Organizational
Transformation
as a Function
of CEOs’ Developmental Stage1
In terms of developmental
theory (see Table 1, 2, and 3 in theory section), this cognitive-emotional
structure is characteristic of rare, late- stage leaders at the Strategist stage or beyond. The
ten cases
represent too small a number for confident conclusions, but our hypothesis is tentatively confirmed.
In all
five cases when the CEOs were measured as Strategist/Leaders, their organizations transformed in positive
directions based on business measures, and these five organizations are clinically assessed, with strong
inter-rater reliability, as undergoing 15 progressive developmental transformations (see methods section
and Tables 4 and 5). By contrast, only two of the five organizations whose CEOs were measured
at pre-
Strategist stages of development transformed positively. Among these five organizations clinical
developmental assessments indicate three progressive transformations in two organizations, two
organizations that showed “no change” developmentally, and one organization that regressed
three
stages. We now discuss our theory, methods, and findings in greater detail.
Theory
Both our consulting
itself and our findings in this paper are based on Developmental Action Inquiry.
Developmental Action Inquiry works with developmental theory (Alexander & Langer, 1990; Kegan, 1982,
1994; Wilber, 1995,2000), as applied to individuals and to organizations through a process we call ‘action
inquiry’ (see Fisher & Torbert, 1995 re consulting method and cases; see also Torbert, 1987,
1991, 1995 re
developmental theory and action inquiry as a social scientific approach).
The notion of qualitative,
developmental transformations was introduced by Hegel in the nineteenth
century (and is compatible with Platonic, Vedic, Buddhist, and Gurdjieffian appreciations of human
development as well [Overton, 1997; Alexander & Langer, 1990; Wilber, 1980, 1995; Ouspensky, 1949]).
Developmental theory has been given empirical expression through the studies of Piaget, Kohlberg,
Loevinger, and Kegan during the twentieth century. Kegan’s most recent reformulations (Kegan,
1982,
1994) recap this development and respond re-constructively to the well-aimed feminist critique (Gilligan,
1981) of Kohlberg’s masculine, individualistic bias (Kohlberg, 1981). In the spirit of feminism
and social
constructivism, Kegan focuses on the active interdependence of multiple voices in the later stage “self-
transforming” mind and in later-stage life among others in organizations. Overton (1997)
offers the most
recent explication of the relational and transformational foundations of developmental theory.
This
tradition of inquiry offers developmental theory a level of construct validity (and construct contestation)
not even distantly approached by other theories and studies of transforming leadership and organizational
transformation (e.g. Tichy & Devanna, 1986; Bass, 1985; Greiner, 1972; Lippitt & Schmidt,
1967; see
commentaries in Torbert, 1976, 1991).
According to developmental
theory and workplace research (Fisher & Torbert, 1995), the
Strategist/Leader stage of individual development is the first stage at which a leader can initiate
personal
and organizational double-loop learning (Argyris & Schon, 1974, 1978) in a potentially effective
fashion -
that is, in a fashion which does not attempt to unilaterally coerce transformational learning
and which
therefore creates the climate of mutual initiative conducive to genuine personal and organizational
transformation. But 90% of managers score at earlier stages and
Table1
Analogies between Personal and Organizational
Stages of Development
Stage Personal
development Organizational development
1 Impulsive Conception
Impulses
rule reflexes Dreams about creating a new
organization
(Multiple, distinctive impulses gradually resolve
into characteristic approach)
2 Opportunist Investments
Needs
rule impulses Spiritual, social network,
and
financial investments
(Dominant objective: gain power to have desired
effects on outside world)
3 Diplomat Incorporation
Norms/pleasing
others Products or services actually
rule needs
rendered
(Adapting to wider culture or market)
4 Expert Experiments
Craft
logic rules norms Alternative strategies
and structures
tested
(Intellectual mastery/innovation to discover what
structures work best)
5 Executive Systematic
Productivity
System
effectiveness Single structure/strategy
rules craft logic institutionalized
(Institutionalize triangulation among plan, implementation,
and outcome)
6 Strategist/Leader Collaborative
Inquiry
Self-amending
principle Self-amending structure to
rules system
match dream/mission
(Self-conscious reframing of mission, strategy,
timing,
listening to multiple voices of stakeholders &
customers)
7 Magician/Witch/Clown Foundational
Community
Process
(interplay of prin- Structure fails, spirit
sustains
ciple/action) rules principle
(Spiritual/material/transformational/inquiring praxis
among others)
8 Ironist Liberating
Disciplines
Instersystemic
develop- Widen members’ awareness of
incongrui- ment
rules process ties among mission/strategy/operations/
outcomes and skill at generating organi-
zational learning
(Acceptance of invisible alienation among multiple
human paradigms,
such that paradigm transformation best approached
indirectly
through ironic words, gestures, and event-structures)
only 10% of over 500 managers we have measured (Torbert,
1991) score at the Strategist/Leader stage (see
Table 2, below, for characteristics of each developmental stage, and Endnote 2 for more detail on the
psychometric method of assessing a person’s stage). Given these percentages, we can begin
to
understand why attempts at organizational transformation are usually so painful and often so
unsuccessful.
(Indeed, the latest
two stages - Magician/Witch/Clown and Ironist - whose dialogics and practices are
most mutuality-enhancing and transformational - are still empirically rarer [under 1% of all persons
measured]. Fisher and Torbert (1995) devotes a chapter (ch. 11) to describing a sample of six
manager/leaders scored at these stages, and Torbert (1987, 1989, 1991) clinically assesses such historically
well- known leaders as UN Secretary General Dag Hammarskjold, Pope John XXIII, Schlumberger CEO Jean
Riboud, the Motorola executiveteam during George Fisher’s tenure as CEO, Martin Luther King, and
Shirley
MacLaine as illustrating qualities characteristic of these latest stages.)
The key paradox of
transformational praxis - that developmental theory highlights and that the action
inquiry approach to practice enacts - is that no kind of power (coercive, referent, legitimate,
or expert) can
generate personal or organizational transformation when it is exercised unilaterally (Torbert, 1991).
Only
power exercised in a mutuality-enhancing, awareness-enhancing, empowering manner can generate
wholehearted transformation. In other words, only power exercised in such a way as to make oneself
as
well as the other potentially vulnerable to transformation can generate voluntary transformation rather
than
mere external conformity and compliance, or resistance (for examples of the exercise of transforming
power,
see Erikson, 1970; Fisher & Torbert, 1995; Torbert, 1987, 1989, 1991). According to developmental
theory as
supported by data such as this paper presents, only persons who develop to the Strategist stage or beyond
appreciate in action the paradoxes of exercising this type of vulnerable power.
It is significant
that most definitions and measures of power in the organization behavior field altogether
omit transforming power, as here understood, from the field of study (French & Raven, 1959; Hickson,
Lee,
Schneck, & Pennings, 1971; MacMillan, 1978; Pfeffer, 1981; Finkelstein, 1992). Thus, Finkelstein
writes that
power is “the capacity of individual actors to exert their will (p.506)” and Pfeffer contends
that power is “the
capability of one social actor to overcome resistance in achieving a desired objective (p.2).”
Consequently,
just as the practice of transforming power through action inquiry is unfamiliar to most managers, so
too the
entire flavor of qualitative, developmental transformations to later perspectives that include one’s
entire
previous perspective as a variable is by and large unfamiliar to the American management research
community.
The developmental
theory of organizing has been developed over the past thirty years in action settings
and used in clinical fashion. Originally developed in grounded-theory style from comparison among five
cases of organization development, it later gained increasing construct validity by explicit analogy
to
Erikson’s, Loevinger’s, and Kegan’s theories of personal development and in comparison
with Greiner’s
(1972) and Lippitt & Schmidt”s (1967) theories of organization development (Torbert, 1976,
1987, 1991;
Fisher & Torbert, 1995). The retrospective field quasi-experiment presented here, with multiple
raters
seeking reliability in the use of the organizational stage categories, is the first quantitatively assessed
empirical test of the theory. The three raters worked from the characteristics of each stage as
listed in Table
3.
Empirical Background and Methods
The ten organizations
to which we consulted include five for-profit companies and five not-for-profit
organizations. Their senior management teams range in size from five to fifteen persons.
These senior
management teams in turn manage between five and 1,019 employees, with an average of 485 (see Table
2,
page 8).
There are four
of us (two males and two females) who work alone or together in different
participant/consultant/researcher combinations. We have had intensive, longitudinal relationships
with
each of the ten companies, always engaging directly with the CEO and the senior management team and,
intermittently with some or all of the other employees. In three of the ten cases, we have interacted
with the
organization for about two years. In the other seven cases, we have interacted with the organization
for
about five years. The average length of our association with the organization is 4.2 years.
In each of the ten
cases, we have served as consultants and action researchers. In three of the cases,
one of us has also held a Board position; in another three of the cases, one of us has also held a
management position. In short, we have become knowledgeable observant participants (Torbert,
1991) of
these organizations, capable of offering ‘thick’ ideographic descriptions of events (see,
for example,
Chapters 9 and 10 of Fisher & Torbert [1995] for one such thick description of organization #6 in
Table 2).
In all ten of our
organizational intervention cases, some or all of the senior management team have
completed the Washington University Sentence Completion Form (Loevinger & Wessler, 1978) and have
received feedback on the results, as have we ourselves. (Participation in this research exercise
has always
been voluntary and has never been a condition of our work in the client system.) It happens that
all ten of
the CEOs participated in the sentence completion exercise. As Table 2 shows, five of the CEOs
measured at
the Strategist stage or later and five of the CEOs measured at pre-Strategist stages. All four
of the
consultants measured at the Strategist stage or later.
As mentioned above,
developmental theory gains unusually high construct validity by virtue of its two
century heritage of philosophical/theoretical contestation. At the same time, the Washington University
Sentence
Table 2
Managerial Style Characteristics Associated with
Six Developmental Frames
Stage
Name Characteristics
2
Opportunist Short
time horizon; focus on concrete things; manipulative; deceptive;
rejectsfeedback; externalizes blame; distrustful; fragile self-control;
hostile humor; views luck as central; flouts power, sexuality;
stereotypes; views rules as loss of freedom; punishes according to
‘eye for an eye’ ethic; treats what can get away with as legal; positive
ethic = even trade.
3 Diplomat Observes
protocol; avoids inner and outer conflict; works to group
standard; speaks in clichés, platitudes; conforms; feels shame if
violates norm; sin = hurting others; punishment = disapproval; seeks
membership, status; face-saving essential; loyalty to immediate
group, not ‘distant’ organization or principles; positive ethic = nice,
cooperative.
4 Expert Interested
in problem-solving; seeks causes; critical of self, others
based on craft logic; chooses efficiency over effectiveness;
perfectionist; accepts feedback only from ‘objective’ craft masters;
dogmatic; values decisions based on merit; sees contingencies,
exceptions; wants to stand out, be unique, positive ethic = sense of
obligation to wider, internally consistent moral order.
5 Executive Long-term
goals; future is vivid, inspiring; welcomes behavioral
feedback; effectiveness and results oriented; feels like initiator, not
pawn; appreciates complexity, systems; seeks generalizable reasons
for action; seeks mutuality, not hierarchy, in relationships; feels guilt
if does not meet own standards; blind to own shadow, to the
subjectivity behind objectivity; positive ethic = practical day-to-day
improvements based on self-chosen (but not self-created) ethical
system.
6 Leader Creative
at conflict resolution; recognizes importance of principle,
contract, theory, and judgment-not just rules, customs, and
exceptions- for making and maintaining good decisions; process
oriented as well as goal oriented; aware of paradox and contradiction;
relativistic, aware that what one sees depends upon one’s worldview;
high value on individuality, unique market niches, particular historical
moments; enjoys playing a variety of roles; witty, existential humor
(as contrasted to prefabricated jokes); aware of dark side, of
profundity of evil, and tempted by its power.
7 Magician/Witch/Clown Disintegration
of ego-identity, near-death experience; seeks
participation in historical/spiritual transformations; creator of mythical
events that reframe situations; anchoring in inclusive present, seeing
light and dark, order and mess; blends opposites, creating ‘positive-
sum’ games; exercises own attention, researches interplay of intuition,
thought, action, and effects on outside world; treats time and events
as symbolic, analogical, metaphorical (not merely linear, digital, literal).
Completion Form, based on Jane Loevinger’s version
of this theory, shows split-half, test-retest, and inter-
rater reliability coefficients of over .80, and considerable convergent validity with many other appropriate
psychological variables such as Rokeach’s “openness-closedness” measure (see methodological
endnote
2). In the past decade, Fisher and Torbert have shown in a series of laboratory experiments, depth
interview
studies, and field interventions that Loevinger’s measure also predicts statistically significant
behavioral
differences among managers scored at different stages (Merron, Fisher & Torbert, 1987; Fisher &
Torbert,
1991, 1995; Torbert, 1989, 1994; Torbert & Fisher, 1992). Thus, this measure combines strong
construct,
content, and predictive validity (see methodological endnote 2 for more detail).
Table 3
Characteristics of Each Stage of Organizational
Development
Stage
Name Characteristics
1
Conception Dreams,
visions, informal conversations about creating something new
to fill need not now adequately addressed; interplay among multiple
‘parents’; working models, prototypes, related projects, or business
plans developed; critical issues -- timeliness and mythic proportions
of vision.
2 Investments ‘Champions’
commit to creating organization; early relationship-
building among future stakeholders; peer networks and parent
institutions make spiritual, structural, financial commitments to
nurture; critical issues -- authenticity and reliability of commitments;
financial investment appropriately subordinated to structural and
spiritual investments.
3 Incorporation Products or services produced;
recognizable physical setting, tasks
and roles delineated; goals and operating staff chosen; critical issues
-- display of persistence in the face of threat, maintaining or recreating
consistency between original dream and actual organizational
arrangements.
4 Experiments Alternative
administrative, production, selection, reward, financial,
marketing and political strategies practiced, tested in operation and
reformed in rapid succession; critical issues -- truly experimenting,
taking disciplined stabs in the dark, rather than merely trying one or
two preconceived alternatives; finding a viable, lasting combination
of strategy and structure for the following stage.
5
Systematic Attention
is legitimately focused only on the systematic procedures
Productivityfor
accomplishing the pre-defined task; marketability or
political viability of the product or service, as measured in
quantitative terms, is the overriding criterion of success; standards,
structures, and roles are taken for granted as given and formalized,
usually in deductive, pyramidal terms; reality is usually and most
easily conceived of in deductive terms as dichotomous and
competitive: win-lose, rational-emotional, leader-follower, personal-
professional, practical-theoretical; critical issue: whether earlier
development has provided a strong and appropriate analogical
system that frames, and is not distorted by, the deductive systems
developed during this stage.
6 Collaborative Explicit
shared reflection about the corporate dream/mission and
Inquiry actuality/history
in the wider social context; open rather than
masked interpersonal relations, with disclosure, support, and
confrontation of apparent value differences; systematic evaluation
and feedback of corporate and individual performance on multiple
indices; direct facing and creative resolution of paradoxes (which
otherwise become polarized conflicts): inquiry-productivity, freedom-
control, quantity-quality, etc.; interactive development of, and
commitment to, unique, self-amending strategies and structures
appropriate to this particular organization at this particular historical
moment.
7 Foundational Political friction
within organization and with different norms of
Community
behavior in wider environments; regular, personal, shared
research on relations among spiritual, theoretical, and behavioral
qualities of experience; structure fails (‘dies’), phoenix rises from the
ashes, shared purpose (spirit) revealed as sustaining; transcendence
of pre-existing cultural categories, appreciation of continuous
interplay of opposites: action/research , sex/politics, past/future,
symbolic/diabolic, etc.; new experiences of time: his-story becomes
my-story: interplay of creative timeliness, timeless archetypes, and
timebound needs.
8
Liberating Leadership
practices deliberate irony; tasks incomprehensible and
Disciplines undoable
without reference to accompanying processes
and purposes; premeditated and precommunicated structural
evolution over time; constant cycle of experiential and empirical
research and feedback; leadership uses all available forms of power
to support the previous four qualities, consistent with while also
meeting the next three conditions; organizational structure open, in
principle, to inspection and challenge by organizational members;
leadership
becomes vulnerable to attack and public failure in practice,
if tasks, processes, and mission become incongruous and leadership
does not acknowledge and correct such incongruities; requires
leadership committed to, and highly skilled at seeking out,
recognizing, and righting personal and organizational incongruities.
__________________________________________________________________
Although we are using a well-validated psychometric measure
for CEOs’ developmental stage, there is no
such measure or comparable history of thought with regard to organizational transformation. In
some ways
this is an advantage. Indeed, the study began retrospectively when we as change agents realized
that we
had made a total of ten interventions in recent years, of which seven were viewed as successes by
divergent stakeholders and measures. At the same time, three other long-term interventions resulted
in
organizational deterioration, blocked change, and reduced outcomes. Thus, the organizational
variable has
been measured pragmatically by many stakeholders, rather than by a single, theoretically-contructed,
empirical instrument.
At the same time,
the organizational stage theory presented in Table 1 has been tested through clinical
case studies of organizational stages and transformations over thirty years, lending the theory some
degree
of empirical face validity and content validity (Torbert, 1976, 1987, 1991; Fisher & Torbert, 1995).
Also,
considerable construct validity can be said to have been established by the analogy to developmental
theory at the individual scale, by comparison to other theories of organizational transformation (Greiner,
1972; Lippitt & Schmidt, 1967; Torbert, 1976) and by reference to the distinctive political philosophies
which
make explicit the ontological/epistemological assumptions behind each organizational stage (Torbert,
1991).
Three of the four consultants who have worked with this theory in various ones of these ten organizations
developed consensus in clinically assessing whether each organization had regressed, had remained
developmentally stable, or had transformed in a progressive fashion (and how many times). First,
on the
basis of first-hand knowledge and the narrative documents already written about the organizations, each
rater made independent judgments. In all ten cases, the three raters agreed on whether the
organization
had developmentally progressed, remained at the same stage, or regressed; and in nine of the ten cases
all
three raters agreed on what the specific changes were. In the case of the smallest organization
(#3 in Table
2, with 10 employees), one rater rated a three stage change from Conception to Experiments, while the
other
two rated a five stage change from Conception to Collaborative Inquiry. In any event, the reliability
among
these trained practitioner/theorists is between .9 and 1.0, depending on how you calculate it.
Thick descriptions
(Geertz, 1983) would be necessary to persuade others of the robustness of these
judgments, and these actually exist for some of the cases (e.g. Fisher & Torbert, 1995, Chapters
8-10;
Torbert, 1991, Chapter 4). Here, one brief example of successful organizational transformation
and one brief
example of organizational stagnation and regression will illustrate the kinds of data on which judgments
about organizational tranformation have been made. Over the five-year period during which we consulted
to it, one of the not-for- profit companies in our sample (#6 in Table 2) increased its enrollments
at more
than double its industry’s average; increased its net worth twelve times; tied for first place
nationally in
consumer satisfaction according to a highly reputable, impartial consumer survey; and improved its
employee climate from one year to the next more than ever before found by the large firm that specialized
in
conducting such surveys. These were the multi-measure, multi-stakeholder “business”
results. During this
same period, the company transformed developmentally from: 1) being run by the CEO; to 2) being run
by a
strategic plan developed by the senior management team which had internally developed a double-loop
learning capacity; to 3) being run by a bottom-up strategic plan coordinated by the senior management
team and implemented by cross-functional, quality-improvement teams throughout the company, cutting
costs and time-to-market for new products far below other competitors.
By contrast, one
of the three organizations counted as not transforming (despite espousing the
intention of doing so) lost its national ranking during the time period studied, lost preferred clients
to
competitors, lost money, and endured the resignation of all the members of its strategic planning
committee. This organization (Table 2, #10) is the one organization rated as regressing.
Note that the CEO
of this organization is measured at the Diplomat stage of development personally. He succeeded
two
successive CEOs measured at the Strategist stage who had evolved a Collaborative Inquiry stage
organization. The Diplomat CEO appeared primarily concerned with pleasing others and avoiding
conflict
in a low-profile way (e.g. he publicly thanked the members of the first strategic planning committee
as he
appointed a second one, the resignations unmentioned). This CEO eliminated by simple disuse many
of the
peer learning systems built into the organization when he arrived, gradually turning the operating
organization into a crisis-prone Incorporation stage system, paralleling his own developmental theory-in-
use.
Results
Table 4, below, summarizes
the data for each of the ten organizations. It shows: whether the organization
is
Table 4
Size & Type of Organization, Consultant Relationship,
CEO Developmental Stage, and Organizational Transformation
Type of Size Length & Type of CEO Devel- Organizational
Org’n (emp.s) Consulting Re- mental Transformation?
(f-p/nfp) Stage (+=yes;0=no change;
-=regression)
1. Not-for-p.
325 5 yr.s; consulting Strategist +
from Conception to
& Board
Collab. Inquiry
2. For-profit
43 6 yr.s; consulting Strategist +
from Incorporation
& Board to Collab. Inquiry
3. For-profit
10 7 yr.s; consulting Strategist +
from Conception to
& management to Collab. Inquiry
4. For-profit
732 15 months; Strategist +
from Systematic
consulting
Prod’ity to Collab. Inquiry
5. Not-for-p.
627 6 yr.s; consulting Magician +
from Experiments
& management to Collab. Inquiry
6. Not-for-p.
847 5 yr.s; consulting Expert +
from Experiments
& Board to Collab. Inquiry
7. For-profit
183 2 yr.s; consulting Executive +
from Experiments to
Systematic Prod’ity
8. For-profit
1,019 2 yr.s; consulting Executive 0
Systematic Prod’ity
9. Not-for-p.
584 4 yr.s; consulting Executive 0
Systematic Prod’ity
& management
10.Not-for-p.
481 4 yr.s; consulting Diplomat -
regression from
C.I. to Incorporation
for-profit or not-for-profit; its size in terms of number
of employees; the length of consultation and
additional forms of participation, if any, by the consultants; what the personal developmental stage
score of
the CEO was; and whether the organization is judged to have transformed.
Table
5, below, summarizes the results shown in Table 4. In seven of the ten cases, the
organizations successfully transformed their size, profitability, quality, strategy, reputation, and
systems-
logic in progressive directions during the period studied. In the other three cases, the organizations
have
not so transformed; indeed, all three have experienced crises and highly visible performance
blockages and
one of them (#10, just described above) has clearly regressed in terms of how business gets done on
a daily
basis to the point where terms like ‘vision’ and ‘strategy’ are sour jokes for what
is missing.
As
Table 5 shows, in all five cases where the CEO is measured at the Strategist/Leader stage, the
organization has positively transformed. Conversely, in all three cases where transformation
did not occur
despite consultative intervention, the CEO is measured at an earlier stage of development than the
Strategist/Leader stage. The Fisher Exact probability of obtaining these data by chance is .083
- suggestive,
but not reaching the conventional .05 level for statistical significance. On the other hand, if
we correlate
CEO stage (ranging from Diplomat to Magician in our sample) with the number of organizational regressions
or transformations (ranging from -3 through 0 to +5 in our sample), we use more of the information in
Table
2. Applying the Spearman rank order test, we find a strong correlation of .65 between later-stage
CEOs and
the likelihood of progressive organizational transformation. This correlation accounts for a robust
42% of
the variance in the observed organizational transformations, and this correlation is significant beyond
the
.05 level. Put still differently, the pre-Strategist CEOs generated
a total of 0 organizational transformations (-3+0+0+1+2),
whereas the Strategist CEOs generated a total of
+15 organizational transformations.
Additional Qualitative Data
In the two anomalous
cases, where the organization transformed but the CEO has been measured at a
pre-Strategist stage, a thicker description shows that the CEO has treated the consultant and one or
more
team members who are measured at the Strategist/Leader stage as close confidantes. By contrast,
in the
three cases where different stakeholders and outcome measures, as well as the developmental ratings
of the
three consultants, all agree that the organizations have not transformed in a positive direction,
the pre-
Strategist CEOs have increasingly distanced themselves from the consultant(s) and from senior
management team members who measured at the Strategist/Leader or later stage.
Table 5
CEO Stage of Development and Organizational Transformation:
A Data Summary of 10 Cases
CEO
Stage of Development
Pre-Strategist Strategist or
later
Organiza- Yes 2 5
tional
Transform-
ation No 3 0
__________________________________________________________________
Here is a little more detail on the two anomalous cases
of positive transformation. In one organization (#7 in
Table 2), the consultant recommended a new Executive Vice-President position and identified the one
Strategist/Leader stage member of the team (who was also the one woman member) as a likely candidate.
During a two-day restructuring retreat with the consultant, the CEO and the rest of the senior team
decided
to make this structural change. This change made her the person to whom the other Vice-Presidents
reported and the intermediary between them and the CEO. She led a whole series of subsequent changes,
with the concurrence of the CEO and the continued occasional support of the consultant (see Fisher &
Torbert, 1995, ch.8 for more detail on this case).
In the second case
where the organization transformed even though the CEO did not measure at the
Strategist stage (#6 in Table 2), the CEO worked unusually closely with the consultant for several years,
inviting his influence in all aspects of the meeting-to-meeting operation of the senior management team.
This CEO also promoted one Strategist stage manager to senior management and highlighted the work of
another Strategist stage manager in a way that increased its influence over the whole organization.
(In this
case, the consultant’s clinical appraisal of the CEO was that he regularly exhibited strong Technician,
Achiever, and Strategist characteristics, even though measured at the Technician stage.) Thus,
in both of
the anomalous cases where CEOs who measured as pre-Strategist/Leaders participated in the leadership
of
successful organizational transformation, the CEOs encouraged the widening leadership influence of senior
members and consultants at the StrategistLeader stage.
By contrast, as already
noted, in the three cases where different stakeholders and outcome measures
agree the organization has not transformed in a positive direction, the pre-Strategist CEOs increasingly
distanced themselves from the consultant(s) and from senior management team members who measured at
the Strategist/Leader or later stage. In one case (#8 in Table 2), for a year and a half, the
CEO welcomed the
senior management team building efforts and successes of the consultants, who had been invited at the
initiative of a senior management member who measured at the Strategist/Leader stage. Then, during
the
critical days of an international merger, which his own team viewed him as mishandling, the CEO invited
detailed feedback and strategy development with regard to his own merger-related actions from the senior
team and the consultants. Because of the organizational urgency of this issue, and because the
consultants judged that a ‘hard truth’ intervention in a supportive environment might join
with the CEO’s
own transformational energies, the consultants phrased the feedback in colorful metaphors, estimating
that
the company was “three quarters of the way down the (merger-partner)’s throat” and that
the CEO needed
to play some role other than that of “silent mouse” in the merger negotiations. Other
leadership initiatives
were role-played, and the CEO stated his commitment to taking a new level of confrontative political
initiative in the construction of the future company. In the months following this meeting, however,
none
of the senior management team could report any such actual leadership initiative by the CEO. Nevertheless,
the merger was aborted because of other stakeholders’ political initiatives. Once the merger-crisis
was
eliminated, the CEO discontinued work with the consultants and distanced himself from the senior
management team member measured at the Strategist/Leader stage.
In the other two
cases, the CEOs also distanced themselves from the consultants. In one case (#9 in
Table 2), one of the consultants was actually a member of the senior management team as well as an internal
consultant. Her work, and that of a second one of us who joined briefly in that work as an external
consultant, led to significant insight and action changes by individual members of the 15 person senior
team, as well as to some organizational changes. But the CEO weaved between valuing his internal
consultant/senior manager and the change process highly, on the one hand, and, on the other hand, trying
to displace her from the senior team altogether while freezing the change process. When he publicly
misrepresented certain actions of hers, she took him on in an adjudicated administrative case, and he
lost to
her. A year later he resigned. The organization did not transform during this period.
The third case where
the CEO was measured at a pre-Strategist stage and the organization foundered
rather than transforming has already been described in the final paragraph of the Methods section.
In
addition to what is said there, we can add that the CEO maintained throughout that he highly prized
the
consultant, even though the consultant openly proposed that the CEO resign, both to the CEO himself
and
to the Board Chair. When this did not occur, the consultant eventually initiated the discontinuation
of his
own consulting role.
Discussion
Contrary to our finding
about the significance of the CEO’s developmental stage in supporting
organizational tranformation, Finkelstein (1992) has argued against studying just the CEO and in favor
of
considering the distribution of power among top managers in predicting a company’s destiny.
Recall,
however, that Finkelstein’s definition of power does not include the non-unilateral type of power
-
transforming power. Recall, also, that only ten percent of managers score at the Strategist/Leader
stage,
where the possibility and practice of mutuality- enhancing, transforming power becomes meaningful.
Thus,
Finkelstein’s argument is likely to hold for those types of power that are broadly understood and
broadly
distributed among senior managers. But, in the case of transforming power, which is neither widely
understood, nor widely practiced, the special legitimation and company-wide voice of the CEO is likely
to
be critical in sustaining transformational processes until the time when results persuade an increasing
proportion of the workforce to commit more fully and internally to the new order. And, conversely,
as our
final illustration in the results section illustrates, a single CEO incapable of exercising, recognizing,
or
supporting transformational power among his or her colleagues can be enough of a bottleneck to undo
prior organizational abilities and accomplishments.
From this small number
of cases, it does appear that the ego development stage of the CEO and of his or
her most trusted advisors is a critical variable influencing the likelihood of successful progressive
organizational transformation. More specifically, it appears that a CEO at the Strategist/Leader
stage has a
major influence on the likelihood of organizational transformation. The data in Tables
2 and 3 do not rule
out alternative hypotheses, however. The reader will note that the organizations where transformation
did
not occur were, on average, somewhat larger, hosted shorter interventions, and were more likely to be
not-
for-profits. None of these possible alternative explanations is strongly supported by the
data, though,
since: 1) three of the organizations that did transform are larger than two of those that did not; 2)
two out of
three of the shortest interventions resulted in organizational transformation; and 3) three not-for
profits did
transform and only two did not.
Another alternative
hypothesis can also be constructed to explain the data from these cases, however.
This hypothesis accepts that the ego development measure succeeds in identifying persons who hold a
similar worldview, but does not accept the stronger argument of developmental theory that the rare late-
stage managers are the only ones who understand and facilitate organizational transformation. Instead,
this
alternative hypothesis simply states that when consultant and CEO in fact hold a similar worldview,
successful influence and positive transformation are more likely to occur (Reeves, 1997, offers more
data
bearing on this hypothesis).
Looking at our data
from the point of view of this hypothesis, we see that it successfully explains the
same eight cases as our own hypothesis. In other words, it explains all five cases when the CEO
and the
consultant(s) share the same worldview (in this case the Strategist/Leader worldview) and the organization
transforms in a timely and successful fashion. It also explains the three cases when the CEO and
the
consultant(s) do not share the same worldview and the organization does not transform.
This alternative
hypothesis ought to be taken very seriously since it is as successful at intepreting the
main effects as our own hypothesis, and since it serves as an always-to-be-welcomed reminder for
executives, consultants, and scholars that, throughout any professional service engagement, the alchemy
of generating honesty, effectiveness, mutuality and, possibly, transformation across worldview differences
is a continual, delicate, mysterious process that we know all-too-little how to cultivate. In
the study we are
here reporting, we were clearly more successful at cultivating organizational transformation in those
cases
when we shared a worldview with CEOs (5 for 5) than we were when we did not (2 for 5).
Despite this serious
alternative explanation for our findings, we prefer our own hypothesis. Our
hypothesis is consistent with the thick description of the two cases that initially appear to contradict
both
our own and this new hypothesis. In both those cases, as in the other eight, greater influence by
Strategist/Leader stage senior members is associated with organizational transformation. Thus,
there is a
sense in which a variant of our hypothesis explains every single case. Moreover, our hypothesis
provides
a coherent theoretical explanation for why a Strategist stage CEO may be critical to generating
organizational transformation (because of the rarity and significance of the Strategist and post-Strategist
ability to exercise mutual, transforming power); whereas the CEO-consultant/stage-fit hypothesis only
explains why the CEO and consultant may recognize and be open to influence by one another’s logic,
not
why such mutual influece will lead to organizational transformation.
One other
previous study lends tangential support to our hypothesis, although it did not study
organizational transformation. Using multiple measures of organization development consulting
competence, Bushe and Gibbs (1990) found that eleven internal consultants measured at the
Strategist/Leader stage on the Washington University Sentence Completion Test were perceived as more
competent by other organizational members, and as playing more of a change management role, than fifty-
three other consultants who scored at earlier stages of development. Here too a Strategist perspective
seems correlated with judgments by multiple stakeholders about efficacy in fostering organizational
change.
Briefly let us consider
a final alternative hypothesis. In cases like Table 4, #10, where the CEO is at an
early stage, like the Diplomatic stage, a truly late-stage consulting approach may not accommodate the
CEO’s and/or the organization’s intolerance for the risk, ambiguity, and vulnerability that
action inquiry
reveals. Instead, an intervention that minimizes loss of face or maximizes pre-defined structure
may be more
effective. The work of Barrett and Cooperrider (1990) and of Lewis (1996) are excellent examples
of such
alternate consulting strategies. These consulting strategies will be developmentally sound if they are
based
on the consultant’s implicit action inquiry that clinically assesses the CEO, the senior management
team,
and/or the organization as a whole as unprepared for an intervention based on explicit action inquiry.
If,
however, such strategies are generalized without sensitivity to developmental considerations, we would
predict a far lower success rate and far fewer organizational transformations than that achievable through
the Developmental Action Inquiry approach.
Conclusion
So far as
we know, these are the only ten cases in which the personal developmental stage of senior
managers and organizational transformation have been studied together. (A dissertation that uses
the ego
development measure in examining relations among middle managers who are in superior-subordinate
relationships to one another is currently being completed [Steeves, 1997].) The ten longitudinal
cases
presented in this paper represent a small n from a third person, external, nomothetic, parametric
point of
view. As action inquirers in the midst of these experiences, however, there were literally thousands
of
cases when we tested our approach. For we sought to use the theory from moment-to-moment in action
as
we worked with our clients, in order to deconstruct our taken-for-granted frames and widen our awareness,
in order to explore the interaction among concurrent and mutually interruptive developmental scales
(individual, group, organizational, industry-level), and in order to craft empowering actions.
In general, Developmental
Action Inquiry seeks theory and practice that opens to transformation in the
present, rather than closing on certainty about the past. It also seeks theory and practice that
contends
with 100% of the variance rather than explaining 5-35% of the variance. Our short flurries of
(relatively)
thick description in the earlier pages, are efforts to point in that direction.
1. William R. Torbert
