**2. Dynamic capabilities of people-centric organizations**

Over the past 15 years my colleagues and I have worked with hundreds of senior executives in many industries across the globe and asked what has changed. When we ask if the way we work with people has changed, has the nature of the work being done by our people changed, have the interests and goals of stakeholders changed, and is the environment that the organization operates in different, the overwhelming response is either "Big changes" or "Very big changes." Yet when we then ask if we have changed how we organize and manage the people and the organization the response is overwhelming "Very small change" or "Small change." **Figure 1** illustrates the feedback that we have gotten. Knowing that managers and executives continue to structure organizations and handle people using outdated concepts and methods, the existence of so much destructive, negative, inflexible, and incompetent leadership should not be surprising. Nearly every profession and discipline on the planet has experienced massive change in recent decades, all except management and leadership which are firmly rooted

It seems unlikely that ethics or managerial psychology courses, at any level, have been able to mitigate the pressures for performance and success that bring out the greed and narcissism inherent in the fundamental personalities of many people. The need for personal gratification seems to be a basic human condition and is accentuated in many individuals who, given the opportunity, will take satisfying their ambitions to extremes or may simply lack sufficient emotional intelligence to realize the damage their actions are causing to others and the organization. Maybe minor insecurities become magnified as the pressure and stress that comes with greater titles become major debilitations. The good news is that after nearly two decades of observations and study, we have concluded that all is not necessarily lost! Organizations cannot eliminate many of the forces that result in destructive and incompetent leadership. However, senior leaders and business owners **can** create a managerial system with an environment to help mitigate dark leadership behaviors while simultaneously improving the ability of the organization to adapt and change in a world that is volatile, uncertain, complex, and ambiguous (VUCA). A few courageous Jedi Knights can combat the

in methods and ideas of the industrial twentieth century.

112 Dark Sides of Organizational Behavior and Leadership

**Figure 1.** What has changed?

In the twenty-first VUCA century, organizations of all types, sizes, maturity, industry, etc., must identify new processes and structures and be aware of the importance that people have on the success or failure of the organization. Okay, most of us would agree that everyone knows that people are your most important asset. In reality, this is a nice buzzword that is largely overlooked or ignored in practice by many leaders in many organizations. It sounds great and looks good on the company web site and is almost a required statement. Can you imagine a company saying anything like "Our mission is to make as much money as possible at the expense of our employees, suppliers, or the environment."? Clearly, a statement like this would be a death blow to any company, but I suggest that many people reading this chapter have experienced organizations where this was the "real" mission statement. I, and my colleague, Lukas Michel, view leadership as an integral part of a complex, dynamic, managerial and organizational system where each part influences the others which is driven by interactions among people. Lukas Michel in *The Performance Triangle: Diagnostic Mentoring to Manage Organizations and People for Superior Performance in Turbulent Times* described what he calls the Performance Triangle shown in **Figure 2** [9]. The dynamic system consists of organizational culture, systems, and leadership and is powered by people through their shared purpose, relationships, and collaboration. What this means is that effective leaders are simultaneously a function of and contributors to the culture and systems but the power for the entire system comes from people both internal and external to the organization.

Success comes by finding the right balance among the various dimensions of the Performance Triangle model. Success can be achieved by constantly evaluating many elements that make up the dimensions to make subtle changes throughout the organization quickly and effectively. Too often, leadership effectiveness seems to be evaluated in isolation and we forget that in addition to dealing with their own personal ambitions and demons, leaders and leadership behaviors are strongly influenced by other factors, many of which they may not even be aware of. I have observed and participated in many leadership development programs where leadership qualities and attributes are discussed. However, the discussion is almost always directed in a way that suggests that leadership is somehow insulated from the rest of the organization or that the leaders dictate how to behave or react to the rest of the organization. Every reader knows leaders who were successful in one situation but were abject failures in a different setting. I suggest that this is because of the complex interactions and power of the culture, systems, and most importantly, **people**. Lukas and I know from our research that there is a very high correlation among the dynamic capabilities of the Performance Triangle model and success [10]. Dimensions and underlying elements of the Performance Triangle that remain unseen to the untrained eye either inhibit or enable success of both the leader and the organization as a whole. Further, in a turbulent VUCA world these unseen forces become critical factors that either inhibit or enable superior performance.

• Responsiveness—If your employees and the organization as a whole are responsive to the needs and expectations of customers, clients, or beneficiaries. You might be successful.

Dynamic Capabilities for People-Centric Management in Turbulent Times

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• Alignment—If your employees and the organization as a whole are aligned and working

• Capabilities—If your employees and the organization as a whole have the technical capabilities and proper tools to service the needs or provide services. You might be successful.

• Motivation—If your employees and the organization as a whole are highly motivated and

• Cleverness—If your employees and the organization as a whole are encouraged to be creative to find innovative solutions then allowed to implement them. You might be successful.

*"I believe the real difference between success and failure in a corporation can be very often traced to the question of how well the organization brings out the great energies and talents* 

While there are undoubtedly many other factors that influence success of any organization whether for-profit, not-for-profit, governmental organization, or other form, these five ele-

The culture of the organization creates shared context, enables or inhibits knowledge exchange, and defines invisible boundaries of collaboration. A vibrant culture establishes shared context as the common ground with a shared agenda, language, mental models, purpose, and, relationships [11]. Shared context describes a shared mindset and the behavior of individuals based on shared norms, beliefs, values, and assumptions. The organizational culture becomes the invisible force that, like gravity, shapes all interactions within the universe that the organization exists. Everyone, including the CEO, is strongly influenced by the inexorable force of the organizational culture. Similar to The Force in Star Wars, the culture permeates everyone and everything in the organization and shapes every action or reaction. While senior executives can influence the culture, it is extremely difficult to function effectively if executives are out of step with the beliefs and shared assumptions of the rest of the company. CEOs can force changes, but these changes commonly become temporary, and the organization reverts to its former behaviors when the executive leader is gone. The classic example is Lee Iacocca at Chrysler. Iacocca is widely credited with saving ailing Chrysler in the 1980s, but the company reverted to its former ways shortly after he left the company in 1992 which ultimately lead to the ill-fated marriage of Chrysler with Daimler-Benz in 1998. The failure of the merger of Chrysler and Daimler is widely attributed to cultural differences between the two organizations. Iacocca demonstrated that it is possible for a strong leader to force behavior changes through incentives or punitive action but when the force from the leader is removed, the

*"The effectiveness of organizations could be doubled if managers discovered how to tap into* 

together to achieve a common goal or purpose. You might be successful.

engaged to deliver superior products or services. You might be successful.

ments for success are among the most critical and keys to success.

people and the organization revert to their former behaviors.

*the unrealized potential present in their workforce."—Douglas McGregor*

*of its people."—Thomas J. Watson, Jr.*

**3.2. Culture**

**Figure 2.** The performance triangle.

Rather than preach, I will offer a brief introduction of our logic behind each dimension. Then I will phrase the discussion of the various elements that make up the dimensions of dynamic capabilities in the form of a question. The idea is to stimulate introspective thought to answer the question and to encourage readers look at themselves and their organizations and attempt to gain insight and new meaning. Hopefully, some readers of this chapter will gain a level of perspective that will allow them to appreciate people-centric management principles and avoid some of the dark sides of leadership in their careers.
