By Max Shkud and Ben Haggard
In their pursuit to make their organizations more innovative, engaged, and agile in the digital age, most business leaders pursue one of the two approaches: Some try to instill the “right” mindsets, behaviors, and organizational practices. Others prioritize creating cultures of learning and inclusion where people can thrive. Both approaches fall short when it comes to building highly successful businesses amid volatility and rapid change. But there is a third way that has quietly evolved in some iconic Fortune 500s that represents a real breakthrough. It has been proven to generate the kind of sustained innovation, engagement, and agility that most ambitious leaders dream of. This third way is the main focus of this essay.
A senior business leader recently lamented that these days every large company is undergoing some sort of transformation. Regardless of whether these efforts are genuine or gimmick, most organizations have embraced rapid change as the new normal. And while specific change agendas differ from company to company, we observe that most focus their efforts on three interdependent arenas:
Why these three? Because leaders understand that in a rapidly evolving market, there can be no business growth (and eventually no business) without relentless customer-focused innovation. Similarly, there can be no true innovation unless employees are purposefully engaged and contributing their deepest creativity and passion toward customer success. And without operational agility, none of the creative innovations matter because they won’t reach customers quickly enough.
Achieving this golden trifecta of core capabilities is a complex leadership challenge, especially for large legacy companies with thousands of employees in highly competitive industries. Most leaders choose the path of thinking by analogy, as Elon Musk would put it, mining industry research and copying best practices from other successful leaders and companies. “If it worked for Google, it should work for us,” they reason. More often than not, this results in a hodge-podge of me-too, flavor-of-the-month initiatives that generate a lot of disruption and busy work but little meaningful and lasting change.
Companies that are widely admired for their innovation and agility-for example Amazon, Apple, Google, Netflix, and Tesla-avoid adopting best practices or copying each other. However, they do have one thing in common: each has its own distinct leadership culture and way of working. For this reason, whenever someone tries to copy what these companies do, they don’t achieve the same result. Because it’s not what they do that makes the difference, it’s who they are.
The conclusion we draw from this is simple: Genuinely innovative leaders chart their own paths, ones that are tailored specifically to their businesses, industries, and situations. To do this, a person must generate their own thinking. More important, they must generate the right level and quality of thinking.
In this essay, we advance a framework that can help you do this kind of thinking. It consists of three leadership paradigms, each of which offers a different approach and produces radically different results. The first two paradigms will likely sound familiar; the third, which has quietly evolved in some iconic Fortune 500 businesses over the past 50 years, represents a real breakthrough. It has been proven to generate a level of thinking that results in the sustained innovation, engagement, and agility that most ambitious leaders dream of. By changing the ways they think, these companies have ignited double- and triple-digit growth, disrupted entire industries, and generated extraordinary outcomes for every stakeholder they touch. This third paradigm is the main focus of this essay.
Three Paradigms of Leadership: What Got You Here Won’t Get You There
A paradigm is an underlying structure that determines how people view the world. It generally manifests as a cognitive framework containing basic assumptions, ways of thinking, and methodology that guide reasoning and action. A paradigm claims, “This is reality; this is how the world works.” Paradigms provide comfort and coherence, but they also create profound unconscious barriers to thinking about anything that lies outside or beyond their organizing principles.
In what follows, we will look at the behaviorist, humanist, and developmental paradigms, which are prominent in business today. Each is undergirded by a set of beliefs about people, motivation, performance, and change. Each reveals itself in different behaviors and practices and consequently has a distinctly different effect on a business’s capacity for innovation, engagement, and agility. By understanding and assessing your thinking and approach through the lens of these paradigms, you can set the stage to become a more discerning, exacting, and effective leader.
The behaviorist paradigm was shaped during the culmination of the industrial era, and has its philosophical roots in Frederick Taylor’s Scientific Management and John Watson and B. F. Skinner’s Behaviorism. A core, underlying belief in this paradigm is that a high-performing organization is like a smoothly running machine. The role of leadership is to ensure that the right conditions are present for people to perform within this machine as productively and efficiently as possible.
Employees are seen in functional terms, as sets of skills and behaviors to be hired, managed, and upgraded over time. Standardization and homogenization are pursued in the name of consistency, causing companies to codify performance excellence into standardized competency models that specify ideal behaviors and skills for each profession and career level. These competency models apply to all employees, ignoring their unique characters and aspirations. They also tend to reflect company leadership’s image of what constitutes excellence. Thus, excellent performance looks the same for all employees, and all are expected to mimic the behaviors of top leadership. It is noteworthy that most talent management practices are still based on this thinking.
From the perspective of the behaviorist paradigm, high worker performance depends on the presence of four conditions:
- They must know what is expected of them.
- They must be held accountable.
- They must be trained on how to perform their job well.
- They must be incentivized to work hard.
In a behaviorist paradigm company, it is the responsibility of leadership to create these conditions for employees. This is accomplished with cascading KPIs and OKRs, technical and behavioral skills training, regular status checks coupled with adjusting feedback, performance reviews, and elaborate reward and recognition systems that incentivize expected behaviors and results. The overarching conviction is that high performance is achieved through the external management of employees’ motivation and behaviors by leaders and experts with superior knowledge and skills.
This way of thinking is alive and well in corporate America. Its appeal is pragmatism, efficiency, and concreteness. Behaviorist-minded leaders find it easier and more sensible to focus on functional tasks, measurable behaviors, and concrete deliverables than intangibles like purpose, meaning, and potential. But clear-cut though they may be, behaviorist ways of thinking and working tend to make employees feel like generic and replaceable cogs in an organizational machine. This is a dehumanizing, soul-depleting experience for all involved, which might explain why, according to Gallup, two-thirds of American workers are disengaged. The behaviorist paradigm undermines creativity, resourcefulness, and good will, resulting in a tragic waste of human potential.
The humanist paradigm celebrates personal agency, freedom, and self-actualization in all people. Where leaders working within the behaviorist paradigm see people as skillsets and behaviors to be managed, humanist leaders approach their employees as persons with inherent potential who aspire to live meaningful and fulfilling lives. While behaviorist leaders assume that workers need constant direction, oversight, and incentives to perform well, humanist leaders believe that people will naturally deliver great results if given opportunity, autonomy, a sense of purpose, and a supportive environment where they can thrive.
Providing these conditions for employees has become the rallying cry of humanist leaders. They aim to inspire and energize employees during informal town halls and live Q&As, where they openly share their thoughts on company strategy. They also share their personal stories and struggles as a way to support and encourage employees to be their authentic selves. Managers are taught to exhibit empathy, compassion, and caring toward their teams. Instead of being strict disciplinarians, they are asked to provide ongoing coaching and feedback and remove roadblocks so that their teams can soar. Humanistic values such as diversity, inclusion, and belonging are zealously pursued and reinforced.
With respect to organization design, humanist leadership emphasizes employee empowerment, information transparency, and broad participation in decision making. The belief is that employees are naturally smart and resourceful, and will do the right thing if they’re given the autonomy to make their own decisions and freedom to act as they see fit. It is also assumed that networks of people are exponentially smarter and more creative than hierarchies and will naturally self-organize around company priorities to deliver amazing results.
All of this must sound like an organizational heaven on earth, so what’s not to like? Unfortunately, it doesn’t turn out to be as rosy in practice as it seems in theory. Those who have had direct experience with humanist leadership will probably have noticed several inherent tensions. First, thriving employees are not always high performing employees. While a number of studies link employee happiness with increased productivity, these studies tend to show correlation, not causation. We have certainly worked with companies where performance deteriorated as employees became increasingly entitled and complacent thanks to their “thriving” work environment.
Second, there is an unspoken assumption that leaders and HR are responsible for creating thriving conditions for employees. When asked what kind of workers they’d need if they wanted to build an innovative, engaged, and agile business, most leaders agree that they’d want people who are:
- Acting like leaders,
- Resilient in the face of change and adversity, and
- More committed to making a difference than to their own self-interest.
Yet, when we ask the same leaders whether the humanist drive to provide thriving conditions for employees builds these prized capabilities, most agree that it builds exactly the opposite. That is, it builds dependency, entitlement, and self-focus instead.
The third and perhaps most troubling aspect of this leadership paradigm is the way humanist leaders approach capability building. Some start from an assumption that employees are naturally resourceful and capable-with encouragement and a bit of autonomy they will do the right thing. In other words, capability development isn’t necessary. We call this “magical thinking.” Carol Sanford, in her book The Responsible Business, explains it well:
Businesses have fostered an impulse toward greater autonomy and freedom but have failed to equip employees with the corresponding critical thinking and self-management capabilities to use that freedom effectively.
Multiple hazards can arise from this way of thinking. Google’s experiment with removing managers and Netflix’s struggle to uphold its “culture of freedom and responsibility” offer two well-known examples. Most people love the idea of freedom at work but, in the absence of the self-governing capabilities that Sanford alludes to, they find the responsibility part really hard.
Other, more pragmatic humanist leaders take a different approach to capability building, which roughly follows these steps:
- Management, with some employee participation, zeros in on a desired organizational capability or cultural trait-for example, “We want to be more innovative and agile.”
- A mix of consultants, an HR center of excellence, or an employee-led transformation team defines the right behaviors and values that, according to their intuition and research, produce innovation and agility. The list might include aspirational behaviors such as taking risks, challenging the status quo, showing initiative, thinking outside the box, and being curious about the ideas of others.
- The organization then creates and deploys an innovation and agility program that trains, nudges, rewards, and reinforces these ideal behaviors in employees. Of course, consistent with humanist philosophy, the program is experiential and participatory, paying equal attention to the building of both “soft” and “hard” skills.
If this sounds like a kinder version of behaviorism, it is. If you still wonder why it doesn’t work well, read more here.
In sum, although the humanist paradigm celebrates highly desirable qualities, such as agency, autonomy, and self-determination, it lacks an adequate methodology for building the capacity and capability of workers to manifest these qualities in their everyday work life. At best, they remain ideals. At worst, they become weaponized for use in evaluating and judging others.
Confronted with an inability to bridge this gap, organizations collapse back into the behaviorist practices they know well: tell employees how to behave, put them through a training, and reward-and-recognize the new behaviors so that they stick. This may not build much innovation, engagement, or agility, but at least it’s clear, tangible, and actionable. As the saying goes, better the devil you know than the one you don’t.
What to do? The behaviorist approach stifles people. The humanist approach frees them but fails to build their capability to use this freedom effectively. How can a business that is committed to being innovative and agile unleash the innate intelligence and creativity of its people? This is the work of the developmental paradigm, which aims to address the shortfalls of both behaviorist and humanist thinking by supplanting them with a more whole understanding of how human beings work.
The developmental paradigm springs from a fundamental belief that every living being-a customer, an employee, even a company-is born with a unique essence and distinct potential that it yearns to contribute to something greater than itself. But uncovering and manifesting this potential requires a deliberate development of will, character, and capability. Based on this philosophy of purposeful development and contribution, a developmental leader pursues three overarching aims, which can be visualized in terms of a framework:
First, developmental leaders evoke purposeful contribution in every organization member. They do this by illuminating the company’s unique essence-its core identity-and connecting it to the customer aspirations and societal imperatives that the company aims to serve. Within this generative context, leaders call on every employee and team to discover the unique contributions that reflect their own distinct potentials.
Satya Nadella, Microsoft’s renaissance CEO, is masterful at this aspect of developmental leadership. When he stepped into the role, he made rediscovering the soul-or essence-of Microsoft his top priority. Why did Microsoft exist? What would be lost if it disappeared?
Paul Allen and Bill Gates founded the company with a dream to democratize computer technology. Although technology has evolved dramatically since that time, Microsoft’s original aspiration endures. Nadella often says that Microsoft is at heart a productivity platform that empowers both customers and employees to pursue and achieve their most ambitious aspirations. He prompts his colleagues to ask themselves, “What is my unique role and contribution within this grand adventure we’re on? What am I aspiring to? What is my audacious promise to those we serve, and who do I need to become to realize it?” Understanding that Microsoft’s core promise must be regularly regenerated in service to the evolving lives and aspirations of real customers and beneficiaries, he challenges the company to ask, “What does it mean to empower this specific customer, to make this specific beneficiary more productive? What is our unique contribution and how do we become increasingly purposeful about it?”
Developmental leaders also seek to build whole-business thinking at every level of their organizations. They understand that to build a successful business, innovative ideas must be translated into financially viable products and services. This happens most effectively when organization members have a whole-business view and are capable of making decisions that benefit the whole.
Behaviorist and humanist leadership paradigms assume that for most people responsibility begins and ends with their own job or role. In contrast, developmental leaders build everyone’s capacity to take responsibility for the whole business and work across departments and functions as one integrated business team. People develop this kind of responsibility when they know how their decisions and actions contribute to customer outcomes and the financial effectiveness of the business-its earnings, margins, and cash flow.
The third leg of our triad is cultivating tri-level development. When we introduce the developmental paradigm, leaders often ask, “What about people in my organization who aren’t driven by the desire to contribute or think more systemically? What about those who are motivated by money and promotions, and who simply want to do their job and provide for their families?” It’s a fair question. While the capacities for purposeful contribution and whole-business thinking described here are inherent to all humans, they tend to be dormant, a result of narrowly focused education, behaviorist corporate cultures, and humanist cultures that take them for granted and fail to develop them fully. We see this as a key reason why so many employees are disengaged at work.
Developmental leaders believe that the capacity for purposeful contribution and whole-business thinking can be activated and grown in every organization member, although it takes an ongoing and deliberate developmental process that builds:
- Critical systemic thinking — the capacity to make sense of the complex dynamics of the business, its customers, industry, and markets, and discern increasingly effective ways to create system-actualizing effects.
- Interactive effectiveness — learning to order and organize one’s thinking, as well as manage one’s reactivity and attachments when engaging with others.
- Personal mastery — learning to manage one’s ego, motivation, and energy drains in order to maintain focus and productivity in the face of ambiguity, uncertainty, and disruption.
We are not talking about yet another humanist-derived, HR-driven “learning and development” program for employees who occasionally (and often begrudgingly) pop into a workshop, eagerly waiting to get back to real work. The tri-level development we are describing must be embedded into how work is done. Carol Sanford describes the difference in this way:
This process of developing people is built into the design of a business and how it works. It is not something that gets bolted on, along with other management practices that have accumulated over the years. Rather, it is fundamental-a necessary part of what it takes to grow a successful, holistic, highly intelligent organization.
Taken together, the three core premises of developmental leadership-evoking purposeful contribution, building whole-business thinking, and cultivating tri-level development-work together as a whole dynamic system. When organization members can connect their aspirations to the essence of the business and the real lives of customers, they develop caring, which awakens their will and creativity. They learn to focus their attention on how to make customer lives more healthy, meaningful, and fulfilling. As employees come to understand how a whole business works, they become more effective and agile in delivering innovative and financially effective solutions. Supported by an organization’s commitment to their tri-level development, employees become more able to act on their caring, driving innovation on behalf of customers at every level of the business.
Most business leaders we meet are full of intelligence, passion, and commitment. But what they often lack is a coherent and well-tested leadership philosophy and methodology. This causes many of them to adopt ineffective and conflicting practices, mostly sourced from the behaviorist and humanist paradigms, which produce confusion, resistance, and other unintended side effects. This is why this essay focuses on building paradigm consciousness -paying attention to how you think and make choices and where your convictions come from.
Our aim is to help you become more discerning and precise about the nature of change you wish to generate, and the approaches and methods that will therefore be required. It is our experience that the developmental paradigm is the most comprehensive and powerful for building an innovative, engaged, agile business-as well as a responsible citizenry and healthy democracy. But we also know that it takes deep commitment and courage. Most importantly, it takes developmental leaders. Are you willing to become one?