are those who sell ideas while managers are those who try
to buy ideas at the lowest possible price in practice. Managers are
always worried about the price while leaders are not interested in
prices at all. New concepts are needed today to bring an
organization closer and link it more firmly to consumers. The
manager’s task is to preserve the given concept and within its
framework to “push out” maximum efficiency, while a leader breaks
valid concepts and offers new, even not proven, concepts and ideas.
An organizational model able to cope with all these changes is
needed today. And that is a high performance organization with
leaders in its entire structure who have mind of winners and turn
attacks from their environment into chances and long-term growth
and development on market.

3. Human Society and Leadership

In this Chapter the attention will be drawn to the roots of leadership
and followership in human society.9

The mankind originates from primates. The primates are

hierarchically organized with clear differences in domination within
9
Gardner Howard, Laskin Emma, LEADING MINDS, Basic Books, USA, 1996, pg.
23-36

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the species. The researches have shown that dominant males in

relation to the non-dominant ones have greater production of
serotonin hormone in their bodies and lower level of stress. Another
ability we have inherited from the primates is the ability to imitate.
With primates the imitation is almost always one-way: lower status
primates imitate actions of the higher status primates. As with
people, the preschool children have the behavior similar to the
primates: dominant children control toys, choose games and decide
who will join the group. Less dominant children subordinate
themselves to the dominant children, imitate them and accept their
behavioral forms.

The next recognizable factor is early socialization of a child, namely

importance of establishing firm relation of an infant with his
guardians in order to survive. A child of 18 months has a strong
awareness of his own existence as an individual. It is when he starts
to look for the similarities with other people from his environment.
Freud called this process the identification. The child identifies
himself with the parent of the same gender as well as with elder
child of the same gender. It is rather rare for a child to identify
himself with another child of the same age. By identifying himself
the child becomes a devoted “follower” because he anticipates
actions and acts abased on the example of his “leader” also in
situations when he is out of his control.

A five-year old child already completely understands the position of

a leader, follower and place in the hierarchy. With clearly expressed
wishes and aspirations and low developed empathy, in this period
the child develops his emotional forms that will mark his behavior
until the end of its life. Luckily, latest researches refute Freud’s
allegation that the forms remain unchanged during lifetime.

Education is the last factor essential for studying leaders. Namely,

the expertise may be achieved by acquiring knowledge in certain
activities and, based on this knowledge, an influential position may
be achieved and leader’s potential realized as well. Influences in the
previous age affect the choice of expertise area of an individual.

According to the studies10, over 60% of the top British leaders have
lost one of their parents back in their childhood, mainly the father.
Also, the most influential world leaders (e.g. Hitler, Lenin, Stalin,
and Gandhi) have been on good terms with one, and bad terms with
other parent. Churchill himself has emphasized in his biography that
famous people have mainly been a product of unhappy childhood.

10
Ibid., pg.32

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The followers are made of “species” different from those of leaders.

They are constantly searching for a fascinating personality while
many of the followers are often migrating, searching not for a
perfect leader but for a perfect organization, association or society
to which they would like to belong. Nevertheless, there are
examples showing that even chronic followers may become leaders.
There are followers who are attracted by the power or strength of
an idea, and those attracted by charisma of leaders. The charisma
may be physical, intellectual and spiritual.

It is of great importance to consider biological and psychological

conditions for the existence of both the leaders and the followers in
human society because of the future education of leaders. An
illiterate of the 21st century will nor the one who does not know
how to read or write but the one who does not improve his
knowledge. Such should be particularly the future leaders always at
the edge of new knowledge. However, the procedure for building a
leader out of the one who is not made off this “fabric” would be a
waste just like trying to make a pianist out of a typist. I believe in
the future that developing science on leadership will be ever more
focused on the phenomenon of early discovering of leaders so that
they could be built as leaders starting from earlier stage. The
current principle of building leaders is based on the principle of
empowering already proven top-level managers. Only such target
groups justify investing in development and only such small classes
of people have the opportunity to reinforce their leader’s qualities
through education.

4. Leadership styles
The leadership style is a manner in which relationships between
leaders and collaborators as well as other employees in the
company are established. Namely, it is the manner in which leaders
direct the behavior of subordinates as well as the means they use to
win over or obtain consent for the desired behavior11. Basic criteria
according to which we distinguish the styles are the following:
• Leader approach to motivation of subordinates – coercion or
motive,
• Leader’s decision making manner,
• Sources of power the leaders use to exert their influence on
subordinates,
• Leader’s competencies to adjust his behavior to various
situations.
11
Pekovic M., Janicijevic N., Bogicevic N., ORGANIZATION: THEORIES,
DESIGN, BEHAVIOR, CHANGES, The school of Economics, Belgrade, 2002, pg.
301

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Based on these criteria the following styles are distinguished:

• Classic leadership styles, and
12
• Modern leadership styles.

4.1. Classic leadership styles

The pioneer studies on leadership are the Hothorn’s and Iowa’s
studies. These studies have investigated the influence of three
leadership styles on behavior and performance as follows:

The characteristic of autocratic leadership style is in that a leader

makes own decisions. He has no confidence in his collaborators. He
uses coercion while his influence derives from a formal power of
authority. There are two sub-types of autocratic style: charismatic
and paternalistic leadership. The charismatic leaders rely on those
personal qualities which distinguish them from others, while the
paternalistic leaders build their power on a vision of a company as
of their own family, they are fathers taking care of well-being of
employees. The autocratic leadership is applied in small-size
enterprises; as the enterprise grows and develops this style has to
be transformed into the leadership style more appropriate to the
situation.

The democratic leadership style is characterized by greater inclusion

of subordinates into decision making process, greater confidence in
subordinates and faith in readiness and willingness of subordinates
to undertake responsibility in the decision making process. The
decision making is decentralized, authority is delegated, and this
style ensures the participation of employees, flexibility of
organization and better performances. The democratic leadership is
typical for medium-sized and big enterprises.

The liberal leadership style is characterized by full inclusion of all

employees, in whom a leader is fully confident, while they feel
completely free to discuss all issues. The liberal leadership is
implemented in all enterprises, regardless of their size, structured
according to their type and working groups, in which complex jobs
are performed requiring sophisticated knowledge and highly
educated people who do not tolerate restraints and cliches.

The Ohio studies are the first inter-disciplinary studies on leadership

based on team work of psychologists, sociologists and economists.
The concept of “management network” is actually based on the
conclusions of these studies. The network has two dimensions: care
for people and care for production. By advancing along horizontal
12
Ibid., pg. 301-25

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axis, where the care for production is shown, the leaders show that
they are task orientated, while by advancing along the vertical axis,
where care for people is shown, the leaders show that they have
higher degree of care for people.

10

High 1.9. Club 9.9. Team

Management Management
Care for People

5.5. Half-
Half-way
Management

1.1. Impoverished 9.1. Task

Management Management
Low 0 10

Low Care for Production High

Figure 2: Management network

(Source: Petkovic M, Janicijevic N, Bogicevic B., ORGANIZATION: THEORIES,
DESIGN, BEHAVIOR, CHANGES, School of Economy, Belgrade, 2020, pg.305)

In management network three leadership styles are defined:

1. STYLE 1.1. IMPOVERISHED MANAGEMENT is characterized by
extremely low interest of leaders in people and production. This
style indicates a low level of entrepreneurial spirit and low
competencies of a leader.
2. STYLE 1.9. CLUB MANAGEMENT is typical for leaders who are
hardly interested in production but who devote their attention to
employees. This style is not recommended to leaders because it
is considered as a specific manipulation with people in an
organization.
3. STYLE 9.1. TASK MANAGEMENT is typical for leaders who are
interested in everything pertinent to the production process but
who are very little or not at all interested in motives and needs
of employees. This style has all characteristics of autocratic
leadership.
4. STYLE 5.5. HALF-WAY MANAGEMENT is typical for leaders who
have a balanced sense for both the people and the production.
Such leaders, who are majority in real life, do not set ambitious
goals and have benevolent autocratic attitude towards the
subordinates.

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5. STYLE 9.9. TEAM MANAGERS are the most effective ones,

because they are leaders equally greatly interested in both the
people and the business. This is a position to be aimed to, and
only chosen great leaders may achieve it.
The management network has been proven in practice as a good
way of testing leaders because it shows them that the satisfaction
of employees is as important as the achieved productivity.

The Michigan studies represent the most comprehensive researches

of the classical school of this problem and Likert used their results
to develop the “System 4” of management leadership. The first
system represents the autocratic leadership on which all power is
concentrated on an organizational top level. The second system is
still autocratic because management and control have remained on
the top level, however some decisions are delegated. There is
certain, but not sufficient, confidence between leaders and
employees. The third system comprises consulting employees in the
decision making process, cherishing the team work in an
organization. Nevertheless, the goals are set on the organizational
top level. The fourth system represents a system of decentralized
decision making favoring ideas of all employees who enjoy great
confidence. The teams make organizational structure. These
systems will be discussed in more detail in leadership philosophy of
the HPO model.

The group dynamic approach is a modern school approach starting

from the attitude according to which an organization is composed of
organized and led groups. This approach distinguishes two styles:
transactional and transformational leadership.

Transactional leadership means that leaders determine what the

subordinates should do in order to realize organization’s objectives,
define tasks and assign jobs to subordinates and then stimulate and
motivate them to accomplish the set goals. This leadership is
successfully realized by authoritarian leaders.

Transformational leadership appeared in 80ties of the last century

along with a big wave of organizational transformations of the well-
known companies. It has been shown that only a special kind of
leaders may make such changes, actually the leaders who have a
vision and energy to inspire their followers. They redefine reality,
move boundaries of impossible and with the power of their
personality move forward the followers to accept and even to create
innovations. These are transformational leaders and their qualities
are:
1. They are recognized as advocates of changes.
2. They are brave.

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3. They have confidence in people.

4. They are governed by values.
5. They learn as long as they live.
6. They are able to cope with complexity, ambiguity and
uncertainty.
7. They are visionaries.

4.2. Modern leadership styles

The contingent approach to leadership is the attitude according to
which different leadership styles are variously efficient in various
situations. According to this approach no style may be efficient in all
situations. The factors affecting the leader’s efficiency are:
1. The task characteristics and requirements.
2. The employees’ qualities, expectations and behavior.
3. Organizational culture and organizational policies.

Further, the four leadership models based on contingent approach,

dealt with in the literature the most, will be explained.

Fiddler is considered a founder of an efficient leadership contingent

model. The Fiddler’s model is built on the basis of a relation
between leadership styles and appropriateness of the situation,
namely the degree to which a leader can control, influence or
anticipate the consequences of certain behavior. The combination of
a leadership style and concrete situation determines the group
performances. Fiddler is of opinion that leaders can implement two
different styles in leading their collaborators. One style is
characterized by benevolence and tolerant relation towards
collaborators, while the other is characterized by unfavorable
relation towards the collaborators, namely the ordering relation. The
technique he has developed is based on rating opinions of a group
leaders on the group members with whom they have worked and
collaborated worst, the so-called LPC (the least preferred
collaborator) scale.

A leader with low LPC rating is a task-oriented leader, and it is

thereby quite logical that he describes negatively those employees
who do not contribute to good results. A leader with high LPC
rating is the one devoted to building ever better interpersonal
relations. Fiddler shows that the both leadership styles have good
performances under favorable conditions while under unfavorable
conditions they don’t. Accordingly, we cannot speak of a “good “ or
a “bad” leader but of a situation in which a leader may have good
performances or a situation in which he may have bad
performances. Some leaders may achieve better results with less
rather than with more power. The performances may be improved

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either by changing some leader’s qualities and his motivation

system or by changing situation in order to make it more favorable
for a leader.

The advantages of this model are in successful linking of three

factors of critical importance for leadership success:
1. The relation leader/member may be categorized as a good one
when there is mutual confidence, or as a bad one when high
level of control, threat and fear is present.
2. The task structure may be categorized as highly structured,
when a task is defined by known and clear procedures and
instructions for members of an organization, or as badly
structured, when organization’s members face a dilemma on
what they have to do, when and how.
3. The position of leader’s power may be strong, when he has great
influence, or weak, when he has little influence in an
organization.

The basic criticism is directed towards the procedure and statistical

analysis applied in the model. In practice, it is not simple to
precisely define the level of task structuring, as well as the quality
of the leader/subordinates relation. Also, the model does not include
in the analysis the characteristics of subordinates and the degree of
competency of both the leaders and the subordinates.

The Harsy – Blanshar model, in addition to the tasks/leader–

follower relation also introduces in the analysis the third situational
variable, maturity of followers. The maturity of followers is defined
as competencies and readiness of the employees to assume
responsibility when directing their own behavior related to the given
task. The maturity level is determined on the basis of three criteria:
1. Degree of motivation for achievements.
2. Readiness to assume responsibility.
3. Degree of education and/or experience.

Based on this three-dimensioned situational model the four

leadership styles are defined:
1. TALKING LEADERSHIP STYLE is the best one for the low maturity
level followers not ready to assume responsibility so that their
role in performing tasks is ensured by orders and guidelines.
2. SELLING LEDERSHIP STYLE is best to be applied in case of the
low to moderate maturity level followers. This style at the same
time ensures both the orientation towards the tasks and the
support to people not able but ready to assume responsibility.
3. PARTICIPATIVE LEADERSHIP STYLE is applied in a situation when
the followers show maturity and competency but not readiness to

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assume responsibility because of which they need support to

raise their motivation.
4. DELEGATING LEADERSHIP STYLE is the best for high maturity
level followers. This leadership style allows the followers high
degree of freedom and possibility to assume full responsibility.

The House’s model, the “road-goal” model, places focus on

expectations and motivation of employees. Initial attitude is that
employees expect to achieve high results, and based on this, high
rewards while the leader’s task is to assist them and explain which
road towards the goal to take. This model distinguishes leadership
styles according to leader’s competency to notice distinctions
between employees and to build, on these distinctions, various
systems of remuneration according to individual contributions.
Based on these criteria, four forms of manager’s behavior are
distinguished in the model as well as two categories of contingent
variables. The motivation and satisfaction of subordinates is the
result of a sum of forms of leader’s behavior and contingent
variables.

The contingent variables creating leader’S behavioral forms and

attitudes and behavioral forms of subordinates are:
1. Qualities of subordinates (rigidity, external – internal orientation,
and competency)
2. Environmental characteristics ( nature of jobs, formal system of
authority, and characteristics of a group)

Four leader’s behavioral forms are:

1. Directive behavior, resulting in positive influence on subordinates
when a task is complex, and negative influence in the situation
when a task is clear.
2. Imitating behavior, contributing to greater satisfaction of
employees working on jobs which cause monotony, frustration
and stress.
3. Achievements-oriented behavior aiming at inspiring employees
for greater dedication and acceptance of challenges. A leader
will, in addition to high assessment of results, create possibility
for development and promotion of subordinates.
4. Participating behavior, meaning a high level of including
subordinates into the decision making process, developed
communication, getting information, and confidence.

Just like other model based on contingent approach, this model as

well suggests to leaders that leadership style should always change
and adjust itself to the given situation.

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The Vrum-Jeton’s model or normative leadership model tries to

explain how leaders should respond or what decisions they should
make in a given situation. They have created “decision making
tree”. The model contains 5 leadership styles, 7 situational
dimensions, 14 problem types, and 7 decision-making rules.

Vrum and Jeton have identified seven possible situations, namely

problem characteristics, setting certain requirements before the
leaders who face these problems more or less every day. In this
model, the requirements are formulated as questions with offered
answers YES and NO, and are listed from A to G:
A) Does the problem require quality solution?
B) Do I have enough information to make a decision?
C) Is the problem structured?
D) Is the acceptance of the decision by subordinates critical for its
successful implementation?
E) If I make a decision all by myself, is it certain that it will be
accepted by my subordinates?
F) Do the subordinates accept (share) organization’s objectives
which would be realized by solving this problem?
G) Is the conflict among subordinates likely to occur in the preferred
solution(s)?

A B C D NO E F G
AI
YESAI
NO YES
NO
GII
NO AI
YES AI GII
YES YES YES YES
NO
NO NO YESCII
YES
YES CI
YES NO NO
NO AII AII
NO YES YES CII
NO YES GII
NO
CII NO
CII

Figure 3 : Vrum – Jeton normative leadership model

(Source: Ibid., pg. 317)

This relation between questions and answers should make possible

to make a diagnosis of the situation a leader is in, and then enable

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choice amongst one of the five leadership styles, out of which the
two are autocratic decision making (AI, AII), two have
characteristics of a consultative decision making (CI, CII), and one
has characteristics of a group decision making (GII):
1. AI
The situation when a leader alone solves problems and makes
decisions relaying on information available in the given moment.
2. AII
A leader obtains the required information from his subordinates
and then alone solves problems and makes decisions. The role of
subordinates is exclusively in collecting information.
3. CI
Including subordinates through consulting. A leader consults the
subordinates but makes his own decisions which may, but do not
necessarily have to, reflect the viewpoints and opinions of the
subordinates.
4. CII
A leader gathers subordinates into groups in which the problems
are discussed and opinions of the group conceptualized and
presented to leaders. After having consultations, the leaders
make decisions.
5. GII
Manner of decision making in which leaders and groups discuss
problems and make decisions together. They together create and
evaluate alternatives and apply consensus in choosing solutions.

The Vrum-Jeton decision making model, by its appearance at the

beginning of 70-ties of the 20th century, greatly contributed to the
development of theory, and, as analytical means, proved to be very
useful in practice. However, the authors themselves pointed at
certain model deficiencies.

Vrum and Jago have made significant modification of the normative

model. Compared to the normative model offering two options for
an answer: YES and NO, the Vrum-Jago model offers several
options, such as for example: NO, PROBABLY NO, MAYBE,
PROBABLY YES, and YES. They have also introduced in the model
some additional aspects of a situation, such as:
• Time limitations,
• Quantity of information,
• Geographical dispersion of subordinates included in the
decision making process.

The care for the development of subordinates and the time required
for decision-making are also additional elements in the new model.
Besides, the rules defined as a support to the normative model have
been replaced with mathematical functions. In this way, the already

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complex model has become ever more complex, so that it is

possible to apply it only by using a computer.

4.3. Behaviorist theories, shared leadership and

virtual leadership
The behaviorist approach has further improved the theory of
leadership styles. Modern authors do not deal with answers to the
question who the successful leaders are, but they deal with the
question what the successful leaders do, how they behave in
organization, how they organize their enterprises, how they make
decisions, how they communicate, and how they motivate
employees. The leaders are suggested to learn how to behave.

E.Shane concludes that new forms of leadership should be learnt

and not through one-time learning, but through changes and
unceasing learning. He links effective leadership with the behavior
of leaders and defines the following leader’s roles:
1. Leader as an animator.
2. Leader as a culture creator.
3. Leader as a culture preserver.
4. Leader as an agent of changes.

A leader as an animator is a creator of organization. He is important

in the first, entrepreneurial phase, when organization of a young
enterprise is being created. The entrepreneurs having visions often
lack energy to motivate them to persist, on one hand, and, on the
other, to inspire confidence, loyalty and readiness of employees to
face failures. The entrepreneurs who successfully overcome this
crisis may be said to be leaders-animators. They create organization
and give initial impulse for further growth and development.

A leader as a culture creator is an architect of organizational culture

of an enterprise. When the organization is created, the leader is, in
the second phase of organizational development, expected to
convey to employees the assumptions, believes and values, so that
they accept and adopt them, in order to build a desirable model of
employee’s behavior, and he:
• Employs and keeps only those employees who accept the system
of organization’s values, by changing his mental model.
• Indoctrinates and socializes employees in accordance with his
cultural formula.
• Imposes his own behavior as a model of roles by which he
encourages employees to identify themselves with the
organization.

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A leader as a culture preserver maintains the accepted model of

organizational culture that is realized in the third phase of
organizational development called institutionalization. In this phase
the successful elements of organizational culture are recognized and
leader’s task is to find the way to stabilize and preserve them.
Simultaneously, leaders should monitor the organizational
development, in order to be able to recognize a new situation,
adjust leadership style and allow the appearance of other leadership
forms. The leader’s task is to develop competitiveness both of the
individuals and the groups. They should develop together with their
organization as well as develop a new generation of leaders, for a
different future of the organization.

A leader as an agent of changes also changes organizational

culture. The role of the agent of changes requires leadership skill in
recognizing disharmony between the size and age of organization,
newly created conditions and cultural forms of organization. The
change in organizational culture understands the activities of
leaders aiming at destroying elements of old culture and promoting
new elements that will create a basis for new behavior.

The Benis’s researches show that basic dimensions of an effective

leader’s behavior are:
1. Effective leaders focus their attention on visions. Their own
convictions direct behavior of others. By defining an image of a
desired future, they direct actions by visions thus transforming
the existing opinions of the followers. The more the vision
accepted the stronger the emotional and spiritual foundation of
organization.
2. Effective leaders provide meaning through
communication. Leaders define what has been unsaid or
presumed before. The leaders explore why and not how, always
and constantly discovering new problems. Leaders are those
creating organizational culture.
3. Effective leaders win and maintain confidence through
positioning that is considered an active side of vision. A
task of positioning is to make the positions, values and models
known and clear. Leaders are trusted if their positions are
consistent, if their beliefs are persistent. This has a return effect
on further strengthening of visions as well.
4. Effective leaders develop their personality through
respect. Recognizing advantages and eliminating weaknesses,
sharpening competencies and talents, distinguishing appropriate
competencies through job requirements; ability of recognizing
mistakes as a way of learning and not as a failure, are
requirements which leaders must respect. The leaders accept
people for what they are, avoid the past in relations with them,

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are full of attention and kindness, have confidence in people and

self-confidence as well.

For a continual success of an organization it is necessary to provide

a generation scheme. Solution to this problem is in Handy’s concept
of shared leadership the essence of which is in distributing power
throughout entire organization.

There are two basic concepts on which the shared leadership is

based:
1. SUBSUDIARY quality, a notion taken from the political theory,
introduced in practice of modern organizations aiming at
achieving balance of power. The essence of the principle is in
that the higher body should not take over the duties which could
be performed by lower bodies. The subsidiary relations
understand confidence, while the task of leaders is to develop
competencies of employees and make them become independent
in order to assume the leadership role.
2. EARNED AUTHORITY, the notion taken from political theory, in
leading modern organizations which is less and less like a
machine and more and more a group of political processes,
which should explain to leaders that power does not spring out
from somebody’s position. According to this principle, the power
should spring out from the competencies and merits of the
organization’s employees.

Leadership and leaders are becoming changeable categories. The

leaders realize their influence on behavior of other members by
their respect earned by contributing to the organization’s success.
When others achieve better results and merit authority, they will
assume the leader role.

Replaceability of leaders means that in modern organizations there

is not only one leader. The reality shows that there should be more
leaders in an organization and that leadership functions must be
divided throughout the organization. The subsidiary and earned
authority principle presupposes two things:
1. Structuring organization per teams and working groups; and
2. Making people independent for leadership.

Traditional organizations have been created on the concept of place,

namely space where business activities are performed. Today, in
the era of high technologies, information, learning and changes, the
traditional organizations are undergoing metamorphosis and are
being transformed into virtual organizations based on the concept of
activities and not on the place at which the activities are performed.
This phenomenon brings us to the need of studying the leadership

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required for such type of organization. Such leadership is defined as

a virtual leadership. The virtual leadership affirms a new doctrine
trying to find an answer to a key question of virtual organization:
how to manage the people we don’t see? The answer seems to be
an easy one: by having confidence in them. The confidence is a
basis of virtual organization and a phenomenon opening new
chapter of leadership. This is a leadership model which should
develop the feeling of belonging and loyalty in the people who work
on certain jobs, regardless of place and time in which a job is
performed. In order to accomplish the goal of belonging, the basic
principles on which the confidence is built are suggested:
• Confidence is not blind.
• Confidence requires boundaries.
• Confidence requires learning.
• Confidence requires strength.
• Confidence requires unity.
• Confidence requires contact.
• Confidence requires shared leadership.

The motivation and participation of employees in virtual leadership

become more and more important. For virtual leadership the key
issue is how to keep people with good qualities. The answer is in
changing relation towards the employees. The employees must be
evaluated as assets and not as costs of an enterprise. And indeed,
the market value of two hundred leading companies on the London
Stock Exchange in average is equal to three times greater value of
visible fixed assets. This means that markets evaluate the invisible
assets of an enterprise, namely knowledge, experience and quality
of employees, more than visible assets shown in balances of
enterprise.

5. Types of Leaders
The main division of leaders would be the following:
transformational and transactional leaders.13 A transformational
leader is the one at the top position in an organization and his role
is in changing reality of certain environment to bring the
organization in conformity with values and ideals. A transactional
leader is in position below the top one and his task is to efficiently
get in interaction with the changed reality. Although an organization
needs both leaders, only the transformational leader is a principle-
centered leader.

Covey Stephen R., PRINCIPLE CENTERED LEADERSHIP, Simon &Schuster,

13

USA, 1992, pg. 286

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Covey recognizes 2 basic principles at 4 levels. A principle-centered

leader should incorporate the following principles, from own level to
organizational level:

Figure 4: Levels of the Principle centered leaders

and key principles
(Source: Covey Stephen R., PRINCIPLE CENTERED LEADERSHIP,
Simon &Schuster, USA, 1992, pg. 286)

Related to the central massage of a leader14, the following types of

leaders are distinguished:
1. ORDINARY type, who has found out the way to effectively
communicate the traditional story among followers, ever less
desirable type in the world;
2. INNOVATIVE type, who adds to the story latently present in
population a fresh component or highlights it in different way,
this being a good quality of transactional leader; and
3. VISIONARY type, the rarest type, who creates new stories,
unknown to the audience, by which he achieves efficiency at
higher level, this being the very quality of transformational
leader.

A leader spends a lot of his time working with people. According to

the quality of interpersonal relations between a leader and his
followers, the resonant and dissonant leaders are recognized,
14
Gardner Howard, Laskin Emma, LEADING MINDS, Basic Books, USA, 1996,
pg.10

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namely the leaders whose actions are in harmony with follower’s

feelings so that they are all in positive emotional climate, and
leaders whose actions are in disharmony with wishes and feelings of
the followers so that the emotional climate is not simulative.15

Based on Goleman’s researches carried out on 3,871 leaders, the

following types of leaders are recognized:
1. VISIONARY, resonant. When changes require a new vision, or
when a new and original direction is needed, this type of leader,
creating positive climate in organization, moves people towards
the common dream.
2. TRAINER, resonant. He assists employees in improving their
performances on long-term basis, creating very positive climate
in organization, linking wishes of each employee with
organization’s objectives.
3. GUARDIAN, resonant. When it is necessary to strengthen
connections, provide motivation in stress situations and “fill in
holes” in organization, in a positive climate, this type of leader
creates harmony by linking people.
4. DEMOCRATE, resonant. When it is necessary to build consensus
or stimulate employees to improve their outputs, this type of
leader, in a positive climate, appraises outputs of employees and
creates the participating culture.
5. REGULATOR, dissonant. When high-quality results are to be
obtained from a motivated and competent team, this type of
leader regulates steps how to bring the realized results close to
the expected ones. Considering that this is usually poorly done in
practice, this type of leader often creates negative climate.
6. COMMANDER, dissonant. In crises, radical changes or critical
situations between the leaders and employees, this type of
leader diminishes uncertainties issuing clear directives. Often
misused model, so that this type of leader creates a negative
climate in organization.

Although Goleman and collaborators consider the first 4 types of

management as positive, and the last 2 as negative ones, still his
general advise is: manage with style, the right style in the right
time.

A study on management16 manners shows that management is not

dependent on emotional nature of leaders but that business
environment and branch activities determine the manners of
15
Goleman Daniel et al., PRIMAL LEADERSHIP: REALIZING POWER OF
EMOTIONAL INTELLIGENCE, Harvard Business School Press, USA, 2002, pg.
19-18
16
Farkas Charles M., Wetlaufer Suzy, The Ways Chief Executive officers Lead,
Harvard BUSINESS REVIEW ON LEADERSHIP, Harvard Business School
Press, USA, 1998, pg. 115-46

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management. Farkas and Wetlaufer have studied the manners in

which 160 world business leaders manage and they have expected
to discover another 160 manners of management. However, they
have discovered only 5, oriented to:
1. STRATEGY, less than 18% of respondents;
2. PEOPLE, about 22% of respondents;
3. EXPERTISE, about 15% of respondents;
4. CONTROL, 30% of respondents;
5. CHANGES, less than 15% of respondents, the smallest share in a
sample.

The Strategic leaders, e.g. in the CEO Coca-Cola or Dell Computers,

consider that their main job is to create, test and implement a long-
run strategy of the company. They spend most of their time on jobs
pertaining to strategy and contacts with external factors. The
people-oriented leaders, e.g. in the CEO Gillete or PepsiCo, spend
most of their time travelling, in business units and in contacts with
people. Their special sphere of interest is recruiting and employing
new workers. For the expertise-oriented leaders, e.g. in the CEO
Motorola or Ogilvy & Mothers, the primary sphere is the one in
which expert knowledge produces competitive advantage on the
company’s market. They spend most of their time in creating
programs, systems and procedures. The control-oriented leaders,
e.g. in the CEO Bank America or British Airways, are oriented on
creating a set of control elements which may ensure uniform or
anticipated behavior of the company towards consumers and
employees. These leaders very much appraise confidence and long
employment of collaborators in the firm. The job of leader of
changes, e.g. in the CEO Goldman Sach or Tenneco, is in continual
innovations in business running. Compared to a strategic leader,
this leader does not set a specific goal to be achieved or determine
a place to be reached, but a desired direction. They spend most of
their time communicating: speeches, meetings, and alike. And
these leaders are the most effective ones.

Based on these researches it was concluded that the management

manners is not dependent primarily on personal leadership style but
that leaders should accept the way of managing needed by the
organization with relation to the environmental conditions. It was
also concluded that leadership style should and must change with
changes in environment.

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Figure 5: COP model

(Source: Zenger John H. et al., THE EXTRAODRINARY LEADER:
TURNING GOOD MANAGERS INTO GREAT LEADERS
McGraw-Hill Trade, USA, 2002, pg.117)

COMPE-
Figure 5 shows the COP model17 revealing where the “right
combination” for leaders is, namely the center of their acting. This
is a good model, which may clarify how leaders behave with relation
to their environment. TENCY
Obviously, the COP is actually an abbreviation composed of the
main model element initials in English language: competency (C),
organization(s) (O), and passion (P). The right leadership
combination is in the cross section of competency, organizational
needs and passions.

Competency is a skills, behaviors and competencies that a person

possesses or performs more than well. A sphere of knowledge or
expertise may also be a competency. In order the leaders may
successfully find their “right combination”, the competent people
possessing passion for performing their jobs must be appraised by
the organization. Typically, organizations will appraise competencies
and passion of an individual having direct influence on business
ORG
success of organization. However, the fact that somebody has a
competency does not necessarily mean that he has passion, namely
enthusiasm and irresistible need to use his knowledge and skills for
17
Source: Zenger John H. et al., THE EXTRAODRINARY LEADER: TURNING
GOOD MANAGERS INTO GREAT LEADERS, McGraw-Hill Trade, USA, 2002,
pg.117

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the benefit of his organization. It is actually impossible to develop

passion for things we dislike or don’t appreciate in our life outside
business.

The leaders who are in the model average:

• produce output greater then their colleagues.
• are ranked as persons of higher performance.
• generally spend more time at work than their colleagues do.
• don’t search new jobs.
• are more motivated and to them their organization’s problems
are clearer.
• permanently receive education and develop new skills.
• job is amusing for them… and they are pleasant to work with.

6. Jobs and characteristics of leaders

URGENT JOBS NOT URGENT JOBS
IMPORTANT

I II
• Crises • Most of preparations
JOBS

• Problems • Clarification of goals

• Projects that have become • Planning
due • Training
• Urgent meetings • Alignment
• Urgent preparations
NOT IMPORTANT

III IV
• Interruptions in job • Trivial jobs
• Some telephone calls • Some telephone calls
JOBS

• Some meetings • Unimportant mail

• Some mail • Non-business software
• Out-of- business activities • Out-of-business activities

Figure 6: The time management matrix

(Source: Covey Stephen R. et al.: FIRST THINGS FIRST: TO LIVE, TO LOVE,
TO LEARN, TO LEAVE A LEGACY, Free Press, USA, 1996, pg.37)

As shown in the matrix, various activities take place at work:18

some things are urgent, some are not, some are important, and
some are not. In practice the jobs are performed in the following
sequence: urgent jobs listed in square I are performed first. Then
the work is continued by performing urgent jobs listed in square III.
Then a person wants to have a coffee break playing solitaire on his
PC. Then he spends time in square IV, so that least time is

18
Covey Stephen R. et al.: FIRST THIGS FIRST: TO LIVE, TO LOVE, TO
LEARN, TO LEAVE LEGACY, Free Press, USA, 1996, pg.37

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dedicated to the jobs in square II, actually the jobs of utmost

importance because only in climate of these activities a vision of
business operation and strategy for future is developed. The matrix
shows that the managers are needed in organizations considering
great numbers of activities are the very jobs of a manager.

In a HIGH PERFORMANCE ORGANIZATION (hereinafter referred to

as the HPO) the time management matrix looks different. Namely,
by training people, authorizing them to get fully involved in
business activities, as well as by aligning people in an organization
by drastically reducing hierarchy levels, a lot of so far urgent jobs,
overburdening the top management, are today performed at lower
levels of organization. Thus, the “time crunch” problem is gradually
fading away. The leader in square II is thereby gets free from stress
and short focus and may dedicate most of his time to developing
vision, finding out new possibilities and improving communication
between people. This matrix, where bolded numbers represent the
HPO while italic numbers represent the typical organization, is
presented as follows:19

URGENT NOT URGENT

IMPORTANTNOT IMPORTANT

I II

20 – 25% 65 – 80%
25 – 30% 15%

III IV

15% Less than 1%

50 – 60% 2 - 3%

Figure 7: Time management matrix in the HPO and typical organization

(Source: Ibid., pg. 218)

In the period of rapid structural changes, the only one who survives
is the leader of changes.20 The changes cannot be managed; one
can only be ahead of them. The leader of changes is expected to:
1. Penetrate deeply into the future.
2. Find out and anticipate changes.
3. Incorporate changes.

Ibid., pg. 218

19

20
Drucker Peter F., MANAGEMENT CHALLENGES FOR THE 21st CENTURY,
Harper Business, USA, 2001, pg. 73-93.

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4. Balance chances and continuity.

The strategy of a leader of changes is denying the past. What has

been good yesterday may not be, and usually is not, good for today
and tomorrow. It certainly does not mean that everything is to be
denied. Drucker suggests that in such situation we should ask
ourselves the following question: “If then I had had the wisdom of
today, would have I done the same thing?” The next policy pursued
by a leader of changes is “exposing problem to starvation” and
“feeding” chances, all this in the spirit of continual and organized
improvement and progress. The third systematic policy is insisting
on innovations because in this way the changes are stimulated. The
only strategic orientation having chance is creating future.

The effectiveness is a habit of guru management, claims Drunker in

his well-known and supplemented paper21 reprinted and translated a
number of times in the past 40 years. A habit is a complex of skills.
Skills may be improved by learning, meaning that effectiveness may
be learnt.

Effective executives have a set of 5 skills:22

Firstly, effective executives know where their time runs. Drucker

suggests three steps in mastering these skills:
1. Recording the time used,
2. Time managing, and
3. Consolidating time.

Secondly, effective executives have a clear result in their focus.

Namely, they focus their work on results and not on mere job
performing. The key of efficiency is in the focus on results while in
its basis are: communication, team work, self-training and training
of collaborators.

Thirdly, effective executives lean on their own strength, the

strength of their superiors, colleagues, and the subordinates as well
as on the strength that may be created by a certain situation in the
environment. This is a fundamental behavior of the executives. It is
primarily manifested at the employment of new workers. They make
decision on employing new workers, however, not to minimize
weaknesses but to strengthen advantages. The tasks assigned to
the collaborators are demanding and intensive, and the executives
see, not what the requirements of the job or work place are, but
how a person may contribute to the organization.

21
Drucker Peter F., THE EFFECTIVE EXECUTIVE REVISED, Harper Business,
USA, 2002
22
Ibid., pg. 23-24

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Fourthly, effective executives do not concentrate on everything but

on several major activities where their superior performances may
produce supreme results. One of the secrets of effectiveness is that
effective executives work on the most important things first and one
by one. Many of them are aware that things having no priority are
not worth to be considered and are to be rejected.

Fifthly, the effective executives make effective decisions. They are

aware that this is a matter of the system – the first step in the right
time. Effective executives don’t make many decisions, they
concentrate on the most important ones. They rather think
strategically and generically than they “solve the problems”. They
also know when the decision is to be based on principles and when
the case calls for pragmatism. The decision is like a surgical
operation, a court judgement. The choice between the good and
bad is rarely made, while the choice between several alternatives is
more often the case. The golden rule in the decision making process
is that the decision is not to be made until the disharmony is made.
There are three reasons why: this is a safe way for a decision-
maker not to be a prisoner of his own delusions or misconceptions
of his organization; the disharmony produces alternatives, and
without alternatives the decision may be unproved and deficient;
the disharmony is needed in order to stimulate imagination.

An effective leader is, according to Drucker, our greatest hope for

the modern society to be economically productive and socially vital.

A leader will find out that idle moments are greatly under their
control. One research work23 shows in a plastic way what executives
actually do. While according to the conventional opinion according
to which the executives, as defined by Feyol back in 1916, deal with
planning, organization, coordination and control, Mintzberg shows
that the job of executives comprise: interpersonal activities,
information activities and activities pertinent to the decision making.
Thus, the myths to be demystified are:
• The managers are reflexive and systematic planners. In reality,
the manager’s job is full of discontinued activities, and managers
are, thereby, action oriented and not reflective-activity oriented.
A study comprising 56 American executives showed that they
had 583 activities in 8 hours or one activity per 48 seconds on
average. The studies comprising 160 British executives showed
that they could work on one activity continuously only half an
hour in two days. Thus, managers can only in such way respond
to the pressure created by their work.

23
Mintzberg Henry, The Manager’s Job, HARVARD BUSINESS REVIEW ON
LEADESHIP, Harvard Business School Press, USA, 1998, pg. 1-36

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• Managers are not in charge of regular duties. In practice,

manager’s job is full of formal duties, including both rituals and
ceremonies vital for relation between organization and its
environment. According to the researches the managers spend
almost 50% of their time on these very activities.
• Managers need information in a summarized form, in the form of
report. Three studies show that managers spend 66%, 78% and
80% of their time respectively in oral communication. As for non-
oral communication, the managers spend most of their time on
reading – various mail.
• Management is, or will soon become, a science. Mintzberg’s
observations show that the work of managers in practice and the
description of managers in books differ to great extent. The job
of a manager – how he organizes his time, makes decisions, etc.,
is something that happens deeply in his mind. The effectiveness
of executives, according to him, primarily lies deeply in the
executives themselves, in their own relation towards the job.

Mintzberg has developed, based on explained myths, major roles of

a manager. A manager is a person responsible for the welfare of his
organization. He has formal authority and status. His job may be
described through roles he has, namely organizational set of
behaviors identified with the position. Based on authority and
status, the roles of a manager are:
1. INTERPERSONAL ROLE:
1.1 frontman - every head of organization has certain
ceremonial duties such as for example opening of
company’s tournament or taking a guest out for lunch.
1.2. leader – he is responsible for leading people in an
organization or organizational unit, as well as for
accomplished success or failure on the basis of such
leadership;
1.3. link – the researches show that contacts outside a vertical
chain of commanding with colleagues from environment
are extremely important, as well as the fact that managers
dedicate much of their time to this; 44% of contacts,
according to Mintzberg’s study, are the contacts of such
kind;
2. INFORMATION ROLE:
2.1. monitor – a manager constantly screens environment
searching for information, and the result is information as
much good as the network of his contacts is good.
2.2. disseminator – a manager has a power to control the
scope and quality of information he conveys to others.
2.3. speaker – as a speaker the manager conveys direct
information to people, especially to those outside the
organizational unit;

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3. DECISION MAKING ROLE:

3.1. entrepreneur – the duties of a manager are improving
organization performances and adapting to the changes
in the environment, and in this role a manager is herald
of changes.
3.2. handler of disturbances – in previous role the changes
are under the influence of a manager, in this role they
are out of his control; a manager must respond
immediately to all dangers coming from environment;
3.3. resource allocator – a manager is responsible to decide
who will do what. The essential resource is also the use
of manager’s own time. According to Mintzberg the
managers make lot of decisions on ad-hoc basis;
3.4. negotiator – a manager spends a part of his time
negotiating, this being an essential element in integral
job of a manager.

Instead of giving answers, the leaders should ask questions. Instead

of orienting people towards their jobs, the leaders should disorient
them in order to obtain new ranges. Instead of diminishing conflicts,
the leaders should stimulate them. Instead of maintaining stable
behavioral norms the leaders should change them.
Leaders whose task is adapting to changes should adhere to the
following 6 principles:24
1. Leaders should have a strong sense for reality and should watch
the situation as if standing “on the balcony”.
2. When the business cannot be quickly adapted to changes, then
he is most liking facing its disappearance. Leaders should rapidly
identify changes to which the business should adapt.
3. Leaders should regulate stress situations in the sense to lessen
the stress. They should create the so-called sustainable situation
using pressure cooker analogy – to keep the pressure constant,
neither to too high nor too low. Leaders are responsible for
directing, orienting, establishing norms and managing conflicts.
And finally, the leaders must have a sense of equilibrium.
4. Leaders should maintain discipline. Nobody is able to be a leader
unless he is not open for different attitudes. When in stead of
sterility a leader introduces as a practice a conflict of thoughts,
then the leader must withdraw to enable the team to come to
acceptable solution and then he has to show up again to quickly
establish equilibrium.
5. Leaders should bring the work back to people. The people having
sense for early changes are often at the periphery of events. The
changes require special knowledge. Unless all team members are
not included in the process, the organization might deprive itself
24
Hiefetz Ronald A., Laurie Donald L., The works of Leadership, HARVARD
BUSINESS REVIEW ON LEADERSHIP, Harvard Business School Press, USA,
1998, pg.171-97

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from visions of those who see early changes, as well as of those

who have expert knowledge, and thus lead itself to self-
destruction.
6. Granting rights to people is a basis of an organization wishing to
experiment, learn and adapt itself to changes. The leader’s task
is to support voices “from bellow” but also to suppress or root
out the voices of those deviant ones not fitting in the values and
norms of organization and thereby generating negative
imbalance in the organization.

The model25 that follows introduces basis of a leader and leadership,

namely explains what makes the foundation of a successful leader:

Zenger John H. et al., THE EXTRAORDINARY LEADER: TURNING GOOD

25

MANAGERS INTO GREA LEADERS, McGraw-Hill Trade, USA, 2002, pg. 55-82

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Leading
organizational
changes

Interpersonal
Focus on
skills
results CHARACTER

Personal
capacity

Figure 8: Model of a leader basis

(Source:Zenger John H. et al., THE EXTRAORDINARY LEADER:
TURNING GOOD MANAGERS INTO GREAT LEADERS,
McGraw-Hill Trade, USA, pg.55)

The character is the central part and main column of a leader.

Everything lies on him and derives from him, and a leader should:
• make decisions thinking to the benefit of an organization, and
use his own attitudes in order to influence decisions,
• fulfill obligations and given promises,
• always work on himself, learn and be trained,
• be open for feedback
• be available to everyone
• treat every collaborator in the same way,
• make no difference among people at different levels in the
organization,
• trust people and expect good intentions from them,
• work in a team,
• not be arrogant,
• be steadfast towards barriers and
• be elastic towards the changes.

Knowledge and skills a leader should posses represent his personal

capacities:
• technical knowledge,
• knowledge on products/services,

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• personal skills,
• innovative knowledge,
• initiative, and
• effective application of information.

Very important link in the model is the manner in which leaders

focus on results:
• determine stretched goals for their people,
• assume personal responsibility for team results,
• provide constant feedback and behave as coaches while working
with their people,
• attach the halo of sublimity to the goals assigned to the team,
• act as sponsors of each initiative or action,
• initiate new programs, projects, processes, technologies, new
relations with consumers,
• focus on organization’s objectives and ensure that they are
turned into individual actions,
• operate quickly and intensively and give rhythm to the team,
• they are champions in relations with consumers, and
• balance long-term and short-term results.

Interpersonal skills, interpersonal relations are what gives great

advantage to leaders in their work with people. They:
• communicate intensively and fruitfully,
• inspire others to achieve high performances,
• build positive relations with others,
• develop skills and talent of their collaborators,
• work in the atmosphere of togetherness with others,
• are effective team members,
• recognize and reward contributions of others,
• are open towards new ideas,
• receive and respond to feedback positively,
• effectively resolve conflicts in the organization,
• have positive influence on both the superiors and the colleagues
and on the subordinates as well,
• build self-respect of others, and
• teach others.

Leaders, in leading organizational changes, have the following

competencies:
• competency to be a champion of changes in the organization,
• lead programs and projects with the support and cooperation of
others,
• are effective promoters of programs of changes,
• have strategic prospective,
• know how to fit their work in the business strategy,

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• turn organization’s vision into challenging goals and tasks for

others,
• have long-term visions, but still find out balance between the
visions and short-term goals,
• link outer world with stakeholders in the organization,
• represent the work of his team in and out of the organization,
and
• help people understand that meeting customer’s needs is the
mission and objective of the organization.

Such qualities have been found in practice, based on the most

comprehensive researches to which I have had access: basis of
25,000 leaders assessed by 200,000 of their collaborators. Further,
Zenger and associates have brought into relation 5 basic leader’s
qualities and have come to conclusion that leaders assessed as
being strong in focusing on results and in focusing on interpersonal
qualities are the best combination. Out of 10% of the best leaders
even 66% of them have been assessed as strong in these two
qualities. We shall go back to this research later.

Leaders come in all forms and sizes, but they are all composed of
the following components:26
• The first basic leadership component is a visionary guideline. A
leader must have crystal clear idea where he leads.
• Second basic leadership component is a passion - passion for life,
passion for profession, passion for actions, passion for vision. A
leader communicating with passion gives hope and inspires
collaborators.
• Third basic leadership component is integrity. There are three
essential components of integrity: self-awareness, openness and
maturity. “Get to know yourself” has been inscribed long time
ago on oracle in Delphi, in ancient Greece.
• The fourth basic component is confidence. The confidence
emerges as a quality product of his cooperation with
collaborators. Expressing confidence by followers is like a
“cream” without which a “leadership cake” is not finished, not
sweet, not perfect.
• Fifth basic leadership component is curiosity, inquisitiveness. A
leader always asks questions and wants to learn everything that
he may know.
• Sixth basic leadership component is boldness. A leader likes to
experiment and does not fear a failure. On the contrary, he
learns from failures and turns his mistakes into advantages.

Bennis Waren G., ON BECOMING A LEADER: THE LEADERSHIP CLASSIC –

26

UPDATED AND EXPANDED, Perseus Publishing, USA, 2003, pg.31-33

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We may already emphasize that we slowly come to understanding

that two critical leader’s characteristics are his personality and
interpersonal relations. The HPO leader, as we shall see, is a leader
building his strength on the following advantages: emotional
intelligence and democracy.

The art of leadership lies in freeing people to do what they are

asked in an efficient and the most humane possible way. Three key
elements27 of this art:
1. mastering changes.
2. diminishing conflicts, and
3. reaching maximum potential.

It would be interesting to see the specific characteristics of a

political leader. David Gergen, as a member of the White House
team, was a counselor to six American presidents, from Nixon to
Clinton, and wrote a book on that. The suggested principles and
characteristics appropriate for an American president from this
paper may be presented as a model of good characteristic of a
political leader.

Seven lessons on political leadership are:28

1. The leadership starts from the inside. The inner soul of a
president affects all decisions made even more than generally
known or thought of. Integrity is the most important component
of a president. There is a disagreement in how the president’s
life affects his rule, especially as regards Clinton, but there is no
disagreement that a president should be a virtuoso in public life.
In order to be able to govern the president should inspire
confidence in the public as well as amongst the people in his
team. Also, an important component of a good president is
courage. The issue of “presidential intelligence” is also
disputable. The most intelligent of the observed presidents were
Nixon, Carter and Clinton, however, Reagan achieved the
greatest success with his combination of competencies and
emotional intelligence.
2. Central bearing message. Out of the observed ones, Reagan
was the only one who had a clear goal to which he was going.
Just as he must have a strong character, he must have a clear
intention. A President must base his/her message in the same
way as the founders of American State did in the Declaration on
Independence. It does not deal with who the Americans are (at
that time a new nation with only 3 million inhabitants), but what
the vision of the nation is – to be great and free, and this road
and this direction will never end. A President should not deal
Depree Max, LEADERSHIP IS AN ART, DTP, USA, 1990, pg.59
27

28
Gergen David, EYEWITNESS TO POWER, Simon & Shuster, USA,
2000,pg.343-52

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only with the present and with general places, however should
not conceive a new Declaration either. He should add to the
existing one the fresh elements leaving his own mark.
3. The capacity of convincing. Television has changed the existing
political world. Kennedy has beaten Nixon on TV. In previous
history it was not important whether a president could mobilize
the public. Today, the media and the public are always hungry
for new information. In 1997 Clinton delivered 545 public
speeches.
4. Capability to work within the system. Presidents are surrounded
by institutions of a system and they have to understand that
they are one of these institutions. The institutions critical for
presidents are: the public, Congress, and journalists. The
institutions important but not critical are: foreign powers,
domestic stakeholders, and domestic elite. In the past century
the only American president who controlled all institutions was
Roosevelt.
5. Fast and safe start. In most of the institutions the influence of
leaders rises with time. As for presidents the situation is
opposite, their influence is falling. A successful start is the most
important wisdom of a president, because the above observed
presidents have defined the basis of their policy and what they
should do until the end of their mandate not in the first hundred
but the fist thirty days. A President has to both define his policy
and choose his team already during the campaign in order to
start working as a “locomotive” from the first moment in their
cabinet. Out of the observed presidents, Clinton has had the
worst start.
6. Strong and vigilant advisers. Since the first American president,
it has been obvious that the best presidents have been those
surrounded by the best men. George Washington, whose
advisers were future American presidents, to mention only
Thomas Jefferson, has been aware of this message.
7. To inspire others to continue their mission. The point is that
effective presidents have left a living heritage, a legacy that
inspired others to continue their mission long after them.
Gergen refers to other researchers who have singled out five
presidents: Jefferson, Jackson, Lincoln, Roosevelt, and Reagan
as presidents who have abandoned the “old orthodoxy” and built
“new paradigms”. Out of the observed ones, Reagan has moved
the balance between the political centralism and entrepreneurial
culture in favor of the latter and ensured powerful economic
development of the States as his own legacy long after his rule.

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7. Democracy and Leadership

The democracy, the greatest of all social experiments, has not yet
been rounded up nor finalized either. The democracy is being
transformed. And it supports transformation. The democracy is
related to people and the rule:29 how we live our lives, how we
behave at work, what principles and values we adhere to, what kind
of authorities we have on local and higher levels, and what are our
hopes for the future. The democracy inspires the freedom, equality,
individual values, justice, and openness. The democracy is open and
sensitive to changes. A democratic organization is based on people
who are free, intelligent and competent. The democracy is not one
man – one voice, everyone-does-what-he-pleases, chaos and
anarchy. It is highly organized, purposeful, accountable and
disciplined. A democratic organization is based on team work. The
starting point of an effective team work is based on the following
emotions of team members:30
1. Belief that each of us is responsible for the success of each of
us, our team, as well as organization as a whole.
2. Belief that none of us is as effective as all of us together.
3. Belief that the success of organization is a success of all of us.
4. Belief that every team member is a friend and not consumer or
competitor.

The democracy is inevitable because it is the only system able to

cope with the requirements of the modern civilization changes, both
in business and in political sense.31 In the past the business leaders
were of opinion that the democracy was beautiful but not efficient in
the business world. Their attitude was the “democracy is a good
thing for good people, but they do not work for me”. The history
has shown that nations with democratic systems have had relatively
richer and more stable development than those with authoritative
regimes that have been suffocating either in blood or in poverty.
The democracy has been the only one that has coped with the
requirements of the modern civilization changes, and it may be said
that it is the only one capable of adapting itself to changes in the
future as well. The practice also shows that growing number of
business organizations in the USA are aware of efficiency of the
democracy, not only the newly founded ones but also those with a
long tradition, and they implement it successfully.

29
Roberts Deborah D., DELIVERING ON DEMOCRACY: HIGH PERFORMANCE
GOVERNMENT FOR VIRGINIA, “University of Virginia NEWS LETTER”, Vol.71,
No.6, USA, 1995, pg.1-11
30
Ibid., pg.10
31
Slater Philip, Bennis Warren G., DEMOCRACY IS INEVITABLE, “Harvard
Business Review”, USA, September-October 1990, p.167-76.

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The democracy in organizations does not rely on the “laissez-fair”

principle but on certain set of values:32
1. Full and free communication.
2. Relying on consensus in solving conflicts and not on coercion or
compromise.
3. Power is based on professional competency and not on position
in an organization.
4. Atmosphere allowing and stimulating emotional relations and
behavior.
5. Conflict between a man and an organization is solved on rational
basis.

The MIT has carried out researches related to the issue: Which
organization is the best for a particular type of environment? The
conclusions are that:
1. For simple tasks under static conditions the appropriate system
is autocratic, centralized system, such as was in many industries
in the first half of the past century, which is faster, clearer and
more effective.
2. For adaptability in changeable conditions, for fast acceptance of
new ideas, for flexibility and greater moral attachment of
workers, the best system is a decentralized democratic system.

It is well known that most of the scientific institutions have always

had a democratic system of organization. In the atmosphere of
equality, liberalism and pluralism the forms stimulating new and
more advanced ideas have been built. This is necessary to be done
in the industry as well – particularly when a change is omnipresent
and when new creativity is needed. For these organizations the
democracy is not an idealistic concept but an everyday reality based
on effectiveness.

In the past, the entrepreneurship was based on a great man with

one idea. Today, this is “altmodisch” because innovations are taking
place everyday and are diverse. And they come from all sides, not
only from direct competition but also from other industries and
other branches, materials, products or services. Today, a
“democratic” man is in fashion.

The democracy is becoming a necessity whenever a social system

strives for survival under the conditions of chaotic changes. For the
organization to subsist and survive, it has to be prepared to
everything and to be future-oriented, it has to develop products,
services and technologies irrelevant for the present, if they may be
relevant for the future.

32
Ibid., pg. 168

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The changes will not take place in organizations if top leaders do

not focus on effectiveness. For the top leaders to be effective the
required leadership system should be the one stimulating their
subordinates and collaborators to work together as one team. The
democratic organization is this new leadership system. A change will
not take place if the top leaders would not be suspicious towards
the paradigm that the democracy, empowering and aligning are the
necessity in the present dynamic marketing environment. By
adopting this paradigm they will be able to encourage their
collaborators to change their own paradigms as well and to adopt a
simple fact that all of them together are responsible for
effectiveness, that this should be everybody’s role, everybody’s
belief and general bequest.

The ideal of an organization of the future is a model preparing an

enterprise to successfully face many complex problems and to
respond to them in a manner which would be of utmost benefit for
it33. In such an organization the power is not on the top but in
leader's working teams. The power lies in the position, but the root
of power is in expert knowledge of the team members. Such teams
and organizations may not be managed in an authocratic manner.

A new leader is certainly not an autocrat but a democrat. A

democrat will succeed to stimulate and motivate. A democrat will
know how to use all potentials. A democrat will allow the leader’s
jobs to descend from the top level to the team level. A democrat
will strengthen teams and team work. Such approach is the right
approach that will contribute creating high performance
organizations because such organizations are a set of strengths of
all teams and team members in them. It may not be designed by a
wish of any brilliant individual in the top position; it may be
designed only if a vision of all people in the organization is a
common one. Thus, the democracy lies in the core of high
performance organization and a democratic leader - the leader
eliminating the worn-out hierarchical systems in management, is
the right type of leader for a high performance organization.

33
Petkovic M., Janicijevic N., Bogicevic B., ORGANISATION: THEORY,
DESIGN, BEHAVIOUR, CHANGES

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II MULTIDISCIPLINARY ASPECT OF
LEADERSHIP

The employed in 1979 possessed knowledge comprising 75% of the

knowledge required for performing their jobs. This percentage
rapidly fell and in 2000 the employed possessed 15% of the
knowledge required for performance of their jobs. We have seen
that the success of both leaders and an organization depends to a
great deal on leader’s personality. The psychological aspect of
leadership is crucial while the emotional role of a leader is a primary
role. In this Chapter other disciplines related to the phenomenon of
leadership will be discussed.

1. Emotional Intelligence and Leadership

Every man has at least two kinds of intelligence, one rational and
the other emotional34. They in fundamentally different way affect
our mental life. After returning from a party, a girl wanted to
frighten her parents by hiding in a cupboard in her room. Her father
heard some noises in the room, took out his gun and entered the
room. The girl jumped out of the cupboard and the father fired…And
killed her on the spot. Although a sever punishment for this man did
not exist, the court released him. Why? Because of the structure of
our brain. The evolution has conditioned that our survival instinct is
fast and active. The emotional brain responds several times faster
than the rational brain. And what is even more important, the
emotional brain may “kidnap” the rational brain. The psychologists
call it amygdala kidnapping. Visual information is gathered in a part
of brain called thalamus and then sent to two places, in amygdala,
the center of emotional mind, and cortex, the center of rational
mind. The distance between the thalamus and amygdala is shorter
than between thalamus and cortex. What is happening to a man
when amygdala kidnapping takes place? The blood pressure rises
and the heart pulsates faster. The muscles contract and prepare for
action. This has already happened to all of us, hasn’t it? It should be
mentioned that the cortex after processing information sends it to
the amygdala. The infantile nature of emotions is also important to
be mentioned because the emotional brain is the first to develop
and these early emotions may significantly affect our later life. The

34
Goleman Daniel, EMOTIONAL INTELLIGENCE, Bantam Books, USA, 1997,
p.28

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basic emotions are: rage, sorrow, fear, satisfaction, love, surprise,

disgust, and shame.

Each of the emotions play a unique role, which is revealed also by

their characteristic biological properties:
• In a fit of rage the blood pours into the hands, enabling them to
reach a weapon or attack adversary easily; heart starts to beat
faster, and the rise in hormone level, such as adrenaline,
produces sufficiently powerful energetic impulse for violent
action.
• In fear the blood flows up to the big skeleton muscles, such as
for example legs, making escape easier – the face turns pale
since the blood runs down from it (causing the feeling as if the
blood has “frozen in our veins”). At the same time, the body
becomes stiff, even for a second, perhaps giving it time to assess
whether hiding would be the right response. The processes in
cerebral emotional centers release a flood of hormones which
place the body in the state of total alert, making it stiff and ready
for action, while the attention is directed to immediate danger in
order to make the best assessment of the move to follow.
• Basic biological changes in the state of happiness include more
intensive cerebral centers activity inhibiting negative feelings and
stimulating available energy increase, while calming down those
arousing anxious thoughts. However, in psychology there is no
particular change discontinuing the state of inactivity thus
allowing faster recovery of a body than biologically aroused
disturbing emotions. Such state allows total relaxation of a body
as well as readiness and desire for any forthcoming task, but
also an aspiration towards realization of a whole series of goals.
• Love, tender feelings and sexual satisfaction arouse
parasympathic stimulation – physiological opposite to the state
of “fight or escape” movement caused by fear or rage. The
parasympathic formula of “relaxation reaction” represents a
series of reactions along the whole body producing general state
of calmness and satisfaction, eased cooperation.
• Rising brows in surprise allows the field of vision become wider
and also more light reach the retina. In this way we get more
information on an unexpected event, it is easier to understand
what will happen and think out how to act.
• All over the world the expression of disgust is equal both by
appearance and by message it conveys: something is unpleasant
by smell or taste, or alike. The expression of disgust – the upper
lip bends at ends while nostrils pucker up a little – indicates, as
Darwin observed, primordial attempt to close nostrils because of
smell or to spit out poisoned food.
• The basic action of sorrow is to help us to grow accustomed to a
great loss, such as death of the closest person or essential

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disappointment. The sorrow causes loss of energy and lack of

good mood for dealing with everyday commitments, loss of
desire for entertainment and satisfaction, and if it becomes
serious disturbance leading to depression, then it slows down the
body metabolism. This essential isolating enables us to survive
the loss or betrayed hope, to realize the significance of life, and
when the energy recovers, to plan a new start.

The strength of emotions is not the same with all people. Imagine
that you are flying in an airplane on a pleasant flight. However, a
pilot announces: “Ladies and Gentlemen, we’re approaching
turbulence, please be seated and fasten seat belts”. Soon, the plane
gets into an air storm, the worst you have ever experienced.

The question is what will you do? Are you a person who will be
absorbed with reading a book or watching a film, not thinking about
turbulence, or maybe you are a person who will take out flight
instructions in case of emergency, listening all in ears how the
engines work and looking around to see signs of panic amongst the
crew indicating catastrophe?

The airplane scenario is a part of a standard psychological test35,

while the above two types of behavior in case of emergency point to
the difference in experiencing emotional reactions. Those who
identify themselves with the situation may unconsciously attach too
much importance to own reactions, especially when by identifying
themselves they loose self-conscience. Their feelings are much
more intensive. Those who do not identify themselves with the
situation, who are at the distance, pay less attention to own
reactions, diminish tension and intensity of the very reaction.

In extreme cases, the awareness of emotions completely paralyzes

some people, while others hardly notice it. With the first group of
people, the increased emotional sensibility, given even the slightest
cause, provokes an emotional storm, happiness or terror, while
other kind of the extreme hardly experiences such feelings, even in
crucial moments.

There is probably no more important psychological ability than

instinct control. This is an embryo of emotional self-control, because
by their nature all emotions affect expressing of impulses. To what
extent this skill to resists instincts is important is shown in the so-
called munchmellow experiment36. A group of four-year old children
was proposed the following: they were in a room with a researcher
who told them that he had to out and gave a munchmellow to each

35
Ibid., pg. 48-49
36
Ibid. , pg. 80-83

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of them. But he also told them that those who would wait until he
returned and would not eat the sweets would be given another two
pieces. Some of the four-year children could wait for endless twenty
minutes until the researcher returned. They covered their eyes,
talked to themselves, sang, played, and even tried to sleep. They
got their reward – two sweets. However, those more impulsive
ones, seized the munchmellow just few seconds after the researcher
had left the room. The children were monitored until they left the
school. The difference between the children who seized the
munchmellow and those who resisted was obvious.

Those who in their age of four resisted the temptation, as

adolescents became socially more resourceful: successful, self-
confident and more prepared to deal with life problems. It was
almost unlikely that they would “fall apart”, loose strength or
regress during a stress or become disorganized and disarmed under
the pressure. They accepted challenges and tended to combat them
not surrendering in spite of difficulties. They were reliable and self-
confident, trustworthy; they were self-initiative and struggled for
projects. Also, when the tested children were analyzed at the end of
high-schooling, those who patiently waited at the age of four were
better students than those who surrendered themselves to caprice.
And after all these years they have still been able to postpone
awarding for the purpose of accomplishing goal.

More than a third of the children who seized the sweet had less
expressed the above mentioned qualities and had more problematic
psychological profile. As adolescents they were shy and avoided
social contacts. They were stubborn and indecisive. Failures
discouraged them easily. They saw themselves as being “bad” and
worthless. When under the stress they regressed and became
inactive, distrustful, suspicious and exasperated. They were jealous
and envious, excessively irritable and violent and thus provoked
disputes and fights. And after so many years they have not still
been able to postpone rewarding.

What is hardly evident in childhood, becomes a wide spectrum of

social and emotional skills during lifetime. The ability to influence
postponement of instincts represents lot of efforts, from sticking to
diet to meriting academic title. What Walter Mischel, who has been
doing researches, has described in a complicated expression that
“self-set postponement of award for the purpose of accomplishing
goal” probably represents the essence of self-regulation: ability to
deny instinct in order to accomplish a goal, regardless of whether it
is opening of a new business, solving equation or winning prizes. His
discovery has emphasized the role of emotional intelligence as a

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target - ability defining how well or how bad the people will succeed
in using their mental capacities.

When we speak about leaders then we speak about their ideas,

their strategies and visions. In reality, leaders lead us to emotions.
Several research works and practice have shown that the fashion
from the beginning of the past century, researches and rational
intelligence measuring – IQ, ever more withdraw before the
researches and emotional intelligence measuring – EI. The IQ has
shown little correlation with how the job is performed and with
advancing in carrier during lifetime. However, emotional
advantages, such as possibility to manage frustrations, control own
emotions or emotions of others, which is something learnt since
childhood, have undoubtedly shown greater correlation with a
success in future life. Many people having IQ 160 work for people
having IQ 100 (which is an average) because the first have a good
emotional intelligence while the latter have not. In everyday work
the intelligence used in relations with people is the most important
one. In case of a bad emotional intelligence, you will be bad at
work, you will be in trouble deciding which job to accept, who to
marry…

A person having high IQ and low EI is almost a caricature of an

intellectual, resourceful in the world of knowledge but unskillful in
the world of intimacy. The profiles differ in some characteristics in
men and in women.

A type of man with high IQ is directed towards a wide sphere of

intellectual knowledge and competencies. He is ambitious and
productive, predictable and persistent and not troubled with
personal problems. He may also be critical and humble, refined and
shy, lacking self-confidence in intimate and sensual experiences,
insensible and indifferent, and emotionally cold and tepid.

Compared to this type, men with high emotional intelligence are

balanced, cheerful, sociable and open, and are not prone to fear and
worry. They are extremely faithful to people and ideas, responsible
and ethical, and in their relationships full of understanding and
attention. Their emotional life is rich and diverse, they are in
agreement with their selves, with others as well as society in they
live.

Women of basic type with high IQ have intellectual self-confidence,

very skillfully express their thoughts, discuss about intellectual
issues and are interested in a number of intellectual and aesthetic
spheres. They may also be introspective, prone to anxiety, worry

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and may have a feeling of guilt; they hesitate to openly express

their anger, although they do it an indirect way.

Compared to them, emotionally intelligent women are talkative and

directly and openly express their feelings. They have good opinion
about themselves: the life is for them everything. As men of the
same type, they are joyful, open and express their feelings in the
right manner (they do not have bursts of feelings because of they
later will feel sorry); they can take a stress well. Their social
inventiveness allows them to easily meet new people; they are
sufficiently in agreement with their own selves so that they are
spontaneous, playful and open for all intimate experiences. Contrary
to women with high IQ, they are rarely upset, have no feeling of
guilt and rarely fall in despair.

Indeed, these portraits are only extremes, in each of us the IQ and

EI intermingle to a different extent. People with high IQ and low EI,
in spite of stereotypes, are relatively rarely found, but these types
represent useful insight in distinguish human qualities.
Nevertheless, IQ and EI are not opposed but separate
competencies. The emotional intelligence attaches to a living being
qualities that make it more human.

The emotional intelligence is a capacity for recognizing own

emotions and emotions of the others, for self-motivation and for
controlling emotions in ourselves and of others.37 The five domains
for expressing emotional intelligence talent are the following:
1. AWARENESS OF OWN EMOTIONS. Self-awareness – recognizing
an emotion as it actually is in the moment when manifested
represents a key of emotional intelligence. The ability to control
emotions in every moment is of essential importance for
psychological self-awareness and self-understanding. The self-
awareness represents awareness of one’s own mood coupled
with own consideration of this mood. Impossibility to understand
our real emotions makes us dependent upon them. People more
confident in own emotions lead their lives more skillfully and are
more self-confident in making decisions.
2. CONTROLLING EMOTIONS. Overcoming and controlling emotions
in an appropriate manner is a talent built on the basis of self-
awareness. People who are bad in controlling their emotions are
constantly overwhelmed with emotions and under stress. The
people who improve the control of their emotions recover much
faster from life disturbances and falls.
3. SELF-INITIATIVE. Controlling emotions that leads to a particular
goal is a basis for the feeling of caution, for self-initiative,
mastering certain skills, as well as for creativity. Emotional self-

37
Ibid., pg. 43-44

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control – postponing satisfaction and suppressing impulses is the

basis of every achievement. Reaching the state of “calmness” will
enable exceptional achievements in every sphere.
4. RECOGNIZING EMOTIONS OF OTHER PEOPLE. Empathy is a
fundamental human skill. It is based on self-awareness – the
more we are open to own emotions the more success we will
have in reading other people’s emotions. The empathic people
are more successful in understanding subtext of social signals of
needs and wishes of people they emit through communication.
The empathy enables a success in professions such as: care
about others, teaching, trade, and leadership.
5. ART OF BEHAVING IN INTERPERSONAL REALTIONS. This gift
represents an art of understanding other people’s emotions. This
ability is a foundation for popularity, leadership and interpersonal
effectiveness. The people having this gift are able to perform the
jobs and assignments based on interpersonal relations more
successfully than other people; they are “stars in the society”.

One of the skills to which leaders should pay particular attention is

empathic listening. The empathic listening understands that a
listener from the conversation recognizes and feels emotions of a
person he is talking to. There are 5 phases of listening. The only
empathic listening is the one within the reference system of others,
while all others are listening within ones own reference system:

5) EMPATHIC LISTENING WITHIN REFERENCE

SYSTEM OF OTHERS
4) CAREFUL LISTENING WITHIN
3) SELECTIVE LISTENING OWN
2) PRETENDING THAT ONE IS LISTENING REFERENCE
1) IGNORING SYSTEM

Figure 9: Continuum of Listening

(Source: Senior Executive Institute, University of Virginia, 2003,
Materials of attendants)

Managers are inclined to criticism, and the employees feel that their
superiors address them only when they make a mistake. Tendency
to criticism is expressed more with managers who do not support
employees for a longer period of time. A leader has no right to such
approach, he must be competent in criticism, and the art of
criticism lies in empathy and emotional intelligence.

The feedback in a system theory is in getting to know the data on

how a part of a system functions, where it is understood that one
part influences all other parts in the system, and that every part
“deviating” from the main course may be replaced with a better
one. In an organization everyone is a part of a system, while the

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feedback is main artery of an organization. The way in which people

receive the feedback is of vital importance for continuity of their
work. Without feedback the people are in darkness, they do not
know what their superiors want, what their collaborators think
about them, nor what is expected from them, while problems
accumulate in the course of time. A competent transmission of
feedback may be the massage of the greatest help which a leader
delivers to his followers. The competent criticism is directed towards
the good what a man has done and is of more help than criticizing a
person because of badly performed job. By attacking the personality
the goal is missed.

For leader to be good in the above said, he should take the

following advises:
1. BE DETERMINED. Choose a conflict of importance, an event
representing main problem needed to be solved, or any kind of
deficiency preventing certain parts of jobs to be successfully
accomplished. People are discouraged if they only hear that they
have done “something” wrong at the same time unaware of
details that may help them to correct their mistake. Concentrate
on details, say to a person what he has done well and where he
has been wrong, and in which way this may be corrected. Don’t
hesitate and don’t be dishonest or ambiguous, because in this
way you will bypass the right message.
2. OFFER A SOLUTION. The criticism, as all useful feedback, has to
be directed towards solving problem. Otherwise, a man will be
dissatisfied, discouraged and unmotivated. The criticism may
open a road to possibilities and alternatives of which a person
was not aware, or to point at shortcomings to which he has to
pay attention – but it should also include suggestions for solving
problem.
3. BE PRESENT. Criticism is, just like a praise, the most efficient
when communicated personally, face to face. The people who
feel unpleasant in criticizing or praising will certainly make things
easier for themselves if they do it in writing. But, then the
communication is getting more distant and prevents the criticized
or praised person to have a chance to respond or clarify things.
4. BE COMPASSIONATE. This is a call for empathy. Keep in mind
the effects of what you say, and the manner in which you say
this to the hurt person. The executives who are not empathic say
their opinion in a rude way, which is an inappropriate
humiliation. The results of such criticism are destructive: in
stead of making possible the mistakes to be corrected, he
provokes emotional response or exasperation, bitterness, retreat
and keeping distance.

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Contrary to the IQ, which is given, the EI may be raised. Leaders

have to go through four phases while improving themselves:
1. GET TO KNOW YOUR ONW SELF,
2. CONTROL YOUSELF,
3. GET TO KNOW AND TAKE CARE OF YOUR PEOPLE, and
4. LEAD YOUR PEOPLE.

In more details, the competencies of an emotionally balanced leader

are:38
1. PERSONAL COMPETENCIES: These competencies determine
how we control ourselves.
1.1. SELF-AWARENESS
1.1.1. Emotional self-awareness: Reading own emotions and
recognizing their impacts, using inside feelings in
making decisions.
1.1.2. Exact evaluation of own self: Knowing own advantages
and limitations.
1.1.3. Self-confidence: Clear feeling of own values and
competencies.
1.2. CONTROLLING OWN SELF:
1.2.1. Emotional self-control: Keeping disturbing emotions and
impulses under control.
1.2.2. Transparency: Showing honesty and integrity,
credibility.
1.2.3. Adaptability: Flexibility in adapting to changeable
situation or in overcoming difficulties.
1.2.4. Achievement: A desire to improve performances in
order to achieve utmost internal standards.
1.2.5. Initiative: Readiness for action and utilization of good
opportunities.
1.2.6. Optimism: To see only the best in the events.
2. SOCIAL COMPETENCIES: These competencies determine how
we control interpersonal relations.
2.1. SOCIAL AWARENESS
2.1.1. Empathy: Feeling emotions of others, understanding
their prospective.
2.1.2. Organizational awareness: Understanding what is going
on, decision making network and policy on
organizational level.
2.1.3. Services: Recognizing and reaching agreeing for the
needs of followers, clients or consumers.
2.2. CONTROLING INTERPRSONAL RELATIONS
2.2.1. Inspirational leadership: Directing and motivating with a
vision.

Goleman Daniel et al., PRIMAL LEADERSHIP: REALIZING THE POWER OF

38

EMOTIONAL INTELLIGENCE, Harvard Business School Press, USA, 2002, pg.39

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2.2.2. Influence: Having a great number of tactics for

convincing.
2.2.3. Training others: Support capcompetencies of others
through directing and feedback.
2.2.4. Catalyst of changes: Move, direct and lead towards the
new directions.
2.2.5. Controlling conflicts: Solving conflicts.
2.2.6. Building bonds: Cultivating and maintaining
interpersonal relations network.
2.2.7. Team work and cooperation: Cooperating and building
teams.
Great leaders should also possess all of the four singled out
competencies which are components of interpersonal or social
intelligence:
1. ORGANIZING GROUPS is a basic leader’s competency and it
means initiative and coordination in organizing groups of
people.
2. NEGOTIATING SOLUTIONS is a talent of an intermediary
preventing or solving already existing conflicts. Leaders
having this competency are successful in negotiating jobs or
solving disputes.
3. PRSONAL RELATIONS are a gift for feeling empathy and
making friends. Such competency makes establishing
relations easier, as well as recognizing other people’s feelings
and troubles and appropriate responses to them – this is the
art of maintaining interpersonal relations. Such leaders are
good “team players”.
4. SOCIAL ANALYSIS represents a competency of discovering
and interpreting other people’s feelings and worries. Knowing
other people’s feelings makes establishing relations with
collaborators easier to leaders and allows the feeling of
intimacy.

Considered together these competencies are inevitable

“components” of a charm, social success and charisma. Those
having some form of social intelligence, may easily put in touch
other people, wisely read their reactions and feelings, lead and
organize, and solve misunderstandings occurring in any life domain.
The leaders are born, the people who are able to express collective
feelings and articulate them in a manner that will enable the group
to accomplish its goal. These are people with whom others like to be
in a company as they inspire them emotionally. These interpersonal
competencies develop on the basis of emotional intelligence.

A survey carried out in 12 organizations, comprising 2,000

managers, showed that 81% of difference between exceptional and
other managers is in emotional intelligence. Another survey carried

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out by the MBA University students showed the manner in which the
EI raises – lasting learning. Comparing the students who for two
years had a lasting emotional intelligence program with university
students who did not have any program at all, the following results
of EI improvement were obtained:39

MBA STUDENTS MBA STUDENTS

WITHOUT EI WITH EI PROGRAM
PROGRAM
PERSONAL
COMPETENCIES 4% 67%
SOCIAL
COMPETENCIES -3% 40%

Figure 10: Results of EI improvement with the MBA students

(Source: Goleman Daniel, Emotional intelligence,
Bantam Books, USA, 1997, pg. 107)

These results brought about another surprise. Seven years after the
survey it was found out that in the other, more successful group,
the EI raised in time. They continued to train themselves in the
skills they have not built at the University, and they have achieved
better results. Another words, they have learnt how to raise their
emotional intelligence.

Finally, it has to be pointed out that inevitable task of a state in

future will be a wider study of this concept in all schools. Alarmed
by the statistical data on emotional state of young people in the
USA in the past two decades, namely:
• record rate of apprehended young people,
• four times higher rate of murders of young people,
• three times higher rate of young people suicides,
• three times higher rate of crimes of young people under 14
years of age,
• three times higher rate of juvenile pregnancies,
• three times more drugs consummation, with the young black
people the increase is even thirteen times
• one third of the young people face problems with depression,
• according to the trend, two thirds of their future marriages
will be dissolved;

The school authorities have already started an emotional

intelligence research pilot project in standard schools and schools
specialized in EI, and the current results of changes in behavior and
life of these young people are very satisfactory.

39
Ibid., pg.107

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It was shown that the price of emotional illiteracy is very high. The
Grant’s Association40 dealing with improvement of emotions, reveal
the main elements of effective preventive programs:
1. Emotional competencies:
a. recognizing and naming emotions,
b. expressing emotions,
c. assessing intensity of emotions,
d. controlling emotions,
e. postponing satisfaction,
f. controlling instincts,
g. diminishing stress,
h. becoming aware of difference between emotions and acting.
2. Awareness of competency:
a. talking to oneself – controlling “inside talk” as a way of facing
problem, challenge or support to human behavior,
b. understanding and interpreting social characteristics – for
example, recognizing social influence on behavior and self-
perception within wider community,
c. using measures for problem solving and decision making –
for example, controlling instincts, accomplishing goals,
recognizing possible response, forecasting consequences,
d. understanding other people’s opinions,
e. understanding acceptable and unacceptable behavioral
standards,
f. positive approach to life,
g. self-consciousness – for example, developing real
expectations
3. Behavioral competency:
a. non-verbal – understanding by glances, face expression,
voice tone, movements, etc.
b. verbal – establishing clear demands, avoiding negative
influences, competent reply to the criticism, listening
others, helping others.

The T. Dobson’s41 story, one of the first Americans who in Japan

learnt martial art of aikido, represents a good example of the
applied emotional intelligence.

One day Dobson was going back home by the Tokyo subway when a
huge, very drunk and enraged man in a belligerent mood got in a
car. The man started, cursing and roaring, to molest passengers.
Dobson felt that he should intervene to prevent someone to be hurt.
And, while all others were sitting, he slowly stood up and turned to
the aggressive man. Noticing him, the drunkard roared: “Aha!

40
Goleman Daniel, EMOTIONAL INTELLIGENCE, Bantam Books, USA, 1997,
pg.301
41
Ibid., p.124

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Foreigner! You should get a beating in a Japanese way!” and started

to prepare himself for the first blow.

But, someone shouted in an unusually cheerful way: “ Hey!” The

shout had a tone of a joyful person. Surprised, the drunkard turned
around and saw a short Japanese of about seventy years of age in
kimono. The old man smiled to the drunkard in an enthusiastic way
and asked him to come close to him. The drunkard said
belligerently: “Why the hell would I talk to you?” The old man asked
him in return: ” What’ve you drunk?” The drunkard said he drank
sake and that it was not his concern. “Eh, that’s wonderful”,
responded the old Japanese mildly, “you see, I also like sake! Every
night me and my wife, you know she’s got 76 years, used to heat a
bottle of sake, take it in the garden and sit on a wooden bench…”
Then he continued his story talking about date-palm tree in the
garden, about beauties of his garden and enjoying the warm rice
brandy every-evening.

While he was listening to the old man, the drunkard’s face became
good-humored; he released his fists. “I like dates too…” said he, in
a drawn-out voice. “Too”, responded vividly the little old man, “and
I’m sure you’ve got a nice wife.” The drunkards said: ”No, I haven’t.
My wife’s dead…” And he continued, crying, the sad story about
loosing his wife, house, job, and about being shamed of himself.
When the subway stopped in the Dobson’s station and while Dobson
was leaving, he turned around and saw the drunkard stretching
himself on the seat, his head in the old man’s lap. This was
emotional perfection.

2. Types of Personality and the Leadership

Two million MBTI (Mayers – Brigs indicator type) tests are carried
out yearly worldwide in 24 languages. The MBTI is a very suitable
tool for implementing leadership approach lying on democracy and
team work. Why? Because people differ from each other, and their
type of personality and character should be calculated as a
constant. For leaders there is no reason for wanting to change
people. On the contrary, these differences are for them advantages
and not short comings. A leader using the MBTI builds a climate in a
team on advantages, and not on people’s weaknesses. In this way
he will fully use human talents, particularly those he is lacking
himself. The golden leadership rule is that a leader should treat
people in the way they would like to be treated and by this concept
the rule is fully respected.

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People differ in a fundamental sense:42

1. they want different things, because they have different motives,
values, wishes, needs, goals, and impulses;
2. they think differently, because their opinions, knowledge, ideas,
comprehension, understanding, notions, and plans are different;
3. they behave differently, because they are lead by their manners,
emotions, wishes, and comprehension.

The first classification of personality characters was established by

Hypocrate back in antic times. However, the basis of today rounded
up knowledge was established by Carl Gustav Jung with his
functional, i.e. psychological types. He claimed that people were
different in fundamental sense although in the sum of impulses
(archetypes) they were the same. This is typical, so that we may be
classified in types based on the desired preferences. In 1950
mother and her daughter (Mayers – Brigs) developed the MBTI, a
tool for classifying Jung’s main preferences in 16 different
behavioral forms. Before we explain them, some bases of the
Jung’s thinking are to be highlighted:
• Jung did not claim that a person belonged exclusively to one or
the other type but only to some extent.
• Jung did not claim that the preferences were unchangeable in
time, they may become weaker or stronger in time.
• Jung was of opinion that a character was given by birth and not
molded in childhood.

The main pairs of preferences are:

1. EXTROVERSION vs. INTROVERSION. With relation to the
orientation towards the people from the environment. A person
who chooses other people for their source of energy and who is
full of energy when in a company of others is an extrovert person
and is marked as E. There are 75% of them in the population. A
person preferring solitude for renewing his energy is an introvert
person and marked as I. There are 25% of them in the
population.
2. SENSITIVITY vs. INTUITIVENESS. With relation to the method of
collecting information from the environment. A sensitive person
sees himself as a practical and realistic person, with a sense for
values, tradition, past and future, and is marked as S. There are
75% of them in the population. An intuitive person defines
himself as innovative one, insists on imagination and future, and
is marked as N. There are 25% of them in the population.
3. FEELING vs. THINKING. With relation to the manner of decision
making and reasoning. Persons using personal, subjective way of
thinking, preferring to make decisions based on people and

42
Keirsey David, Bates Marilyn, PLEASE UNDERSTAND ME, 5th Edition,
Gnosology Books Ltd., USA, 1984, pg.2

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values are very sensitive F types. Persons using non-personal,

objective way of thinking, preferring to make decisions based on
logics and objectivity are thinking T types. Generally, there are
50:50% of them in the population, however, 65% of men are T
type while 65% of women are F type.
4. PERCEIVE vs. JUDGE. With relation to the need for controlling
and completing jobs. Here, it should be pointed out that the type
names given by Jung were very unfortunately chosen, so they
will be marked as P for perceive and J for judge. The P types lead
an easy life, keep options open and fluid. They are “take it easy”
type. The J types are a complete opposite, because they are
organized, structured and prone to planning. They like to make
list of jobs and “cross out” the completed ones. There is 50% of
each type in the population.

Based on the above stated, there are 16 Mayers – Brigs types,

presented below by typical name and by representation in general
population:43

ISTJ ISFJ INFJ INTJ

6% 6% 1% 1%
Guardian Conservator Author Scientist
ISTP ISFP INFP INTP
5% 5% 1% 1%
Craftsman Artist Searcher Architect
ESTP ESFP ENFP ENTP
13% 15% 5% 5%
Promoter Showman Journalist Inventor
ESTJ ESFJ ENFJ ENTJ
13% 13% 5% 5%
Administrator Salesman Pedagogue Field marshal

Figure 11: MBTI types

(Source: Senior Executive Institute, University of Virginia, 2003,
Materials of attendants)

The basic characteristics of the MBTI types are highlighted:

1. ENFJ
They are great leaders in a group. They have charming character
and want the people to follow them, and people do follow them if
they ask them to. This is a type of unbelievable charisma. For
the ENFJ the people are of utmost importance and priority. They
constantly feel responsible for other people’s feelings. They are
tolerant, trustworthy and rarely critics. The ENFJ intuition is
rather developed, on the basis of which they make decisions.

43
Ibid., pg. 70

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They like their jobs to be organized and completed. In a team

they may be very talkative.
2. INFJ
This type is focused on opportunities. They base their opinions on
values and make decisions easily. They have a strong desire to
contribute to other people’s happiness and it is their pleasure to
help others. They are strong and very complex personalities and
thus they understand and may cope with complex problems. The
INFJ have the strongest vision of interpersonal relations in the
past, present and future. They take their work seriously and
enjoy in academic achievements. Generally, they will not be
visible leaders but exert their influence behind the scene. It is
difficult to get to know them. They are reserved towards
everyone in whom they do not have complete confidence. They
easily get offended. They have vivid imagination and often find
their orientation in arts. In a team they may often be “lost in
space”.
3. ENFP
For this type everything that is happening in his life is of great
importance, life is a drama, full of good and bad opportunities.
They have great influence on others because they are masters of
non-verbal communication. Emotional experience is of utmost
importance for them. The ENFP constantly screen outer
environment and nothing may skip their attention. Although they
have brilliant perception, on the other hand, they make great
mistakes in drawing conclusions based on it. They are
enthusiasts, enjoy in creating something new, while they feel as
much bored in usual activities. The ENFP are optimists by their
character. They have envious and rich career because they are
successful in many spheres. Working with people is essential for
them. They constantly look for feedback from their interaction
with others. They are non-conformists. In a team they often
alter team opinions and orientation.
4. INFP
They are calm and pleasant persons. Although they appear as
cold person, they are not such inside. They have a capacity for
caring for other people not found in other types. They are
idealists, ready to make extremely great sacrifices for those
whom they trust. The INFP searches for the unity of body,
emotions and intellect. They respond to impressions more than
to logics. They like to look at “black-white”. They are adaptable
at work, welcome new ideas and new information. They may
have problems when idealized concept of their life meets the
reality of everyday life. In the team they may easily feel hurt.
5. ENTJ
In one word, a commander. The ENTJ basic need is to be a
leader. He may very much develop the thinking based on empiria

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and goals. He insists rather on policy and goals then on

regulations and procedures. He may break all procedures if they
are not in harmony with his goals. He shudders at non-efficiency.
The ENTJ must always have reason for doing something, and
human emotions are usually not a sufficient reason for him. He
has the greatest ability out of all types to visualize the road that
the organization takes and are the best in communicating visions
to others. As designers of the organization they cannot be
leaders.
6. INTJ
This type has the strongest self-confidence out of all types. He
lives in introspective reality and focuses himself to opportunities.
The decisions are natural for the INTJ. Once he has made a
decision he feels calm. He rather looks into the future then into
the past. In one word, he is like an architect – system architect
and one who implements theoretical models. The authority based
on position, rank or title has absolutely no on the INTJ. In case
he comes to like an idea or position he will accept it and in such
case he will break all rules if he thinks it right, or otherwise, he
will not lift a finger. Those on the top are pragmatic. Out of all
types he is the greatest theoretician, always open to new
concepts and ideas. The INTJ uses his intuition rather than
deductive logics, searching for strategies and tactics rejecting the
greatest performances. He is stimulated by barriers and likes to
be a solo player. He usually keeps distance from his friends,
while they see him as being cold and insensitive. The INTJ is the
most independent of all types. In a team they may be stubborn.
7. ENTP
This type is a good analyst. He is tolerant towards the others and
enjoys in complexity. He is enthusiasts and often a source of
inspiration for others. He always searches for a way to find out a
new road, new activity or procedure. The ENTP often ignores
standards, traditional actions and authorities. As a result, he
often brings about a new approach to work. However, he is an
improviser, not a creator. The entrepreneurs often belong to this
type. They are rarely conformists. In a team they excessively
generate new actions.
8. INTP
He shows the greatest precision in thinking. He is a real
architect, the architect of ideas and architect of system. He will
always find contradictions in a system regardless of how far in
space or time they are. Authority does not leave any impression
on the INTP type. Wishing to understand the universe he
constantly searches for answers in laws of nature. The INTP may
be obsessed with analysis. He may easily become intellectual
snob and express intolerance towards the less intellectually
gifted people. The reality is for him trivial. The INTP is a system

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architect, but he goes away when the system is to be applied. In

a team he may be too theoretical.
9. ESTJ
This type is closely linked with exterior environment. The best
attribute to describe this type is responsible. The ESTJ
excellently organizes daily procedures and detailed rules. He
likes to see that the things are concretely done and is not patient
with those who do not implement procedures in all details. He is
a realistic person and estimates others on the basis of whether
they observe the standards and procedures or not. He is very
loyal to his organization. He is often occupying positions
requiring great responsibility. He tends to make decisions too
quickly. For him the harmony is in respecting tradition and
rituals. In a team, he may be more energetic than necessary.
10. ISTJ
This type may be best described with attribute reliable. Given
word is for the ISTJ a sacred thing - when he has given his word
he has given his honor. This type is usually taciturn and serious.
He performs his duties very dedicatedly. He is interested in the
details in the reports and procedures and is coping well with hard
tasks. The duty is a word he very well understands. He may be a
great banker, tax or accounting officer. In a team he may work
more than he is expected to.
11. ESFJ
This type socializes more than other types. He draws energy
from interactions with people. He honors the harmony the most.
He may be great host – he addresses people by heir first name
immediately as he meets them. The ESFJ seeks his career in
services. The best salesmen belong to this type. He is loyal to his
superiors. Analyzing complex things and notions does not attract
him at all. The ESFJ is excellent in emotional relations. In a team
he tends to keep company quite a lot.
12. ISFJ
This type wants to be in the service of someone other’s individual
needs. The tradition and conservation are resources he highly
estimates. He is the least hedonist out of all types. He believes
he is good and that a rest should be earned. He may work very,
very hard. The directed procedures are for him the must. This
type may be often found in hospitals, libraries, secretarial work
and at lower managerial levels. The greatest satisfaction for him
is to take care of someone else. The ISFJ has an exquisite sense
of responsibility as well as great gift for performing routine work.
The theory does not intrigue the ISFJ type. He is loyal and
dedicated to his superior. He is awe-struck by titles and
positions. He is often underestimated and not understood. In a
team he expresses a lot of care for everyone.
13. ESTP

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These are men and women of action. When they are present the
things always happen. They are great entrepreneurs, diplomats
and negotiators. Life is never boring to them. They always know
locations of the best restaurants and night clubs. This type is an
urban and socially sophisticated type. The ESTP always looks
right into the eyes. He possesses enormous amount of empathy.
He is the only type who likes to work “at the edge of
catastrophe”. For him the deadline is matter of seconds. He is
pragmatic. He dislikes dealing with details. He always lives in the
moment. He is not faithful. In a team he may be arrogant.
14. ESFP
This type radiates warmth and optimism. Soft, charming and
open are attributes best describing this type. He is very amusing
and most generous of all types. The ESFP avoids solitude and
seek a company of others whenever possible. He likes
excitements and creates them. The ESFP is sophisticated, often
dressed very in the latest fashion. He is impulsive and
psychologically vulnerable. He ignores dark side of a situation as
long as possible. The ESFP prefers active jobs and is excellent in
public relations. He avoids science and engineering. In a team he
is more involved in playing than working.
15. ISTP
This type is impulsive and attracted by impulsive actions. An
impulse is for him more important than a purpose. He controls
himself and does not subject himself to the prescribed
procedures and laws. The ISTP has to do what he likes. Each
step must be free. He is often brave and, compared to other
types, he takes a risk the most. He needs everyday excitements.
He longs for action. The ISTP is as a rule a master of tools, any
kind of tools. When we see someone working very precisely with
tools then we are most likely looking at the ISTP. He does it
virtuously. He has passion for weapons. He is impulsive. For him
action is important and he has a little interest to develop verbal
skills. He may be great leader but only when “storming with a
sword in his hand”. He is a leader on a battlefield but not on an
intellectual field. He does not use strategy (like the NT) but
rather everything what is within his reach to win a victory. Patton
was such leader, chosen by the NT Marshal, Sheridan was such
person, chosen by the NT Grant, Romel was such person as well,
chosen by Hitler (ENFJ). In a team he may be a nuisance
because of his great precision.
16. ISFP
This type is an artist of fine arts. Many composers and painters
were of such type. His temperament is very hard for observing
and they are most likely the most non-understood of all types,
this resulting from his tendency not to express himself directly
but finding a medium for expression, mostly some artistic form.

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If he does not find it he remains closed and has no way to

express himself. He is a hedonist and impulsive. The ISFP does
not prepare and does not plan. He just does what he feels that
he must do. He climbs up a mountain only because the mountain
is there. When he finds a way to express himself he becomes a
virtuous. He is the most kind of all the types. This type has
unbelievably good relationship with animals, including wild
animals as well. In a team they he is too much worried.

The real advantage of this concept is not in memorizing all 16 types

but in being able to understand on the basis of types the four Jung’s
basic characters. This paper will not deal with general explanations
of the characters, but will be based on defining characters of leaders
and their followers:

SJ, 38%

This leader could be called a traditionalist, stabilizer and

consolidator. This is a responsible worker respecting loyalty,
dedication and hard work. He prefers the system and stability of
the organization. The SJ leader has strongly expressed sense of
social responsibility. He is a great organizer. Sometimes, this type
of leader resists the changes. The representatives of this group are:
Colin Powel and Mother Theresa.
Cautiousness and accuracy are the characteristics of the SJ
followers. He is focused on products and the measure of success for
him is an opinion on how and whether the product is in compliance
with standards. He wants to be thought of as being a loyal,
responsible and diligent person.

SP, 38%

This leader could be called a pragmatic leader of open mind and

flexible. He takes the risks; he is a negotiator and sorts out the
problems. He has entrepreneurship spirit and out of all types he has
the highest sense of a moment of a situation. He is excellent for
critical situations. Since he lives in the present moment, he is
sometimes had no patience for theories and abstract meditation.
The representatives of this group are: Ronald Reagan and Clint
Eastwood.

The SP follower is oriented on the processes and not on products.

He likes hazardous and dynamic tasks. He likes to be thought of as
being a punctual, adaptable, wise and brave person.

NT, 12%

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This leader could be called a visionary, catalyst and strategic leader.

He is focused on systemic principles. He must design. He looks for
and enjoys in complexity. He expects a lot from himself and little
from the others. He is a great architect of changes. Considering that
he is intellectually oriented, he sometimes experiences problems in
communicating with other. The representatives of this group are:
Albert Einstein and Margaret Thatcher.

The NT follower wants to be estimated on the basis of a success of

his ideas. He may be an intelligent listener but has difficulties in
working with routine tasks.

NF, 12%

This leader may be called an idealist, catalyst and optimist. He is

focused on people and their potentials and has ability to get out the
best from the people. He has a communicating gift. He is excellent
for democratic management. He sometimes makes decisions based
only on his opinion on collaborators and not on facts. The
representatives of this group are: Mahatma Gandhi and Martin
Luther King.

The NF follower more then other types wants to be primarily treated

as a unique human being. He may feel particularly defeated by a
negative criticism, but highly esteems a constant feedback.

Leaders essentially lead in a dual manner: they want certain actions

and they want certain results. The degree to which one gets want
one wants, to which actions turns to results, is the degree of
leader’s successfulness. For this degree to be higher it is important
to consider people’s characters. The Mayers – Brigs test of
personality types is therefore very useful and is recommended.

3. Creativity and Leadership

We have concluded that the job of a leader and a manager differs.
We have also seen that a leader and a manager even think in
different ways. Leaders deal with long-running problems and visions
while managers deal with efficiency of everyday work. What is
important is the fact that science has concluded that two opposite
halves of a brain work this process. Managers use one half, while
leaders use the other half. However, the most important is not to be
exclusive in this approach, but for an effective leader it is essential
to use both halves of the brain. The “process” stimulating a
“complete” work of brain is called creativity and it will be further
elaborated in this paper.

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It may often be found in books: manage from the left, lead from the
right. This is not the question of any ideology but of the human
brain structure. The left brain half thinks in details, verbally,
logically and in sequences. The right brain half thinks in big images,
it is non-verbal, emotional and intuitive. Typical action of the left
brain side is current account balancing. Typical action of the right
brain half is driving a car. Given that the leadership relies on a
vision how to survive and win in changes, it is clear why it is
necessary to lead from the right, using the right brain half. This is
the first stage. The next is to use both brain halves together. This is
already the question of creativity. Like all other leadership skill, this
creativity may be learnt.

The creativity is ability to see the same things the other people see
in a different way.44
The main phases of creative process are:
• FREEING,
• EXPRESSION,
• CREATION, and
• ACTION.

The essence of the first phase is coming to a great amount of ideas.

The process is structured in the following way: ATTENTION - SHOOT
– SIGHT ON. Here the importance of using both brain sides is
noticed, because the process sequence is the following: LEFT SIDE –
RIGHT SIDE – LEFT SIDE. In this phase it is important to first find
out what are the places and time appropriate for a leader to come
to generating new ideas. According to researches, most of ideas are
generated while sitting on a toilet bowl45, and then while taking
shower, going to office, falling asleep or while awaking, at boring
meetings, while reading light literature, exercising, taking a night
walk, during the church service or physical work, respectively. A
man spends 3 years in the bathroom during his life. 99% of the
ideas do not happen at a study. The next thing to be ready to are
the co called killing sentences. These are the sentences usually
starting with: “Yes, but…” and they may quickly and at the very
beginning defeat an idea, if they are not anticipated.

The essence of the second phase is in exposing the problem.

Various techniques are suggested, such as for example mapping,
nonlinear technique of generating ideas, simplified describing of a
problem by using the following technique ”Dear Mrs. Advice, my
problem is …”, using simple questions such as and why is this, and

44
Thompson Charles “Chic”, WHAT A GREAT IDEA!, Harper Perennial, USA,
1992, pg.4
45
Ibid., pg. 13

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why is that… at least 7 times. In the final phase the universal

questions are always to be asked: who, what, where, when, how,
and why, and adhere to the Einstein’s rule: find out the next correct
answer – do not think like in school that only one answer is correct,
but take an attitude that there are always several correct answers.

The essence of the third phase is in creating ideas, the very process
of creating. A creative person, in order to be successful, should run
from reality, avoid it, in order to come to the right idea. There are
useful techniques:
• Returning from the future – imagine solving problem in imagined
future and then return to the present.
• Jin/Jang – thinking in opposites.
• Finding faults in assumptions – define a problem, imagine and
note down all assumptions related to it and find what is negative
in each assumption.
• Changing prospective –considering problem from “somebody
else’s shoes”.
• Thinking in metaphors – my problem is like for example in
music…
• Borrowing from others – one should adhere to old rules
according to which the idea should be 15 minutes ahead of its
time, and not two centuries, so that adapting already good and
proven ideas may be a good option.

The essence of the fourth phase is encountering of innovations with

an organization. The ideas should be managed, the ideas should be
filed, and the ideas should be considered through a team work and
estimated correctly, from the point of view of: future, success,
failure, organization’s visions, time implementation and purely own
affinities. However, the most important for an organization and a
leader is openness of the organization towards ideas. The formula
explaining this is:

Openness = #Idea x (# accepted ideas + # Rapid rejections) + Common vision

Penalties for failure

Figure 12: Equation of organization openness towards the ideas

(Source: Thompson Charles “Chic”, WHAT A GREAT IDEA!,
Harper Perennial, USA, pg. 153)

As shown in the above equation the number of new ides first and
foremost increases if the lower part of the formula is decreased, i.e.
if the penalties for failures in generating or implementing bad ideas
are reduced. Then, the number of new ideas increases if the
number of new ideas are stimulated, particularly if they are
implemented, or if they are assessed as a complete failure and
quickly set aside. And finally, an organization becomes more open

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towards the ideas if the ideas are based on common values and
organization’s vision. The conclusion is that this is indisputable task
and leader’s responsibility in an organization.

4. Leadership and New Sciences

Let us imagine a black box in which we will put two dishes, one with
food and the other with poison. Let’s now imagine a cat which we
put in the box and which has two alternatives – to survive, eat food,
or to die, eat poison. After a while, we ask ourselves: is the cat
alive or dead? This is classical Schredinger’s test, the so called
Schredinger’s cat, which gives us the possibility to understand the
manner of thinking in quantum physics.

Let’s image an expert for organization and imagine how she has to
travel often because of the nature of her business. Imagine her
being constantly on a plane, how she reads all books she could and
then remembers that natural sciences are her first love. Let’s
imagine further how this same person reads a pile of latest books
dealing with new trends in science and imagine that impressed by
them she writes a book herself. All this has actually happened, the
book has become a bestseller, and while you read it you feel as if
having fever. Very soon the book has become mandatory text in all
business schools. Considering that the book gives us an idea of how
the organization and leadership will look like in this century, this
paper is based on it.46 And what happened with the cat?

New sciences – new discoveries of quantum physics, chemistry,

biology and theory of chaos give us orientations how a leader
should lead in a new world full of changes and how he functions.
Each of us lives and works in organizations established on the basis
of Newton’s comprehension of the world and universe. We manage
in details by focusing on certain organizational parts in an
organization. We believe that a reaction is a direct result of stimulus
in human relations. We believe that by complex planning we may
anticipate everything and always search for new, objective methods
of measuring and understanding environment. And what happened
with the cat?

However, the world has changed since Newton and the science is
aware of this. One of the first distinctions between the Newton’s and
new science is a holistic approach, the focus on system as a hole
rather than on its part. The intention is a system as a whole and
46
Wheatley Margaret J., LEADERSHIP AND THE NEW SCIENCE:
DISCOVERING ORDER IN A CHAOTIC WORLD REVISED, Berret-Koehler
Publishing, USA, 2001.

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relations within the system. In a quantum-world, everything is in

correlation and the correlation is a determinant of everything. Sub-
atomic elements exist only in relation to something; they do not
exist as a separate “thing”. In biology the body is observed
holistically, as one whole. In 1977 the Nobel Prize for chemistry was
awarded to the paper which proved that chemical systems
reorganized themselves in higher degree when confronted with
changes in environment. In old mechanistic model the change has
signalized danger, in the new one it has become a critical factor of a
system self-organizing in a new form of existence. The theory of
chaos showed that the chaos is an order in alternative dimension,
that there are limits and anticipation of chaos in this dimension, as
well as that the chaos is necessary in order to establish a new
creative order. And what happened with the cat?

The Newton’s statistical laws on universe are incorporated in

organizations in our society. Responsibilities are organized in
functions, the people have their assignments. The organized
schemes and assignments look like being made for machines. Since
recently we have believed that is possible to study a part without
knowing the whole, as well as that based on knowledge of all parts
we can have a picture of the whole. However, by discovering
subatomic world of quantum physics, another world unknown to the
Newton’s laws has been discovered. In quantum world everything
lies on relations, everything is correlated, while a relation is basis of
everything. Nobody and nothing exists unless in relation with other.
The objective reality does not exist. An environment affecting
business organization is created by the organization. Given that
there is no objective reality, an environment is a set of relations
which we choose and estimate as important. However, we certainly
may not take into consideration the set of all relations and
correlations so that we may never thoroughly comprehend our
environment and its possibilities and sources of changes. Many
leaders no longer use the phrase strategic planning, but rather
strategic reasoning. In order to discover the possibilities in changes,
we have to get into stronger interaction with the world surrounding
us. The relations are strength, and strength is energy. The whole of
our organization should be permeated with this energy. The more
we will be sensitive to the system dynamics the more we will be
effective. One has to be focused on processes. And what happened
with the cat?

The emptiness is a basic component of the universe. In an atom as

well 99.99% of the space is empty. And we, as human beings, are
mostly composed of emptiness. In the Newton’s theory, the
emptiness is solitude. In the new science, the emptiness is filled
with fields, non-material impacts of emptiness on the universe. We

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cannot see it, but we can feel it: gravitational, electrical-magnetic…

In one of the researches no correlation could be found between
selling points where consumers have felt “well” and those others
and the behavior of shop assistants or appearance of the shop.
Wheatley deems that the influence of a leader is a component which
has filled empty space in good shops, so that there people have felt
better and purchased more. An organization’s vision is excellent as
a candidate for the field theory. And what happened with the cat?

In the quantum world the reality does not exist. The reality exists
only if noticed. In an organization we alone decide what we shall
and what we shall not observe in interpersonal relations, and that
creates the quality of relations in an organization. Participation,
interdependence and democracy are therefore the best system for
leading an organization. In the traditional model, the managers
have interpreted information and by definition they could not have
greater possibility to react then in the new HPO model, where
information is interpreted by everybody so that the possibility of
discovering new and unknown relationships is greater. Hierarchy
and power are no longer important. New type of relationships in an
organization and type of energy created by these relationships are
critical. And what happened with the cat?

The equilibrium is a state in physics when the resultant of all

activities equals zero. This is the result of the second Newton’s Law,
as a result of the closed system evolution. And let’s imagine an
organization having relations with the environment equal to zero.
Let’s image the life without interaction. For an organization it is
good to be outside the balance so that the system could grow and
change itself. The structure is not important, but the system
dynamics. The new sciences have discovered the self-organizing
systems. They are rather adaptive and elastic than rigid and stable.
The openness towards environment creates even stronger system.
Paradoxically, based on stronger bonds and partnership with
environment, a system develops stronger autonomy than the
impact of the same environment. Another quality of self-organizing
systems is their ability to change in order to preserve themselves
whenever the environment changes. The system notices this and
changes itself in the sense of remaining consistent. Stability and
vitality is also a characteristic of these systems. General paradox is
– the more freedom the more order. And indeed, the democratic
form and gathering around a vision represent freedom; the
procedure and control of the old organization exclude it, still the
first one is today more successful then the second. And what
happened with the cat?

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Information is not a thin. It is a dynamic and changeable element.

Human skin changes every month, liver in every six weeks, even
our brain renews itself. Body is only a place called a home by our
memory. The challenges of the new sciences are continual
processes of organizing information. The information demolishing a
system and disturbing peace is what we need in order to find out
new forms. We do not need the control but information genesis.
Information has to be free. The American Army is the best example
of understanding new role of information. It possesses and develops
the technology enabling each individual to have full information on
what is going in battlefield, which has earlier been an exclusive
privilege of a commanding staff. The researches have proved that
on the basis of such information and regular drill a soldier on
battlefield uses the provided information in the best possible way
because he is aware of the Command’s intentions. This approach is
in the Army and Marine Forces called the network commanding
approach and it is further intensively developed because its proven
efficiency is matchless. And what happened with the cat?

The computer multidimensional models have revealed the order in

the chaos. In a multidimensional space the chaos does not look like
the chaos but an order of a higher dimension. This means that the
disequilibrium, instability leads us to equilibrium, the stability of the
new order. In the non-linear world, small and apparently hardly
visible vibrations may lead to enormous and far-reaching changes.
There is an equation proving that a quiver of butterfly wing in Tokyo
may produce a tornado in Texas. And what happened with the cat?

About 75% of projects initiating changes are not successful in

organizations. The new sciences give us instructions how to
introduce the changes. First of all, we have to consider a system as
a whole and we have to understand that we have impact on the
overall system even when we affect only a small or isolated part of
the system. The changes require the whole team to be included, all
people in an organization. Then, the efficiency will be achieved if an
organization is observed in its real light, and that is an endless
game of numberless interdependent relations. We have to
understand that we work with a network of relations, and not with
machines. For a system to be changed, it must get to know more
about itself. The people must be linked on the new, democratic
relations within and outside an organization. The changes should be
understood as a manner of preserving system and organization. A
body will accept changes only of what is significant for its
preservation. In an organization, this is a vision. If everything is
linked with everything, the size is no longer important. We do not
have to wait for a critical mass in order to initiate changes which
should occur. And what happened with the cat?

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Wheatley claims that the new leaders will be perhaps called with
other metaphors: gardeners, midwives, servants, attendants,
missionaries, assistants or convokers, because nobody could any
longer lead an organization by ignoring network of relationships
among collaborators. They must be leaders in the ever more
unknown and bizarre world, only by a faint glittering of a vision.
Each moment on this path requires from us to be comfortable with
uncertainty and changes. And above all, a leader should ask us to
be one, to use all our courage, wisdom and knowledge. And to
thank God for having created this world which gives us unimagined
opportunities.

And what happened with the cat?

And here is what happened with the cat:

1. REALITY: The cat, her life and death exist as reality only in the
box. From the point of view of our momentary comprehension of
this unknown reality, the cat is both alive and dead.
2. RELATION: By opening the box, namely only after making
relation between our reality and the reality of the black box, we
can solve the cat’s enigma. If we do not choose this reality, we
will not have the answer. Meaning that our curiosity has killed
the cat. Or has set her free alive.

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III DYNAMIC MARKETING

ENVIRONMENT OF THE 21ST
CENTURY

In this Chapter the dynamic changes in environment will be shown.

Given that the USA are both an economic giant and currently the
only world power left in the world, the stress will be laid upon the
trends in America, however only to those indicating global
conditioning. What happens in America in any case dramatically
affects other phenomena and trends in the world, the overall world
environment.

1. Kotler’s Model of Main Actors and Powers

in Marketing Environment
Kotler’s model47 is a good basis to start studying the dynamic
marketing environment of a company.

ECONOMIC

POLI-
PHY- Competitors TICAL
SI- And
CAL LEGAL
Suppliers Company Distributors Buyers
TEH- in marketing SO-
NO- CIO-
LO- CUL-
GI- Public TU-
CAL RAL
DEMOGRAPHIC

Figure 13: Main actors and powers in marketing

environment of a company
(Resource: Kotler Philip, Managing Marketing,
Informator, Croatia, 1944, pg. 160)

The marketing environment comprises “uncontrolled” facts and

powers affecting markets and marketing of a certain company. The
47
Kotler Philip, Managing Marketing, Informator, Croatia, 1994, pg. 160

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micro-setting consists of actors in immediate environment of a

company and they affect its marketability, and they are: company,
suppliers, marketing agents, buyers, competitors, and the public.
The micro-setting comprises wider social powers affecting all actors
in a micro-environment of a company, and they are the following:
demographic, economic, natural, technological, political, and
cultural powers.48

Primary task of each company is to supply and satisfy certain needs

of the selected target markets for the sake of its own profit. In
order to fulfil this task a company links itself with a group of
suppliers and a group of intermediaries in marketing to attract its
target buyers. The chain a supplier – company – intermediaries in
marketing – buyers comprises the essence of a company’s
marketing. The success of the company will also be under the
influence of two other groups: competitors and the public. The
micro-environment of a company may be structured in such way
that a company not having a leadership approach may have market
position worse than its competitors. Namely, a company could be
placed in worse position in the described chain by its suppliers and
intermediaries in marketing – companies assisting the company in
promotion, selling and distribution of its goods or services, because
it has not accepted the leadership approach.

Nevertheless, the main influence on adopting leadership approach in

managing company lies in a dynamic micro-environment of the
company. The powers and mega-trends which shape the
possibilities and pose threats to both the company and its suppliers,
intermediaries, competitors, buyers and the public, are from the
company’s point of view uncontrolled and the company must
observe them and actively respond to them. The current marketing
environment has characteristics of a very dynamic development and
its main feature is in continual changes. Six powers of micro-
environment shall be discussed, each of them separately.

The demographic environment for a company is of vital importance

because – people make market. Leaders are vitally interested in the
size of world population, its geographic distribution and density,
trends of movements, age division, rate of birth, marriage and
mortality, as well as racial, ethnic and religious structure. Major
demographic trends are the following:
• POPULATION GROWTH WORLDWIDE. The implications of this are
in that with the current growth rate of 1.7% yearly the degree of
utilization of the Earth’s resources for maintaining life in water,
food, energy, ores and minerals is closer to their limits, so that in

48
Ibid, pg. 158-90

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future the shortage of basic resources and finding out alternative

ones may be expected.
• THE SLOWED DOWN BIRTH RATE IN THE DEVELOPED
COUNTRIES. In the underdeveloped world the annual growth
rate is 2.0% while in the developed 0.6%. The declining birth
rate is a long-term trend in the developed economies. This
phenomenon represents a threat to some branches of economy
while for other branches this may be an advantage.
• AGEING OF POPULATION IN THE DEVELOPED CUNTRIES. The
development of medicine has conditioned the limits of human life
to be moved. Given that the life is longer and longer, while the
birth rate is falling, this phenomenon must be incorporated in
marketing strategy of a company.
• CHANGES IN A FAMILTY. The people get married later in life than
earlier. The number of children per family is decreasing. The
number of employed women is growing. The number of single
households is also growing.
• BETTER EDUCATED EMPLOYEES AND POPULATION. 72% of
Americans has graduated from high schools while 20% from
faculties. The labor force is more and more composed of office
workers and they now make 54% of the employed in America
while in the past 35 years the number of workers fell from 47%
to 33%.
• ETNIC AND RACIAL CHANGES IN POPULATION. In America and
in European industrial countries as well, the ethnic communities
and racial groups who are not indigenous and white-colored have
the greatest growth rate.
• TURN OF MASS MARKETS TOWARDS MICROMARKETS. The
companies depart from earlier approach based on the “average”
consumer and create their products and services more and more
according to the concrete specific micro-market demands.

The elements affecting purchasing power of consumers and their

consumption structure represent the economic environment. The
total purchasing power is dependent on the current income, prizes,
savings and loans:
• CHANGES IN INCOME. During seventies and at the beginning of
eighties the real income on American market was decreasing
while since mid eighties until today it has been increasing.
Leaders must pay attention not only to the average income of
inhabitants but on income distribution towards the socially
vulnerable classes. The practice shows that, for example, those
selling luxurious goods and low cost goods survive on market
while those offering goods at average price are losers.
• CHANGES IN STRUCTURES CONSUMER’S EXPENSES. More than
a century ago the German statistician Engel established a well-
known “Engel’s laws”. The essence of these laws is in the fact

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that as the income increases the percentage of expenses for food

decreases, the percentage for expenses for housing and
household needs remains the same, while the percentage of
expenses for other categories (clothing, transportation,
recreation, health, and education) rises as well as the percentage
of income separated for savings. These laws have been generally
proven in practice and are valid even today in the USA.
• LOW RATE OF SAVINGS AND HIGH DEBTS. The consumers may
increase their purchasing power by taking loans and consumer
credits are meritorious for faster growth of American economy.
In 1984, each American was at average indebted 11,000 dollars.
On the other hand, the savings amounted to 6.1% of average
personal income. This percentage in Japan is three times greater.

The natural environment, which is more and more devastated by

each generation, is today considered to be rather polluted. This is
also one of the major problems the business world and wider
community is facing in modern time. Four major trends are:
• SHORTAGE OF RAW MATERIALS. The earth consists of unlimited,
limited renewable and limited non-renewable matters. The
unlimited resources, such as water, are not a direct problem, but
in a long-run they may become a problem. The limited renewable
resources, such as woods and food, must be reasonably
consumed. The limited non-renewable resources, such as crude
oil, coal and metals, are serious problem because of the time
when they will be depleted.
• INCREASE IN ENERGY COSTS. Since the crude oil crises in
seventies of the past century, the crude oil prices have been
increased by 15 times. Since then, governments, companies and
scientific institutes of many countries search for alternative
energy sources.
• HIGHER DEGREE OF POLLUTION. Some industrial activities
inevitably pollute natural environment. Finding out alternative
ways of producing and packing goods is a trend which will mark
near future.
• CHANGEABLE ROLE OF A STATE. In sixties and seventies of the
past century various governments had active role in
environmental protection. In eighties this was weakened while
today states again undertake active regulation of environmental
protection. The picture of legislation pertaining to environmental
protection is different in the whole developed world because
some countries, for example, the Scandinavian ones, have a long
tradition in active role of normative protection of environment.
Even greater diversity and disharmony of laws is present
amongst the developed and underdeveloped countries.

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The technology, technological environment, is the most distinctive

power developing activities of population. In this environment we
may observe the following trends:
• ACCELERATED RATE OF TECHNOLOGICAL CHANGES. Ninety
percent of all scientists ever lived – are still alive. The
accelerated stride of new inventions, application and spreading of
new technologies is obvious. The time distance between the new
idea and its implementation is rapidly getting smaller and the
product lifetime is getting considerably shorter.
• UNLIMITED POSSIBILITIES OF INNOVATIONS. Today, the
scientists work in almost unlimited space of new technologies
that will revolutionize our products and production processes.
• HIGH BUDGETS FOR RESEARCH AND DEVELOPMENT. In 1987
the expenses for RD in the USA amounted to more than 123
billion dollars. The Government provided more than a half of the
resources. 87% of the resources are earmarked for applied
researches while the remainder is spent for fundamental
researches, out of which more than two thirds at colleges and
universities.
• CONCENTRATING TO MINOR IMPROVEMENTS. As a result of high
expenses for RD, many companies rather get involved in minor
improvements of products than taking a risk with great
innovations. There are more defensive than offensive researches.
• GROWING NUMBER OF REGULATIONS ON TECHNOLOGICAL
CHANGES. Given that the products are becoming more complex
the public must be sure in its safety. This is a job of a state
which is lately more and more active in this sphere.
Technological changes encounter both copying and stealing of
ideas and products. Protecting intellectual property is today a
sphere in which a role of state in very distinctive.

The situation in political environment strongly affects the decision

making of a company. The major features in this environment are:
• CONSIDERABLE NUMBER OF LEGAL REGULATIONS GOVERNING
BUSINESS OPERATIONS. The legislation affecting business
operations is for years consistently growing. The purpose of
these regulations is protecting consumers, competition and wider
social interests.
• GROWNG NUMBER OF AGENCIES FOR IMPLEMENTING LAWS.
There is a growing number of Government agencies having
certain competence in implementing laws. The lawyers and
economists, often lacking practical sense for business and
marketing, prevail in these agencies.
• GROWING NUMBER OF PUBLIC INTEREST GROUPS. Just like the
number of government agencies grows, the number of non-
government agencies for the purpose of protecting interests of
certain groups or public interests is also growing.

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Cultural environment is the environment emerging as a product of

conviction, values and evaluation of people in society. Major
features of cultural trends are:
• FUNDAMENTAL CULTURAL VALUES ARE VERY STABLE. People in
modern society have many essential convictions and values,
which they want to keep. Changing these convictions and values
by companies will certainly be a waste. Secondary human
convictions and values are much easier subject to changes.
• EVERY CULTURE CONSISTS OF SUB-CULTURES. Every society
has different groups of people with common comprehension,
stemming out from their common life experiences or
circumstances. The sub-cultures are a good marketing strategy
of a company if it chooses them to be their target markets.
• SECUNDARY CULTURAL VALUES SUBJECT TO CHANGES IN TIME.
Many agencies for public opinion polling deal with discovering
such changes. People’s opinions on themselves, on others, on
organizations, on society, on nature, and on the world are those
viewpoints that change in time. Companies must count on these
changes and must anticipate them.

2. Trends in Modern Environment

It is interesting to quote which trends are taken as crucial in the
books dealing with leadership.

According to Bennis, who concludes that everything is moving and

changing, and that a leader should not understand this as a danger
but as opportunity for personal growth and salvage of organization,
the following five basic powers affecting current world may be
recognized:49
1. TECHNOLOGY. 40 people today produce something for the
production of which 1,200 people were necessary 50 years ago.
Someone said as a joke that in future factory only a man and a
dog would be employed. The role of the man would be to feed
the dog. The role of the dog would be to prevent the man to
touch machines.
2. GLOBAL LINKEAGE. Half of the Los Angeles central part is in the
ownership of Japanese. Europe is being united, the European
Union accepts new members. The Chinese economy is
strengthening. The USA has a stable development. The world is
ever more linked; the countries are ever more dependent on
each other.

49
Bennis Warren G., ON BECOMING A LEADER: THE LEADERSHIP CLASSIC
– UPDATED AND EXPANDED, Perseus Publishing, USA, 2003, p.163-77.

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3. MANAGERS AND ACQUISITIONS. In twenties in the century

behind us the number of taken over companies increased from
1,529 at the beginning of the period to 4,500 at the end. The
value of taken over companies in 1989 amounted to 600 billion
dollars, in 1998 increased to 2,000 billion dollars. The number of
managers and acquisitions, for the purpose of increasing
economies of scale, diversification and better approach to global
markets, have tendency of further growth.
4. DEREGULATION AND REGULATION. Airline industry is under the
conditions of new regulation, this being a product of terrorist
attacks to America. Deregulation of electric power market in
California has resulted in electricity shortage. Enron and brokers
without scrupulous have provoked a big scandal. These cases are
the reason for new regulations.
5. DEMOGRAPHY. The American population is aging. 21% of
Americans is older than 50 years and this age group is the group
with greatest growth rate in America. In 2030 one out of five
Americans will be older than 65 years. At the beginning of this
century 15% of those starting a new business have been the
white-colored men and 25% white-colored women, others
belong to minorities who will some time in future become a
majority in the USA.

According to Kouzes and Posner, the context of leadership is rapidly

changing from high uncertainty through intensive search for
essence up to linking of both the people and the people and leaders.
Basic trends are:50
th
1. HIGH UNCERTAINTY. Horror followed by the events after 11
September conditioned the whole world to feel less peaceful and
less safe than before this terrible terrorist attack.
2. PEOPLE IN THE FIRST PLACE. Terrorist actions, new literature
and business courses, as well as practice of many companies
conditioned a new reality – that people are most important, that
people are in first place.
3. EVEN GREATER LINKEAGE. Technology has linked the whole
world in an electronic global place. Internet and mobile
telephone industry covered even the most distant places on the
Globe.
4. SOCIAL CAPITAL. Knowledge has replaced land and financial
capital as a new economic resource. This is a social capital –
collective values of people in an organization who know each
other and what they will do for each other. And amongst them
there is always an effective leader.
5. GLOBAL ECONOMY. The social lineage and social capital go
beyond national limits. This lineage is global. This is a

50
Kouzes James M., Posner Barry Z., THE LEADERSHIP CHALLENGE, 3RD
Edition, Jossey-Bass, USA, 2003, pg. XVIII-XXIII.

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characteristic of new economy – and a chance for leadership.

Global leadership means global understanding.
6. SPEED. The speed is a direct consequence of technology uniting
us. It improved our lives and reduced the cost of production.
7. CHANGED LABOR FORCE. Growing number of people is self-
employed, growing number of people work at home. The labor
force is more and more diversified. Leaders, based on this trend,
find answers to a new question: how can an organization be
loyal to each employee?
8. EVEN MORE INTENSIVE SEARCH FOR ESSENCE. However we call
it: spirituality, religion, faith or soul, the trend in business
organizations towards always greater openness to spiritual,
emotional side, is clear. Books dealing with spirituality are
regularly on the top of the bestseller lists. In the magazine
FORTUNE in 2001 there was a headline on religion and business.
The task of a leader is to create climate at work in order the
people would bring to work their souls and not only their hands
and brain.

Social and political phenomena which are according to Drucker51

essential for determining company’s strategy in our century are:
1. DECREASING BIRTH RATE IN THE DEVELOPED WORLD. The final
implication of this is in that all developed countries should rapidly
increase productivity of their workers.
2. CHANGE IN DISTRIBUTION OF CITIZEN’S INCOME. Four sectors
have had the greatest growth in the share of citizen’s income:
state, medical protection, education and entertainment. And
none of these four sectors are on “free market”, they do not act
strictly according to the supply and demand laws and they do not
correspond to the model of desirable economic behavior
according to the old economic theory. In any country, even in
the most capitalist one, for example in the USA, these expenses
exceed half of the average costs per man. This will be a great
challenge for new economic science. On the other hand, many
believe that informatics is the most prosperous branch in the
world at the moment. The truth is that it is not, but that these
are financial services, actually a new portfolio of new financial
services which had not existed before – directed to the retired
persons. There is another industry that has had greater growth
than informatics, the book publishing. In western countries more
books than computer equipment have been sold.
3. DEFINING ENTERPRISE’S PERFORMANCIES. In the USA the
pension funds, namely future retired persons, are owners of 40%
of shares of all companies in high demand in stock exchange,
while 60% of shares of those big ones. The situation is similar in

51
Drucker Peter F., MANAGEMENT CHALLENGES FOR THE 21st CENTURY,
Harper Business, USA, 2001, pg. 41

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Great Britain. It should be expected that these owners will focus

on performances other than those recognized by economic
theory, based on greed and selfishness of private owners. To
these owners the non-financial values are of even greater
importance, and this is a long life of a company, in order the
company’s income would be continued when they will be very
old. And today, an average life of companies in the USA is 30
years!
4. GLOBAL COMPETITION. All organization must have as their prime
goal the global competition. One of the implications is that no
country may base its economic development on low cost labor.
Labor costs amount to one eighth of total costs, and competitive
and development advantages obviously lay somewhere else.
Every business today depends on global competition. This
represents a danger even for political decisions of the countries
which have caused damages to the country’s economy, or which
may cause it. Good examples for this are Japan (the Government
restricting import) and Mexico (the Government restricting
export).
5. GROWING NON-UNIFORMITY BETWEEN THE ECONOMIC
GLOBALIZATION AND POLITICAL DEVISIONS. The golden rule in
business in overcoming this problem should read: if the non-
uniformity between political and economic reality exists, than
nothing that will not completely satisfy economic reality it to be
done.

3. Challenges to the 21st Century

Management
In his latest book Peter Drucker52 also elaborated the challenges od
the 21st century management. First of all new management
paradigms were elaborated showing us how the management would
develop in 21st century. Since 1930 the management lies on two
sets of assumptions related to the management reality,
assumptions related to the management discipline (the first three
assumptions) and assumptions related to the management practice
(the remaining four assumptions).

The first assumption is that management is business management.

The development of all social organizations until today has shown
that management is a specific and different body in each of them
individually, but in all organization of the society as well.

52
Ibid., pg.1-40

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The second assumption is that there is – or has to be – only one

right organizational structure. We are witnesses that there are a
number of different organizational structures at various hierarchical
level of organization having effective results. For a right
organization the management must search for and develop an
organization complying with its objectives.

The third assumption is that there is – or has to be – only one way

to manage people. However, in this century the people will not be
managed. The task is in that people are led by leaders and with the
purpose that an organization builds up its productivity on specific
skills and knowledge of each man.

The fourth assumption is that technology, market and consumers

are given and unchangeable. In this century the management must
be more and more based on the fact that technology and market
may not be basis for the management policy. The impact of
management on the business and constant changes of environment
have contributed to the fact that basis for management strategy
and policy should be the values, viewpoints and decisions of
consumers on their available income distribution.

The fifth assumption is that the area of management is legally

defined. This assumption lies on the assumption of controlling and
commanding in management. The trend is in that the management,
as a discipline and practice, should be more and more based on the
assumption that its area is not legally defined. The management
should be operational. It should comprise entire process. It should
be focused on the results and performances in the entire economic
chain.

The sixth assumption is that the management is focused on inside,

on organization. But the results of each organization, either
enterprise, church, university or hospital, exist only in outer
environment. The management exists because of benefit the
organization receives based on these results. It should place its
focus on assumed results and organize the realization of the
anticipated results. The management should be a body producing
results outside itself.

The seventh assumption is that the economy is defined within

national borders and that the management area is politically
defined. Today, national borders have become a restraint for
business. The management practice, and not only in business,
should be more and more based on operations, and not on policy.
And finally, new management paradigm is that the area and
responsibility of management are all that affects performances of an

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organization and its results – either inside our outside, either under
the control of organization or completely out of its control.

What is the answer to these management realities? That is a leader

of changes, the only one who will survive in the period of rapid
structural changes. A leader of changes is expected to:
1. Penetrate deeply into the future.
2. Find and anticipate changes.
3. Incorporate changes.
4. Balance changes and continuity.

The favorite Drucker’s topic for the 21st century is the so-called
skilled worker, one of his central concepts. Thus, in the 20th
century the greatest contribution to management was the fifty
times increased productivity of common workers in the production.
The greatest contribution of leaders in the 21st century should be
the skilled worker’s productivity and a skilled worker. The most
important value for company in the past century was production
equipment, in this one it is a skilled worker. The difference between
a common worker and a worker who is skilled in his job is obvious,
and the following factors determine the skilled man productivity:
1. The question for the common worker was: “How should the work
be done?”, while for a skilled worker the question should be:
“What is the assignment?”
2. The productivity of a skilled worker should be imposed on by
himself. A skilled worker should manage himself. He should have
autonomy.
3. The continuous innovation should be a part of work, assignment
and responsibility of a skilled worker.
4. A skilled work requires unceasing learning, in both directions.
5. The skilled worker’s productivity is not primarily expressed by
quantity but by quality.
6. The skilled worker’s productivity requires that he is not
considered as a cost but as a value for a company. It is
necessary for a skilled worker to want to work for a company
with relation to all other potential opportunities.

A big group of skilled workers performs both the skilled jobs and the
manual jobs. They are technologists. They are the greatest and
most rapidly growing group of skilled workers. In future, the
competitive advantage of a state will be determined on the basis on
the success of skilled workers’ organizations. This primarily calls for
redefining purpose of organization from the root, it must no longer
serve the purpose of satisfying legal owner but also of satisfying
human capital owner, namely each individual skilled worker. This is
an implicit demand for a democratic organization and leadership
orientation of companies. A state’s task in future will be building an

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educational system in the service of skilled worker’s productivity

improvement. The skilled workers, technologists, encounter
drastically new requirements:
1. They should ask themselves: Who am I? What are my
advantages? How shall I work? People think that they are aware
in which things they are good. Actually, researches show that the
people are generally aware in what things they are not good,
while they are not aware of opposite. A man must become aware
in what things he is good, he must concentrate on his
advantages and improve them. Advantages and weaknesses are
given, however, the question is how the assignments are
performed, particularly those in which a man is good, because
the people have results based on how they perform them. This is
not given and there is a way how this may be improved. The
improvement is based on learning. A man should be aware of
which learning methods are most suitable for him, whether he
learns best alone, with the assistance of mentor or in team. By
learning, the conflict between the man’s advantages and ways in
which he performs them may cease to exist. However, the
conflict may occur between the man’s advantages and the things
in which he is good. Undoubtedly, values should have priority.
2. They should ask themselves: Where do I belong? This is a
decision which one should make soonest, if possible at the very
beginning of one’s career. If the choice is based on maximizing
above mentioned three questions, then an average man as well
may become a great performer in the organization towards which
he has affinity.
3. They should ask themselves: What have I contributed to? This is
a new question in human history, because the traditional tasks
were assigned. Skilled workers should learn to ask themselves:
What should be my contribution? An effective action is based on
three elements structured in three questions: What does the
situation require? How can I most contribute to my advantages,
my way of working and my values? What results should I
achieve to reach difference?
4. They should undertake responsibility for interpersonal relation.
Few people work independently – great artists and scientists,
while other people work in organization. The work of most of the
people is effective through the work of other people. For one to
manage himself he has to undertake responsibility for
interpersonal relations. First of all he has to accept the fact that
all people are not the same, but that they are human beings and
that one has to behave towards them as to own self. Don’t do to
others what you wouldn’t like the others to do to you. Evident,
but hardly applied in practice. Then, an effective communication
has to be achieved. Organizations are interwoven and linked
through jobs of various individuals. How to give own contribution

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if the work is based on assumptions, if people know very little

about each other, if they do not know a basic thing: who is in
what and to what extent good, how one likes to work, what are
their individual values and how much one wants to contribute to
the results?
5. They should have plans for the Second part of life. The pension
system has been established in some other times with different
assumptions. If it was done today on the then assumption, one
would be retired with 79 years of age. Without going into
economic topics, the then system was created for common
workers who really worn themselves out during the course of
years and were biologically mature for retirement in their sixties.
However, the skilled workers place a new paradigm – they do not
wear themselves out during their working life, but on the
contrary. They permanently get trained for their jobs so that
over the years they become more and more productive. The
inevitability of moving retirement age limits will be soon
understood by the law makers. The skilled workers should make
their careers for the second part of their lives because it is likely
that they will survive their organizations during their working life.
One should be prepared for this career long before the time
these changes occur. The possibilities are:
• starting new, different career;
• developing parallel career – another assignment in the
same organization;
• social entrepreneurship – same assignment in another
organization usually of non-profit sector (for the people
who were unusually successful in the first career).

4. Ecological Environment Impact on

Competitiveness
Porter, the greatest expert for competition, showed in one of his
works how leadership effectively responds to dynamic changes of
marketing environment.53 Many people have fixed opinion that
economy and ecology are on opposite poles. On one hand, here is a
social advantage of a clean environment and, on the other, the
costs of private capital for preventing pollution and improving
environment. This statistical approach neglects the fact that
companies constantly find innovative ways how to adapt themselves
to changes under pressures of competition, consumers and
legislation. These innovations lead to more productive use of inputs

53
Porter Michael E., Van Der Linde Claas, Green and Competitive, HARVARD
BUSINESS REVIEW ON BUSINESS AND THE ENVIRONMENT, Harvard
Business School Press, USA, 200, pg.133-67.

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– from raw materials to energy and labor force and the increased
productivity makes companies more competitive, not less
competitive. These improvements in productivity reject greater yield
for companies than additional costs based on new regulations. The
Holland flower industry was under great pressure of the public and
State because of land pollution caused by artificial fertilizers. The
producers, under the pressure, ceased growing flowers on the land
and started to grow flowers on water and stones - and improved
their productivity, competitiveness and share in world market. The
pollution, releasing toxic and waste maters into environment,
should be considered as uneconomical and ineffective use of
resources. In this is a key of the story why the Holland flower
industry today is not an exception in the world economy but ever
more a rule. Also, the blame for uneconomical use of resources has
been shifted to direct consumers through prices. For many leaders
this concept has opened new roads towards the increase in
productivity both through closed production technologies and
through substitution of materials. As leaders have made a deviation
from the costs of ecology, because of legal regulations, towards
opportunity costs of ecology – the loss of resources, loss in
profitability, diminished value of products for consumers, the
ecology and economy have found themselves at the same level. In
researches of 29 leading chemical plants, 181 new technologies for
pollutant reduction have been discovered. Only one of them has
caused increase of costs. Out of 70 activities on products, 68 has
shown rise of productivity, 7% of them at annual level. 48 activities
have been carried out without capital, two thirds of the remaining
activities paid off within 6 months or in shorter time. In the mass of
these activities, 1 dollar of expenditure for preventing pollution has
brought 3.49 dollars of increased revenue. In 1990, the prohibition
of the CFC because of ozone bought about disturbing titles in
newspapers on disappearance of refrigerator, but luckily the
companies dealt with innovations and not with reading black
forecasts. The modern industry is based on propane-isobutane. The
results are: 10% greater power efficiency and 5% lower final prices
for consumers. What stand should the leaders and business
organization take in these industries? The Porter’s and Van Der
Linde’s message is the following:
• Direct and indirect impacts on environment are to be compared.
• It should be learnt how to recognize opportunity costs of
insufficiently used resources.
• Atmosphere in an organization stimulating innovative solutions
increasing production should be created.
• They should be proactive in defining new type of relationships
with regulation makers and ecologists.

I would like to add another one, the primary one:

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• They should, with the assistance of leaders of changes, on

democratic basis, create a high performance organization.

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IV HIGH PERFORMANCE
ORGANIZATION MODEL

The HIGH PERFORMANCE ORGANIZATION model (HPO)54 was

created as a two-decade experience of authors of the model (John
W. Pickering and Gerald S.Brokaw) in their work in Government
agency the Federal Executive Institute (FEI) on educating high
officials and their knowledge related to organization performance
improvement55. The essence of the program is a synthesis of theory
and practice of organizational changes of great scope. The Program,
focused on individual officials of private and public sector, rarely
had results in significant changes towards the HPO in organizations.
The greatest move forward is achieved when the Program is focused
on entire organization and leadership in the organization. The
development and educational goals should move from individual
education towards the education of teams in an organization
starting from the management team, best from the entire team.
The best approach is in leading development of a team through
organizational model of changes. The model is appropriate and has
been implemented in a great number of various organizations: New
York Stock Exchange, US Navy, GE – Fanuc, City of Norfolk,
Virginia…

For the model to be implemented the teams of people are needed

who are experts in their organizations and willing to be holders of
changes and who need framework model of changes and analytic
approach how to achieve an HPO, based on the so far progress of
theory. The experience has shown that in case the organization
does not have “good” leadership, there is no any possibility to apply
the model “well”. To build such leadership it is necessary to reach
consensus in the organization about clear and comprehensive
common vision of all employees in an organization.

The feedback lies in the basis of the HIGH PERFORMANCE

ORGANIZATION model. The model shows how strategy, structures
and organization systems are is changed on the basis of leadership,
54
For explanation of the model the following material will be used: Pickering John
W., Brokaw Gerald S., BUILDING HIGH-PERFORMANCE ORGANIZATIONS
FOR THE TWENTY-FIRST CENTURY, Charlottesville, VA, USA: Commonwealth
Center for High Performance Organizations Inc. (Unpublished Participant Text),
2003
55
Pickering John W., Matson Robert E., WHY EXECUTIVE DEVELOPMENT
PROGRAMS (ALONE) DON’T CHARGE ORGANIZATIONS, ASTD’s Training &
Development Journal”, USA, 1992.

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vision and values. The leadership is based on philosophy, function

and form, the vision is based on direction and alignment, while
values are based on culture and behavior. In the model the success
is reaching high performances, and they are in:
• quality of products and services,
• additional values for consumers, and
• financial performances.

The environment responds to the change in performances and

sends signals in the organization for additionally necessary changes
in it. The first to be affected by changes from the environment are
the very leadership and leadership basis on which the model is
based.

FIGURE 2 : The CCHPO High-Performance Organization Change Model

Vision
Strategy
E High
N • direction Performance
Leadership
V • product and
I • functions • alignment service quality
R • customer
O • philosophy Structure “value” (serv-
N ice,responsi-
M • form Values veness, satis-
E faction)
N • culture • financial
T performance
• behavior Systems

Figure 14: Model of HIGH PERFORMANCE ORGANIZATION changes

(Source: Pickering John W., Matson Robert E., WHY EXECUTIVE
DEVELOPMENT PROGRAMS (ALONE) DON’T CHANGE ORGANIZATIONS,
“ASTD’s Training & Development Journal, USA, 1992, p.1-8

1. “Business Nature” Evolution

The “business nature” evolution is a staring basis for the HPO. It
clarifies types of organizations through history and offers
explanations of how will organizations in the 21st century look like.
These will be organizations based on democratic values.

At the beginning of the human era a man was a collector or hunter.

He did not possess any knowledge and played a passive role with

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relation to the Nature. As agriculture and handicraft trades

developed, men undertook more active role.

The Evolution of ““T

T

before
Figure 15: Division of labor in the handicraft trades phase

1800
(Source: Pickering John W., Brokaw S., BUILDING HIGH-PERFORMANCE
ORGANIZATIONS FOR THE TWENTY-FIRST CENTURY, Charlottesville, VA,
USA:Commonwealth Center For High Performance Organizations Inc.
(Unpublished Participant Text), 2003, I-3)

In this phase of work the entire organization lies on one man so

that the work is holistic, namely united in one personality, so a man
performs it independently without dividing work further. Every man
thus possesses all competencies required for performing a job, and
these are: leadership, managerial and technical competencies,
knowledge and skills.

At the beginning of the past century the industrial phase

Subsistence Farming
commenced. Basic division of labor appeared, primarily the vertical
one, because the owners and workers became members of two

CRAFTS
classes. In time the owners, having leadership function, left the
sphere of management to a new class of people, managers. The
managers managed on the basis of new sciences and disciplines on
production and management based on industrial engineering in

PHASE
production and based on “scientific management” in managing an
organization. The most competent ones came before the working
class but they did not have possibility to access the managerial
class. The horizontal division also appeared in this phase of
economic development. At each level the individuals were required
to perform the entrusted role well – to be only a leader, only a

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 LEADER IN MARKETING

manager or only a common performer. There was no mixing

between classes and levels in an organization.

The Evolution of ““T

T

1900
“SCIENT
Figure 16: Division of labor in the industrial phase
(Source: Ibid., I-4)

The changes in environment and the marketing orientation of an

enterprise contributed to the fact that enterprises should be
oriented in a different manner. In the industrial phase only a leader
U
INDUSTRIAL
could communicate with environment and he was in charge of both
the products and the services satisfying consumers’ needs and
wishes. Soon it was proven to be insufficient. Growing competition
conditioned a new approach to consumers – marketing development

PHASE
phase commenced. Marketing philosophy required the entire
enterprise to be oriented to the consumers’ needs and wishes so
that the so-far pyramid of managing enterprises was changed. Now
the first line has the assignment to respond to the consumers’
needs and wishes, and it is mainly sales operative unit or services
operative unit in an enterprise. They should have technical support
by technical operative unit, which will provide them products and
services which the consumers demand, and on the basis of

Division of Labor
recognized needs and explanations of the first line. Here, there is
also general management support. A leader is the last. He is
responsible for a vision and values of an enterprise. In this structure

Vertical
it is already obvious that for special or potential wishes of
● responds in the manner to form special
consumers the enterprise
teams within the enterprise which will deal with this niche as with
● Horizontal
their own micro-business.
●

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W
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The dynamic changes in environment, as already explained,

inevitably demand from the organization to turn to democratic
values and enterprise organizing, because this is the only way to
survive by applying leadership approach in the years to follow.
Given that in democratic model all are equally important in an
organization, all have the same tasks as well.

The model appropriate to the democratic organization is called

network talent model because each individual is expected to use its
talent and competencies for the benefit of progress and wellbeing of
its organization. Along with leadership, managerial and technical
competencies, a man in a democratic organization must have team
skills as well.

The Evolution of ““T

T

2000
Figure 17: Division of labor in the 21st century HPO model

NETWORKED
(Source: Ibid., I-6)

In this model, man’s work and his role again becomes holistic,
namely all organizational roles are summarized in each individual. A

TALENT
man is in the role of using all of his competencies, all the best he
can offer, and that is:
1. Leadership competencies, skills and behavior,
2. Managerial competencies, skills and behavior,

M
3. Technical competencies, skills and behavior,

MODEL
4. Team competencies, skills and behavior.
T

T
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The team roles and significance of teams in an organization, which

established on the basis of the theory of niche, represent the very
qualitative difference in competencies, skills and behavior between
the workers in the 21st century and workers in the phase of
handcraft trades. Team competencies, skills and behavior may be
divided as follows:
1. PROCEDURAL; types of meetings, chairing meetings, procedural
rules at meetings, procedural roles, presentation skills.
2. PROBLEM SOLVING: understanding, techniques, values, and
models.
3. BEHAVIORAL (BEHAVIOR): at personal, interpersonal and team
levels.

Industrial model is:

• stable,
• studied,
• based on activities,
• people support technology,
• based on numbers,
• focused on products,
• standardized, and
• rigid.

Network talent model is:

• flexible,
• in learning,
• based on performances,
• technology supports people,
• based on communication,
• focused on consumers,
• non-standardized, and
• virtual.

However, does the talent model presume that all of them have the
same function in an organization? No, because a function and role
depend on the level in the organization. All of them should have
leadership, managerial and technical knowledge, competencies and
skills, but which knowledge should be given priority depends on the
level of contacts with consumers. The first line should lay stress
upon his technical competencies, while other knowledge and skills
should not be set aside. By developing organizational structure a
greater role is given to the managerial competencies, skills and
behavior while on the top position the greatest stress is to be laid
on leadership competencies.

The eminent organizations of today were established in the past

century, in the industrial phase, and therefore the system and

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working processes which then produced results today does not

produce them any longer, because the worn out organization is not
able to lead us to future. The solution is in an organization based on
the network talent model, the organization based on leadership and
democracy. Such is the HPO organization.

2. Diagnosis of Organizations and Getting

Familiar with the HPO Model
The HPO model is not:
1. reducing the number of employees,
2. how to work longer or shorter every day,
3. techniques, or
4. recipes.

The HPO model is focused on performances, actually on high

performances. The generic definition of high performances is:
simultaneous production of quality products and services, of
exquisite values for consumers and envious financial performances.
Under quality we understand purposeful “design and characteristics”
of quality and excellent quality of “performance”. In this Chapter we
will discuss questions asked at the beginning, and then we will
move through diagnosis of organizations and introduction of the
model of changes towards higher performances. In the focus of the
HPO material is not only an individual, as already emphasized, but
also the team and micro-business, which has emerged on the basis
of the philosophy of niche, as well as the entire organization. A
leader in the HPO model has a circle of control over him, circle of
influences on the team and micro-business, and finally, a circle of
interests spreading over the entire organization:

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FOCUS OF TH

Figure 18: Diagram of the HPO model focuses and circles

(Source: Ibid., II-5)
Or
There are seven basic diagnostic questions in the model for
organizations and they are the following:
1. WHAT ARE THE HIGH PERFORMANCES FOR US?
2. HOW SHALL WE KNOW THAT WE HAVE ACHIEVED THEM?
3. IN RELATION TO WHOM THE PERFORMANCE ARE HIGH?
4. WHY HAVE THE HIGH PERFORMANCES?
Micro-
5. ARE WE DOING THE RIGHT THING?
6. HOW WELL ARE WE IN IT?
Business
7. HOW WE BEHAVE TOWARDS EACH OTHER AND TOWARDS THE
CONSUMERS?

Team/Unit
The most important thing with the model is that it is a model which
should be implemented in each organization individually, so the T
EN
answer to the first question, what the high performances are for us,
M
should be specific for each organization. The answer must be firmly
N
IG in
linked with the mission and desired position of the organization
L
the future, in the selected market niche. A

“NOG’s”
How could we know that we have achieved the high performances
when high performances do not include compromise? It is a well
know fact that many industries in the past did not behave
simultaneously in a unique manner towards the speed and price of
manufacturing, so that more rapid manufacturing was often possible

Individual
only at higher prices. The high performances require the work to be
done well, rapidly and at low cost, namely to work better, faster and
Circl
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at lower cost than earlier. This is a 3+ approach explaining that it is

necessary to increase all outputs with relation to the preceding
state. Until 1900 there was only one approach “choose 1” – price,
quality or speed. In the 20th century until around 1975, the year
taken as the end of industrial society, the approach was “choose 2”
– the price depended on either quality (higher) or speed of
production (lower). Faster production meant lower product quality.
Until the end of the past century the approach was “choose 3” – the
standard quality was delivered along with standard production and
prevailing price. The 21st century and dynamic marketing
environment require each economic entity to adopt approach
“choose 3+” –namely better, faster and lower-cost products and
services are offered to consumers in every further iteration.

The third question is environment-oriented, actually micro-

environment-oriented, as Kotler defined. Let’s us recall that the
actors are in the direct environment of a company and it is
composed of: a company, suppliers, market intermediaries,
competitors and the public. The answer to the third question is a
test of adopting marketing orientation of a company. Organizations
are requested to improve their relationship with all actors in their
environment. The two-way communication is essential for
establishing effective relation with the environment.

The fourth question is also environment-oriented but compared to

the previous one the stress is here laid upon the macro-
environment, and according to Kotler these are: demographic,
economic, natural, technological, political and cultural powers. An
organization should expand its focus from the narrow profit to
broader interests, such as:
• higher moral interests,
• pride, and
• existence.

The fifth question, whether we are doing the right thing, is focused
on consumers. The answer to this question should provide
information on whether the quality of a design and product
characteristic conform to wishes and needs of consumers. The
answer to this question should also show whether we use right
materials for the desired product, as well as whether the labor force
is appropriate in number and level of training to the output quality
and price. The quality of designs and characteristics may range on
the scale from complex to modest, and the right one is the one
requested, wanted and expected by our consumers.

The sixth question, how much we are good in producing right

things, is focused on the process of production. The answer to this

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question should furnish us information on whether the quality of

performance conforms to consumers’ wishes and needs. The
process should be the “right one”, namely the costs of the designed
technological process should be minimized, and it should also be
carried out well, by which the costs of non-performing operation
(machine idling, standstill in production, and alike) are minimized.
The quality of performance on the scale may range from excellent
to poor, and the right is the one expected by our consumers.

DEFINI
DESIGN AND
VERSUS EX
Figure 19: Quality in the HPO model
(Source: Ibid., II-12)

The fifth and sixth question is best explained by way of a plastic

example. Hence, a design and characteristics should be directed
towards a determined target group and should be of high
performance for that target group. Let’s take the YUGO and
Mercedes cars; of course, everybody would like to drive Mercedes,
but cannot afford it. The observed organization should find its
appropriate place on the scale, and it is often somewhere in the
middle, or upper half. Let’s say that this cross section is Skoda and
that we have positioned there our designed quality in the design
and characteristics of vehicles. Quality of performance represents
the process performances because Skoda may be manufactured in
Czech Republic or Germany for some ten thousand EUR, and it may

6. How
be manufactured in Kragujevac for some twenty thousand EUR. The
HPO will produce the right thing in the right way, namely with the

Execution $
lowest process costs. As it may be concluded the first axis, the one
defining quality of design and characteristics is an axis of
Good?
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effectiveness, while the other one, the axis defining the

performance quality is an axis of efficiency.

This model, as may be concluded from the above example, requires

the work of both a leader and a manager in an organization, so that
the organization may be both effective and efficient simultaneously.
The mechanism of changes must be built at each organization level
in order to reach high performance organization, that much
necessary in the dynamic environment of the 21st century.

The first six questions were the questions to which answers were
based on a vision. It was highlighted that in the past a vision was
often a vision of only one man – owner. The dynamic environment
of today makes this almost impossible, but the possibility still
exists. However, as the changes require the use of knowledge,
competencies and skills of all in an organization, the last 7th
question is thus related to the values of organization, and it may
also be put in the following way: is the organization’s business
culture based on democratic values? Only democracy and
democratic values ensure the work to be based on maximum
utilization of each individual’s potential for the purpose of successful
adjusting to changes in the environment and long-running
effectiveness of an organization.

Finally, all seven questions will be incorporated in a model:

THE HPO C
PUTTING

3. According
to whom?
Figure 20: HPO model and diagnostic questions in the model
(Source: Ibid., II-19)
LEADERSHIP

ENV • Page
Philosophy
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• Functions
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We notice that the diagram of a vision and values is spiral. It

represents the relation from general to particular. The vision and
values should be general in their essence, however, they should
lead to particular and for an organization unique implementation,
which will ensure competitive recognizability, marketing positioning,
short-running efficiency and long-running effectiveness.

3. Spheres of work in an HPO

The focus will be further put on an organization as a whole and
what sphere of work is required for achieving changes at each level
in an organization will be shown:
• The first one, a line level must be exposed to fast learning of the
basis of business and management, in order to adapt “culture of
leadership”.
• Middle level – network of working units and department must
work on improvement of work process of the entire organization
and improvement of system of support to work process.
• At the top level the leader’s and manager’s team should be built
which will ensure the process of changes to be implemented at
all levels of work in an organization.

The model is based on an presumption that an organization may

change itself from industrial into the talent model network, into a
democratic organization composed of high talented individuals at all
work levels, who, as leaders in their micro-business teams,
effectively perform their assignments providing to the consumers
the quality products and services, delivering superior values for
consumers and realizing envious financial performances.

A line unit is closest to consumers. This is actually a result of an

organization based on marketing logics according to which those in
direct contact with the consumers are interested most in
effectiveness and efficiency of micro-business, which is each
individually positioned in a separate market niche. The technical
support provides to the line unit the necessary technical and
specialized products and services. The general support provides to
all parts of organization the resources and information, such as:
new labor force, financial services and budgeting, and alike. The top
level is responsible for creating organizational architecture and
running processes supporting such structure.

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WHERE WO
DONE IN O

Figure 21: Reverse pyramid of the HPO model

(Source: Ibid., VI-3)

The primary need of each organization is to create efficient and

effective first line, which is in the first contact with consumers. To
succeed in this, it is necessary to be based on two work spheres at
this level. The first work sphere J1 is a change of behavioral culture
model from the industrial into network model, establishing a culture

L
based on team work and participative approach. Individuals should
understand that their work is holistic, that the organization
demands from them a contribution from their other competencies
and not only from technical skills they posses: leadership,
manager’s and team competencies. This is achieved by training and
learning. The first level should also crystallize its vision and value.

M
Then, it should make a long-term strategic plan, which will be
transposed in specific tactics and operational plans, all together
making a plan and budget of this level of organization. It is
suggested to establish a team in the following:
• HPO,
56
• Covey’s 7 habits of highly effective people:
• Team building,
• Strategic planning,
• Trainer’s approach. T
Covey Stephen R., THE 7 HABITS OF HIGH LY EFFECTIVE PEOPLE, Simon &
56

Shuster, USA, 1989

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The second work sphere 2 at this level is ensuring that the line
team members have knowledge on business and management
bases, and that they should be trained in:
• Basic financing,
• Project management,
• Managing work and processes,
• Performances and their measuring
• Benchmarking tests,
• Forecasting standards for labor force.

The first work sphere - J1, behavioral culture model change, derives
from organization’s leadership, vision and values, while second
sphere – J2, business and management bases, from organization’s
strategy, structure and system.

The next sphere of the demanded work P1 is in an organization

includes key work processes. These are processes taken over by the
first line work in order to satisfy consumers’ needs and desires. In
many organizations the key jobs are not controlled by
organizational level of a business unit, but it is rather partnership
network of various units and departments. In this case, leaders and
management of all organizations in a partnership network must
ensure that mechanism of changes are created, leading to work
process improvement. It should be taken into consideration that
such approach is fundamentally opposite to hierarchic approach, not
focused on the level and participation in the power, but on
processes.
Here, it is necessary to be based on experiences based on
knowledge on:
• engineering,
• designing processes,
• costs control and management bookkeeping,
• continual process improvement, etc.

The fourth work sphere P2 are key support processes, such as

technical support (engineering, laboratory, garage…) and general
support (finance, information, employment, law…) The key process
may not also be an obligation of one unit or department, so the
leaders and managers have to ensure that mechanism of changes is
created leading to support process improvement. Here, it is
necessary to be based on experiences based on knowledge on:
• engineering,
• process analysis,
• costs control and cost/benefit analysis,
• designing, and alike.

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The last two work spheres T1 and T2 are related to building leader’s
and manager’s team in an organization and are located at the very
top level. As may be presumed, building effective leadership team,
trained to lead on the basis of vision, form and values of an
organization, depends on philosophy, form and leadership function,
while an effective manager’s team, trained for daily assignments,
works in the right way, depends on strategies, structures and
systems, based on values and on vision of an organization.

The leader’s teams are suggested to be trained in the following

fields:
• HPO,
• Covey’s 7 habits of highly effective people,
• Team building,
• Team skills,
• Strategic planning,
• Trainer’s approach,
• Getting familiar with 360º feedback.

The manager’s teams are suggested to be trained in the following

fields:
• Basic financing
• Project management
• Managing work and processes,
• Performances and their measuring
• Benchmarking tests,
• Forecasting standards for labor force
• Managing and measuring direct and indirect activities and
functions.

It is critical for the top team to be initiator of changes in an

organization. It is of great importance come to awareness of
changes at this level, in order to convey this awareness to other
levels in an organization, up to departments and further to work
units in the first line. The top team should also be a support in
overcoming resistance to changes and getting into changes as well
as a support to collaborators in their work and high performances
building, again at all levels, upside down. The trainer’s approach is
an approach suggested as a successful one in leaders’ work with
their collaborators in an organization. Similar development in
leadership and management should be achieved at all levels. An
open and frequent communication in organization is necessary. A
consensus between the workers and organizational levels related to
vision and organization’s values is also necessary.

In some organizations this high performance building process,

which sometimes requires more than a year of work, appears to be

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unachievable, just like an “elephant eating” process. Although the

elephant analogy is good related to the problem complexity, the
real question should not be “whether we should eat an elephant?”
but “which bite would be the first?” in these complex problems.

WHERE WO
DONE IN O
WORK AREA S/D1:
Leadership S
Team
Figure 22: Achieving changes at every level in an HPO
(Parallel Org)
(Source: Ibid., VI-22)

4. From Visions to Performances

A vision and values offer an answer to the question what kind of inte
strategy, structure and business culture in the HPO model is
needed.

The adopted values represent a business culture pattern. Based on:

• leadership philosophy,
WORK AREA P1:
• individual values of a person, and
Work
• system values, community values,
the behavioral pattern in an organization is defined. Behavior may
D
Processes
be positive and negative, and a leader’s job is to stimulate the first
one. Based on decisiveness to of all in an organization to go towards
the HPO, as well on feedback research, the potential positive
behavior will contribute to the business culture development which
is critical for creating the HPO.
DEMAND FUNCTION
+
We will further discuss the road from vision to performance. Based
on vision and strategic reasoning, the following is developed:
SUPPORT CAPABILITY
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1. Strategic plans,
2. Tactical/operational/project plans
3. Monitoring and corrective actions.

Building High -P e
High-P
LEADERSH
VISION / VALUES TO ST
(moving from vision to per
pe

VISION
End Values/Higher Mora

{
Figure 23: Visions and values in the HPO model
DO WE HAVE THE
(Sources: Purpose/Desired Future St
Ibid., VII-4)
RIGHT __________ ?
following questions are to be defined:
• Customers
Strategic Thinking
To understand “common vision” in the model, answers to the

1. What is • Key
higher • Mission/Niche
moral& purpose, ultimate value – final
Products
Services • Theory of the Busin
performances, desired situation in the future?
2. Why do we need the HPO, who will miss us if we become the
HPO? • Business Strategy (strategy/structure/syst
3. What are •high
Org.performances
Structure for us and how shall we know that
• Work Processes
we have them?
Prepare Business Ca
4. Why should• Support
we haveProcesses
high performances and why now?
• Equipment, Facilities,
We have to be Strategic Plannin
convinced that a common vision is the right vision,
Technology,
that it is appropriate in terms of place and in terms of time. In order
Information, etc.
• Set Direction
to know that our performances are high in each sphere, the
following process is recommended:
•PEOPLE
1. Return always to a common vision. • Capacity Building
2. Decompose – Right
3. Develop measuring
competencies
a vision into “elements”.
– Development process of:
of performances
Prepare Business Pl
a. – Feedback/Coaching
results ,
b. effects.
Tactical/Operationa
(360 ) o
– Resolution Process
Measuring performances of results demonstrates to us, after some
time, whether(Performance • Action
our cause/effect model is satisfactory
Appraisal)
or notPlan
in
• Resources Plan
• Resources Plan
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 LEADER IN MARKETING

rejecting anticipated results. Measuring performance of effects

shows to us whether we have or have not reached higher moral
purpose we have aspired to.

Second key element of this spiral represents a strategic reasoning.

That is a product of business theory and mission / niche.

The business theory is the basis for us to establish strategy,

structure and system. It represents employees’ viewpoints on
market position of organization, as well as belief on a position
where the future should be. It comprises beliefs on environment,
mission and competitive advantage. The business theory is oriented
on the “performance quality” and in its focus is efficiency:

Th
Strategic of
Thinking Bu

DEFINITION: “
Figure 24: Business theory in strategic reasoning
(Source: Ibid., VII-36)

The business theory is a basis for answers to the following question:

1. What do we have to do (which strategies, structures and
systems to use) to realize our vision?
2. Are we doing things in the right way (right process and well
performed)?
3. Are we efficient?
4. High performance indicators:
a. performance quality
b. financial performances
5. Strategy – do we have a right business cause/effect model?
a. redesigning /reinventing business process

6. How Page 109 of 184

$
 LEADER IN MARKETING

b. reengineering of costs based on activities

6. Structure – are we correctly structured?
a. reductionist approach (business centers, and alike)
b. integralist approach (matrix structure, project
management, and alike)
7. System – do we have system, which is uniform and supportive?
a. right business process (total quality management)
b. right management and monitoring process
c. right systems of support (information, technological,
financial, legal, and technical ones)

Compared to the business theory, which in its focus has efficiency,

the mission and niche analysis has effectiveness in its focus. It is
based on the following analyses:
• BENCHMARKING,
• SWOT,
• GAP.

The mission and niche analysis is based on “quality of design and

characteristics “, while its basis lies in interaction of the following
answers:
• Do we have necessary products and services required by the
final consumers?
• Do we know what is the strategic value for consumers?

Strategic Miss
(Nich
Thinking Anal

DEFINITION: “DESIG
Figure 25: Mission/niche analysis in the strategic reasoning
(Source: Ibid., VII-16)

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 LEADER IN MARKETING

The mission and niche analysis is the basis for answers to the
following question:
1. What is our niche?
2. What for we (our organization unit) undertake responsibility and
what other units are our partners?
3. Are we doing right things for right consumers?
4. Are we effective?
5. The high performance indicators:
a. quality of design and characteristics
b. consumer’s “values”
6. Analysis of key services and products:
a. have we correctly identified the products and services to be
delivered
7. Strategic values for consumers:
a. have we correctly identified who are our consumers now
and who should be our consumers both now and in the
future
b. are we in partnership relations with our consumers in order
to determine their desires and needs now and in the future
8. Environmental protection
9. Market analysis
10. Feasibility studies of trends.

By synthesizing business theory and mission/niche analysis we

synthesize all elements necessary for good strategic reasoning, thus
we may synthesize fundamental elements necessary in this process:
• Buyers,
• Products and services,
• Business strategies,
• Organizational structures,
• Work processes,
• Processes of support
• Equipment and plants,
• Technology,
• Information,
• People,
• competent enough,
• in development process
• feedback/training (360º)
• process of decisiveness (change of performances).

Based on leadership values in a dynamic marketing environment,

the HPO must repeatedly return to determining values and visions,
and base efficiency and effectiveness on results of strategic
reasoning. If the obtained result of strategic reasoning is an
effective strategic plan, out of which we get efficient operative
plans, then our business planes, which are the result of previous

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 LEADER IN MARKETING

ones, and the results emerging from the business plans will be
outputs of the highest possible performances.

To ensure long running of the concept, the feedback concept in the

HPO model should be shown. The feedback in the HPO model is
longer that classic feedback in an organization:

Commonwealth Centers DIAGN

FORHIGH-PERFORMANCE ORGANIZATIONS
HIG
ORGANIZATIONAL LEADERSHIP
PHILOSOPHY
 What Is/should be the organization’s/unit’s beliefs  What should be our organizational/unit “nature of work”
(as expressed in its culture, behaviors, and paradigm and Leadership Philosophy?
systems) about the following: • “Networked Talent” Model vs. “Industrial” Model
• The “nature of people” and their attitudes • “Leadership/Management/Task/Team Skills” as
toward work? “job” vs. ”Task-only” as “job”
• How are people motivated? • “Consultative/participative” leadership philosophy
• The distribution of knowledge and creativity? vs. “exploitative/benevolent autocratic” leader-
• The “nature of work?” ship philosophy

FUNCTIONS FORM
 Are the Functions of Leadership (as well as the  How and at what levels are problems solved and
“functions of management”) getting performed at all decisions made? How and at what levels should they
levels of the organization? What is the appropriate be solved/made? Is power shared appropriately in
content at each level? our organization/unit?
Figure
• Strategic Customer 26:
Value Feedback
Analysis (SCVA)in the 
HPO
Do wemodel
have organizational/unit “Change Mech-
(Source: Ibid., II-21)
• Vision/ValuesStrategy/Structure/Systems anisms” at all levels of the organization to ensure
• Suprasystems Integration/Stewardship that the “Work of Leadership” occurs appropriately
• Learning/Thinking/Changing/Renewing (an effective “Parallel Organization”)?
In most of common organizations the feedback
• Enabling/Empowering/Energizing  Do we have isa good
shorterbalancethan in “thinking” and
between
high performance organizations. Namely, the HPO feedback includes
“doing”? A good “handoff” between the two modes?
also the impact on the change of leadership, visions and values, and
This is theand
not only operative feedback
strategic plans. This is theThese are the “normal”
feedback that feedback loops
loop needed for they miss the leadership, vision, va
may ensure fundamental changes. It should be mentioned that the
fundamental change
feedback including the change of only tactic plans is even shorter
and may be even less favorable for an organization because it
contains changes in strategy, structure and system, as well as
ENVIRONMENT This loop also miss
changes
 3. in mission niche in which it is present.
ACCORDING TO WHOM ARE WE HIGH-PERFORMING? Conduct a Strategic Strategy/Structure
Customer Value Analysis (SCVA) looking at: Who are our customers and other
The stakeholders
common(foodcharacteristics of high
chain, beneficiaries, suppliers, performanceothers)?
collaborators/partners, organizations
 What do they “value” (wants/needs/expectations) now? In the future?Are 57 there
markedly
conflictingsuccessful on the market
wants/needs/expectations) among our forcustomers/stakeholders?
a long time are:Do we have
• structure with methods
effective/appropriate less fororganizational
setting priorities amonglevels
them whenand less hierarchic
necessary?
levels,
Do we understand the politics of our environment? TACT
•
 What other environmental changes/conditions are important for us?
larger unit autonomy, TIO
• orientation on products and services with higher added value,  Do we have a
• quality control, Plan connecting
performance pla

Bennis Warren G., ON BECOMING

57 GAP
A LEADER: THE LEADERSHIP CLASSIC –
UPDATED AND EXPENDED, Perseus between
 How large/serious is the gap our customers’/stakeholders’
Publishing, USA, p.174.
Action Plan
wants/needs/expectations and our performance? Between our
potential performance and our actual results?  Do we have clear
 What must we do to narrow the gap? “tactical” goals and
Page 112 of 184 objectives at every
level of the organi-
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alize our strategic p
 LEADER IN MARKETING

• services control,
• reliability,
• speed of innovation,
• flexibility,
• highly trained workers using both the brain and the hands
• leaders at all levels rather than managers.

5. Leading Change
For the changes to be successful, leading changes should have a
leadership approach. Given that the HPO model does not provide
enough information on the very change-leading process, it is
necessary to clarify this sphere as well and give one change-leading
model to have a rounded action plan. The book on leading changes58
by John P. Cotter, guru of leadership, was written on the basis of
articles published in the HBR. It was sold in 1,500,000 copies and
was the first book, as professor Kotter stated in the preface, written
without any footnote, because it is based only on his knowledge and
experience. It is an excellent guidepost for action plan of leading
changes.

According to all objectives measuring, the important, often

traumatic changes in organizations have lately tremendously
increased. Unfortunately, in many cases, the changes have failed
due to mistakes, and the most often ones are59:
1. A LOT OF SELF-SATISFACTION: the greatest mistake is the
attempt to change organization without a high level of need for
changes with collaborators.
2. FAILURE IN CREATING ENOUGH POWERFUL LEADING
COALITION: great changes are impossible if a top leader of an
organization does not accept them. However, if he accepts
them, an individual alone, regardless of his competencies or
charisma, has never enough power to overcome tradition and
inertia, except in very small organizations.
3. UNDERMINING THE SIGNIFICANCE OF THE VISION: a vision is
crucial in realizing necessary changes, in the manner that it helps
in inspiring people and directs their actions.
4. POENTIAL COMMUNICATION WITH FACTORS 10, 100 OR EVEN
1000: a great change is impossible unless majority of employees
does not want to assist, often along with short-running self-
denial. Without credible communication the visions of a leading
coalition will not capture hearts and souls of employees.

58
Kotter John P., LEADING CHANGE, Harvard Business School Press, USA, 1996.
59
Ibid., pg.4-14

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5. ALOWING BARRIERS WHICH BLOCK NEW VISION: sometimes

this is organizational structure, sometimes influential and well
positioned person who may block all efforts of changes.
6. FAILURE IN CREATING SHORT-RUNNING VICTORIES: the true
transformations are complex and require a lot of time. Many
people will not be a part of changes unless they see or celebrate
long-running victories.
7. ANNOUNCING VICTORY PREMATURLY: while the celebration of
the short-term goals is good, any suggestion that the work is
almost completed is an awful mistake. Until the changes do not
get deep in the company, which usually lasts 3 to 10 years, new
approaches are sensitive and breakable as glass.
8. FAILURE OF THE CHANGES TO BECOME A PART OF
CORPORATIVE CULTURE: changes bring about great moves
forward only if they become “this is our way of working”. Until
new behaviour does not become rooted in common values and
social standards of an organization, they may always be a
subject to degradation. These mistakes are not inevitable. With
due attention and skill they may be avoided. The key lies in
understanding why an organization resists changes and what
kind of leadership is required to achieve a success in the process
of changes.

Implementing successful changes is a process having 8 phases. It is

very important that all 8 phases are carried out in the following
sequence. The first 4 phases are in unfreezing status quo. The
phases 5 to 7 introduce a new practice while the last phase is in
rooting changes in corporative practice. A common mistake is in
jumping over the first 4 phases. Sequential running of phases is of
crucial importance, each phase must be 100% completed in order to
move on to the next one. The second mistake is in that many
manage changes while changes are not the job of a manager or a
leader. The successful transformations are 70-90% leadership, and
only 10-30% management.

Establishing a sense of urgency is the first phase of the

process and is crucial for establishing necessary cooperativeness.
With a dose of satisfaction with the present state the transformation
leads to nowhere, because people are not interested in changing
problems. A success in this phase is when the majority of
employees, at least 75% of them as well as the whole managers’
team believe that a change is absolutely necessary. To raise the
urgency level it is necessary to:
• Create crisis in such way to allow financial loss.
• Eliminate obvious elements of previous success (luxurious cars
and restaurants, etc.)

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• Set aims too high so that they could not be realized in a usual
manner of performing job.
• Separate as much people as possible from functional
performances and include them in business performances.
• Send as many as possible data on financial performances and
(dis)satisfaction of consumers with employees, particularly those
showing weaknesses in an organization.
• Insist on people speaking regularly with dissatisfied customers,
partners and shareholders.
• Engage consultants who will provide even more relevant data
and conduct discussions honestly at meetings of executives.
• Publish as many honest discussions on company’s problems as
possible in company’s newsletters as well as speeches delivered
by the executives.
• Bombard people with information on future chances and on
miraculous awards for capitalizing these chances.

Forming a powerful guiding coalition is the second phase.

The CEO alone, even if having royal prerogatives, will not succeed
in carrying out a change. A weak committee, of low credibility, will
be even worse. The first coalition must have:
• POWER OF THE POSITION: sufficient number of key executives.
• EXPERTISE: the people of necessary professions.
• CREDIBILITY: people with good reputation in the firm.
• LEDERSHIP: sufficient proven leaders to lead the process.
The coalition must be based on effective team work, must have
enough confidence and common goals. Confidence will be built
through many talks and activities as well as through carefully
planned events not related directly to the job. The goal must be
pleasant for ear and fascinating for soul.

Creating a vision is the third phase. Often, even incredibly

often, in the opinion of John P. Kotter, people try to transform
organizations by authoritative decree and micro-management
methods. Let’s imagine three groups of people sitting in a park on
the grass. In the first group one of them got up and said:”Get up
and follow me.” Since not all of them followed him he turned back
and said: “I said immediately!” In the second group one of them
said: “We should move aside, we will get up one by one and move
left. At bench we will count ourselves to see whether we’re all here.
Don’t leave anything on the grass. Therefore, take all of your things
and go to the bench…” In the third group one of them said: “It
seems it’s going to rain. We’d better take shelter in a little tavern
over there, and it’d be lovely to have a cup of coffee”. Isn’t it
obvious that the third approach is the best one? This approach is
based on a vision, an essential component of great leadership.
Leaders create effective visions, attractive images of future and

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strategy, logical roads of realizing visions. Managers based on

leader’s creations create plans, specific steps aiming at
implementing strategy and budget, plans converted in financial
expressions, and aims. A good vision has three purposes:
• Enlightening roads of changes.
• Motivating people to take action in a desired direction.
• Helping in coordinating action of various people, sometimes
thousand and thousand of them, very quickly and efficiently.

Communicating the vision is the fourth phase. Failure in the

first three phases of changes often creates problems in this phase.
When urgency is not high the people will not listen about a new
vision. When a leading coalition is not the right group of people they
will have problem in creation and sending certain messages. If the
very vision is not initiating, if it is too detailed or too general, in
short, if a vision is bad, it will not be “sold” easily. However, if the
first three phases have been greatly done, the leaders often “fall” in
this phase. Communicating vision of changes is incredibly
demanding job. The key elements of effective vision communicating
are:
• Simplicity of speech.
• Using metaphors, analogies and examples.
• Abundance of forms: big gatherings and small meetings, formal
and informal encounters, newspapers and speeches of
executives.
• Repeating, repeating, and repeating.
• Leadership by example: behaviour of top people must be
consistent with new vision.
• Explaining visible deficiencies (new mahogany furniture is not
necessary).
• Two-way communication.

Empowering others to act on the vision is the fifth phase of

this process. The barriers in training workers, the process in which
they get chance and possibility to free their work, are:
• STRUCTURES: formal structures of organization make them
unable to act.
• SKILLS: a lack of necessary skills mines actions.
• SYSTEMS: information systems and systems of labor relations
make the process of changes impossible.
• SUPERVISION: the executives discourage actions directed
towards their implementation.

In the above cases the employees understand visions and want to

make them real, but they are in a “closed box”. To avoid this,
leaders should:
• Communicate sensible vision with employees.

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• Make structures compatible with a vision.

• Enable training necessary for the employees.
• Adjust information and personal system with visions.
• Confront with executives undermining necessary changes.

Planning for and creating short-terms wins is the sixth

phase. The impact of short-terms wins, and victory based on them,
on business transformation is great, which many examples taken
from the practice show. The transformation is not a process
exclusively relaying on leadership but a good management is also
crucial. It is necessary to balance of these activities, while the
realization of short-running goals is a measurement of a good
management success. The short-running goals give the necessary
feeling of security to people that the results of changes come, that
they are planned in a long-term process of changes. The role of
short-terms wins would be:
• Providing proofs that sacrificing is useful.
• Awarding agents of changes with intensified credibility.
• Fine adjusting of visions and strategies.
• Undercutting cynics and those resisting changes.
• Uniting leader’s teams because there are evidences that the
transformation is on a good road.
• Creating momentum: the neutral ones become supporters, while
the supporters become active bearers of changes.

Consolidating improvements and producing still more change

is the seventh phase. Irrational and political resistance to changes
never completely ceases. Whenever the job is given up before
completely done, the critical momentum is lost and followed by the
regression. This is directly linked with increased interdependence of
all parts of an organization creating dynamic environment changes.
This interdependence makes it difficult to change anything if all is
not changed. And this is a crucial truth: the changes of
interdependent systems are extremely difficult, because they
require almost all to be changed. The effect in practice means that
more changes will take place than it could be imagined at the
beginning. This phase will be successful and the great changes will
take place along with the following moves:
• More changes and not less changes: the leading coalition, based
on the achieved credibility on the basis of short-running
victories, will take over additional and greater projects of
changes.
• More assistance: promote active bearers of changes, bring
additional people if you need their expert knowledge.
• Top level leadership: a top level is focused on visions; it
communicates visions and explains them. It maintains the level
of urgency constantly high.

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• Project management and lower level leadership: a lower level in

hierarchy ensures leadership for specific projects and manages
these projects.
• Reducing necessary interdependence: makes changes easier, the
managers discover the unnecessary interdependence and
eliminate it.

Institutionalizing new approach in the culture is the eighth

and the last phase of this process. The culture comprises
behavioural standards and common values of a group of people.
The behavioural standards are the usual manner of acting adopted
by a group and they are resistant because the members of the
group try to behave in a way they are used to and try to teach new
members of the group these standards, awarding those adopting
them and punishing those who don’t. The common values are
important interests and goals of most of the people in the group and
they tend to be constant in time even when the group members
change. The cultural changes come last, while anchoring changes in
the culture has a powerful effect, because the culture is powerful
out of the following reasons:
• Because the individuals are chosen and indoctrinated so easily,
and effectively,
• Because the culture runs through actions of hundreds and
thousands of people.
• Because all this happens without much awareness on what is
going on and therefore it is difficult to resist this, sometimes
even to discuss.

The changes will be a part of culture if they:

• COME THE LAST NOT THE FIRST: this is the end of
transformational process.
• DEPEND ON RESULTS: new approach will be a part of culture
only if it is crystal clear that they are superior with relation to old
methods.
• REQUIRE A LOT OF TALKING: without verbal instruction and
support, people often refuse to accept new practice.
• MAY REQUIRE A TURNAROUND: sometimes the only way of
changing culture is in changing the key people.
• NEW DECISIONS ARE MADE CONSECUTIVELY: if the process of
promotion within the organization is not changed in order to be
compatible with new culture, the old culture will survive.

A research60 analyzed 377 of the Fortune 500 companies that

underwent dynamic fall of activities because of external factors such

60
Rigby Darrell, Moving Upward in a Downturn, HARVARD BUSINESS REVIEW
ON LEADING IN TURBULENT TIMES, Harvard Business School Press, USA,
202, pg. 1-19

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as recession and instability of economic branches.

The author of this research, Darell Rigby, explains that every cycle
has three phases but also, which is more important, two
approaches, the conventional approach and the new one, the so-
called counter approach, the approach appropriate to the leadership
philosophy and high performance organization behavior in network
talent model:

PHASE CONVENTIONAL COUNTER

APPROACH APPROACH
False conviction that a Building culture which
company/industry is is ready for all
safe from changes. surprises.
STORM CLOUDS ON *
HORIZON Diversifying in hope *
that the gains in other
activities will cover By focusing on major
major activities. activity, we play on
victory, there where
we’re the strongest.
Reducing expenses as Treating partners as a
if tomorrow does not friendly army stuck in
exists. the same trench
AMID STORM together with us.
* *

In the budge for “Loose a valet” if that

acquisition written is helps major activity.
0$.
Quickly forget that the Don’t start all
THE SUN RISES ON times have been bad engines: start slowly
THE HORIZON and urgently return to and prepare yourself
the old way of living for higher growth rate

Figure 27: Two approaches to changes in an environment

(Source: Rigby Darell, Moving Upward in a Downturn,
HARVARD BUSINESS REVIEW ON LEADING IN TURBULENT TIMES
Harvard Business School Press, USA, 2002, pg. 5)

The picture of the organization of the future is61:

1. Consistent sense of urgency.
2. Team work on the top-level.
3. People creating and communicating visions.
4. Broad training.
5. Delegating management for short-term performances.
61
Kotter John P., LEADING CHANGE, Harvard Business School Press, USA, 1996,
pg.161-73

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6. Without unnecessary interdependencies.

7. Adaptable corporate cultures.

The best for all of us is to start to learn how to cope with changes,
develop all leader’s potential we have and assist our organization to
start the transformation process. The sooner we do that the better
it will be. The leaders who want to develop themselves, learn, be
bearers of changes – these people are led by the sense that what
they do is good for themselves, their family and their organization.
The people who make changes to “catch” the future are much
happier than the people caught by shadow of the past. We need as
much as possible the people of changes. They are leaders of the
21st century.

6. Examples of Successful HPO Model

Implementation
6.1. Johnsonville Sausage
In 1980 the long-standing successful family firm JOHNSONVILLE
SAUSAGE made a turnaround towards an HPO62. Till then the firm
grew 20% yearly, the profit was above average for the industry,
sales were excellent, and quality was high. They were a respected
firm and they made a lot of money. However the owner felt nausea,
because of competition and environment. The firm was too big to be
a local manufacturer, and too small to be a national one. The most
important was that the owner Ralph Stayer felt gap between the
potential and performances. Until then he had opinion that the
workers could not be dedicated to the firm as he was, given that he
was the owner. And indeed they weren’t.

Then the changes began to take place, starting from the Owner. He
asked himself what the objectives of the company actually were and
understood that he alone could not give an answer to than question.
When he imagined a company selling the most expensive sausages
in the industry and having the greatest share on market, he did not
see the company in which where he alone made decisions, but an
organization where all workers undertook the responsibility for their
work, products and for the company as a whole. He saw the
organization as a flying flock of geese.

Firstly, a survey on workers’ viewpoints towards related to their

jobs and the company. The results were average. The Owner began
62
Stayer Ralph, HOW I LEARNED TO LET MY WORKERS LEAD, ”Harvard
Business Review”, USA, November - December 1990, pg. 62-83.

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to look for excuses, but he soon realized that the methodology was
not to be blamed for the fact that the workers did not feel anything
towards the company. He understood that the organization is like a
herd of buffaloes following blindly their leader, namely Owner. He
summoned the manager’s team and said: “As of today you will
make decisions by yourselves.” After two years of such work the
Owner understood that his managers could not meet new
requirements. He sacked them all. Afterwards he understood that
he himself did not want them to make decisions by themselves but
the decisions he would like them to make. Also, in these two years
while making a new organization they started from a detailed plans
and procedures, which should show in detail who was responsible
for what. The plans were logical, but simply did not give any effects.
Briefly, a catastrophe.

The Owner understood that he had to be an instructor63, to learn the

art of training, which essentially means communicating visions and
training people to understand own behavior, own frustrations and
own problems. He asked the workers:” What is your greatest
problem?” and got an answer: “We don’t like to work on weekends!”
Then he told them: “Let’s make a chance out of the problem, it is
not important when but how much you work.” And they did it, they
alone. The machine idling of 40% was by better organization of
workers reduced to 10%. They did not work on weekends by the
results were better. The people began to self-manage, but the
Owner still managed the system and structure. This would be the
next to change.

Firstly, the quality control system was introduced, the key system of
business success and competitive advantage. The people were not
encouraged to produce high performance sausages, because the
quality was the responsibility of a separate division and high
executives. The owner learned the following: the first strategic
decision he had to make was who should make decisions. The first
line of workers was told: “Since now you are responsible for
sausage quality and you alone are to make the quality system
control you want to have.” They did it and the results were
surprisingly good. The team collected information, identified
problems, worked with suppliers and other line workers on
developing and implementing solutions, even visited retail facilities
to learn what problems or remarks the salesmen and consumers
had. The percentage of sausages of unsatisfactory quality in the
process of production fell from 5% to 0.5%. The workers’ teams
63
Training is, according to the definition, a process of posing effective and
provocative questions which enable the trained to identify and analyze the key
problems and issues and to find out new alternative approaches and questions for
himself. The question should not be an accusing question but a question enabling
learning: open, sensitive, reflective, researching, analytic …

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began every morning to carry out product organoleptic testing and

search for solutions for possible improvement. They asked for
information on expenditures and on opinions of consumers, so the
information system was redesigned to allow such data. In time, the
people asked for more and more obligations. They asked
information on labor costs, efficiency and income. They were
furnished with the information and were solving them. Every
morning they made ever greater progress and found deeper and
more complex problems. Soon they undertook obligation to manage
all performances, including also managing of performances of each
individual worker separately. The results were a dramatic change
for better. They said that selecting and training workers caused bad
performances. They took over selecting – employing and dismissing
– and training for themselves. The next change was in the system
of wages. The old system rewarded continuity in the company, the
new rewarded performances. The fixed profit percentage was
additionally established and called “share based on performances”,
which was divided amongst the workers by themselves every six
months. The Owner stopped eating sausages at morning meetings
and visually they all knew that they alone were responsible for all
related to them.

LEADERSH
JOHNSONVILLE SAU

We, here at Johnsonvi

to become the be
Figure 28: Company’s Mission
(Source: Pickering John W., Brokaw Gerald S., BUILDING HIGH-

established. We will a
PERFORMANCE ORGANIZATIONS FOR THE TWENTY-FIRST CENTURY,
Charlottesville, VA, USA:Commonwealth Center For High Performance
Organization Inc.(Unpublished Participant Text) 2003, SM-47)

us becomes better tha th

best interest of all tho Page 122 of 184
 LEADER IN MARKETING

The change in structure was almost automatic. The teams

undertook the jobs of the right-line managers and then of top-level
managers. The teams made decisions on budget, capital
investments, sequence of obligations, standards, tasks,
performances… The traditional Personnel Department was replaced
with a Training and Personnel Development Team. Today, 65% of
people in Johnsonville are included in some kind of formal
education. Everything is learnt – from accounting, engineering and
marketing to Italian cooking and kite gliding. Learning is a change,
should be unceasing, the continuity in learning is necessary. The life
is an inspiration. Helping people to free all their potentials is morally
a very good thing, and great for business. The Owner said to
leaders’ team; “Talk to me as to consultant and call me whenever
you need me”. One morning the Owner found a message by a
leaders’ team on his table:”I need you at 8:15 hrs”. At first he was
angry… and then he was aware that he succeeded.

The “pay off”64 came in five years, when Johnsonville was offered a
big contract for which the Owner did not believe the company could
fulfill. In the old system he would refuse it immediately, but in the
new system he presented it to all workers. All teams started to
communicate mutually and in two-week time the workers decided –
the contract was accepted. They decided to employ and train new
workers, raise efficiency and effectiveness and work seven days a
week.

The sale, quality and profit were far greater that one could expect in
1980. The people were aware that their greatest enemy was the
success in the past and learned that a change is the right deal of
any effective business because the change related to today and the
future was not related to the past. No end for changes.

6.2. Charleston Naval Shipyard

The American Naval Shipyard in Charleston65 existed already 100
years when in March 1991 Captain Tom Porter (now Admiral) took
over command. In the work until that moment the orientation
towards the Shipyard’s buyers was choose two. Choose two meant
that the Shipyard could deliver a quality product by either faster
delivery or lower costs, but not all three simultaneously. In 1991
the Navy decided to implement in all three shipyards the business
strategy more oriented to buyers: project management (PM), and

64
Teal Thomas, The Human Side of Management, HARVARD BUSINESS
REVIEW ON LEADERSHIP, Harvard Business School Press, USA, 1998, pg. 161
65
Porter Tom et al., BUILDING HIGH-PERFORMANCE ORGANIZATIONS FOR
THE TWENTY-FIRST CENTURY: LESSONS FROM CHARLESON NAVAL
SHIPYARD, Project Management College, NAVSEA07, USA, January 1995

Page 123 of 184

 LEADER IN MARKETING

simultaneously the advanced industrial management (AIM). Porter

was assigned to do the following:
1. Reduce number of workers from 8,000 to 6,500.
2. Implement PM/AIM.

Porter restructured his assignment through three processes of

changes by:
1. Creating high performance organization.
2. Implementing the PM/AIM.
3. Improving relationship between workers and managers.

V
Charlesto

Our vision is to be th t
Figure 29: Company’s vision
(Source: Porter Tom et al., BUILDING HIGH-PERFORMANCE
ORGANIZATIONS FOR THE TWENTY-FIRST CENTURY: LESSONS FROM
CHARLESON NAVAL SHIPYARD, Project Management College, NAVSEA07,

customers. In achievi
USA, January 1995, pg.2-32)

In January 1992 a three-day HPO seminar and fife-day workshop

which we are proud an

for improving team skills commenced. The first training commenced
with the top team of the organization. Leader’s teams were also
formed at all levels and the training commenced. In April the

an opportunity to c
education and leadership development began. Also, the new PM/AIM
approach was implemented. The core of this approach was that the
team members building vessels were responsible for all aspects:
quality, delivery speed, relations with buyers, and budget. The first

advance based on me
two PM/AIM teams, which created the HPO, were responsible for
building two nuclear submarines. The first one that was built was
completed with 35% lower costs than standard of other shipyards

treated fairly, listened

and they saved 9 million dollars to Navy. The total of 22 other

we want personal
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 LEADER IN MARKETING

vessels/projects were built when the Shipyard was awarded the

price of the Ministry for their exceptional contribution to the growth
of national defence at high money savings of taxpayers.
Immediately after his arrival, Porter, first alone and then along with
the assistance of other managers, initiated intensive talks with
trade unions. In May 1992, the tension that appeared at the
beginning of the process because of redundancy totally
disappeared, and all groups agreed that they had built consensus on
future relationship and actions.

V
Charlesto
LEADERSHIP is the responsibility of e
clerks and mechanics to the highest lev
each person in ensuring that we live an
Figure 30: Company’s values
(Source: Porter Tom et al., BUILDING HIGH-PERFORMANCE
ORGANIZATIONS FOR THE TWENTY-FIRST CENTURY: LESSONS FROM
CHARLESON NAVALTRUST, SHIPYARD,based on mutual
Project Management
USA, January 1995)
respect and trut
College, NAVSEA07,

accountability, and a recognition that we

The HPO model applied in the Shipyard, explained in preceding
Chapter, emerged solving problems,
on the basic and
postulate of the author responding
of the model
according to which the most important for managers is a clear and
to chan
concise concept support.
of the model synthesizing comprehensive
theoretical knowledge on building high performance organization,
HUMAN DIGNITY and FAIRNESS in t
with diagnostic tools which may have a practical application in
understanding their own organizations. The HPO model has
opportunity to contribute, learn, grow, an
contributed to the shipyard to realize 3+ approach:
• Superior products and/or services,
and celebrate success, never missing a ch
• Focus on delivering high values for consumers, and
• Good financial performances.
UNQUESTIONABLE ETHICAL STAN
In April 1996 the Shipyard was closed. The reason for closing was
the important business of this shipyard. P
the change in national navy strategy – reducing building of new

OPENNESS marked by clear

Page 125 of 184 communica

performance must support those goals; an

 LEADER IN MARKETING

vessels from 600 to 340 vessels yearly. Which of the shipyards were
going to be closed was not decided on the basis of their
performances and results but on the basis of territorial distribution
defined according to the changed global strategy.

The lessons to be learnt from this case are:

1. The first and most important lesson is that establishing an HPO
does not grant automatic survival.
2. The second lesson is that training is only a tool in the process of
changes, it neither causes them nor may be their substitute.
3. The third lesson is that a mechanism of changes is in leaders’
teams created on the basis of the job nature. The team success
in achieving an HPO was in the ability of a leader to base his
work in, for us already known, K2 leadership square. The
contribution of external consultants was also important.
4. The fourth lesson is that improvement of relationships between
workers and managers is of crucial importance.
5. The fifth lesson is the importance of awarding system change.
6. The sixth and final lesson: experience from Charleston confirmed
that the program of changes focused on organizational
strategies, structures and system, and without previously defined
high performances, leadership approach and articulation vision
and values have marginal value.

6.3. Local Government HPO

The results of researches show that some leaders, because of the
situation in an economic branch and because of environment, while
leading their firms incline to the non-democratic styles of rule. In
their case this may be justified because it is temporary due to
momentary situation in the branch, and latest until the company
becomes endangered due to the changes in the environment.
However, in the policy of a democratic country, although some
researches would show that all leaders do not have democratic type
of rule, particularly in traditional societies, it could be said that this
might never be justified. The democracy is the best existing type of
rule and it must be practiced at all levels of power, at the local level
as well. Its effectiveness has been proven so far.

Just like the HPO model of an economic organization, the HPO of a

government is also based on values and visions, but in this case the
values are given beforehand – and these are democratic values. The
local community political and administrative logic must be taken
into consideration in the HPO of local authorities. All actors of public
services based on democratic principle of power should choose the
set of their jobs on the following political values:

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 LEADER IN MARKETING

1. REPRESENTATION. The elected body is a chosen representative

of citizens. Therefore, the citizens’ will must be represented
through the actions of the body.
2. EFFECTIVENESS. The citizens expect to be governed wisely and
reasonably. Such relation must be felt through the results of
public services and companies’ work – their work and outputs
must be highly effective.
3. INDIVIDUAL RIGHTS. A citizen must strongly feel that the
authorities in communication with him, or through decision-
making, are not violating his constitutional rights and freedoms.
4. SOCIAL EQUALITY. The citizens are often addressed to as a
certain social group, and not as an individual. All groups of
citizens must have equal treatment by local authorities.

A vision of local authorities of high performance must be tightly

linked with the communal strategies. If the leadership philosophy is
adopted at all levels in an organization, as well as at the level of
teams and each individual separately, we come to the model of the
local authorities or local government HPO. I would like to emphasize
that it is crucial for the model to be funded on democratic values.

Figure 31: Local government High performance organization Indivi

(Source: Roberts Deborah D., DELIVERING ON DEMOCRACY: HIGH
PERFORMANCE GOVERNMENT FOR VIRGINIA, “University of Virginia
NEWS LETTER”, Vol 71, No.6, USA, 1995, pg.9)

The duality of power at local levels is usual in all democratic

countries: legislative (or political) and executive power. It is also
the case in our system, along with all changes in legislation. More

CO
MM
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 LEADER IN MARKETING

stable and effective democracies strengthen the executive power

and leave it to professionals. The art of dealing with public services
at this level has been since long ago studied as profession at foreign
universities. However, it this case there is a gap in knowledge and,
most likely, in skills between the professional and political power,
namely appointed and elected power in our political system of local
self-governance, shown in figure 32:

Gap between t
po
Much

Figure 32: Appointed and elected persons in the local authorities

Appointed
LEARNING

HPO (Source: Senior Executive Institute, University of Virginia, 2003,

participants materials)

For the elected body to be a high performance body it should

persons
necessarily move from its political convictions (politics) towards the
guidelines of acting (policy). The elected body needs assistance
from professionals to be able to accept long-running visions.
Without that, this form of rule is vulnerable. When the final picture
of desired state is shaped, by maintaining constant creative tension
between the momentary reality and desired goal, all will be on the
road of accomplishing high performance. This leadership concept
“all hands together” is realized in three phases:
1. Forming strong working linkage.
2. Building collective image of the community future.
3. Developing principles moving visions.
4. Choosing effective operative guidelines.
5. Including citizens in the process.

The work process is to commence as soon as the “dust settles” after

the elections. The focus should be on a vision, on the desired future
Little
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 LEADER IN MARKETING

status. The democratic values are the base. The difference in

motives should be understood, the politicians are interested in being
elected again, and the professionals in keeping their jobs. “Building”
politicians along with unselfish participation of all the appointed
persons and professionals, the full participation in work will be
achieved because all of them will work in the same goal, fully
sustaining their motives. Firstly, a link between the work and
assignments is to be established, respecting the fact that the
development strategy framework is a job of politicians, and after
that the citizens have to be included. It is important to make visions
acceptable by the citizens. Obviously, the well-known thesis on
necessity of both leader’s and the manager’s work is repeated here.
The leadership concept “all hands together” allows stable and
positive development of the community in the future.

The local authorities and every power have since long ago been
called public services. Unless the holders of power do not accept
their role in the power only as a common job, but make use of it to
serve high ideals of democracy, freedom and equality in the same
way as they would serve interests of their co-citizens,
acquaintances and friends, their mission will be remembered as a
good and successful one.

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 LEADER IN MARKETING

V LEADERSHIP IN THE HPO MODEL

1. Philosophy of Leadership
Firs of all, it is necessary to underline the necessary change of
paradigm in the philosophy of leadership. The new philosophy is
required because of the new convictions of individuals and
organizations related to the nature of people and their relation
towards the jobs, primary source of motivation, distribution of
knowledge and creativity in an organization based on decision
making and related to designing and assigning tasks. An
organization has to change its culture from an “industrial model”
with typical autocratic leadership towards a “network talent model”
with participative, democratic leadership. Thus, the questions to be
answered are:
1. What does an organization, a system within the organization,
believe (with relation to people) THE NATURE OF PEOPLE AND
THEIR RELATION TOWARDS THE JOB is?
2. What do we believe the PRIMARY SOURCE OF MOTIVATION of
most people is?
3. What is the relation towards the DISTRIBUTION OF KNOWLEDGE
AND CREATIVITY and, therefore, HOW THE DECISIONS ARE
MADE?
4. What do we believe the JOB NATURE is?

As for the nature of people and their relation towards the job, the
autocrat leadership philosophy is based on a presumption that
people like to work, that they are not ambitious and they do not
want to be responsible. The coercion and control are necessary in
order to perform a job. The new philosophy is based on an
presumption that the work is primeval man’s need, that people
want to be a part of something important and on equal footing.
Self-control is more effective than external control.

As for primary source of motivation, the old philosophy is based on

Maslow’s lower levels of needs and Hertzberg’s hygienic factors
respectively. The democratic leadership philosophy sees the
motivation sources in Maslow’s high levels of needs and in
Hertzberg’s motivators respectively.

The distribution of knowledge and creativity, namely decision

making, in industrial model are based on the philosophy that
knowledge and creativity are concentrated mainly on the top of

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organization, that the top-level managers are experts and they

know the best which decisions are to be made, without consulting
lower levels in the organization. In the network talent model the
knowledge and creativity are widely distributed through the
organization, those closest to people holding functions know the
best how they see them and how they improve them, while
consulting is necessary to reach the best decisions.

Related to the job nature, the old philosophy is based on

presumption that the job is best done if divided into simplified
tasks, where management is obliged to unite them. The work is
what an individual does by alone, the award is based on competition
between the workers. The new philosophy is based on presumption
that the job has surpassed the individual and the network of
educated and stimulated collaborators is required for the task to be
performed. The award is based on cooperative team performances.

The research of motivation in the HPO model is based on works of

Maslow66, Hertzberg67 and Emery68. These authors have recognized
two kinds of employee’s motivation factors:
• MOTIVATORS: factors related to business satisfaction and
motivations, and
• HYGIENIC FACTORS: appropriate level of these factors may
prevent dissatisfaction, but they alone are not “motivators”.

Maslow is known by studying motives and needs they satisfy.

The motivators for Maslow are:
• Development (self-actualization)
• Respect (Ego-status)
while hygienic factor for Maslow are:
• Belonging,
• Security,
• Basic survival.

Hertzberg has studied goals and goal stimulation. The motivators

for Hertzberg are:
• Interesting and demanding jobs,
• Responsibility,
• Achievement,
• Recognizing,
• Professional growth,
• Promotion to higher levels,
while hygienic factors for him are:
• Wages and allowances,

66
A.H. Maslow, Motivation and Personality, Harper & Row, New York, 1954.
67
F. Hertzberg, Motivation to Work, John Wiley, New York, 1959.
68
F. Emery, Report on the Hunsfoss Project, Tavistock, London, 1964

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 LEADER IN MARKETING

• Feeling of security,
• Interpersonal relations,
• Status,
• Working conditions,
• Quality of control,
• Organizational policy and fair administration.

The Emery’s field of study is a job design. The job motivators

according Emery are the following:
• Diversity and challenges,
• Decision making,
• Feedback and learning,
• Mutual support and respect,
• Feeling of comprehensiveness,
• Possibility of growth,
while hygienic factors are:
• Honest and adequate salary,
• Job security,
• Allowances,
• Security,
• Health,
• Process of recognizing.
The most important authors whose works are the basis for
designing HPO model in the leadership philosophy are McGregor69 ,
Block70, and Likert71.

The theory X and theory Y by McGregor have been the basis for the
development of behavioral science. He alone has believed that the Y
model is appropriate for most of the people.

According to the X theory:

• Work is for most people mostly unpleasant.
• Many people are not ambitious, have little desire for
responsibility and want to be directed.
• Many people have little competencies for solving organizational
problems.
• The motivation is based on physical needs and need for security
(according Maslov).
• Many people must be directly controlled and must often be under
coercion in order to accomplish organization’s objectives.

According to the Y theory:

• Work is a natural game, if the conditions are favorable.

69
D. McGregor, The human Side of Enterprise, McGraw – Hill, New York, 1960
70
P. Block, The Empowered Manager, Jossey – Bass, San Francisco, 1991
71
R. Likert, The Human Organization, McGraw – Hill, New York, 1967

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 LEADER IN MARKETING

• Self-control is often necessary in achieving organizational

objectives.
• Competency for solving organizational problems is widely
represented in population.
• Motivation is based on social needs, self-respect and self-
actualization just like it is based on physical needs and need for
security.
• The people are not to be managed. They may be creative if
adequately motivated.

It is obvious that the HPO model and democratic network talent

organization are based on the Y theory.

Block dealt with the so-called cycles and his studies has brought
about bureaucratic and entrepreneurial cycle. They are in opposite
poles. The Block’s entrepreneurial cycle has coincided with the
democratic leadership philosophy:
• THE INTREPRENEURIAL CONTRACT SEES that:
◊ each person has authority; individuals are responsible for
their actions and for organization’s success; the
management is focused on the purpose of organization and
helps in creating culture,
◊ self-expressing is necessary to free human energy, passion
and motivation,
◊ vision and values are the basis for responsible actions of
individuals,
◊ people are loyal to the organization because they want, and
not because they have to.
• ENLIGHTENED SELF-INTEREST:
◊ success is defined as giving contribution, working something
important, being helpful to the colleagues and customers,
integrity is of primary, while awards are of secondary
importance.
• AUTHENTIC TACTICS:
◊ communication is direct and honest; information and control
are divided; people have feeling of belonging.
• AUTONOMY:
◊ we feel that our existence is in our hands; we undertake
responsibility for our situation and for the future.

The block’s bureaucratic cycle is related to the authoritative

organization, formally and strictly worn out and inflexible in terms
of hierarchy:
• PATRIARCHAL CONTRACT REQUIRES:
◊ subordination to higher authority; the top-level knows
better; the management is autocratic, control is centralized;
hierarchy

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 LEADER IN MARKETING

◊ impossibility of self-expressing; be careful,

◊ sacrificing for the benefit of unknown award in the future,
◊ anticipated disloyalty towards the contract.
• SHORT-SIGHTED SELF-INTEREST:
◊ success is defined as gaining personal benefit – advancement,
authority, benefit and “corporate jewellery”.
• MANIPULATIVE TACTICS:
◊ autocratic cultures and personal ambition support selfish, careful
and indirect behavior; manipulative; based on control of people.
• DEPENCENCE:
◊ we feel that our existence is in hands of others; our situation
depends on decisions of others and their relation towards us.

However, the best theoretical and practical value is found in Likert’s

organizational system having four basic and one “gemischt”
systems which may even not be called a system:
1. EXPLOITATIVE AUTOCRATIC,
2. VOLUNTARY AUTOCRATIC,
3. CONSULTATIVE,
4. PARTICIPATIVE.
5. LAISSEZ FAIRE (ZERO SYSTEM)

LIKERT ’S ORGAN
LIKERT’S
SYSTEM 1 SYSTEM
(Exploitative (Benevole
Autocratic) Autocrati

EMPLOYEE Security Status

MOTIVATION Money

Figure 33: Table of Likert’s organizational systems

(Source: Pickering John W. Brokaw Gerald S., BUILDING HIGH-
PERFORMANCE ORGANIZATIONS FOR THE TWENTY-FIRST CENTURY,
TEAMWORK None
Charlottesville, VA, USA: Commonwealth Center for High Performance Little
Organizations Inc. (Unpublished Participants Text), 2003, III-9)

COMMUNI- DownPage 134 of 184 Mostly

CATION Only Down
 LEADER IN MARKETING

The zero system is called a system because it contains mixture of

everything: one element operates at the level of consultative
organization (say communicates), while the other is based on
authoritative organization system (say the team work). In such
cases we have the “sickest” organization.

In the first, exploitative system, the philosophy is based on the

following: people are seen as being lazy and selfish, while the policy
of the organization is exploiting. The people are motivated with fear
to loose a job or salary. Knowledge, competencies and creativity are
concentrated in hands of top-level managers. The work is strictly
controlled, every 6-8 workers have supervisor, every 6 – 8
supervisors have a manager, hierarchy is highly explicit. The
relation between the manager and workers is similar to the one of
slaveholder and slave, a worker is not important for existence of the
organization.

In the other, voluntary autocratic system, the philosophy is based

on the following: the people are seen similarly as in the first
system, however, the policy is not exploiting. The people are
motivated, besides the fear and salary, also by their status in the
organization. This organization usually has a lot of advancing levels
and a lot of high-sounding titles. The knowledge, competency and
creativity are still concentrated on the top-level, however,
confidence in knowledge of some technical collaborators is shown.
The work is broken into a number of assignments, with a manager
being obliged to ignore them. The relation between a manager and
a worker is similar to the boss and servant relation, namely is based
on distrust.72

In the third, consultative system, the philosophy is based on the

following: people are desirable, even needed for good jobs to run.
Well dressed, they will accomplish their assignments well and
without external control. When the “hygiene” factors are met the
motivation derives from the job – high demands, growth,
acknowledgement and contribution. The knowledge, competencies
and creativity are widely represented in the organization, the
management has no answer to all questions, so that consultation is
a standard for decision making. The work is considered as a
complex process, and the management is responsible for creating

72
In a TV serial the “Star Tracks” captain Kirk is an example of an S2 (voluntarily
autocratic) leader. In a critical situation, for instance, Klingons attack and the
shield will endure another two minutes, Captain Kirk takes the control over the
situation, issues clear commands and saves the vessel. He is a “good parent”, we
are convinced that he has clear vision because of the importance of his function,
while obedient crew is in the role of “good children”.

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 LEADER IN MARKETING

organization’s culture. The relation between managers and workers

is the relation of an adult towards another adult.73

In the fourth, participative system, the philosophy is based on the

following: people have status as in the third system. When
“hygiene” factors are met the motivation derives from jobs –
demand, growth, acknowledgement and contribution. The people
are considered as being broadly trained and creative, so the job of a
manager is transferred into assignments of a team, which naturally
has the leader’s and manager’s role. The work is considered as
being complex, the teams are responsible for technical, manager’s
and leader’s performances. The relation between manager and
worker is the relation between an adult towards another adult, while
the job of leader is training and equalizing.

The practical value of this model is in that the upper systems are
the basis for examining organization - in which system it actually is.
The less consultative organization should represent a benchmark for
the HPO organization, and it is desirable for it to gradually get
changed in order to adopt philosophy and standards of a
participative organization. Based on leader’s assessment it is
estimated to which system the organization belongs, or, if the
answers are dispersed in various systems, then such organization
belongs to the zero system, which could not be called an organized
system but a mixture of everything. The zero system is convincingly
the system with lowest performances. Also, leaders answer to the
question in which organization they would like to work, by which
their competency to lead participative or consultative system is
tested. It should be mentioned that the fourth system is still rare in
the very United States. Besides assessment by leaders, the
assessment by collaborators is also carried out – assessment of the
existing and desired system.

The leadership philosophy is a guidepost for the nature of people,

their motivation, distribution of knowledge, creativity, and
responsibility. It should be a guideline in leading an organization. In
the philosophy of HPO leadership the new thing is that it is based on
full empowerment and alignment of all in an organization. It
contributes to wipe out the hierarchic levels in an organization and
to new motivation of employees. By considering an organization as
something common to all in it, the full potential of its team

73
Twenty years afterwards, in continuation of the serial “Star Tracks” – new
generations (Star Tracks: New Generation)in moments near the catastrophe,
when Romuls attack (now Klintons are allies), Captain Pickard, an S3
(consultative) leader, gathers the crew for consultations. For the best possible
decision, he needs an input of skillful and a highly trained crew. In the most
cases, the decision is a common one, in case of disagreement, Captain Pickard
takes over the control and makes a decisive decision alone.

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 LEADER IN MARKETING

members is released and leadership adopted by all collaborators in

the organization.

2. Leadership Functions
The leadership functions are focused on “leadership job”, NAMELY
ON WHAT A LEADER ACTUALLY DOES. The leadership necessary for
the HPO model is the leadership represented at all levels in an
organization, each worker must contribute to leadership functions
for an organization to be successful. The function of a leader is to
find in each job the right answers per the following items:
• STRATEGIC CONSUMER’S VALUE ANALYSIS (SCVA)
• VISION/VALUES  STRATEGY/STRUCTURE/SYSTEM
• INTEGRATION OF SUPRASYSTEMS/STEWARDSHIP RELATIONS
• KNOWLEDGE/OPINION/CHANGE/RENEWAL
• ENABLE/TRAIN/INCOURAGE

Strategic consumer’s value analysis should give answer to the

following question:
1. Who are and who should be our buyers and consumers?
2. What do they appraise (want/need/expect) now and what will
they appraise in future?
3. Who are our competitors and how do they affect us?
4. What is happening in the environment and how this can affect
us?

The linkage of vision and values with the strategy, structure and
system should enable awareness of the following answers:
1. What are the high performances for us, which are the higher
moral values we serve and what is for us the desired future of
the organization’s higher levels?
2. Are visions and common values for a business unit defined and
applied, are they harmonized with visions and values of
organization’s higher levels?
3. Strategic thinking: does the interaction between the
mission/niche analysis and “business theory” result in strategic
plan and are the operational plans based on it which result in
increase of performances elaborated?
4. Do the values of business unit/organization allow the values
(leadership philosophy, individual values, operative system
values) to be action values (focused on the necessary and
forbidden behavior) in order to be incorporated in the business
culture?

Integrating Super-systems and stewardship relation understand the

following:

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1. Tighter linking of organizational parts into togetherness to allow

the realization of a vision.
2. Stewardship role is required from an individual, to serve
togetherness. One should act as a “host of a whole” and not as
an “owner of a part”.

Knowledge, opinion, change and renewal represent:

1. Personal learning, renewal, growth and change; demanding and
using personal feedback.
2. Be on the “edge” of new knowledge both personally and
organizationally, build up the organization of learning.
3. Using the best experiences from the practice, continual
improvement.

Empowering and aligning are rather crucial words in philosophy but

also in leadership functioning. But one should be careful and know
that if an incompetent person is empowered, then bad decisions will
be made faster.

There are four levels of knowledge and a leader should reach the
last one for his knowledge to become distinctive. Although
according to our system (and according the adopted Chinese system
respectively) the highest degree of learning is I know that I know,
such relation is not applied in this model. A leader is a “spoiler”,
always throwing system out of its axes and setting new direction
and discovering new possibilities. To succeed in this, he must be a
complete person, however in such way that his knowledge and
experience determine the direction:

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 LEADER IN MARKETING

LEADERS
THE FOUR S

Un
Figure 34: Four knowledge levels
(Source: Ibid., IV-22)

Leader’s functions – enable, empower, encourage – for a leader

means to:
1. Be a teacher and mentor, the bureaucratic behavior has to be cut
off in its root.
2. Ensure necessary knowledge, skills and information for making
good decisions.
3. Be provocative.
C
4. Remove barriers for empowering collaborators.

ENV
To answer why the leader’s functions in many organizations are not
performed, we will use the well-known time control matrix:

Shift

Co

Page 139 of 184

Unc
 LEADER IN MARKETING

LEADERSH
WHY
WHY LEADERSHIP
LEADERSHIP FUNCTIONS
FUNCTIONS ARE
ARE

CONSEQ
Near-t
Figure 35: KII – HPO leader’s job square
(Source: Ibid., IV-32)

Therefore, an HPO leader should “spend” most of his time working

Significant
in the KII square, the square in which important jobs but less
Task / Man
urgent ones are performed such as defining vision and values draft,
so important for a high performance organization.
CONSEQUENCES
More

3. Leadership Forms
IMPACT OF

Transiting form the organization of problem solving of autocratic

style, led by a group of several individuals, to the organization of
participative style, leading by a team, takes place at each level of
organizational mechanism. In the HPO model this is defined as a
leadership form.

The activities include building collective leadership mentality,

presupposing responsibility for merging organizational units in a
whole, as well as creating “parallel organizational structures” where
the strategic reasoning and leader’s job may be performed rather
than in hierarchically founded organization.
Significant

For leadership form we ask ourselves the following question:

• Does a unit/organization have an organizational “mechanism of
changes” to ensure that the Knowledge/Opinion/Change/Renewal
Less

appear at all levels (parallel organization)?

• Does a unit/organization have a good balance between the
“reasoning” and “behavior” at all of its levels?

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 LEADER IN MARKETING

The goal is to change a form, to move towards building parallel

organization, which will be more appropriate to the present-day
conditions of changes in an environment. We have already been
acquainted with the desired form of parallel organization, and that
is a network talent model.

In designing an HPO we first deal with a procedure of how we can,

out of initial system of organization according to Likert, come to the
effective last participative system S4. Organizations in the initial
authoritative systems S1 and S2 have strong and stratified
organizational pyramid. The relation between the superiors and
subordinates is identical to the relation between parents and
children. Personal interests prevail over collective ones. The
executives deal mostly with urgent jobs (squares KI and KIII in the
time control matrix). The HPO tends to be in the system S4, to be
an organization with leader’s teams at all levels.

A leader’s team is defined as a team of collaborators gathered

together because of a permanent or temporary job within an
organization, and all team members have equal rights and
responsibilities. Each team member is as valuable as any other
member. Equal importance of all in the team and their “being” in
leader square KII still does not exclude a hierarchy. The hierarchy is
the first and only then empowering and alignment. The leader team
has an assignment to use potential of all team members to the
maximum.

Forming HPO may be a long-lasting procedure. It is important to

know that systems may not be jumped over and then to proceed to
the last one immediately. In order to reach system S4 it is
important to be (and probably for a long time) in the system S3. It
should be always kept in mind that S4 is the final aim, and when we
have such approach we can say that we are in the system S3+.

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 LEADER IN MARKETING

LEADE
HIERARCHY
QI, QIII - -“Urgencies” Task
S1 / S2
(Parent /(Source:
Child)
Figure 36: Hierarchic and Parallel Organization
Ibid., V-7)

Therefore, teams are gradually formed, which are indoctrinated with

leadership and which, still insisting on the management philosophy,
become S3 – the consulting teams. Visions and adopted values,

Parent
along with new effectiveness, which a team accomplishes, condition
the transition of the team from S3 into S3+ form. This form is
excellent, because it is necessary for all teams to reach this form so
that afterwards the whole organization would come into S4 – the
organizing form and participative phase.

The indoctrination with leadership should start from the top level,

Parent /
because the first leader’s team required for creating HPO is a
managing leader’s team:

Child
Parent /
Child

Child
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 LEADER IN MARKETING

LEADE
HIERARCHY
QI, QIII - -“Urgencies” Task
S 1 / S2 S3+
(Parent /(Source:
Child) (Adult - Adult)
Figure 37: Management Leader’s Team
Ibid., V-8)

After establishing an effective leader’s team on top level, it is

necessary to form teams for particular projects, out of workers at
various levels in the organization who have special expert
knowledge, by taking into consideration psychological type of a
person. The project management based on mission niche is a
Mana
suggested approach.
T
Instructions as how to behave within the parallel organization are:
• The “normal” hierarchic organization rules are
abolished, all team members are equal in a parallel
organization, the decisions rare made by consensus.
• The focus is on achieving the best solution for the team
as a whole, the team members have to be dedicated to the
organizational visions and values.
• All get “promotion”, each team member has to
“promote” himself for two levels, in order to have a sense
of entirety, the sense of associate owner of the

“My”
organization.
• The regenerating culture is critical: relationships based
on confidence, honesty and respect.
• Confidentiality – is often necessary, because of an open
atmosphere, a rule should be established according to
which out of team only decisions will be made public, and
not what someone said.

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 LEADER IN MARKETING

• There is no retaliation because of decisions made, but

because of non-observance of rules of the team itself.
• Mandatory observance of these rules is obligation of
each team member, just as performing working process is.

Therefore, we observe the project team form. In an HPO, it

emerges out of the employees from various hierarchical levels of
the old organization.

LEADE
HIERARCHY
QI, QIII - -“Urgencies” Task
S 1 / S2 S3+
(Parent /(Source:
Child)
Figure 38: Project leader’s team
Ibid., V-9)
(Adult - Adult)
In a team of parallel organization the decisions are made by
consensus. It proved to be the best manner of decision making in a
democratic organization. The consensus is reached when all team
members:
• feel that they have been listened to;
• believe that the discussion has been open and honest;
• are convinced that they have faced with and discussed all
important options and information; Ma
• personally feel that they are “in possession” of the decision, as if
they alone have made it and then they will actively support it.

Finally, we come to the final form S3+, which will in certain time
“slide” into the final form of leader’s organization S4.

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LEADE
HIERARCHY
QI, QIII - -“Urgencies” Task
S 1 / S2 S3+
(Parent / Child)(Source: Ibid, V–10) (Adult - Adult)
Figure 39: Leader’ teams at all levels on the HPO

4. HPO Leaders Adult

Parent
The best way to obtain an answer about an HPO leader would be by
doing researches on leaders of effective companies. One of such Mana
five-year researches has been published.74 But, let’s first give data
on a sample: out of 1,435 companies from the Fortune 500 in the T
Adult
period 1965-1995, by using the process of selection, it was found
that there were companies which had index of growth at least three
times greater than the New York Stock Exchange average, and they
Parent /
maintained it for at least 15 years. Such companies are called great
companies. They had to be good companies that had rate of growth
of shares at least 1.25 times greater than the Stock Exchange rate.
Child
They had to be the companies already existing and not the newly
established ones, while their success should have not stemmed out
of the economic branch success. The final number of such
companies was 11, with an average growth of 6.9 times greater
Parent /
than the average growth of American economy. A dollar invested in
these companies in 1965 after 30 years was worth 471 dollars,

Child
while investing in general markets would have rejected 56 dollars.
In the paper they were compared with good companies of similar
size and age, in the same branch and with similar products and

Adult
services. Also, a group of unstable companies was introduced
having some similarities but which had a distinctive peak in growth
74
Collins Jim, GOOD TO GREAT, Harper Business, USA 2001

Child Page 145 of 184

 LEADER IN MARKETING

and fell fast, with the cycle that lasted less than 10 years. It is
important to notice that with great companies the criterion was to
further maintain the growth of shares at the time of researches.

GREAT COMP. COMPARED COMP. VANISHED COMP.

Abbot Upjohn Burroughs
Circuit City Silo Chrysler
Fannie Mae Great Western Harris
Gillette Warner-Lambert Hasbro
Kimberly-Clark Scott Paper Rubbermaid
Kroger A&P Teledyne
Nucor Betlehem Steel
Philip Moris R.J.Reynolds
Pitney Bowes Addressograph
Walgreens Eckerd
Wels Fargo

Figure 40: The companies taken from “GOOD TO GREAT” research

(Source: Collins Jim, GOOD TO GREAT, Harper Business, USA 2001, pg.8)

The greatest shock for researchers was that all 11 great companies
had CEO leaders which were of the “same kind”75. The leaders
leading great companies are called the level 5 leader.

• LEVEL 5: LEVEL 5 L
He builds effectiven
mixture of personal
strength
• LEVEL 4: EFFECTIV
75
Ibid., pg. 17-64
He leads powerfully
performances. Page 146 of 184
 LEADER IN MARKETING

Figure 41: Level 5 leader and other levels

(Source: Ibid, pg.20)

Level 1 includes individual competency, level 2 the team work skills,

level 3 a competent manager, level 4 a traditional leader. Level 5
contains all from the preceding levels along with an “extra
dimension”: paradoxical mixture of personal modesty and
professional will. A level 5 leader directs his ego further from
himself setting as his higher goal the creation of a great company.
This does not mean that he is not ambitious, he is actually very
ambitious, however, his ambitions are directed towards the
institutions and not towards his own self. An interesting dual
character of personality is reflected with them: modest, but willful,
humble, but fearless. They as a rule do not speak about themselves
but about the organization. The researches show that they as a rule
come “out of home” contrary to the leaders of the compared and
vanished companies. The compared companies have engaged six
times more outsiders for the CEO than HPO have done. Also,
compared to them a level 5 leader appoints his successor at quite
early stage and trains him for a successor. They will stoically and
uncompromisingly do all that is necessary for the existence and
growth of their organization. They are fanatically infected with
producing results. When they speak about their success they say
that they have been lucky. When they speak about failures they
blame only themselves. Level 4 leaders do the very opposite, for
their failures they blame bad luck, while they ascribe a success to
their credit. I would like to notice once again that level 5 leader is
not an ideological guideline, but an empirical fact.

After publishing the book, Collins has gathered a great base of level
5 leaders from all spheres of society. He has concluded76 that in
human population there are much more of such leaders than of
egocentric ones who are more represented in media. Our culture
and media like leaders who are greater-than-life, and those quiet,
modest and effective ones. The problem is not in shortage of the
level five leaders. They are actually everywhere around us. The
dynamic changes expected in this century will condition our
attention towards them so that economy and society could
successfully cope with changes, because they are the key to
overcoming them effectively. The task of society will be to identify,
cultivate and develop them.

Effectiveness of a level five leader in the 21st century will be

founded on the following assumptions:77

76
Collins Jim, THE MISGUIDED MIX-UP OF CELEBRITY AND LEADERSHIP,
“Conference Board Annual Report”, Annual Feature Essay, USA, September-
October 2001

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 LEADER IN MARKETING

1. Leaders should define the inside and outside of an organization

according to firm organizational values and visions and not
according to traditional limits and restrains. They must keep
values in order to stimulate progress.
2. Leaders should build mechanisms of bonds and obligations based
on freedom of choice, and not rely on systems of coercion and
control. Democratic values and democratic system of an
organization appear as inevitability of making choice.
3. Leaders should accept the fact that the right leadership is in
reverse proportion with leadership based on power. The right
leaders of the 21st century are only those whom people follow
when they are free to do that.
4. Leaders should encompass the reality in the whole of its
complexity. All barriers that have existed so far must no longer
exist for leaders of the 21st century; all barriers should become
archaic.

Effective leaders:78
• Define mission of an organization as a framework for performing
activities.
• Create flexible environment in which people are not only
esteemed but also encouraged to achieve their full potential,
where everyone is treated equally.
• Shape corporate culture in order to replace conformity,
obedience and mechanical behavior with creativity, autonomous
and continual learning.
• Transform organizational forms from a rigid pyramid towards the
fluid circle, towards the developed network of autonomous units.
• Encourage innovating, experimenting and risk taking.
• Anticipate the future by reading the present.
• Make new bonds within organizations and new connections within
collaborating teams.
• Establish new alliances outside their organizations.
• Constantly study organizational forms of both their own
organizations and those in the environment.
• Identify weak links and replace them.
• Think globally rather than nationally or locally.
• Identify and respond to new and unforeseeable needs of
collaborators.
• They are proactive, not reactive, and comfortable towards
ambiguity and uncertainty.

77
Collins Jim, And the Walls Come Tumbling Down, Peter F. Drucker Foundation
on Non-Profit Management, LEADING BEYOND THE WALLS, Jossey – Bass
books, USA, 1999
78
Bennis Warren G., ON BECOMING A LEADER: THE LEADERSHIP CLASSIC –
UPDATE AND EXPANDED, Perseus Publishing, USA, 2003, pg. 174-75

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The present-day leaders are a basis for democratic development of

today, in which the power is distributed and not concentrated. The
first leader, a level 5 leader, will succeed in responding to changes
of this century. It is crucial that he accepts the human nature as
such and to respond to it. The emotional intelligence has for the
first time been developed in this direction.

5. Good is enemy of great

We will proceed in explaining the “Good to great company”79
concept. We have already shown that a particular type of leadership
and leaders is required for a company to become great. This is a
LEVEL 5 LEADER. A level 5 leader is major but not the only
component of a great company. Other components are in what a
level 5 leader does, and this will be shown hereinafter.

FIRST WHO … THEN WHAT. Also, the (non-)importance of plans in

great companies has unexpectedly been discovered. Researchers
have expected that the first step towards the road to a great
company is in establishing new directions and strategies for the
company, and only then, based on them, the people would be lead.
However, they have discovered a completely different thing. Great
companies first start by engaging the right people and then by
making plans. If one starts with “who” rather than with “what”, then
adapting to changes will be easier. If the right people are employed,
the problem of motivation and management becomes easier. There
is no great company with wrong people. The old syntagm that the
people are the most important value of a company is not valid in
great companies. The right people are the greatest value. On the
road leading to changes, if the company is imagined as a bus, it will
take the right people on the bus, and throw out the wrong ones and
then place the right people into the right seats. Great companies
will assign to the best people the jobs with greatest chances, and
the jobs burdened with greatest problems. Leaders of great
companies are rigorous, but not merciless. The compared
companies had much more dismissals then the common ones. The
manner of work in the compared companies is a “genius with
thousands assistants”. In them only a head man is of crucial
importance while all the others are consumer goods.

79
Collins Jim, GOOD TO GREAT, Harper Business, USA, 2001

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 LEADER IN MARKETING

Figure 42: “Good to great” concept

(Source: Ibid, pg.12) BUILDING
CONFRONT THE BRUTAL FACTS. For great companies the data are
more important than desires. Great companies constantly compare
Level 5
their high performances with brutal facts form the environment. The
First who…
level 4 charismatic leaders often cannot stand the picture from the Br
leadership Then what
environment not coinciding with their view on own successfulness.
And indeed, the charisma is rather a shortcoming than necessary fa
component of successful leadership. The climate in great companies
DISCIPLINED PEOPLE
is such that the truth is always heard. Faced with brutal facts, the
great companies never loose faith. This is a so-called Stockdale
DISCI
paradox. Stockdale is an admiral in the American Army and was the
top rank officer captured by Vietnamese in the Vietnam War. He
was confined for 8 years under very severe conditions. His behavior
was brave and inspired other captives. After being released he was
one of the most decorated American officers. His story is well known
saying that the first to give up hopes in prison were optimists –
those who expected that they would be released soon or during
some of the holidays. On the other hand, the pessimists were none
better either. Based on this, an effective model of survival is made:
keep faith that you will withstand until the end whatever the
difficulties are, AND AT THE SAME TIME face all brutal facts of
reality, whichever they are. This is the Stockdale paradox. In great
companies the leaders say that the most effective collaborators are
those who have been war prisoners.

THE HEDGEHOG CONCEPT. It is a well-know fable in which a

cunning fox tries in many ways to eat a hedgehog. The hedgehog

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defends himself always in the same manner – he has his spines and
the fox can’t do him any harm.

Figure 43: The Hedgehog Concept

(Source: Ibid., pg.96)
What you ca
be the best i
The concept of a hedgehog is a simple concepts deriving from
crystal clear understanding of the following three circles:

the world a
1. In what matters can you be the best in the world (and, equally
important, in what you can’t)? The aim is not to be the best or a
strategy how to be the best, it is awareness in what matters one
could be the best. The great companies will change their major
activities uncompromisingly if they understand that in some
other activity they can be better than in those they are in.
2. What starts your economic engines? The great companies have
spectacular results in very non-spectacular industries. The
central point is that every great company understands what is
crucial in its economic development and builds a system based
on this understanding. As a rule, this is only one denominator,
because it better illustrates the essence than a group of
dominators. With great companies this may be: profit per
employee, profit per buyer, profit per visit of a buyer, profit per
local population, profit per level of risk, profit per brand, and
profit per geographical region.
3. What is your deepest passion? The great companies, contrary to
the compared ones, are not in business only to make money.
W
This is for them in second place. For them it is much more
important to like their business, to feel tremendous passion
towards it.

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 LEADER IN MARKETING

This process of uniting three circles into one is not fast. It has to
run for a long time. In the researched companies it has ran for 4
years. The compared companies are rather like foxes. They
commence many deals and they do them by storm.

A CULTURE OF DISCIPLINE. Great companies have discipline

culture. This is not a tyranny. This is an organization with high level
of discipline and high level of entrepreneurship simultaneously. The
discipline culture is not stemming out of a system but people. The
culture in great companies is based on freedom and democracy,
while insisting on the right people and crystallizing hedgehog
concept will enable the people to be managers to themselves. With
disciplined people the hierarchy is not required, the “red tape” is not
required, extensive control is not required. With unstable companies
the success has also been based on discipline. Actually, on the
discipline of a tyrant the growth would be spectacular, and after the
tyrant would leave, the discipline would quickly be lost and the fall
would be dramatic. Great companies make a list of jobs they will
not perform, make budget items they will by no means finance. All
this based on the hedgehop concept, however attractive it may
appear, will neither be done nor financed.

TECHNOLOGY ACCELERATORS. Great companies think in a different

way about the role of technology. They never take technology as a
prime motive of transformation. On the other hand, they are
pioneers in applying carefully chosen new technologies. If new
technology could be used according to hedgehog concept it will be
used immediately, and if not, it will not be even noticed. Great
companies use technology as an accelerator of development, they
are not a creator of development. Effectiveness and high
performances of great companies are merit of a level 5 leader.
Average results of the compared companies have derived from
failures of their managers, and because of errors of technologies.
An effective approach of great companies is “crawl, walk, run”, even
in times of rapid and radical technological changes. 80% of the
interviewed level 5 leaders have not placed technology among the
first 5 factors of success. However, great companies are, when
compared to other companies, in many ways pioneers of new
technologies.

THE FLYWHEEL AND THE DOOM LOOP. Although outsiders often

think that a change of a company from good to great is a
miraculous moment, this does not coincide with the reality. For
those inside reaching high performances represents a conditioned
development process. They are often not even aware of how good
their results are. By building and rounding a concept the circle

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closes and this circle starts to revolve. Once, twice … five hundred
times. The compared companies actually like revolutions and
dramatic programs of changes. Such approach does not provide
results and as a rule fails. Great companies have no names for their
transformations. Many of the level 5 leaders have claimed that they
have not been aware of great transformations until they have
turned back. For great companies there is a simple truth: great
power lies in the possibility of continual improving and realizing
results. The difference in managers and acquisitions may be
noticed between the compared and great companies as well. The
compared companies often want to make a great move forward by
purchasing other enterprise or merging with it. This usually does not
work. Great companies first make a move forward, and then enter
in purchasing or merging with others. They use managers and
acquisition as a flywheel.

General conclusions by Collins and Porras are that good is the

greatest enemy of great. This is a major reason why so little of
good becomes great. We should not be satisfied with good, we
should strive towards great.

Another Collins’s80 research is dedicated to the visionary companies,

namely companies which are:
• institutions in their industries,
• widely known and recognized by respectful businessmen,
• have left a visible mark in the world we live in,
• have had several generations of leaders,
• have gone trough several production life cycles (or cycle of
services),
• have been established before 1950.

They are compared with the companies of similar character, similar

period of establishment, but of somewhat worse performances. The
visionary companies may be said to be golden medal holders, while
the compared companies the silver medallists. The choice of
visionary companies is the result of a poll carried out amongst the
700 most important business leaders in the USA. The elaborated
concept is called “built to last”:

VISIONARY COMPANIES COMPARED COMPANIES

3M Norton
American Express Wells Fargo
Boeing McDonell Douglas
Citicorp Chase Manhattan
Ford GM
80
Collins Jim, Porras Jerry I., BUILT TO LAST: SUCCESSFUL HABITS OF
VISIONARY COMPANIES, Harper Business, USA, 2002.

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General Electric Westinghouse

Hewlett-Packard Texas Instruments
IBM Burroughs
Johnson&Johnson Bristol-Mayers Squibb
Marriot Howard Johnson
Merck Pfizer
Motorola Zenith
Nordstrom Melville
Philip Morris RJR Nabisco
Procter & Gamble Colgate
Sony Kenwood
Wal-Mart Ames
Walt Disney Columbia

Figure 44: Companies from the “BUILT TO LAST’ research

(Source: Collins Porras Jerry I., BUILT TO LAST: HABITS OF VISIONARY
COMPANIES, Harper Business, USA, 2002, pg.3)

The first to be noticed is a negative correlation between a

charismatic leader and building visionary company. The greatest
creation of a visionary company is the company itself. Visionary
companies have freed themselves from the “tyranny of OR” and
work according to the principle “ingenious AND”. They are able to
encompass differences in many dimensions simultaneously. They do
not choose between changes OR stability, they have changes AND
stability. Profitability is a condition for long-lasting existence of a
company but it is not a key to its existence. The key to existence is
keeping higher values of reasons because of which a company
exists during the course of time. A basic ideology of a visionary
company is composed of basic values and visions or purposes of
existence. The ideology of the Disney Company is, for instance:
BRINGING HAPPINESS TO MILLIONS OF CHILDREN. One of the
leaders of a visionary company has emphasized that an organization
has to accept changes of ever changing environment, has to be
ready to change all except for its major convictions moving it
forward, that the only organization’s “sacred cow” is a basic
philosophy of business running. That’s how visionary companies
operate: preserve the core / stimulate progress. There are five
categories of specific methods for preserving essence and
stimulating progress:
1. BIG HAIRY AUDACIOUS GOALS (BHAGs). This is actually
surrendering to challenging, audacious and often risky goals and
projects through which visionary companies direct their efforts
and stimulate progress. The BHAG has to be a goal, has to be
outside comfortable zone, has to be isolated for employees, has
to be consistent with the ideology of a company and must not be
lonely, but has to be continued with other BHAG as well.

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2. CULT-LIKE CULTURES: Visionary companies are great places to

work in for those employees fitting in the major ideology. Those
who do not fit in it are rejected as a virus, in order to preserve
values. Visionary companies are not soft, on the contrary, they
have standards, they are elitist, and they often have their own
language, which may sound unfamiliar to those outside the elite.
Workers fitting in the ideology are the workers who may be
entrusted with a high operative autonomy.
3. TRY A LOT OF STUFF AND KEEP WHAT WORKS: As a rule, in
visionary companies the best moves forward are not the fruit of
the detailed strategic planning, but rather of experimenting,
trials and errors and sometimes even of an accidental case. High
level of actions and experiments produces new unexpected
progress roads. This is evolutionary progress stimulator, while
the BHAG is revolutionary one.
4. HOME-GROWN MANAGEMENT: Visionary companies promote
from the inside; only people who have spent considerable
amount of time in a company climb to top level positions. In
such way a company maintains is values. In 700 years of a
combined history of visionary companies there have been only
four cases where general directors have come outside the
company. In the compared companies, 22.1% of general
directors have been outsiders.
5. GOOD ENOUGH NEVER IS: Visionary companies are in a
continual self-improvement process aiming to be better and
better both today and in the future. They stimulate the process
by setting top standards to themselves. The right question the
visionary companies ask is whether this is appropriate for us,
and not whether this is good for us.

The essence of visionary companies is not in the existence of

written visions and values, because the compared companies also
have this, but in transforming essential ideology, along with
eagerness for progress, into concrete assignments in an
organization: goals, strategies, tactics, behavior, payment system,
bookkeeping – in everything a company does. All that company
does is to be aligned with basic values.

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Figure 45: Concept “built to last”

(Source: Ibid., pg. 88)

The researches on the long-lasting have been carried out prior to

the researches on greatness. However, Collins is of opinion that the
good to great concept precedes the built to last concept. The first
concept produces the high performance results, while the second
concept shows how the high performance results become long

PRESERVE
lasting. For a great company to become long-lasting one it should
take over the built to last concept and strive towards great, towards
the best. It is not more difficult to build something great than to
build something good.

6. Personal Leadership
•Core Values
Seven habits of highly effective people81 is a standard for training

•Core Purpose
potential leaders in the USA. The first one is also a basic training
because it is focused on building leader’s personality.

Covey Stephen R., THE 7 HABITS OF HIGHLY EFfECTIVE PEOPLE, Simon &
81

Shuster, USA, 1989

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INTE
6
5.
Figure 46: Seven habits of highly effective people
(Source: Covey Stephen R., THE 7 HABITS OF HIGHLY EFFECTIVE PEOPLE,
UNDE
Simon & Shuster, USA, pg.53)
BE
Our character is basically composed of habits. A habit is defined as
a set of knowledge, skills and wishes. Out of 7 habits those first
ones are directed towards building effective personality while the 4. T
rest towards building effective social relations. Public
Habit No.1: BE PROACTIVE. This is a personal vision principle.
The only vision we have about ourselves is coming from the so- IND
called social mirror, namely from the people around us, and our
image may often be deformed. Often, our response to some stimuli
Private
may be such that we cannot comprehend it later. There is a well-
3. PU
known story about Victor Frankl, a prisoner of the Nazi death camp.
Frankl was a psychoanalyst belonging to the Freud’s school and was
suffering in the camp just like all others. One day, standing in front
of a gas chamber, he was thinking how his lectures to students
would be after the War. Soon, he alone could decide how things
that affected him would really affect him. Frankl projected himself
into other circumstances and suddenly he had much more freedom
2. BEGI
than even his jailers did who, like others, admired him. Frankl
survived and his future works were based on a postulate, not at all
close to Freud’s one, according to which a man had freedom to
choose between a stimulus and response. This is a proactive model.
The freedom of choice should be based on our conscience, free will, 1.
imagination and self-confidence. A proactive man takes initiative.
The proactive approach may even be felt in everyday speech of
such man. What a proactive man does is spreading his proactive D
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focus based on positive energy. A man’s circle of influence is

generally smaller than the circle of anxieties. Proactive people
expand their circle of independence, namely what they actively
control, thus reducing the circle of anxieties, namely activities over
which they don’t have direct control.

Habit No.2: BEGIN WITH THE END IN MIND. This is a personal

leadership principle. The exercise explaining this habit is the
following: imagine that several decades have passed from the
present moment and imagine being amongst known people, but in
an unknown place. Now imagine that you are at your own funeral.
Four people describe what kind of person you have been, one of
them representing family, the second friends, the third colleagues
and the fourth representing neighbours. Could you say what would
each of them say? Could you say what would you like them to say?
The point is in that you always have in mind the very goal and
vision that you would like to realize regardless of difficulties you
come across. This principle is based on a presumption that all things
are created twice: first creation is mental - in head, and the other
one is physical - in life. Covey suggests that everyone should write
his own Constitution which will be his own vision, his mission and
guiding principle. In order to achieve this, one should look deeply
into himself, into a center of his circle of influence and find basic
principles there. Principles are like a compass showing your present
direction. The one who in the center finds: himself, his spouse,
family, money, work, property, satisfaction, friendship, hostility, or
church, he is wrong, he is not a man based on principles. For such
visualization to be possible, a man must be able to use the whole
brain, especially its right side.

Habit number 3: PUT FIRST THINGS FIRST. This is personal

management principle. The first habit says you are a creator, you
are responsible for yourself. The second habit is a mental response
of our proactivity, based on imagination and consciences. Third
habit is physical creation, personal fruit, practical fulfillment of the
first habit. In this habit the know time matrix is learnt and K2
quadrant is explained, already explained. In order to become K2
self-manager, Covey suggests the following activities:
1. The first assignment is to define key roles, such as for example:
personal role, role of parent, as of spouse, of a member of some
society or association.
2. The next step is to set goals for each of these roles, namely
important results we wish to accomplish.
3. Third step is making schedule of obligations to be fulfilled to
unite these roles and goals.

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4. Daily adapting of obligations: daily planning on weekly base is

suggested. While planning one should see which of the
obligations may be delegated as well.

To proceed with habits which will bring us public victory, the

interdependence paradigm is to be explained first. From the first
three habits a man has moved from the state of dependence into
the state of independence. However, a man is not a wolf, he is not a
lonely individual. He is in society and he must, out of these relation
and dependence, also realize a progress. Emotional intelligence and
emotional approach are the key of such relations.

Habit number 4: THINK WIN-WIN. This is interpersonal

leadership principle. The author of this book has been asked by a
manager to help him in his work with people. He has told him that
they are selfish and not willing to work in a team. Covey has gone
to the meeting. The manager has opened the meeting and asked:
“why don’t you work in a team, if we work in a team we will have
much more money”. He has told Covey that the present consultant
would show him how he has stimulated team work. Then he has
taken out a poster showing racing horses on a start line.
Photographs of each collaborator separately have been attached to
horse’s heads and on the goal a photograph of Bermudas glued. The
manager has actually not understood that he has not awarded the
team work but a success of one and the failure of other
collaborators. The habit of an effective interpersonal leadership is to
think victory/victory. This is not a technique, but philosophy. In
fact, this is a philosophy victory/victory or otherwise there is no
contract. This is a belief that there is an alternative, which is neither
my way nor your way. This is better way, more effective way. Other
paradigms are: victory/defeat, defeat/victory, defeat/defeat, and
only victory. When it is not possible to reach an agreement from
which all benefit, then it is better to withdraw with honor and
proceed to the option that there is no contract. A high degree of
deference and courage is required to come to the level
victory/victory and, if it is based on principles, it is fundamentally
important for a success in life.

Habit number 5: SEEK FIRST TO UNDERSTAND, THEN TO BE

UNDERSTOOD. This is empathic communication principle.
Empathic listening is the essence of understanding feelings of
another being. When we listen to the others it is not important only
to listen but it is important also to feel. Even a physician does not
give a prescription before he makes a diagnosis. People often link
their feelings to objects, and while speaking, they speak about
objects and not feelings. In order to understand this, there are 4

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development phases of “drawing” feeling out of the real context of

an interlocutor’s works:
1. Repeating context.
2. Paraphrasing context.
3. Reflecting feelings.
4. Paraphrasing context and reflecting feelings.

When you understand the interlocutor … then he has to understand

you. This is critical for the victory/victory solution. It is suggested
that in the business world you should always have an effective
presentation. Its preparation must always precede its performance.
The more time you spend in preparing your exposition or
presentation, the better chances you have in being understood. My
experience as a leader tells me that many problems are soluble only
and exclusively by improving communication.

Habit number 6: SYNERGIZE. This is a creative cooperation

principle. When Winston Churchill promised to the British the blood,
sweat and tears in the war with Nazis, many thought that these
words came into his mind in that moment. Churchill said later that
he felt as if he prepared himself for that moment the whole of his
life. Practicing all the above mentioned habits prepares us for such
habit. Synergy is the highest activity in life – a real test and
manifestation of all other habits taken together. By a complete
joining of habits together new alternatives are created – results
may be miraculous, something that has never existed before can be
created. Synergy is vital in communication. The synergic
communication is a real communication based on the victory/victory
postulate. It is the result of high level of confidence and
cooperation. The medium level of communication is respected
communication, based on compromise, and the lowest level is
defensive communication, based on defeat/victory or victory/defeat
communication. Synergy is 1+1=3, and maybe even 500. The
result of a compromise is ½, the defensive result approaches to 0 or
is pure 0. Synergic communication awakes creativity and points at
new alternatives. Let’s imagine two colleagues in an office, one
wants to open a window while the other objects. Synergic
communication would be the knowledge that one wants to open the
window because he lacks fresh air, while the other objects claiming
the wind would take his papers from his study. The possible results
are to open the door, open the window in a side room and put
something heavy on papers, or anything else. The essence of
synergy is evaluating risk, actually evaluating mental, emotional
and psychological differences between people.

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Habit number 7: SHARPEN THE SAW. This is balanced self-

renewal. If we sharpen the saw we shall cut woods easier. If we
renew ourselves the life will be easier. There are 4 renewal phases:
1. PHYSICAL, based on exercising, nutrition, and managing stress.
2. SPIRITUAL, based on searching for deeper inner goals,
meditation, bonds with nature.
3. MENTAL, based on reading, writing, planning and thinking.
4. SOCIAL/EMOTIONAL, based on serving, empathy, synergy, and
inner security.

Practicing Covey’s 7 habits is a basis of each effective leader and

each effective man. When combined, they enable us to feel great
power in our own selves.

7. Elasticity
We have seen that the two esteemed scientists, Collins and Covey,
have mostly found their inspiration for leadership in survived war
prisoners such as professor Frankl and Admiral Stockdale. An article
from the HBR82 gives the right picture of what is the essence of
these two men and what should effective leaders have. And that is
elasticity.

The characteristics of elasticity are:

1. Capacity of facing and accepting reality.
2. Ability of discovering the essence in certain aspects of life.
3. Possibility of improvising.

The elasticity is necessary both to leaders and high performance

organizations. When we are aware of reality we get ready to
respond in such way as to survive. Searching for the essence means
discovering values that are basis of our existence. Improvising is an
art of solving problems. The elasticity is one of the most important
topics in business circles today. More than education, more than
experience, more than training, the elasticity level is a determinant
of who succeeds and who doesn’t. This is true in a fight with a
cancer, this is true on Olympic Games, and this is true in an office.
Elastic people have ability to construct their future out of their today
activities.

The Morgan Stanley is a well-known investment bank. It was the

greatest premises lease-holder in the New York World Trade Center,
demolished in the terrorist attack on 11th September 2001. The
82
Coutu Diane L., How Resilience Work, HARVARD BUSINESS REVIEW ON
LEADING IN TURBULENT TIMES, Harvard Business School Press, 2002, pg.
79-96.

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Company had 2,700 workers in the southern tower on 22 floors,

between 43rd and 74th floor. The first airplane hit the northern
tower in 8:46 hrs, and in 8:47 hrs, the Morgan Stanley commenced
evacuation. 15 minutes later, when the second airplane hit their
tower, their premises were completely empty. The airplane hit
directly in the Bank premises…

In 1993 there was the first terrorist attack on the WTC and the
Bank management, which showed such elasticity 8 years later, were
aware that they work in a symbolic center of American power and
that it is vulnerable to terrorist attacks. They started to develop a
program of readiness to terrorist attacks, for which the elastic vice-
president Rick Reskorla, highly decorated Vietnamese veteran, was
responsible. By exercising military discipline, he ensured that people
would be trained to cope with a catastrophe. He managed to make
the Morgan Stanley ready for the gravest reality. And not only the
employees but technology and data as well. The data saving system
was made on several locations and all data were saved.

On 11th September the Bank lost only 7 men out of 2,700 workers.
Rick Reskorla was one of them.

8. How to become a great leader?

We have got familiar with the leader’s basis model83, derived from
the researches of 25,000 leaders. Zinger and Folkman found that
the following makes a basis, foundation of a leader:
1. CHARACTER,
2. PERSONAL CAPACITY,
3. FOCUS ON RESULTS,
4. INTERPERSONAL SKILLS, and
5. LEADING ORGANIZATIONAL CHANGES.

The main conclusion of the researches is that the leadership

paradigm is wrongly presented. We don’t need a wide range of
programs and mass teaching of leaders, but what we need are great
leaders. We don’t need to develop leadership, but to produce great
leaders. Great leaders make great difference.

Zenger John H. et al., THE EXTRAORDINARY LEADER: TURINING GOOD

83

MANAGERS INTO GREAT LEADERS, McGraw-Hill Trade, USA, 2002

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Impact of Leade
*Perceptions of

Figure 47: Leaders effectiveness and consumer’s satisfaction

70
(Source: Zenger John H. et al., THE EXTRAORDINARY LEADER:
TURNING GOOD MANAGERS INTO GREAT LEADERS,
McGraw-Hill Trade, USA, 2002, pg. 36)
Perceptions of Customer

60
It is interesting to notice that the results of researches show that
Satisfaction PCTL

only great leaders make great difference. The following graph shows
that upper 30% of leaders according to their successfulness have
great deviation in results of researches50on their successfulness. The
39
first big jump is noticeable in the first third of the researched
population. The second third of the researched “good leaders”
shows that a good leader, wherever on40 the scale from 30 to 60% of
successfulness, is estimated to have medium results. Only the last
third of leaders is estimated as great leaders.

30

20

10

0
Bottom 20% Mid

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Impact of Leade
*Employee Sati
4.8
Figure 48: Leader’s effectiveness and satisfaction of collaborators
(Source: Ibid., pg.30)
4.6
Employee Satisfaction

One becomes a great leader when what is already powerful and

strong in him is improved. There lies the essential difference
4.4 a good leader develops the
between a good and a great leader:
competencies in which he is weak to an average level, while a great
leader develops the competencies in which he is above average and
brings them to perfection. The 4.2philosophy of effectiveness is in
intensify competencies in which you are strong.

4.0

A
3.8
B

E
W o u ld
3.6
F

G th e se tw o
H
c o m p eten cies
I

J
im p ro vin g h a ve
K d ram atic
L
im p act o n
3.4
M

N le ad er’s
O

P
e ffec tiven e ss?
1 2 3 4 5

Figure 49: Classic approach: improving weak competencies 3.2

30th - 39th

40th - 49th
10th - 19th
1st - 9th

20th - 29th

(Source: Ibid, pg. 30)

Classic approach in work on weaknesses is based on mediocrity and

produces mediocrity. The essence of this approach is in improving
competencies in which a leader is below average.

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Leadership Effectiven
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C
Line of mediocrity
D

F Would these
G
two
H

I competencies
J
improving have
K

L
dramatic
M impact on
N

O
leader’s
P effectiveness?
1 2 3 4 5

Figure 50: Modern approach: improving strong competencies

(Source: Ibid, pg. 138)

Modern approach is based on superiority and it is essentially

oriented to building effective leaders.

Another data obtained from researches provide us interesting

information on relation between the strong competencies and
effectiveness of leaders, based on assessment of their collaborators.

Relation of s
and e
100
Figure 51: Dramatic rising of effectiveness
by increasing strong competencies
(Source: Ibid., pg.147)
90
As evident, already one competency in which we are strong
increases our effectiveness to even 64%. Only 3 80
competencies in

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Average 60
 LEADER IN MARKETING

which we are strong give us assessment of effectiveness of over

80%. There are 4 explanations why the competencies are linked:
1. Strength in one competency creates powerful “halo effect”.
2. In the development process of any competency an individual
develops also other, linked skills.
3. Self-confidence of an individual is raised when any competency
or skill produces success. The success in the development of one
competency raises confidence in trying to develop others as well.
4. The level of aspiration grows when people succeed in one
dimension. This encourages them to set new goals at higher level
and new ever more demanding assignments.

It’s interesting to mention that the combination of interpersonal skill

and focusing on results is the best one considering that 66% of
great leaders possess these competencies taken together.

It should be mentioned that the approach of improving superior

competencies is not valid in case when a leader possesses a fatal
shortcoming. Extremely low score in one competency represents a
fatal shortcoming and if people who have it improve their results in
this competency, and their collaborators will assess that the total
score of the assessed individual has dramatically increased.

Focus on weaknesses is good

when …
A … people have
fatal flaws
B

J
Fatal flaw
K

1 2 3 4 5

Figure 52: Fatal flaws

(Source: Ibid., pg. 159)

There are five fatal flaws granting failure in leadership:

1. Lack of ability to learn from mistakes.
2. Lack of interpersonal skills and competencies.

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2.1. Cold, rude, arrogant, and egocentric executive

2.2. Lack of basic social values and good manners
3. Lack of openness to new and different ideas.
4. Lack of responsibility for (un)achieved results.
5. Lack of initiative.

By observing these five behavioral frameworks the following facts

have been crystallized:
1. All fatal shortcomings are extremely evident, everyone near
leaders feels impact of such behavior.
2. Every fatal shortcoming is primarily an inability to do something.
These are not ineffective actions but ineffectiveness deriving
from non-acting.
3. All fatal shortcomings are rooted not only in not having
intellectual but not having emotional intelligence.

Eliminating these shortcomings in their core provides increasing

emotional intelligence of an individual. Technically, a correct and
comprehensive feedback should be organized and its results used.

A great leader emerges from someone who, having natural gifts,

and on the basis of practice, learning and experience, develops his
gifts to perfection. Other knowledge deriving from this research is84:
1. When compared with good leaders, the great leaders make great
difference.
2. An organization may have many good leaders.
3. Goal is too low in development of leadership competencies.
4. The relation between the improved leadership and raised
performances does exist, and is stronger than the linear one.
5. A great leader has several “basic blocks” of leader foundation.
6. Leadership is crucial and critical element in success in changes.
7. Not all components are equal. Some distinguish good leaders
from great leaders, while others don’t.
8. Leader’s competencies are tightly linked.
9. Effective leaders have different personal styles; there is no one
right leadership manner.
10. Effective leadership practice is different for each organization.
11. The key to developing great leaders is in intensifying strong
leader’s competencies.
12. Strong combination produces almost exponential positive
result.
13. Having no weaknesses is not the cause of great leadership.
14. Great leaders have no great weaknesses.
15. Fatal shortcomings have to be corrected.
16. Attributes of leadership are often corrected in non-linear and
non-standard manners.

84
Ibid., pg. 15-28

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17. One is not a leader by birth, one becomes a leader.

18. Leaders may improve their efficiency by self-confidence.
19. Organization and immediate superiors may offer significant
contribution in development of a leader.
20. The quality of an organization often may not be better and is
not better than the quality of a leader at its head.

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VI CRITICAL ANALYSIS OF THE HPO

MODEL

1. Model Contributions and Limitations

The HPO contributions are manifold. It should first be pointed out
that it does not represent a spectacular breakthrough in the theory
development because the model has been created on synthesis of
the existing theory and practice of the complex system
organizational changes.

The novelty in this model is that it can be implemented in both the

profit and the non-profit sector. Thus it is at the “edge” of new
researches ever more oriented towards the work of non-profit
sector, particularly state administration. It is one of rare models
that can be used for organizing city management, which should not
be burdened with politics but first of all be a service of citizens.

Also, the novelty in the HPO model is that the model is based on
leadership. A number of explanations of the model are based on
understanding leadership, first of all its philosophy, function and
form. Without leader’s work in creating HPO it is not possible to
come to such, for present-day ideas, perfect organization.

One of the model novelties is also the fact that it is based on

democracy. The model is based on presumption that the democracy
is the best system the human society currently knows of and that
the democracy has so many times been proven in practice and in
many complex social systems, and it would certainly be appropriate
for the systems developing the HPO as well. This implies that the
type of a leader appropriate for the HPO is a democratic leader.

The novelty is that the model does not give priority to the profit
interest, but primarily to the higher moral interest. That is why in
the model the accent is placed on values and visions, which is one
of the model contributions.

Another model contribution is certainly in insisting on a team and

team work. An organization of today has to use knowledge, skills
and competencies of each individual. They are best expressed in a
team work. And, because of that it is important, as shown by the
model, to develop team skills in an organization.

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The next contribution is in the model viewpoint that knowledge and

creativity are widespread in the organization providing the way in
which they may be united and used for future HPO growth and
development.

The contribution of the model is also in that it makes us think of our

relation with environment. The model has been developed as a need
for redesigning organization in an organization of a new type able to
respond to new possibilities and dangers from the environment.
Comprehending complex possibilities and dangers affecting very
rapidly the organization and work in it is also a key for long
existence of an organization. The one surviving is a high
performance organization.

The history is mother of all sciences, and the authors of this model
also know this. Historical review of business organization
development in the past two centuries is one of the things making
this model well founded and, thus, very good. This approach has led
to the conclusion that an organization of 21st century will be based
on the so-called network talent model, the model based on:
• competencies, knowledge and skills of individuals, as we define a
talent for the needs of the model,
• democratic system, because this model is based on empowering
and aligning, and it for the most its part wipes out hierarchical
levels in an organization and simplifies organizational structure,
• team work,
• leadership, because only a leader knows how to turn the storm of
individual talent into a favorable wind for organization’s sails.

The network talent model is a model compatible with the HPO

model. When we think of Likert’s participative system, which is a
final destination of an high performance organization, we actually
see the network talent model.

The HPO model insists on high performances, however not

specifying concretely what they are but leaving to the organization
to do it itself. This is good in this model since the model takes
specific features of each organization and its specific economic
indicators and denominators, which may be different for each
company, as we have already seen in the concept from good to
great company.

The model is based on the so-called S3+ approach, namely on the

approach that it is always necessary to produce or provide services
at lower costs, faster and with higher quality. This means that the
model properly recognizes the necessity of unceasing learning and

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improving in the current dynamic environment, of both the

individual and the whole organization.

The contribution of the model is also in that it is based on the

philosophy of niche and such approach in marketing appearance. It
actually expands this concept considering that in the essence of the
concept of changes is a complex organization. Accordingly, it also
represents the niche approach in organizing teams in a company. In
the model such associating is called a micro-business.

One of the greatest contributions of this model is in that it is based

also on the necessity of work of both the leaders and the managers.
Although the basis of model is a leadership approach, it does not
approach leadership as if it is a fetish but considers correctly that
the work of managers is also a necessity in a modern organization.
That is why both the effectiveness and the efficiency are in the HPO
model “foundations”.

It is positive that the model is realistic, so it explicitly says that

changes are introduced in a firm from the top level downwards.
Without being infected with changes and leadership an organization
may not guide us to the road leading to a high performance
organization.

Indeed, we have noticed certain model deficiencies. First of all, it is

primarily oriented towards American organizations. Then,
introducing model requires a lot of consulting work and services,
which the decision makers in an organizations may not accept,
while in our country the consulting services market is not that much
developed to make us believe with certainty that consultants would
be of sufficient benefit for great organizational changes.

The model is virtual and hard for automatic copying and broader
use. Diagnostic questions provide qualitative responses but they do
not indicate direction. That is why the model is supplemented with a
part of paper giving us the way how to lead changes in an
organization.

A model limitation is also the fact that the model is focused on

running in the long terms and that the model requires a lot of time
to be implemented (eating elephant, as authors of the model have
nicely defined). The HPO model either does not recognize or does
not deal with the short-term actions.

The model is also oriented towards the changes in complex

systems. The fact that it does not provide guidelines how to solve

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problems on a macro level or the level touching the entire

organization is another limitation in the model.

The model neither provides guidelines how to be turned from the

null, laissez fair system into a more sophisticated system of
organizing enterprise. This is also a limiting factor in implementing
this model.

The model also represents a leadership on all levels in organization.

This may be a problem in smaller firms with more precise roles of
individuals in the organizational structure.

Another model limitation is also an overemphasized consensus of all

employees in decision making and leading changes. On one hand,
this may be a problem in the decision making manner in private
organizations of both profit and non-profit (non-government
organizations) sector. On the other hand, this makes impossible to
overcome certain problems noticed at the top-level leader’s or
management level of an organization. Nevertheless, in the sector of
public organizations the decision making based on consensus is
deemed to be great accomplishment.

One of the great model limitations is also dependence of the model

on a leader of democratic proficiency. As already seen, a democratic
leader is only one of the six types of leaders, so in the model a clear
place and roles of other types of leaders (visionary, coach,
guardian, regulator, and commander) can not be seen.

Generally, we can say that the HPO model may be a good basis for
thinking, but also a call for action. Leadership, on which the model
is based, is a concept easily understood and applicable in managing
and organizing. Many leaders require longer time to reach the level
of a rounded and effective leader. With the HPO model it is easier to
acquire expert knowledge and competencies required for the
leadership manner of leading firms.

Leadership concept in Serbia is a new and unknown concept and

thereby its spreading in firms will be resisted. I believe that
tradition, heritage and present organization of firms is another
barrier to leadership approach and philosophy in our country. After
my researches I may freely say that the leadership concept is
perfect and that I cannot find its visible defects. Therefore, I think
that studying the HPO concept may contribute to easier overcoming
of presumed resistance in future when accepting and implementing
leadership manner of leading profit and non-profit organization in
our country.

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2. Impact of National Cultures on the HPO

Model Application
For a complete estimation of the model it is necessary to consider
cultural values of the HPO model compared to out national culture.
The organizational culture, namely the system of presumptions,
beliefs, values and behavioral norms which members of an
organization have developed and adopted through common
experience and which directs their opinions and behavior85 is today
one of the most popular and most researched concepts in the field
of organizing companies.

In literature dealing with the organizational culture the three basic

sources of organizational culture of each company are quoted:86
1. National culture in which the company operates.
2. Characteristics of economic sector, industry or business the
company is in.
3. Specific history of a company including also personality of
founders, as well as the most important leaders in the history of
a company.

It is impossible to completely understand the organizational culture

of a company without knowing characteristics, namely content of
national culture in the framework within which it develops. This, of
course, refers to high performance organizations as well. The HPO
emerged in the American business environment and thereby suffer
from consequences of “cultural imperialism”, namely viewpoint of
American WASP (White Anglo Saxon Protestant) authors that all
cultures should be subordinated to the American one, which is the
most powerful or at least the “most efficient” one. However, a
comprehensive research of differences between the national
cultures on European territory, carried out by Belgium author Geert
Hofstede in the period from 1967 till 1973, on a group of 40
countries, amongst which was the SFRY, could give us reply on the
possible HPO model application in Serbia.

Hofstede makes difference between four basic dimensions of

national culture:87
1. Distance of power. The distance of power shows the degree in
which members of a national culture deem it normal and
expected for the power to be unequally distributed, so that in a
society there are very powerful individuals and groups, as well as
85
Janicijevic Nebojsa, ORGANIZATIONAL CULTURE: COLLECTIVE MIND OF A
COMPANY, Ulixes, Novi Sad, 1997, pg. 42
86
Ibid., pg. 203
87
Ibid., pg. 208-219

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those having no power at all. A high distance of power indicates

unequal distribution of power in a society. The Serbian society
has high distribution of power; hence the system of
authoritarism is very high, while in the HPO model we recognize
a low distance of power, typical for American society.
2. Avoiding uncertainty. This dimension indicates the degree of
being imperiled which is felt by members of a society in
uncertain, vague or changeable circumstances. In cultures where
it is high the people dislike changes, risks and uncertainty. They
prefer formalization, standardization and hierarchy. The Serbian
society is such society. The American society sees changes as a
chance and not as a threat, while the degree of tolerance is
rather high. We recognize this in the HPO model as well.
3. Individualism vs. collectivism. Basic difference between the
individualism and collectivism consists of locating responsibility
for own destiny. Individualism means that each individual is
responsible for himself and his family, this being typical for
American society. Collectivism means that the collective, either
family, company or society as a whole is responsible for the
destiny of each individual belonging to it. In such cultures it is
hard to change anything, because there is no belief in changes.
High collectivism is cultural characteristic of our society. The HPO
model is recognized to be in the middle of the two poles.
4. Men’s vs. women’s values. In cultures in which the so-called
“men’s” values prevail, the accomplishment, results and
aggressiveness are respected. Care for people is not in the
center of attention of the members of such society. The
“Women’s” cultures are those in which social relations and status
in a society is preferred rather than gaining material wealth.
Entrepreneurship, activism, innovations and changes have no
much sense in women’s cultures. Serbia obviously belongs to the
women’s values while America to the men’s ones. The HPO
model, in my opinion, has medium men’s-women’s values.

Synthesized dimensions, namely criteria, by which the HPO model

culture and our culture differ, are shown in figure 53:

HPO SERBIA
(according to
Hofstede)
Distance of power LOW HIGH
Avoiding uncertainty LOW HIGH
Individualism – collectivism MEDIUM HIGH COLLECTIVISM

Men’s – women’s values MEDIUM WOMEN’S VALUES

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Figure 53: Difference in national culture dimensions

in an HPO and in Serbia
(Adapted according to: Janicijevic Nebojsa, ORGANIZATIONAL CULURE:
COLLECTIVE MIND OF A COMPANY ,Ulixes, Novi Sad, 1997.)

The high distance of power causes the high degree of decision-

making centralization in organizational structure of companies.
Avoiding uncertainty regulates the tendency of organizations
towards the bureaucracy. The high degree tends towards the higher
degree of formalizations, and vice versa. The low distance of power
and low avoiding of uncertainty implies a decentralized structure
with low degree of formalization and bureaucracy, this being in the
HPO model basis, but not in the Serbian national culture. Also, our
culture suppresses and discourages the need for accomplishment,
self-actualization and development in individuals, without which we
don’t see easy application of the HPO model in our country. Also,
both the style of management/leading in Serbia and the HPO suffer
due to conflict of national cultures. Employed workers in Serbia
often create infantile dependence on leaders, expecting leaders to
take over the risk and responsibility, as well as to provide to “their”
subordinates the full protection. The HPO model calls for not
autocratic but democratic leadership.

However, it is very important to notice the difference between the

impact of our culture and the culture on which the HPO model is
based on economic development. Our culture does not encourage
entrepreneurship, this being characteristic of poor countries
according Hofstede’s researches, while the cultures of the developed
countries are based on individualism and entrepreneurship. The
correlation between the degree of individualism and gross national
product has been proved positive.88 The modern society does not
recognize any more efficient manner of doing profitable business
than the market economy, which the HPO model completely
respects.

Our culture is rather different from the Anglo-Saxon one, this

raising a fundamental question of how much the theories coming
from these countries are important, possible and applicable in
Serbia? The same question applies to the model. Should the HPO
model be withdrawn in front of the “half he drinks, half to the Black
Horse he gives” of the non-entrepreneurship collectivist and
egalitarian culture, which has, due to its aversion towards the
uncertainty and changes, so many times in its history said the
“historical no”? I am convinced that it should not be withdrawn,
because I am sure that only concepts having proven efficacy in
unrestricted market economies may pull our society towards growth
88
Ibid., pg. 234-35

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and development, which actually is the quality of the estimated

concept. The question that may be posed is when and how would it
happen? In my opinion, the answer to this question is in developing
democracy, the system proven to be more effective, primarily in
societies, but ever more so in organizations as well, than any other
known system. That this should be the concept of democracy
founded on freedom, of both the organizations and the individuals,
and not on rights and obligations, which in our society often turns
into anarchy, I am absolutely convinced. But to the question: how
can our society change the adopted concept of democracy, this
paper does not pretend to be able to offer an answer.

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VII CONCLUSIONS

Is leadership that critical? Only an Internet searching89on Google, to

the question to the request about the lack of leadership produced
27,000 answers, and each has been a lament on lack of leaders in
various world and national organizations and institutions, virtually in
each field of human life. One of the head stories in magazine the
Time uttered an outcry: “The nation is calling leaders, but there’s
nobody at home”.90

The situation is not that critical, if one responds immediately. In

case of failure to respond, the situation would be drastically critical.
The essence of responding is in changing environment. And the
manner in which one should respond and how great the strength of
the changes is – is well known for thousands of years: “Therefore,
the victory in wars never comes in the same way, but by constant
adapting. The army is like water… Therefore, military force has not
constant form: capability to win by making changes and adapting
depending on enemy is a matter of ingeniousness.”91 All other
aspects are the same even today, only we know that ingeniousness
is called leadership. And it can be learnt.

We have presented out viewpoints which, we hope, provide answers

to these questions. We have defined leadership and shown the
difference between a leader and a manager, where we have
determined that the duties of leaders are a long period and success
in changes. We have presented the roots of leadership and
followership in human society and shown what leaders do and what
their types are. We have also pointed at advantages of democracy,
the type of rule tightly linked with leadership. Since the leadership
is not exclusively a product of economic science, we have presented
achievements of a set of other sciences on leadership. The most
important is that they are based on psychology showing the
significance of the balanced emotional approach of leaders to
leadership. Then follows the description of marketing environment
of this century and we have concluded that it is very dynamic. We
have enlightened major trends of interest for leaders. Furthermore,
we have presented the high performance organization as the right
type of organization created by leaders, which is appropriate to

89
Bennis Warren G., ON BECOMING A LEADER: THE LEADERSHIP CLASSIC –
UPDATED AND EXPANDED, Perseus Publishing, USA, 2003, pg.1
90
Loc.cit.
91
Sun Cu, ART OF MAKING WAR, Alnari, Mono & Manana Press, Belgrade,
2002, pg. 53-54

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their effective nature and have also given a “cross section” of such
leaders. We have also shown the local government high
performance organization. We have shown on examples that the
model has been successfully applied in practice, particularly that
both the high performance and the long running is possible to be
achieved. The field of personal leadership has also been discussed
as well as action plan of management changes, which we deem
highly important. Finally, we have shown how to become a high
performance leader, namely competition. After all the said, we
believe that it is now clear that leadership is necessary in the world
of dynamic changes. We have pointed out how changes are led and
how important the emotional nature of leader’s personality is. We
believe that we have proved the existence of organizations
immanent for leadership spirit and have also presented sufficient
number of elements for the paper to serve as instructions for
acting. We hope that we have clarified that the democracy is the
right manner of leaders’ rule in high performance organizations
because it releases the potential of all collaborators to the extent
not possible in rigid systems.

The task to become such leader as needed for the world of today
has in the first moment seemed to be very hard. However, a
number of examples have luckily shown that we have not been right
and that leadership potential lies in many things. In addition to the
above stated, the final “spice” of leadership is:
• Unceasing learning, because it enables leaders to achieve high
standards, ambitious goals and right feeling of mission in life.92
An illiterate person of the 21st century will not be the one unable
to read and write. The illiterate of the 21st century will actually
be the one who is constantly working on his own self through
always new and new learning.
• Basic leadership process is to bring about the joy. The joy is
essential leadership component and leaders are obliged to ensure
it.93
• It is not your task to become a leader, your task is to become
complete and right you – to direct all your skills, values and
energy towards realizing vision you have accepted.94

Why have we dealt primarily with a business leadership? Because

we believe that the best things affecting human society
development are born in private organizations and institutions.
That this is the most important. An effective society is the society
being aware of this and stimulating this. We believe that this
92
Kotter John P., LEADING CAHNGE, Harvard Business School Press, USA, 1996,
pg. 183
93
Depree Max, LEADERSHIP IS AN ARTDTP, USA, pg.146
94
Bennis Warren G., ON BECOMING A LEADER: THE LEADESHIP CLASSIC –
UPDATED AND EXPANDED, Perseus Publishing, USA, 2003, pg. 104

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concept has already been proven to be superior and that it may be

used in other human society segments, and in politics as well. Great
leaders have already recognized this and used it in their work. We
have also witnessed this, so in memory of the late Prime Minister
Dr. Zoran Djindjic we quote his leader’s viewpoints:
• “The factors necessary for the success of changes are clear
vision, unified and decisive team implementing changes,
educating participants and communicating with all those who at
various levels have to implement changes or who by resisting
them may hinder them. All radical changes call for great
leadership.”95
• “Today the question is not which countries are rich and which are
poor, but which countries respond rapidly and which ones
respond slowly to the changed circumstances. Those responding
rapidly will be rich countries.”96
• “In changes some things are needed, above all the uniform
vision of society. I invite people to remember the vision because
of which they have struggled for changes, the vision of organized
and successful country in which everybody’s place is known,
everybody’s responsibility.”97
• “But, the vision is always important. You must always ask
yourself – where do I go? Not only whether I run fast, whether I
spend energy but whether I know which goal I want to reach.”98

Leadership is important not only because of our personal careers

and organizations in which we work. It is important in every
organization, in every community and in every nation. We need
more great leaders and organizations, and we need them more then
ever. Still a lot of fantastic work is left to be done. We need a leader
who will “fire” and unite us on the road to human society progress.

Finally, I would like to mention my personal experience gained

during the completed leadership training in the USA. The Weldon
Cooper Center for Public Administration of the University of Virginia
in Charlottesville is one of the two “premium” courses for training
city managers in the USA. The other is located on Harvard, JFK
School, where leaders for higher levels of power are trained.
However, the University of Virginia is considered to be for a
nuisance better school. The major course at the Senior Executive
Institute is held once a year for the period of 2 weeks for some forty
participants who must be at leading positions. Managers from
private sector may also attend the course. Only those having strong
recommendations may enroll in the School and the very appearance
on the list of potential candidates is considered a success. The
95
Djindjic Zoran, A SERBIAN VISION, Ateneum, Belgrade, 2004, pg. 114
96
Ibid., pg. 148.
97
Ibid., pg. 122
98
Djindjic Zoran, SERBIA IN EUROPE, Tanjug, Belgrad, 2003, pg. 276.

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University of Virginia is founded by the third America President

Thomas Jefferson and the entire work there is permeated with
thoughts and works of the author of the Independence Declaration
and leader of democratic thought.

The lectures start on Sunday afternoon at 16:00 hours. Formal

cloths, mobile telephones and computers are not allowed. In
luxurious classrooms and restaurant the sitting places are always
changed. This is done to stimulate the right brain side. Also, we
wore a plate with inscribed name and type of personality
determined in the MBTTI tests. At the beginning, they thought us
fundamental democracy, and then the MBTI basis and basis of
emotional intelligence raising. Afternoon work was a team work –
and there were 5 teams. On Tuesday evening the teams went to
bowling, it was an exercise. That day the three day presentation of
the HPO model begun and the teams had to entertain themselves,
but also to behave as the HPO. The last day of that week we had
lectures on creativity and stimulation of the right brain side, and we
also proceeded with importance of psychology. In addition, there
was a lot of discussions, particularly about team work, leadership
and how to become a leader.

In the second week the course was completely reoriented. They

insisted that a leader could not be a high performance leader unless
completely accomplished in all aspects of life. These were: mental,
emotional, spiritual and physical dimensions, where keeping
company with friends and devoting as much time as possible to own
family was of particular importance. It’s interesting to mention the
“20 minutes until the end of life” approach turning the long-terms
goals of an individual, which we mentioned that we want to
accomplish, into goals of a sick person having only 6 months of life.
They also thought us about the most important rule in life, the rule
6 and the only existing rule to be obeyed. The rule reads that
“nothing in life is that damn important”. Only on Wednesday of the
second week, the last day of our work in classrooms, we were
dealing with matters directly related to city managers, chiefs of the
police and chiefs of fire brigades. This exhausting work lasted until
6:15 hours the next morning when physical exercises began,
actually at 8:00 hrs, when the lectures started and this lasted, with
lunch and coffee breaks, until 22:00 hrs. On Wednesday we had a
field work dedicated to the HPO teams. The most important exercise
took half a day. It was in that out of the things offered on a beach
we had to build a raft on which the whole team would cross the
river and bring back certain load from the other side of the river
bank. At the middle of the river the boat would usually sink and the
team would fall into water. What the team should do was to set a
goal and strategy before going into water. There was no best

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accomplishment assignment, the team may agree to get all wet if

that suited it, but it was important that the agreed was also
accomplished. In water amidst the river, although rescuers were
around us, we were watching the raft to prevent it flow away and
the non-swimmers doing our best to accomplish the assignment.
When we managed to rescue and got out of water, the first question
of team leaders was: “And you have laughed when we were bowling
and said that the HPO teams, in which all are important and equal,
and in which all are equally leaders, are not possible. Who’s been a
chief when you’ve been drowning? As in common life, in such
dangerous situations all have the same role and work as a team, do
you need a stronger proof that this is possible in your organizations
as well”.

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3. Web sites

1. http://www.extraordinaryleader.net
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4. http://www.jimcollins.com

4. Teaching materials

University of Virginia
Weldon Cooper Center for Public Service
Senior Executive Institute
Charlottesville, Virginia, USA
July – August 2003

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