If you understood how your organisation is losing behavioural value every day, what would you tackle first?
Where would you start? Who would you talk to? How would you get something off the ground?
To start, we need to know what we are dealing with; what are we developing our leaders to do differently?
Our 8 Leadership Loopholes provide you with a guide to the neglected behavioural value that teams and organisations allow to flow from their businesses every day.
Each of these Leadership Loopholes has the potential to derail entire organisations. They are subtle and unintentional; undermining organisational cultures where people are working really hard, trying to do the right thing.
There is no sense of priority here; each team and culture experiences the Leadership Loopholes differently and needs to decide what matters most. But by encouraging honest conversations and reflecting on what you see around you, you can work out where to start.
These are the 8 Leadership Loopholes that we are working hard to close, with leaders, teams and whole organisations around the world:
- Behavioural Paralysis
- Inadvertent Blundering
- Cultural Selfishness
- Structured Distraction
- Hierarchical Dependancy
- Organisational Disengagement
- Protective Holding Back
- Contextual Complexity
Why does this matter?
Let’s start with a sobering bit of research. Work by Gallup suggests that the hidden value lost through employee disengagement is equivalent to 9% of global GDP.
“Employees who are not engaged or who are actively disengaged cost the world $8.8 trillion in lost productivity”.
Gallup – State of the Global Workplace: 2023 Report
9%! So this engagement void in our organisations is costing everybody a lot of money, a lot of wasted time, and with untold consequences for psychosocial wellbeing. But this isn’t going to be a negative blog post – it is a call to action; a recognition that we can do something about it, if we choose to.
We would argue that this engagement issue is actually a leadership problem.
Or rather, it’s a lack of leadership problem.
And in a BANI world, (the steroid successor to VUCA), leadership is not something that can be left to the few. We need to become much more confident and sophisticated in the way we cultivate a “normalised” culture of leadership across our organisations.
Leadership is a choice, not a job title, and we should be starting leadership development conversations with colleagues from day one; not waiting (according to Harvard Business Review) until they are over 40.
Take a different view of the challenge
For a moment, let’s just take a look at this from a slightly different perspective. What can we learn from some high school physics about what happens if we choose to do nothing?
Imagine, for a moment, that you have just taken your dinner out of the oven. It’s too hot so you leave it on the side for a while. The heat slowly dissipates into the room, warming the kitchen ever so slightly and your meal gradually begins to cool.
This is entropy.
Entropy happens naturally, simply by doing nothing. But if you want to warm up your meal again, you need to put in some work – switching the oven back on.
Physicists use entropy to understand thermodynamics in a way that is completely outside my comfort zone. But increasingly, sociologists are arguing that overwhelmingly complex, fast-moving and integrated organisational systems are susceptible to their own version of entropy.
For them, this measure of the disorder of a system is the natural decay of structure in how we organise, behave, decide, and create direction in complex human systems.
More simply, this “social entropy” describes a tendency towards disorder or chaos.
Left unattended, and in the absence of conscious and deliberate leadership development, our complex organisations descend towards dysfunction, confusion and toxicity.
“The culture of any organisation is shaped by the worst behaviour the leader is willing to tolerate.”
Steve Gruenert and Todd Whitaker, School Culture Rewired, ch. 3 (2015)
This is social entropy in action.
Social Entropy doesn’t have to be inevitable.
If we identify the gaps in our leadership culture and start having the right conversations early enough and urgently enough, we build communities that understand leadership development to be a widespread, life-long journey.
We build resilient, high performance cultures that resist the forces of entropy. Putting consistent energy into the system, raising the bar; setting behavioural expectations, competing and collaborating, challenging each other to be even better. This is what high performance leadership cultures do to address social entropy.
So, back to the original question:
How do organisations lose behavioural value?
Over the last twenty years we have built a body of experience and research based on our work with hundreds of multi-national teams and organisations across the world. When we started to look at how many of these highly professional, successful businesses are losing hidden value we identified 8 Leadership Loopholes that are quietly draining them of behavioural potential.
The presence of Leadership Loopholes certainly doesn’t mean that they are dysfunctional – most of them were doing well – but the presence of one or more loophole means they are having to work harder just to stay in the game.
In no particular order, let’s take as look at each of the Leadership Loopholes:
Behavioural Paralysis
When teams and their leaders don’t have the behavioural skills and coping rituals to face into dilemma and paradox, they begin to experience “behavioural paralysis”. They become hesitant and cautious, wary of committing to difficult decisions or of venturing into constructive conflict.
Leaders struggle to move beyond the immediate tasks in front of them, often making themselves and others very busy but not necessarily purposeful. Faced with avoidance and reticence, teams experience a rise in unhelpful, unchallenged value-destroying behaviours and cynical beliefs begin to solidify a fixed mindset culture.
Inadvertent Blundering
Inadvertent Blundering happens when leaders or team members make repeated assumptions or unintended errors of judgment. Like a collective herd of bulls in a delicate china shop they stumble through their relationships with colleagues, lacking the subtlety and grace to read the room.
Whether it be lazy thinking, misplaced humour or overbearing self-confidence, Inadvertent Blundering is associated with minimal personal reflection or a resistance to feedback. It is fair to say that this Leadership Loophole takes a heavy toll on relationship building and reputation.
Cultural Selfishness
Left unattended, the pressure, complexity and organisational politics of business leaves teams and individuals feeling isolated and vulnerable, and at the same time takes up a disproportionate amount of time and energy. Reinforced by ill-defined performance targets, P&L responsibilities or poor inter-departmental relationships, we see teams and entire departments prioritising their own success at the expense of what McKinsey would describe as a “one firm” mindset.
Equally, an over-inflated sense of collective self-importance creates a culture where immediate interests are placed before the collective effort. Particularly common in teams with highly charismatic and potentially narcissistic leaders, Cultural Selfishness leads to a dilution of shared values, diminishes inter-organisational trust and destabilises attempts at meaningful collaboration.
Structured Distraction
Many leaders we meet have experienced a sense of “cognition deficit” at some point; a feeling of information overload or a lack of strategic clarity. When this extends into a team or community, a shared sense of being too busy to think, with no clear focus, becomes a drive towards the familiar. Taking the well trodden path and doing what we have always done, even if we have to work even harder for diminishing returns, makes sense in this game of reality avoidance.
Being wilfully blind to necessary change is not uncommon, particularly for well educated, skilful people – just read Margaret Heffernan’s book for more on that subject. But we also see Structured Distraction in organisations that habitually avoid difficult conversations and where prioritising frenetic displacement behaviours is the norm.
Hierarchical Dependancy
Even with the easy availability of high quality, fresh thinking on contemporary leadership, many organisations are still burdened by the legacy of the Great Man Theory. Popularised in the 19th century by the writer Thomas Carlyle (1795 – 1881) it established a sense of heroic leadership as destiny; a gift for the few (men). And even today, despite all the changes in business complexity, pace and cultural expectations, some leaders still cling to the legacy of “command and control” and hierarchical primacy.
Over time, and given the right conditions, teams and entire organisations “learn to be helpless”, abdicating responsibility, subdued by hierarchical power. With a toxic mix of outdated leadership legacy, structural inertia and misplaced diligence and duty, individuals and teams become unwilling to take ownership or demonstrate independent action. Hierarchical Dependancy always pushes responsibility upwards, sidestepping personal accountability, creating slow, bureaucratic, cautious organisations.
It is a world away from what Dan Pontefract describes as a “flat army”; a “collaborative armada” of aligned and empowered employees; linked together, co-dependant, sharing leadership and fostering “psychological ownership” of their work.
Organisational Disengagement
When the strategy deck is already seventy slides thick, when targets and aspirations are clearly detached from reality, individuals and teams inevitably begin to disengage. They want to feel part of something but cannot see themselves in the picture, haven’t been part of the conversation and don’t have clarity about what to prioritise and when. They don’t see, or haven’t been given reasons to care about, the higher purpose of their effort; they are missing what the military would call the Commander’s Intent.
Without the attractive gravity of a compelling “why” the essential discretionary effort needed for creativity and problem solving drifts away and with it, competitive advantage. When we are part of a community, we want to feel like we belong, that we have a stake in what is happening and that we are connected. We understand what we are striving for, we feel that we own the strategy and can share it easily and willingly with others; we can work our way through adversity because we know it is worth it.
From our perspective, an effective strategy is not just a clear articulation of a desired future state and how to get there, it is a collaborative engagement tool, a corporate conversation for all.
Protective Holding Back
Our evolutionary instincts for self preservation are still with us, even though we cloak ourselves in all our modern sophistication. We spent too many millennia being the hunted to lose it so quickly. We are wired for threat and we recall negative experiences far more quickly than positive ones – all in the name of protection. It is what Prof. Simon Peters would call the Chimp Paradox – our immensely sophisticated rational brain being both protected and sabotaged by our evolutionary past.
This instinct to self-shield (because of immediate perceptions of threat or bitter previous experience) runs contrary to what contemporary business leaders and teams need to role model: openness, emotional intelligence, vulnerability.
We can be reluctant to be open, to voice our doubts, to ask for help or trust the motives of others. Instead, we emphasise strength and power, competency and stoicism, making sure we don’t get hurt, by cutting ourselves off from those around us.
Contextual Complexity
We haven’t spoken to a business leader in decades who has said that things are getting easier or getting simpler. Business is faster, more integrated and less certain than it has ever been.
Leading, and building teams, often remotely and across multiple timezones, with matrixed layers of complexity and unceasing data overload is not easy. The challenging operating context creates a leadership competency gap, fuelled by decision paradox, dilemma and mis-aligned messaging.
When leaders and teams feel overwhelmed and under-prepared to cope with their contextual complexity, it is tough to break away from preventative behaviours and comforting routines. It feels almost impossible to stretch into the creative, bold, and strategically important conversations.
Leaders facing “contextual complexity” work hard to create absolute clarity around strategy, behaviours, communication and expectations. They simplify the narrative without patronising; they prioritise ruthlessly, they protect and serve those around them without hiding them from the realities of the bigger picture.
It’s all to play for
So that’s it. These 8 Leadership Loopholes are how we identify the behavioural value being subtly lost in teams and organisations every day.
It isn’t negative, it isn’t even malicious, it’s just social entropy. It is understandable, predictable and recognisable.
And it’s all to play for.
We can all do something about it; putting positive effort into developing leaders for the future, creating a positive context for teams to flourish, crafting purposeful organisations that are worthy of our creativity, passion and expertise.
When you want to find out more about the Leadership Loopholes and the work we are doing all over the world, building outstanding leadership cultures and high performance teams, please do get in touch.
We are ready when you are.
