Six Theses for New Leadership

Leaders don’t create followers; they create more leaders.

Tom Peters

Why new leadership? And why now? New leadership is not a new phenomenon—leadership has needed rethinking for some time. But digitalization and increasingly distributed work, intensified by the coronavirus pandemic, have made the need urgent (see Section “The Coronavirus Pandemic as New Work Boost?”).

The relationship between employees and their organization changed fundamentally from the industrial age to the age of knowledge work. Dependent workers have become increasingly independent knowledge workers who carry their means of production in their heads. The organization now depends on them more than they depend on the organization (see Section “Species-Appropriate Keeping of Knowledge Workers”). The transition was long and steady, and it is still going on. Peter Drucker pointed out this development as early as 1959, yet he still hasn’t received the attention he deserves. Despite the theoretical insight, most organizations in the 21st century still follow the machine model of the fading industrial age.¹

For too long, leadership has aimed at obedience. At home and in school, children were (and unfortunately still are) brought up to fit into society and its outdated organizational patterns. This integration meant, and still means, subordination at its core. The impermeable feudal system of the Middle Ages is a thing of the past, but hierarchy has stood the test of time precisely because the Enlightenment created the possibility of personal advancement: no hierarchical order, no advancement. Industrialization and its large corporate structures then expanded and differentiated the principle considerably.

It is high time to make leadership more human and more humane. This “Manifesto for Humane Leadership” is meant as an impetus and a guide. The well-known “Manifesto for Agile Software Development”² served as its template. The question of new leadership, which I tried to answer here, arose during the agile transformation of BMW Group IT. And the format of the theses connects with existing thinking and builds bridges, instead of demonizing the old principles and glorifying the new.

Human Potential, Not Human Resources

Anyone who views organizations as machines and treats people like cogs cannot complain that employees work to rule. Under these circumstances, flawless functioning is the most we can expect. The “Gallup Engagement Index,” which Gallup has used since 2000 to measure employee engagement worldwide, shows the full extent of this waste. The results are sobering year after year: in Germany, for instance, around 15 percent of employees are actively disengaged, and around 70 percent are not engaged, i.e., they more or less work by the book. The values vary from country to country, but in most, the majority of employees are disengaged.³

The employees are not to blame, or at least not predominantly. Where organizations and management treat people as resources, people behave like resources. The same people are motivated and creative, and they often develop their potential in their free time–or fall short of it (see Section “The Eighth Type of Waste”). Leadership can make a decisive difference here for all sides. That is why the first thesis of the Manifesto for Humane Leadership is: “Unleashing human potential over employing human resources.”

Of course, organizations also depend on human labor, and using physical and mental capacities effectively and efficiently is essential. That is why the Manifesto for Humane Leadership ends with the statement: “That is, while there is value in the items on the bottom, we value the highlighted items on the top more.” It reminds us not to forget or underestimate that professional management of labor in the 20th century led to an enormous increase in the productivity of manual work, as Peter Drucker summarizes:⁴

The most important, and indeed the truly unique, contribution of management in the 20th Century was the fifty-fold increase in the productivity of the manual worker in manufacturing. […] The most important contribution of management in the 21st Century will be to increase knowledge worker productivity—hopefully by the same percentage. […] The methods, however, are totally different from those that increased the productivity of manual workers.

Today, it is no longer enough to manage the human workforce. Both people and activities have changed massively over the past 50 years. Manual work is increasingly automated, so the share of knowledge work keeps growing. And people are no longer the unskilled or low-skilled workers of Frederick Winslow Taylor’s day but, more and more, well-trained knowledge workers. Their labor, capacity, and creativity are still crucial, but only the knowledge workers themselves can and should decide how to use them, as Peter Drucker put it:⁵

Even if employed full-time by the organization, fewer and fewer people are “subordinates”—even in fairly low-level jobs. Increasingly they are “knowledge workers.” And knowledge workers are not subordinates; they are “associates.” For, once beyond the apprentice stage, knowledge workers must know more about their job than their boss does—or else they are no good at all. In fact, that they know more about their job than anybody else in the organization is part of the definition of knowledge workers.

In the era of knowledge work, self-organization increasingly takes the place of management. The appropriate leadership motto is now “enabling self-leadership” (see Section “Enabling Self-Leadership”). The task of leadership is no longer to employ standardized “human material” as profitably as possible but to act like a gardener: to create and maintain an environment in which people can develop their full potential and contribute as much of it as possible to the organization. “Leadership is a service—not a privilege. The service for employees is to offer them the opportunity to develop themselves.”⁶ At Upstalsboom, this motto of Bodo Janssen brought resounding success: employee satisfaction rose by 80 percent, the sickness rate fell from eight percent to less than three, and revenue doubled within three years, while productivity increased.⁷

Creating value by valuing people, instead of exploiting human resources, is the future.

Diversity and Dissent

Diversity originated in the civil rights movement in the USA. Since then, it has been a much-noticed and controversial topic in organizations and society. It generally refers to the equal participation of people of different origins, genders, religions, or ages, and so usually means equal opportunities or at least the absence of discrimination. This is desirable and self-evident, but it only touches the surface.

Diversity in age, gender, origin, and so on is useless if the organizational culture leans toward conformity and consensus. Leaders in such a culture will likely fit the same mold, regardless of gender, because the culture and assessment systems can produce only one type of manager.

We seek a culture that highly values people’s different perspectives: how they think and solve problems, based on their unique experiences and values. This diversity of thinking is the antidote to dangerous groupthink. A diverse workforce is necessary for such a culture but not sufficient. The decisive factor is what the culture does with the heterogeneity people bring to work: standardize or nurture?

The second thesis of this Manifesto for Humane Leadership, “Diversity and dissent over conformity and consensus,” means striving for a supportive and inclusive culture that values individuality more than conformity and sees constructive dissent as a necessary part of good decision-making. In the words of Dwight D. Eisenhower:⁸ “May we never confuse honest dissent with disloyal subversion.”

In his book “The Effective Executive,”⁹ Peter Drucker also advises that no decision should be made without real discussion. As a prime example, he cites Alfred P. Sloan, who reportedly said in a meeting of a top committee: “Gentlemen, I take it we are all in complete agreement on the decision here.” Everyone around the table nodded assent. “Then,” continued Mr. Sloan, “I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about.”

Kim Scott reports something similar about Steve Jobs in her book “Radical Candor.”¹⁰ A colleague once gave way in a dispute with Jobs, although Jobs’s arguments had not convinced him. In retrospect, Jobs turned out to be wrong and the colleague right. Instead of apologizing, Jobs ran into his colleague’s office and scolded him loudly. “But it was your idea,” the colleague tried to justify himself. Jobs replied: “Yes, and it was your job to convince me that I was wrong. And you failed.”

Leading with Purpose and Trust

The most fundamental task of leadership is to ensure a common direction, which makes leadership particularly crucial for agile organizations. Agility requires alignment to make self-organizing teams effective. Without it, agility becomes arbitrary, and in the worst case, you end up running around in circles.

The tension between alignment and autonomy, according to Henrik Kniberg

Self-organizing teams are a core element of agility. The remarkable flexibility and customer focus of agile organizations result from the speed of decentralized decision-making. As Henrik Kniberg’s illustration shows, autonomy requires alignment, so that everyone knows and works toward the common goal.

The question is therefore not whether but how leadership should provide orientation today. On the one hand is the traditional top-down approach of policies and detailed instructions. On the other, leadership can guide by fostering a shared vision and a joint mission and by trusting inherently motivated individuals to make the best possible contribution. This is what the third thesis of the Manifesto for Humane Leadership means by “Purpose and trust over command and control.”

A key characteristic of knowledge work is that knowledge workers are not unskilled and do not need a skillful manager to make their labor productive, as in Frederick Winslow Taylor’s time. They own their means of production: their knowledge, experience, and skills. Knowledge workers must therefore be led at eye level (see Section “Species-Appropriate Keeping of Knowledge Workers”).

Self-organizing, agile teams are only a special case of the more general question of how to manage knowledge workers. Peter Drucker’s answer is relatively simple: manage them as if they were financially secure volunteers. Leading with pressure and fear is then no longer viable. The only option is to offer a purpose and a vision that attract as many people as possible to contribute voluntarily.

The third thesis thus emphasizes purpose and trust over command and control. But the theses are meant to give a direction, and the end of the Manifesto states that both sides are important. After these considerations, does command and control still have a raison d’être? Shouldn’t the thesis read “Purpose and trust instead of command and control”?

A boss who moves the pawns across the field like a chess master, without giving any context, will hopefully be encountered less and less. At the other end of the spectrum, fully purpose-driven, visionary leadership and a mature culture of trust, in which everyone does their best to make the vision a reality, is more an aspirational ideal than reality. In practice, organizations will fall somewhere between these bookends, so some command and control remains necessary. That is no excuse for not trying hard to avoid it and come closer to the ideal.

Network and Hierarchy

Hierarchy has advantages when organizing a well-known business model as efficiently as possible, with defined processes and roles. But long-term, sustainable success takes more. Beside the hierarchy, designed for the stability and efficiency of today’s business, the organization needs a component responsible for change, improvement, the new, and ultimately the business of tomorrow.

Traditionally, this task falls to strategy departments, whose means of choice are dedicated change programs and task forces. These approaches make change a temporary part of the hierarchy, steered with familiar management methods. Traditional change management works well for changes with clear objectives, such as introducing a new CRM system or remuneration model. But it assumes that change is the exception rather than the rule and that strategic decisions are the task of a few strategists and top managers.

In a world that grows more volatile, with markets moving ever faster and change becoming constant, such centralized change processes fail because of their inherent sluggishness. In this environment, change must become the organization’s second nature, its second operating system, as John Kotter states:¹¹

We cannot ignore the daily demands of running a company, which traditional hierarchies and managerial processes can still do very well. What they do not do well is identify the most important hazards and opportunities early enough, formulate creative strategic initiatives nimbly enough, and implement them fast enough.

The network complements the hierarchy, the first and dominant operating system. Its basic idea is to recruit an army of volunteers from all over the hierarchy. They work continuously on change and improvement in small, loosely linked initiatives, sharing a strong sense of purpose, a common understanding of the need for change, and a strong sense of urgency. Within this loose strategic framework, new initiatives and directions emerge faster, and opportunities are exploited more quickly.¹²

Managers of the first operating system, the hierarchy, have an essential role to play. Besides running the day-to-day business, they must ensure that the network thrives and that contributions to it are equally valued. Leadership in the network is based on purpose and trust rather than command and control (see previous section). Network activities require a strong shared sense of purpose and a vision that people can say yes to wholeheartedly and to which they gladly contribute their time and labor. For people to engage in the network alongside their work in the hierarchy, they also need permission and the freedom to work on change and improvement. It need not be the well-known 20 percent rule at Google, but leadership must state the expectation and the boundary conditions explicitly. The key ingredient, however, is trust. Without hierarchical power, only trust can hold the network together and make collaboration productive and effective.

This second operating system, the network, is a meritocracy, as we know it from open-source software development, Wikipedia, and companies such as Red Hat.¹³ The task of leadership is to balance the two operating systems. Coming from the established system of hierarchy, this means strengthening the more or less informal networks that already exist in the organization through permission, freedom, trust, and patience. That is why the fourth thesis of the Manifesto for Humane Leadership is “Contributions to networks over positions in hierarchies.”

Encounter at Eye Level

Leadership is a question of attitude. Unfortunately, it is still defined by rank, power, and subordination. The relationship between a leader and their people is usually asymmetrical: the boss has more experience, information, and power than the employees, who depend on the boss more than the boss depends on them.

Historically, this attitude stems from Taylorism, where the manager really was the one who best understood the work processes and could break them down into tiny steps for the then mostly unskilled workforce. Those days are long gone. The nature of work and employees’ expertise have changed radically since. Unfortunately, in many cases the dependency between boss and employee is the only thing that hasn’t changed.

Peter Drucker coined the term knowledge work back in 1959, well ahead of his time. Since then, he has repeatedly addressed the fundamental differences between knowledge work and the manual work of Taylorism. He reframed leadership as a professional collaboration between adult experts at eye level. The relationship between managers and knowledge workers resembles that between a conductor and the instrumentalists in an orchestra. Knowledge workers stand in an entirely different position to their manager than the arbitrarily interchangeable worker to the boss in Taylorist structures. A knowledge worker can sabotage a superior as easily and effectively as an instrumentalist can sabotage an autocratic conductor (see Section “Species-Appropriate Keeping of Knowledge Workers”).

Even sixty years after Drucker invented knowledge work, we are still in the early stages of implementing it. The relationship between managers and employees has changed significantly for the better in recent decades, and many managers now take a more parental and supportive attitude toward the people entrusted to them. The direction is right, but the traditional dependency has mostly remained. And while children demand their independence, more or less vehemently, at various stages of development, employees today remain well-protected children throughout their careers.

Leadership is legitimate only if it aims at the self-management of the employees entrusted to it.¹⁴ With these words, Götz Werner summed up what a contemporary relationship between leaders and their people looks like. It is not about superiors and subordinates but about an encounter at eye level.

Leadership is an equally important function; its task is to make others successful. That is why the fifth thesis of the Manifesto for Humane Leadership is: “Growing leaders over leading followers.” Leading dependent employees is one thing, and still an important skill. The other, and much more crucial, is the attitude to lead employees out of dependency and turn them into leaders. As Tom Peters puts it in a nutshell: “Leaders don’t create followers, they create more leaders.”¹⁵

The Art of Ambidexterity

We live in a world in which it is “normal that many things have become different and are becoming more different faster and faster,” as Karlheinz A. Geißler aptly put it.¹⁶ The perceived speed of life increases daily, driven by fascinating and sometimes frightening technological developments such as artificial intelligence and blockchain. These advances enormously increase the pressure for change and innovation in companies. The half-life of products and business models keeps shrinking.

In plain language, companies must reinvent themselves again and again, at ever shorter intervals, to survive. Besides focusing on the efficiency and profitability of today’s business, they must make it second nature to explore new opportunities boldly and constantly try out new business models. But today’s urgent business tends to crowd out what is vital in the long term, namely the ideas for tomorrow’s business. Hence the sixth and final thesis of the Manifesto for Humane Leadership: “Courageously exploring the new over efficiently exploiting the old.”

Building a company around one product or product family with one profitable business model, and scaling that business, is a considerable achievement. Most companies don’t even make it through this start-up phase. The few that succeed have their hands full operating the business.

For some companies, things go exceptionally well: Xerox with photocopiers, Kodak with films, IBM with mainframe computers. Steve Jobs described excellently what happens in this phase of incredible success:¹⁷ in the initial phase, the products and the passion for great products lead and drive the company, but gradually marketing and sales take over the helm. Fully exploiting existing products and business models makes sense, but it also carries the seeds of decline, because the focus shifts from new and innovative products and business models to the profit of the current business.

To solve this problem, companies set up research laboratories or departments. At Xerox, this was the well-known Xerox Palo Alto Research Center (PARC). The list of inventions from Xerox PARC is impressive: “Xerox PARC has been foundational to numerous revolutionary computer developments, including laser printing, Ethernet, the modern personal computer, GUI (graphical user interface) and desktop paradigm, object-oriented programming, ubiquitous computing, electronic paper, a-Si (amorphous silicon) applications, the computer mouse, and VLSI (very-large-scale integration) for semiconductors.”¹⁸ On the West Coast, 3,000 miles from the headquarters in Rochester, New York, the scientists had great freedom to work on exciting things. But the distance also disconnected them from management. Xerox failed to bring most of the inventions to market.

True organizational ambidexterity, the ability to exploit the existing and explore the new simultaneously, takes more than placing the two side by side. Xerox was very successful in the copier business of the time, and Xerox PARC was highly innovative. The problem was transferring the ideas into new products and business models. Xerox was so fixated on its well-known copier business that many of PARC’s groundbreaking innovations seemed too far away. Conversely, PARC was fixated on technology and innovation and paid little attention to translating them into business models and integrating them into Xerox.

Amazon does this better. Jeff Bezos first expanded the online bookseller’s range in an obvious way, into a complete online department store. Then came new business models. Amazon became a marketplace, a logistics service provider, a leading cloud provider with AWS, a hardware manufacturer, and much more.

Despite its size and core operating business, Amazon must always think and act like a start-up and constantly experiment with new business models and services, sometimes with considerable investments at stake. This is essential for its long-term success in a competitive, fast-moving industry. Striking the right balance, and integrating seamlessly the optimization of the existing business model and the invention of new ones, is a challenging but crucial leadership task in the VUCA world.

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1. Frédéric Laloux and Ken Wilber, Reinventing Organizations: A Guide to Creating Organizations Inspired by the next Stage of Human Consciousness, First edition (Brussels: Nelson Parker, 2014). ↩

2. Kent Beck et al., “Manifesto for Agile Software Development,” 2001, https://agilemanifesto.org/. ↩

3. “Indicator: Employee Engagement,” Gallup.com, accessed October 8, 2024, https://www.gallup.com/394373/indicator-employee-engagement.aspx. ↩

4. Peter F. Drucker and Joseph A. Maciariello, Management, Rev. ed (New York, NY: Collins, 2008), 191. ↩

5. Drucker and Maciariello, 71. ↩

6. Bodo Janssen, Die stille Revolution: Führen mit Sinn und Menschlichkeit, 7. Auflage (München: Ariston, 2016), 48. ↩

7. Janssen, 274 f. ↩

8. United States Department of State Office of Media Services and United States Department of State Office of Public Communication, The Department of State Bulletin, Bd. 30 (Office of Public Communication, Bureau of Public Affairs, 1954), 901. ↩

9. Peter F. Drucker, The Effective Executive: The Definitive Guide to Getting the Right Things Done, repr. (New York, NY: Harper, 1967), 148. ↩

10. Kim Scott, Radical Candor: Be a Kick-Ass Boss without Losing Your Humanity, Fully revised & updated edition (New York: St. Martin’s Press, 2019), 80. ↩

11. John P. Kotter, “Accelerate!,” Harvard Business Review, November 1, 2012, https://hbr.org/2012/11/accelerate. ↩

12. Kotter. ↩

13. Jim Whitehurst, The Open Organization: Igniting Passion and Performance (Boston, Massachusetts: Harvard Business Review Press, 2015). ↩

14. Götz W. Werner, Womit ich nie gerechnet habe: die Autobiographie, 5. Auflage, List-Taschenbuch 61254 (Berlin: List Taschenbuch, 2019), 173. ↩

15. Tom Peters, “Rule #3: Leadership Is Confusing As Hell,” Fast Company, no. 44 (February 28, 2001). ↩

16. Karlheinz A. Geißler, Alles hat seine Zeit, nur ich hab keine Wege in eine neue Zeitkultur (München: Oekom Verlag, 2014), 232. ↩

17. Designer’s Digest - Steve Jobs on the role of product and marketing people., accessed July 14, 2023. ↩

18. “PARC (Company),” in Wikipedia, August 30, 2024, https://en.wikipedia.org/w/index.php?title=PARC_(company). ↩