New Leadership Communication―Inspire Your Horizon 3031343131, 9783031343131

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Nicole Pfeffermann Monika Schaller   Editors

New Leadership Communication — Inspire Your Horizon

New Leadership Communication—Inspire Your Horizon

Nicole Pfeffermann · Monika Schaller Editors

New Leadership Communication—Inspire Your Horizon

Editors Nicole Pfeffermann Ennepetal, Nordrhein-Westfalen, Germany

Monika Schaller Deutsche Post AG Headquarters Bonn, Germany

ISBN 978-3-031-34313-1 ISBN 978-3-031-34314-8 (eBook) https://doi.org/10.1007/978-3-031-34314-8 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023, corrected publication 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

Communication is the most important skill any leader can possess. This quote from Richard Branson has not only been my personal motto for many years, it also introduces one of this book’s chapters. It’s a quote well worth repeating. Communication is key to human interaction and the foundation of every relationship. In short: Good relationships are built on good communication. Successful, and above all personal and direct communication establishes trust and familiarity. I like to call it the interpersonal glue that makes relationships resilient even when things risk falling apart. This is true in both our private and professional lives. Today, demands on leadership have changed significantly. And that is a good development: The expectations require us to be more open, more empathetic, and ultimately more human in our professional lives. I am convinced that this is the right way to go.

Enable Enthusiasm, Empower Passion The rationale is simple: Human-centric leadership ultimately leads to a better overall work environment and to intrinsically motivated colleagues. When, by the “hidden hand” of communication, people are intrinsically motivated, they enjoy their work more and are more productive, committed, and willing to learn. This inevitably leads to the big question: What is good leadership communication and what do you have to do to achieve it? It’s not a question with easy answers, but you’ve already made a great start by reading this book. That shows that you take the matter seriously and that good leadership is a priority for you. Because the book provides some new insights about leadership communication (tasks and skills) and will inspire you to communicate openly, more engaged and connected with other human beings and more passionate and effective. And although the new world of work—with its new ways of working and new types of workers—inevitably demands a new kind of leadership communication, we can take solace in the fact that some adages of yesteryear remain valid: The best way v

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to motivate your team is still to lead by example. A team leader still has to be first and foremost a team player. At the same time, though, leaders must intensify their actions. Good leadership is about enabling people to do what they are passionate and enthusiastic about. Only then can you join forces and perform well together when faced with a challenging situation.

Leadership Means Inspiration Former German Chancellor Helmut Schmidt once said: A crisis reveals your character. As the pandemic unfolded, I was reminded of that often. I was so happy to see how so many of my colleagues across Deutsche Post DHL Group showed such wonderful character—growing beyond themselves as leaders and as team members. The foundation for this was laid by our clearly defined leadership culture, which is based on the principle of leading with “Head, Heart and Guts”. During the pandemic, we led with our head by being rational, calm, and by following the facts. We acted quickly and decisively with a set of clear and transparent priorities. We set up a task force including representatives from all divisions— myself included—and headed by our CEO Frank Appel. Together, we ensured that we provided continuous information and assessed new developments. Undoubtedly, the pandemic also demanded a lot of courage, making decisions in an uncertain environment, challenging ourselves to work differently. But perhaps most important of all for our communications was the “Heart” part of leadership. One of our chief aims here was to bond emotionally with our colleagues, to strengthen the feeling of a global “togetherness”. Our employees could sense that the company cared for them and was there for them. This guided our communications throughout the crisis and was heavily supported by using digital channels and formats, such as webcasts, Yammer chats with our company doctors, a home office challenge or a virtual coffee chat. For me this proves once more how true the quote we started with is: Communication is the most important skill any leader can possess. Good communication, empathetic and strong leadership, and sustainable, heartfelt motivation are inseparably linked. As the demands on leadership continue to evolve, we as leaders must always stay on our toes to improve. In the end, the goal is clear: We all strive to be an inspiration—as a person and as a leader. In closing, my thanks go out to Nicole Pfeffermann for putting together this book. It will help us all evolve to become better leaders and inspirational human beings. Bonn, Germany

Monika Schaller

Acknowledgements

The collection of works, published in this edition, aims to make a valuable contribution to the area of strategic management and leadership communication, covering recent and future developments in leadership development and management practice on how (new) leaders effectively communicate and design new communication models (communication model innovation) in the digital and human age. A number of people have contributed to making the first edition of this book possible. First of all, we would like to thank Holger Schaepe, Editor at SpringerVerlag, who saw the potential of this project and gave his early commitment to the concept of this book as well as the support that brought this book’s first edition to fruition. Special thanks also go to his Book Team Assistance Ms. Petra Jantzen and Book Coordination Team Dr. Zainab Liaqat and Ramamoorthy Rajangam, for their support and advice in preparing the book manuscript and market launch. Writing book chapters is especially challenging when submission deadlines compete directly with other academic, professional, and social tasks. We would like to express our strong gratitude to all authors for taking the time to contribute a chapter. Finally, our thanks go to the readers and reviewers of the first edition, who have supported us preparing this volume. Last but not least, we sincerely hope that researchers, students, colleagues, business managers, and innovators/visionaries will enjoy reading this book and be inspired by multiple perspectives and theoretical and managerial implications provided by the thoughtful book chapters. Düsseldorf, Germany March 2023

Nicole Pfeffermann Monika Schaller

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Contents

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Introduction: Leadership Tasks, Thinking and Essentials for Effective Leadership Communication . . . . . . . . . . . . . . . . . . . . . . . Nicole Pfeffermann

Part I

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Inspiring Perspectives on Communication

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Why Should Leaders Prioritize Purpose? . . . . . . . . . . . . . . . . . . . . . . . . Aurelie Cnop

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How Leaders Can Be Better Communicators in the Virtual Era . . . Leigh Thompson

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New Leadership—Essential Leadership Skills for Interactive Daily Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nicolas Sonder

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Essential Communication Skills for Emerging Leaders . . . . . . . . . . . Michelle D. Fortin and Keith A. Frey

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AI-Supported Communication (Models) and the Digitalization of Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Andreas Quest and Nicole Pfeffermann

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Building Trust for Better Crisis Communication: Lessons for Leadership Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Alan Belasen and Barry Eisenberg

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How Companies Succeed in Creating New Values Through Sustainable and Authentic Communication . . . . . . . . . . . . . . . . . . . . . . 111 Alexander Bilgeri

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Respect, Dialogue, and Innovation: Creating New Ideas and Solutions by Committing to an Ethical Culture . . . . . . . . . . . . . . . 127 Michelle R. Darnell and N. Benton Parish

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10 Ground Rules for Effective Leadership Communication . . . . . . . . . . 137 John A. Daly 11 Leadership and Innovation Communication—How Companies Survive, Grow and Prosper . . . . . . . . . . . . . . . . . . . . . . . . . . 147 Nicole Pfeffermann 12 Strategy and Communication in Organizations. Acts Better Than Words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 Inés Alegre and Miguel Ángel Ariño 13 Effective Top-Management Communication for Consultants and Other Practitioners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Heinrich Rusche 14 Digital Information Overload: How Leaders Can Strategically Use AI to Prevent Innovation Paralysis . . . . . . . . . . . . . . . . . . . . . . . . . . 181 Jamey A. Darnell and Shalini Gopalkrishnan 15 New Leadership and the Communication of Social Support . . . . . . . 191 Scott E. Shank Jr. and Vernon D. Miller 16 Unleashing Aspirational Capital: Sparking Innovation and Engagement Through Communication . . . . . . . . . . . . . . . . . . . . . . 201 Brian T. Moriarty 17 Ambivalences of Leadership Communication in the Digital Age . . . 211 Veronika Kneip 18 Transcendent Communication in the Company: An Indispensable Leadership Competency for Sustainability . . . . . . 223 Nuria Chinchilla, Pilar Garcia, and Alvaro Lleo Part II

Communicative Perspectives on Innovation, Strategy

19 Modern Leadership in Regulation; Lessons from Moral Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235 Han de Haas and Martin de Bree 20 Creative Activism: Engaging Intrapreneurs in Organizational Achievement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 Henrik Totterman 21 How the Most Future-Ready Companies Innovate and Communicate with the External World . . . . . . . . . . . . . . . . . . . . . . 263 Howard Yu, Jialu Shan, Zuriati Balian, and Lawrence Tempel 22 The Entrepreneurial Innovation Value Model and the Importance of Entrepreneurial Leadership, Knowledge, and Learning, in Commercialisation . . . . . . . . . . . . . . . . . 273 Peter Malone, Tim Mazzarol, and Sophie Reboud

Contents

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23 Adaptive Planning for Inclusive Innovation: Creating Communication Spaces for Adopting Digital Government in Peru . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 Bernardo Alayza and Domingo González 24 Crafting Sustainable Strategy from Corporate Purpose: From the Incremental to the Transformational . . . . . . . . . . . . . . . . . . . . . . . . 323 Andrew Mountfield 25 Strengthening the Organization from the Inside Out: Identifying Workplace Problems to Build and Sustain Employee Motivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349 Marion Philadelphia 26 Relationship Management in Technology and Knowhow Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367 Gabriele Schwarz 27 Possible Selves, Identity, Horizons and Communication: An Exploratory Study of Dance Students . . . . . . . . . . . . . . . . . . . . . . . . 381 Phillip A. Cartwright and Juncal Roman-Pastor 28 Mentors, Markets, and Money: How Entrepreneurs Can Leverage Feedback Loops with Stakeholders to Articulate Value Propositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389 Gregory P. Pogue, Clay Spinuzzi, and Claas Digmayer 29 Lead Playfully—Technical Innovations Communicated Through Gaming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409 Marietta Menner and Julia Thurner-Irmler 30 Inspiring Leadership for Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425 Araceli Castaneda and Mark A. Jamison Publisher’s Correction to: New Leadership—Essential Leadership Skills for Interactive Daily Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nicolas Sonder

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About the Editors

Dr.-Ing. Nicole Pfeffermann has expertise in business development, specialized in strategy and innovation, innovation communication and new leadership, and professional experience in IT-driven innovation management in logistics, (high-) tech markets, and R&D transfer projects. She is a Lecturer in digital business, information and knowledge management, and methodology and a (Co-)editor of the international contributed volumes “New Leadership in Strategy and Communication” and “Strategy and Communication for Innovation”, Springer, including book presentation in collaboration with University of Cambridge. She holds a Diploma in Business Economics and did her Ph.D. in an international Ph.D. program at the University of Bremen (DHL scholarship), and was Visiting Scholar at UCLA Anderson and GREDEG CNRS, France. She has interdisciplinary experience and was a community member at the Startplatz Köln (co-working space, startup accelerator). Monika Schaller was appointed as Executive Vice President Corporate Communications, Sustainability & Brand at DAX 30-listed Deutsche Post DHL Group in July 2019. She previously held the position of Deputy Global Head of Communications and Corporate Social Responsibility at Deutsche Bank. In this role she was responsible for advising the Management Board on all strategic communication issues. Prior to joining Deutsche Bank in 2016, Monika Schaller managed Corporate Communications for Goldman Sachs in Germany, Austria, Switzerland, Central & Eastern Europe and Russia for nine years. In this role, she was in charge of the development, implementation and execution of Goldman Sachs’ strategic communication at the time of the global financial crisis in 2008. She has extensive global experience having worked for Citigroup Corporate Communications in Germany, Austria, Switzerland and the Nordic countries. Monika Schaller started her career working for Bloomberg, reporting from various international locations including New York, Tokyo and London after transitioning from her role as a Sales Trader at CA Investment Bank in Vienna. Monika earned her Business Administration degree from the University of Vienna, Austria.

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Chapter 1

Introduction: Leadership Tasks, Thinking and Essentials for Effective Leadership Communication Nicole Pfeffermann

1.1 Introduction: Human Leadership View The Human Age symbolizes the start of a new era, the welcoming of a change in energy and how we innovate. It is the beginning of a period of time where leaders express themselves more freely and also reach a deeper connection with their target groups, a more meaningful and natural—in the flow—exchange. Humans as (self) leaders look for a richer and greater perspective (vision) and learn what is means to be human. But what does it mean for leadership communication? Communication is the critical impact factor to help us understand how we can bring forward a new idea, be understood in black-and-forth exchanges with responsive partners, and (co-)create new worlds or transform systems. This chapter presents a new perspective on leadership and main leadership tasks to effectively transform, build and communicate.

1.2 Why Communication Matters Communication Is The Most Important Skill Any Leader Can Possess. Richard Branson

A closer look at communication shows that the relevant research can be divided into three major areas: First, scientists focus on consumer behavior, psychology,

N. Pfeffermann (B) c/o codecks GmbH, Moritzstr. 14, 42117 Wuppertal, Deutschland e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_1

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and marketing; second ‘marketing diffusion’ researchers concentrate on the diffusion process of innovations from a marketing perspective and how communication enables innovation, newness and commercialization; third, this field involves effective organizational communication on corporate level including leadership communication. The corporate approach, including its later refinements, characterizes communication as the “planning, execution, evaluation of organization’s communication with internal and external publics” (Grunig, 1984: pp. 4–5; Grunig, 1992: p. 4). This encompasses the understanding that communication activities follow specific functions, especially the building function; corporate communication has the task to strengthen the corporate image and reputation by using a mixture of corporate communication activities (Bruhn, 2003). For example, promotion activities and public relations have a great impact on image building, whereas trade fairs and events affect the consumers’ decision to buy a company’s products or services. Contrarily, Hübner (2007) focuses on the behavioral perspective that understands corporate communication as a discourse and an ongoing company’s negotiation process with its stakeholders to achieve legitimation. He describes the legitimation act as a process “to bring peers together […] in order to create strategic thinking in an ongoing communicative and collaborative process” (Hübner, 2007: 165–166). Several authors mention changing environments as a crucial argument for the expanding interest in innovative communication, such as an increasing competition in communication markets, dynamic developments in media consumption, new communication channels, and access to and availability of information transformed into knowledge linked to economics’ success, that affect a company’s management of communication leading to new challenges for enterprises (e.g.,Argenti, 2007; Donsbach, 2006; Karmasin, 2007; Töhlke et al., 2001).

1.3 How Can We Understand New Leadership Communication? The human leadership view From industrialization and digitalization to ‘humanization’, the human leadership view concentrates on the ‘human age’ and thereby on human responsibility, lifecycles, and (ancient) wisdom (e.g. the rise and fall of civilizations). It means we all have the responsibility to respect each other, share common values (e.g. in the climate change debate or post-pandemic era) and better relate, connect and engage, not only among human beings but also understand how we relate to animals, nature and earth (cosmos). Leaders have the responsibility to lead with respect and effectively communicate—know their own communication style and how it impacts others—for instance, learn how to resonate deeply with their audience, create (new) communication models, and empower young minds with joy, wisdom, and abundance. In

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this context, new leadership communication focuses on two main themes: (1) expression and (2) interrelation, as shown in Fig. 1.1. Expression: Influence action and mindset by communicating more successfully through open-mindely created writings, presentations, and speeches/talks. Interrelation: Understanding about the idea of mission and speaking in metaphors to better lead and interact with others (crowd, community); also via various platforms (virtual communication skills, see Chapter Thompson). Based on ancient cultures and wisdom, the leadership cycle (Appendix) highlights 4 main areas of leadership (classic, creative, responsible, strategic) and provides an overview of powerful leadership tasks and challenges in the twenty-first century. Leadership in this approach affects society and family (e.g. a startup family), and can also establish a foundation to express a leader’s personality through creative ideas, thoughts and actions. Another example: Communication is important in the

Fig. 1.1 Human leadership view, by the author

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responsible leadership view to inspire others, to provide a stage for ideas and big dreams (mindwork/ethics), to write, present and talk about enlightenment and new pathways resulting in human (self) leaders who dare to dream big and live a blessed life. In sum, the human leadership view understands human beings as human (self) leaders. The two essential elements are 1. We-mindset and 2. Entrepreneurial spirit. Both help leaders to co-create new values (value chain transformation), better engage and lead teams and people in the human age, and develop new dynamic capabilities. What are dynamic capabilities? Dynamic Capability View in the Human Age: Brief Review Dynamic capabilities are uniquely related to given market positions and can be divided into different types in the hierarchy of a company’s structure. Eisenhardt and Martin described the re-conceptualization view of dynamic capabilities; whereby dynamic capabilities are “specific organizational and strategic processes […] by which managers alter their resource base” in order to achieve a “competitive advantage from valuable, somewhat rare, equifinal, substitutable, and fungible dynamic capabilities”, which also means a “unique path shaped by learning mechanisms [and leadership] such as practice, codification, mistakes, and pacing” (Eisenhardt & Martin, 2000, 2003: 348). Teece defines dynamic capabilities as “the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments” (Teece et al., 1997, 2000). Hence, dynamic capabilities are the answer to modern dynamic, complex and changing environments. For example, innovation communication as one of a company’s dynamic capabilities, is defined as the transactional procedure of transmitting information between an organization and its stakeholders in terms of: (1) introducing ideas, concepts, prototypes, practices, objects or a combination of them, referred to as an innovation cluster; (2) generating and highlighting context-issue(s) for the innovation or the innovation cluster; (3) presenting the innovative capability; and (4) considering openness, interrelation and time/timing used to increase a company’s value by building up new stakeholder schemata (knowledge domains), modifying existing ones, intensifying the company’s reputation, and improving the management of strategic assets and competences (based on Pfeffermann et al., 2008). Presenting with impact, negotiation and persuasion tactics, and effective organizational communication were classical lesdership skills. In the human age, communication has changed, however, and we need to newly define leadership skills. New Leadership Communication skills are as follows: i. Listening and responsiveness (connecting)

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The human world offers new possibilities for so-called prosumers to create content and present own ideas and thoughts on various platforms. Conseqently, it is important to learn how to better listen und be responsive to successfully connect with creators and (self) leaders. ii. Authenticity: Speaking the truth (emotions) How can leaders convince and achieve legitimacy? Credibility play a vital role in the human age, it encompasses being natural and showing personality when interacting with others, especially when presenting (new) ideas, visions and thoughts (e.g. in speaker engagements). iii. Effective communication models (strategic) The development of effective communication models is key for new leaders to better achieve strategic goals. Communication is an art, a craft leaders can learn. Communication model design is thereby the visual method which helps to build (new) models. Other leadership skills related to innovative communication are the instinctive recognition of a leader’s true purpose, commitment to the most passionate inspiration, making something positive out of drama & negativity, and taking responsibility for the way how to achieve goals and dreams. It is important to cherish every moment and enjoy the great position of being a leader, someone who dives deeper into specific themes and appreciates different backgrounds and ages (inclusivity). A true leader inspire others to become great leaders. Leadership Task 1: Value Chain Transformation For so many years we have built businesses and learned about value creation based on Porter’s value chain (1985): Innovation was understood as a closed, primary production process from idea generation all the way to commercialization—meaning from inbound logistics to customer service—supported by activities such as human resource management, procurement, and technology development & information management. After coming to terms with the extreme period of growth 1.0 with the fast-growing Internet platforms and dot-com bubbles, a supplementary e-value chain was introduced by Kollmann (2016) to explain value creation in the so-called net economy (interchangeable with digital business): Information is thereby key to succeed in digital business, for instance, a platform creates value by gathering, selecting, and offering new information via mobile devices (e.g. UBER, Airbnb.com). In this context, the following three main added values for users are: ● Structuring value: Online offer provides an overview of a large amount of information ● Communication value: Online offer allows different consumers to communicate ● Selection value: Online offer allows consumers to locate the desired info/service.

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Fig. 1.2 Growth 1.0, by the author

Linking the two value chains is the ultimate formula for digital business success including activities to transform and adapt businesses to open innovation. Many business consultants and startups are involved in developing new IT-driven operating models and strategic programs to perform open innovation and expand into new (e-) markets. The firm infrastructure represents thereby still the foundation of digital business and the design of innovation-information processes including design workshops has become the key factor underpinning successful innovation and firm’s growth opportunities, as illustrated in Fig. 1.2. What Are the Main Challenges? Linking value chains: Many digital transformation projects do not deliver the promised growth results and returns due to a missing knowledge base of how to best link the two value chains and successfully design open innovation-information processes. Firm infrastructure: Many businesses have problems and misunderstand how to (1) build capabilities as a foundation for innovation in the digital age, (2) establish an open innovation culture, and/or (3) invest in real co-creation activities (not design methods). Fragmentation of systems: It is per se a split system design (support and primary activities) and ‘IT/Information Management’, ‘Communication’ and ‘Innovation’ are separate units in the value creation process leading to silo thinking, budgeting issues. Corporate innovation methods: Corporate-startup partnerships are a new means for exploitation and oftentimes it is not the right engagement model to effectively interact and collaborate with startups and use external value drivers in innovation management.

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Resentment, fear, and emotional age: We experience a tech-driven imbalance in corporate systems and leaders who are involved in power games due to changing structures instead of focusing on expanding their leadership communication skills. In fact, it is not complex, it is a paradigm shift and the ‘old’ familiar world is not working any longer. We have become digital and focus all our human energy and manpower on (a) ego-based power-control games to win the digital race and (b) new IT-driven operating models to desperately find ways to re-create the growth 1.0 pattern. What is the outcome? We build enmeshed2 (engagement level) and enmeshed3 (co-dependent level) systems. It is our collective, learned belief system—our navigation system and world map— how we think businesses are built and individuals relate, engage and connect with other individuals in systems to successfully innovate and achieve goals. We have learned how to communicate, innovate, and strategize to get a job done, achieve greater impact, and make progress in the world. If we want to change it, we must understand how we can modify our navigation system and how we communicate at a system level (leadership communication task). As human beings we have a well-organized system of ideas which helps us to understand what is going on in the world around us and inside (self-talk). It is a specific perceptual lens—a navigation system—that works for us in terms of how we communicate and feel comfortable with events and situations in life. What happens when our navigation system is challenged? To understand (new) ideas and how we react in unfamiliar situations or when we experience disruptive events, we use our knowledge schemes, our templates to organize information and understand interactions with others. These schemes (schema theory) can be activated and modified every time we seek information, reflect, act, and interact with others based on our ability to communicate with others and ourselves. Hence, communication is the critical impact factor to help us understand how we can bring forward a new idea, be understood in back-and-forth exchanges with responsive partners, and (co-) create new worlds or transform systems. Growth 2.0: The New Value Chain Approach As illustrated in Fig. 1.3, I would like to present a new value chain approach and understanding of a solid foundation for long-term growth (growth 2.0). From a dynamic capability view, (a) the innovation communication capability with its five management principles is understood as the firm’s foundation and (b) interaction activities are the linkage between innovation and information processes and represent the new communication chain. The new value chain is divided in this view into support activities (five management principles) and interaction activities, which play a pivotal role in productive thinking and (re-)connecting with individuals in innovation-information processes. !!The main difference: The innovation communication capability bridges the gap between innovation and communication at both strategic and operational levels and is a managerial capability for individuals and organizations alike. The new value chain approach is applicable at both individual (e.g. project) and system levels and

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Fig. 1.3 Growth 2.0, by the author

Fig. 1.4 Scenario 1, by the author

therefore aligned to truly empower individuals to create value and invest in their capabilities (co-creation view – re-thinking human resource management including the role of human beings in organizations). In other words, there is no innovation and information process without interactions and, hence, the innovation communication capability is key to build a solid foundation for long-term personal and business growth in the digitalized information age and in the human age. What Are the Main Added Values of Communication? Collaboration Value: Communication facilitates co-working and strategic partnerships by building strong relationships.

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Commitment Value: Communication helps to engage in sth. And overcome (strategic) change and transformation (e.g. avoidance). Creation & Transfer Value: Communication is an enabler of open innovation (cocreation) and idea commercialization (transfer). Engagement Value: Communication is a gamechanger in system design (relarting networks) due to specific engagement levels (enmeshed, co-dependent, interdependent). Dissemination Value: Communication is key in diffusion and adoption processes and can support the spreading of ideas and distribution of information. Trust & Acceptance Value: Communication leads to reputation (trust) and forsters respect, attention, acceptance and preference. Leadership Task 2: Communication Model Innovation Communication model innovation (CMI) is a key task of senior management teams and leaders. The innovation of communication models is one of today’s most challenging task and is, however, not yet treated systematically. While business model innovation is on the strategic agenda of most firms today, many organizations need to build abilities to innovate their communication models. But what is CMI and why is it important in building healthy relating networks (systems)? The Social Web has changed information exchange worldwide. Both the consumption of content on new channels and platforms on-demand as well as stakeholder involvement has a significant effect on innovation processes and communication. For instance, the active engagement of knowledge-empowered stakeholders in new product development eventuates in community organizers who manage knowledge transfer within and across organizations to successfully perform open innovation (e.g. crowd-sourcing platforms). In this context, communication is defined as an open innovation enabler in terms of coordinating all market-related innovation activities, disseminating new ideas, and successfully communicating the New. Open innovation readiness implies communication readiness. It is crucial to effectively manage all internal and external communication activities on a broad range of communication channels. In fact, embracing new opportunities for business innovation arising from open, collaborative innovation can only be taken by those who manage communication daily (it includes leadership communication). Being able to communicate clearly new visions and strategies is also essential for leaders and business owners to achieve their goals and develop a business; simply, to get a job done. Linking strategy and communication, strategy communication facilitates each strategizing process in a different phase. Consequently, it is crucial for managers to build and work with a communication model for a better understanding of how to link a strategy approach to a communication approach and positively impact the process. In sum, communication of innovation (new ideas, partnerships, strategies, products, topics and visions) has become of increased interest in the open innovation age. The fragmentation of communication management in different functions and fields

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including specific tools and techniques related to channels, platforms and markets has thereby also increased. We experience more and more updates, news and press releases on media channels which spread the word, make a noise in the world, and disseminate novelties and buzzwords. Despite advances in innovation and strategy resulting in the need for action, for instance, growing number of corporate-startup partnerships, co-working spaces, and co-innovation labs, it shows that communication is of relatively low importance in business practice. It is still the old taught schema (paradigm) of primary-secondary activities based on Porter’s value chain, see Value Chain Transformation (Leadership Task 1), and agency-based activities based on the functional communication management view. Hence, we need a new understanding of communication as a journey. Communication Journey in the Human Age Communication Model Innovation (CMI) is defined as a company’s journey to better develop, implement, and evaluate communication models as a continuous process and inspire leaders to re-think how to address communication markets, challenge the way how to orchestrate communication instruments, find new ways to communicate the New, and cultivate a positive communication culture. CMI is a key task of senior management teams and leaders (gamechanger, role models and pioneers). It plays an important role in business model innovation and communication management, for instance, to successfully transfer a business model into reality and build a culture of trust and innovation (entrepreneurship, reputation management). CMI thus involves the following activities: ● The active change and optimization of traditional communication models, which includes goals, strategy, instruments ● the improvement of minimum one of specific elements of a communication model, for instance, communication markets ● the consideration of business environment and critical (success) factors, such as leadership communication skills CMI as a journey means the integration of CMI in business model innovation programs and strategic agendas of a firm: (1) Awareness of the current communication model including strengths and weaknesses (analysis); (2) Development of a CMI journey using the communication model design method and visual canvas tool; (3) Linkage to the value chain of a firm (strategic approach) to create effectively value through communication (trust, acceptance); (4) Integration in the culture management of a company, i.e. a) support of employee empowerment and team spirit through effective communication and b) building of healthy relationships. Why is it important to build healthy relationships? Understanding dynamics in fast-changing, unpredictable and disruptive environments and how the role of human individuals and, hence, communication has changed

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over the years is essential for managing innovation and creating growth opportunities in systems. A system is defined as a dynamic relating network, such as political, corporate and financial networks. The question is how we can create healthy relating networks (= successful systems)? Is there a success formula? We need to first understand the four different types of relationships and how we define communication from a system perspective: System 1. Separation The outside-(take)-in system and one-directional communication with human creators is one option, which leads to separation and fragmentation of systems, such as freelancers, agency-based models and external supply partners (outsourcing = look into the system in a one-directional way). System 2. Enmeshed Relationship The functional system view with different roles and functions in a hierarchy of human capital (the old world) and functional communication management (first mentioned by Grunig, 1984, see appendix) create enmeshed relationships and hierarchy growth, such as top-down leadership information and interaction with authority figures. System 3. Enmeshed2 Relationship—Engagement Level In the open system view exists a new understanding of human talents and innovators who give their talent and ideas to others within and across systems and engage in human-idea relationships to co-create and translate ideas into profit (= growth). Transactional communication means thereby to be fast & open (boundless), mostly storytelling-focused and engaged in co-working or any event, such as co-innovation initiatives, co-working meetups and crowd-powered innovation via social media platforms (e.g. crowdfunding). System 4. Enmeshed3 Relationship—Co-Dependent Level At the next level it is a conscience-free system and controlled growth with power over human doings in reactive, fear-based situations based on greed, entitlement, deception and (self-)betrayal. The dysrelational communication (= not in sync, not relating) takes place in distorted realities and provokes an increased negativity on the scale of emotion, such as frustration, depression, envy, and hatred. All is becoming more or less interchangeable (e.g. copycats, apps, products and services) leading to disconnection, splitting, co-dependency, and traumatizing events which can cause immense health problems, imbalance and stagnancy and even regression (Fig. 4). The so-called ‘intertwined’, co-dependent systems and ‘shut out’ activities stop normal, healthy evolution and true innovation. Can we dare to re-think communication? Let’s have a look at the fifth possible scenario and how we can understand CMI as a healthy communication journey to build successful systems and engagement levels for human (self) leaders in the human age.

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System 5. Healthy Relationship - Inter-dependent Level Human leaders share an open learning space with individuals to clearly communicate ideas and create new verbal expressions including neuronal pathways to build learning and contribution assets rather than only building financial assets (learning model by Luckner & Nadler, 1997). This new perspective on human leaders is a solution to create balance in systems based on healthy relationships and communication journeys. Different communication models help leaders to effectively communicate, build healthy relationships and help to overcome communication challenges (e.g. attention, preference, acceptance, respect and trust). The simple success formula for leaders to communicate is: Open Learning Space + Expression.

1.4 What Makes a New Leader? Leadership Thinking Critical thinking versus problem solving In idea workshops, at leadership retreats, and in agile innovation projects we often make the experience that critical questions—and those who raise them—are not welcome. Should we convince these critical thinkers, or can we engage them? Or, even more important, can we find a way to adapt critical thinking to facilitate learning, become a successful communicative leader and turn ideas into success? Critical thinking is the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning, or communication, as a guide to belief and action. Michael Scriven & Richard Paul, National Council for Excellence in Critical Thinking. What makes critical thinking fascinating and super-supportive in leadership? In business practice and leadership development critical thinking and problem solving are often used interchangeably. What is the difference? Problem solving: Step-by-step process of defining the problem, searching for information, and testing hypotheses with the understanding that there is a limited number of solutions. The goal of problem solving is to find and implement a solution, usually to a well-defined and well-structured problem. Critical thinking: Reasoning in an open-ended manner, with an unlimited number of solutions. The critical thinking process involves constructing the situation and supporting the reasoning behind a solution. According to this view, problem solving is a linear, logic-deductive and sequential processing of information to determine one of a limited number of solutions. On the other hand, the crucial characteristic of critical thinking is that it involves ‘reasoning in an open-ended manner, with an unlimited number of solutions’. Critical thinking leads thus to productive thinking in terms of "wider, more powerful and useful view of ideas" (Collison et al., 2000: p. 127). The technique of full-spectrum questioning

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thereby "can serve as a sort of scaffold […] to frame questions in a reflective dialogue" (ibid. p. 142). Critical thinking encompasses digging deeper and looking at a problem from different stances to move ahead by ‘co-‘constructing the solution and supporting the reasoning behind. Critcally thinking can be understood as a foundation for new leaders to learn to speak more freely about solutions, mindsets or visions and it also helps to consider sense-making as a key concept in conversations. Learning by … Action, Ideas To achieve competitive advantages, companies develop new forms of learning. Ideas and knowledge can be inside and outside a company’s boundaries, whereas communication activities enable leaders to find new opportunities for learning. For instance, communication can have an impact on the stakeholders’ existing knowledge and, therefore, can facilitate an innovation adoption process. The communication mechanism also constitutes a means for learning by shaping and influencing stakeholder’s schemata. Schema theory suggests that people are active processors of information and that schematic thinking derives from the need to organize thinking for the purpose of cognitive economy (Wicks, 1992: p. 119; Miller, 2005).

Honeycutt (1999) mentioned imagined interaction as an important aspect in schema theory, learning which helps to better understand future situations and be prepared for it. The mental application of knowledge domains (schemata) is a necessity of information processing (Rogers, 2003) leading to new individual knowledge domains or subcategories in complex schemata. Schemata refer to mental maps which enable individuals to orient themselves (e.g., Louis, 1983, Weick 1979) and “guide interpretations of the past and present and expectations for the future” (Harris, 1994: p. 310). In this context, the question is how companies make sure leaders work with different dimensions of learning and schemata. Figure 1.5 shows the scalable learning map with different types of learning, for instance, learning-by-doing, learning-by-engagement and learning-by-ingenuity. A passionate new leader uses learning-by-ingenuity in a way that re-defines communication—with inspiration, imagination, and powerful expression. It involves the power of vision and innovation. With respect to experience, innovation and action, this learning map is a helpful guide to better reflect on values, develop new skills and outcomes. Is it integrity, clarity or intelligence? Can leaders become content creators, good supervisors—combine beliefs and blend practices—or does they use visualization and processes to influence actions (frameworks and apps)? Fig. 1.2 presents, thus, a good overview of the possibilities for leaders to learn, develop and become successful, passionate leaders.

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Fig. 1.5 Learning map for new leaders, by the author

1.5 Essentials of New Leadership Communication The Human Age symbolizes the start of a new era, the welcoming of a change in energy and how we innovate. It is the beginning of a period of time where leaders express themselves more freely and also reach a deeper connection with their target groups, a more meaningful and natural—in the flow—exchange. Humans as (self) leaders look for a richer and greater perspective (vision) and learn what is means to be human. But what does it mean for leadership communication? The four essentials of new leadership communication help: ● Planning, coordinating and implementing a leadership positioning and specific communication goals ● Creating cross-format communications, from critical notes for internal and external presentations to innovative, strategic online articles and posts ● Developing strategic and operational communication activities for (new) communication models using the visual, lean method ‘Communicaction Model Design’ ● Communicating the New, inspiring others and connecting with different cultures and people (effective innovation communication) ● Implementing the Human Leadership View to welcome the new era, the ‘human age’, and relate to different stakeholder groups ● Taking care of personal branding of specific leaders and the leadership team including the personal development of leaders (with spirit communication) ● Creating publication strategies and formats to communicate new ideas and visions from passionate, influential leaders.

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Fig. 1.6 Communication strategy: 8 strategies, by the author

Essential 1: Communication strategy According to (Reeves et al., 2015), strategy is getting a job done. And a communication strategy helps leaders to plan the way how to reach out to their target groups and, more importantly, to plan what to achieve with specific chosen communication activities. Different strategies, presented in Fig. 1.6, can improve the communication style and help to get a job done (e,g. contemplation strategy, simplification strategy and clarification strategy). Moreover, strategy is a way of thinking and, hence, it is important how to think about communication strategies and use them with clear intention and commitment. For example to use innovation communication as a new communication field to inspire others and effectively communicate the New (inspiration strategy). Moreover, leaders have to learn how to link a strategy approach to a communication approach including considering the right time/timing when to communicate: For example, the five strategy approaches (Reeves et al., 2015) linked to communication: Enabler: In the classical view, communication is also understood in a traditional way of being supportive in the strategy execution phase, i.e. to coordinate all communication activities to implement, execute and transform strategies. Selector: Second, communication has the pivotal role to take on a wider view on strategies, ask the right questions, and select the right strategy after the experimentation phase has ended to convert a new idea / strategy into action. Visionary: In this unlimited approach, communication facilitates pioneers in leading productive teams in dynamic, changing environments and making the conscious effort to create (neuronal) pathways which includes, for instance, internal dialogs and verbal expressions as well as envisioning the future. Influencer: In the ‘collectively-shaping-an-industry’ environment, communication is defined as the ability to influence situations, develop new mindsets, and empower individuals resulting in new actions and behaviors which foster re-shaping and cocreating new environments.

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Designer: Finally, the fifth approach focuses on renewal with its harsh conditions when facing the survival mode / stress reactions. In this context, communication is key to design new realities and create an impact space in the transition phase (open learning space = growth zone). Essential 2: Sensory communication Sensory communication is a key task of management teams and new leaders. Sensory communication aims at involving several of our basic human senses and advanced senses and abilities in communication activities and tools to better relate and connect to human (self) leaders in the human age. What means human connection? Here are some important points: ● Being in sync and relating to human individuals to share emotional moments and new human experiences; ● Exchanging ideas and thoughts with a responsive partner who mutually participates in a conversation ● Connecting with partners in a present, meaningful and enriching manner to shift to and shape new realities ● Initiating and acknowledging constant completion ‘Yes, I see and hear you.’ to build trust ● Sharing an open learning space with others to acknowledge and appreciate new ideas (attunement) ● Creating new verbal expressions and neuronal pathways to envision the future and get unstuck ● Positive matching (echo, mirror) of rhythm and intention in (non)verbal interactions and behaviour. It is the interplay of our human senses that make a connection more memorable and deeper, more intense and emotional, with respect to our most emotional sense ‘smell’ also more unique. Sensory communication can be thus a new leadership communication tool in the human age with the attempt to communicate new visions and ideas (perspectives) in a deeper and richer, more meaningful way. We all learn how it feels to be human. To the power of language we add feelings. Communication that uses human senses to better and more effectively interact and connect with others: We as human beings have not only our basic human senses (sight, sound, taste, touch, and smell), but also, as shown in Fig. 1.7, specific abilities and higher-developed senses to communicate with other human beings: 1. to receive extra information as a highly sensitive person (empath) 2. to receive subconsious information from someone’s environment 3. to receive information to see through intentions and see someone’s aura. For example, a leader which has the abilities of an empath is able to: (1) see the root of the problem (true cause), addresses the real issues and is capable seeing the symbolism in situations to assess the situation and act properly (2) easily connect and relate to others—excellent judge of character—and see the true intention of others (3)

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Fig. 1.7 Sensory communication, by the author

send out healing energy and see the true potential of others (4) know the things to talk about, feel present, adjust and create a warm atmosphere of care and beauty, and can see the other person, (5) challenge the world to see things differently, offering new ways of thinking, perception, concepts & solutions, and peacefully open somebodys eyes to new possibilities. Essential 3: Innovation communication As a new communication field Innovation Communication can facilitate the flow of ideas, make innovative capabilities visible and inspire through exchange of thoughts and ideas with different people world-wide. Different views on innovation communication can help to develop an holistic approach of innovation communication: Innovation marketing, corporate innovation communication/PR, marketing diffusion, change/innovation communication and innovation communication capability from a strategic management view. But what about the critical perspective of innovation communication which is important for leaders because it can enlarge the growth zone (learning model)? For example, presenting new ideas to senior management and board members might cause bad decisions and non.commitment: – Hiding: Instead of pitching an idea in an authentic manner, a person is dishonest and hides information or keeps secrets because he or she fears rejection and failure, which means making mistakes or dealing with the ‘not-belonging-to-the-innercircle’ phenomena – Avoiding conflict: Another point is that a person wants to please individuals and, hence, says something but actually do not want to act on it or communicate indirectly preventing constructive discussions and critical, productive thinking. This pleasing behaviour usually leads to ‘silo’ ideas, counterproductive results, and diversion tactics

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Fig. 1.8 Reflective innovation dialog, by the author

– Mindblocking: Coming up with an idea that does not resonate can simply be ignored, overlooked and blocked out (misleading perceptions, brain filters). Harsh judgement, labeling, and projection makes it thereby very hard to solve a problem, take an opportunity, and make sound decisions for future business and market success. Promotion-focused motivation is in general more conducive to creative ideas including out-of-the-ordinary ideas. This is explained by the fact that promotionfocused individuals—i.e., creative, innovative, risk-taking, ‘thinking outside the box’ people— are much more comfortable with taking chances and open to more possibilities. They enthusiastically support ideas. In contrast, prevention-focused people— i.e. efficiency-oriented, low-risk takers—like ideas that are foolproof and most of the time their critical mindset hinders the creation process. When successful companies fail to innovate, it isn’t what looks like complacency, rather the problem is a prevention-focused strategic defensiveness. The question is how leaders can use this knowledge in reflective innovation dialogues to effectively communicate new ideas and thoughts. This section presents the critical thinking method ‘full-spectrum questioning’, visualized in terms of a visual one-page tool (Fig. 1.8), to better reflect and learn how to use critical questioning in conversations, for instance, in a project management meeting to also address prevention-focused people, the critical thinkers. For example, the following questions provide an overview of the possible categories in which critical thinkers can raise questions: 1. So What? – Relevance, Importance, Interest, and Context – To whom is this idea of interest? What type of innovation is it?

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– Why do we need to consider it? Does it fit to our strategy? 2. Meaning and Concepts – What alternative meanings might exist? – Do we need supplementary knowledge? 3. Assumptions, Sources, Reasons – Is the idea / innovation unique, real? – What are reasons for (dis)belief in this idea? 4. Cause-and-Effects, Outcomes – Is the idea trigger for other effects? What are they? – What are consequences to realize the idea short / long-term? 5. Action and Next Steps – What is the commitment? Are those involved to close to act effectively? – What plans, strategies and actions might be effective? Any monitoring? Essential 4: Communication model design Communication model design (CMD) describes the rationale of how indiviuals and organizations create value through communication, reach different (new) markets, and link a strategy to a communication approach. It is a visual, lean method to develop, evaluate and document communication models. From top to down it helps an individual or team to visualize, plan, and discuss the elements of a communication model (a plan), for instance, specific required resources such as talents, business partners and IT systems. You can learn more about CMD in the chapter Quest and Pfeffermann. A communication model helps individuals, (senior) project teams, and leadership teams of organizations to transform and balance systems (= relating networks, see also communication model innovation). It is a basic approach to build learning organizations and reflect and work with interaction patterns (see Fig. 1.9). In more detail, a communication model can facilitate leaders to better develop and reflect on communication blueprints and link a vision to communications. It provides clarity for leaders so that they can empower indivuduals to create the New, envision the future and successfully lead their teams, that means inspire by example instead of stressing out, feeling resentment, developing mindblocks and silo mentiality in learning organizations and governmental institutions. CMD is thereby the method that make communications visible and clear. From a strategic perspective, the 15 information-interaction designs (Fig. 1.9) are the specific generic approaches that exist to successfully develop new communication models. For example, Actualization (Communication View) is a strategic approach that can be described as mindful, simple, and informative: (1) true

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Fig. 1.9 15 Information-Interaction designs, by the author

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connection and improved relationships without up-and-down roller-coaster rides; (2) emotional response and openness to new experiences; (3) growth mindset to nuture talent, uniqueness, simplicity, effortlessness, and playfulness; (4) identification with humanity, human ingenuity, community, arts, and culture; and (5) value of the truth and facts in a scientific-thinking manner. Each of the identified 15 information-interaction designs has its main characteristics and tools, for instance, the level of information and interaction differentiate every design. Information-interaction designs are specific communication styles which allow an individual or organization to develop a smart communication model and create value through communication. For instance, a community communication model, co-creation communication model and visionary communication model are not interchangeable when communicating the New and successfully managing dynamic innovation and digital transformation. At a meta-cognitive level, the three perspectives (Communication, Innovation, Strategy), as presented in the 15 information-interaction designs in Fig. 1.9, showcase the basic ways of how we communicate, innovate and strategize resulting in a continuous cycle of bringing forwards new ideas and making progress in the world. They relate and can be seen as comprehensive in the way how we develop communication models. For instance, with respect to digital transformation, it is crucial to understand the 15 strategic approaches because every organization has its own communication design which affects business innovation and transformation. Hence, successfully transforming a business means being aware of the specific information-interaction design and how to develop a new generic or mixed communication, and thus improve a communication model. Managing innovation dynamics involves linking and mixing informationinteraction designs over a period of time. Four generic approaches for communicating innovation can be identified to successfully perform open innovation, establish a positive innovation culture, tap into a firm’s growth potential, and create new market opportunities: – Digital Transformation: Innovation communication strategy [Dynamic information-interaction design = Renewal, Actualization, Growth] – Project Management: Change communication strategy [Dynamic informationinteraction design = Execution, Transfer-Change, Co-Creation] – Business Innovation: Value communication strategy [Dynamic informationinteraction design = BMI, Lean & Agile, Selection] – Entrepreneurship: Dialog communication strategy [Dynamic informationinteraction design = Influencer, Visionary, Art] In sum, working with the 15 generic information-interaction designs is an easy way for leaders to develop new communication models and build healthy relating networks (systems).

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Appendix

References Argenti, P. A. (2007). Corporate communication (4th ed.). Mc-Graw Hill. Berelson, B., & Steiner, G. (1964). Human behavior: an inventory of scientific findings. New York: Harcourt, Brace, and World Bruhn, M. (2003). Integrierte Unternehmens- und Markenkommunikation (3rd edition). Stuttgart: Schäffer-Poeschel Collison, G., Erlbaum, B., Haavind, S., & Tinker, R. (2000). Facilitating online learning: Effective strategies for moderators. Atwood Publishing. Donsbach, W. (2006). The identity of communication research. Journal of Communication, 56, 437–448. Eisenhardt, K.M., & Martin, J.A. (2003). Dynamic capabilities. What are they? In C.E. Helfat (Ed.), The SMS Blackwell handbook of organizational capabilities. Emergence, development, and change (pp. 341–363). Malden, MA: Blackwell Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 21(10/11), 1105–1121. Grunig, J. E., & Dozier, D. M. (1992). Excellence in public relations and communication management. IABC Research Foundation. Lawrence Erlbaum Associates. Grunig. (1984). Organizations, environments, and models of public relations. Public Relations Research & Educations, 1(1), 6–29. Harris, S. G. (1994). Organizational culture and individual sensemaking: A schema-based perspective. Organization Science, 5(3), 309–321.

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Honeycutt, J. M. (1999). Differences in imagined interactions as a consequence of marital ideology and attachment. Imagination, Cognition, and Personality, 18, 269–283. Hübner, H. (2007). The communicating company. Towards an alternative theory of corporate communication. Physica-Verlag. Karmasin, M. (2007). Stakeholder-Management als Grundlage der Unternehmenskommunikation. In M. Piwinger & A. Zerfaß (Eds.), Handbuch der Unternehmenskommunikation (pp. 71–88). GWV Fachverlage. Kollmann, T. (2016). E-Business. Grundlagen elektronischer Geschäftsmodelle in der Digitalen Wirtschaft. Springer Verlag. Louis, M. R. (1983). Organizations as cultural-bearing milieu. In L. R. Pondy, P. J. Frost, G. Morgan, & T. C. Dandridge (Eds.), Organizational symbolism (pp. 39–54). JAI Press. Miller, K. (2005). Communication theories: Perspectives, processes, and contexts (2nd ed.). McGraw Hill. Pfeffermann, N., Hülsmann, M., & Scholz-Reiter, B. (2008). Framing Innovations to Grasp Stakeholders’ Attention: A Dynamic Capability-based Conception of Innovation Communication. Research Report 2007/08 International Graduate School for Dynamics in Logistics, Vol. 01, 2008, pp. 40–44 Porter, M. E. (1985). Competitive advantage creating and sustaining superior performance. The Free Press. Reeves, M., Haanaes, K., & Sinha, J. (2015). Your strategy needs a strategy: How to choose and execute the right approach. Havard Business Review Press. van Riel, C., & Fombrun, C. (2008). Essentials of corporate communication. Implementing practices for effective reputation management. New York: Taylor & Francis. (reprinted version) Rogers, E. M. (2003). Diffusion of Innovations (5th ed.). The Free Press. Schement, J.R., & Ruben, B.D. (eds.) (1993). Between communication and information –information and behaviour. New Brunswick, NJ: Transaction Shannon, C., & Weaver, W. (1949). The mathematical theory of communication. University of Illinois Press. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533. Teece, D. J., Pisano, G., & Shuen, A. (2000). Dynamic capabilities and strategic management. In G. Dosi, R. R. Nelson, & S. G. Winter (Eds.), The nature and dynamics of organizational capabilities (pp. 334–362). Oxford University Press. Töhlke, J. M., Hultink, E. J., & Robben, H. S. J. (2001). Launching new product features: A multiple case examination. Journal of Product Innovation Management, 18, 3–14. Wicks, R. H. (1992). Schema theory and measurement in mass communication research: Theoretical and methodological issues in news information processing. In S. A. Deetz (Ed.), Communication Yearbook (15 (pp. 115–145). Sage.

Dr.-Ing. Nicole Pfeffermann has expertise in business development, specialized in strategy and innovation, innovation communication and new leadership, and professional experience in ITdriven innovation management in logistics, (high-)tech markets, and R&D transfer projects. She is a lecturer in digital business, information and knowledge management, and methodology and a (co-)editor of the international contributed volumes ‘New Leadership in Strategy and Communication’ and ‘Strategy and Communication for Innovation’, Springer, including book presentation in collaboration with University of Cambridge. She holds a Diploma in Business Economics and did her Ph.D. in an international Ph.D. program at the University of Bremen (DHL scholarship), was visiting scholar at UCLA Anderson and GREDEG CNRS, France. Nicole has interdisciplinary experience and was a community member at the Startplatz Koln (co-working space, startup accelerator).

Part I

Inspiring Perspectives on Communication

Chapter 2

Why Should Leaders Prioritize Purpose? Aurelie Cnop

2.1 Reevaluating Our “Why of Work” Everywhere around us we hear more and more example of stories such as Maureen, which abruptly left her first career as a town planner in the aftermath of the COVID19 pandemic. She says: “I found that the reality was that I was standing in the middle of two people arguing about two inches where a fence line should be. I didn’t feel like I was doing anything to help people on the scale I wanted to.” She always wanted to be a teacher, so she spent time researching it, volunteering at first in schools she approached before taking the leap and retraining. She is now headteacher of as school for young people with social, emotional and mental health needs, and loves it (The Guardian, 2021). Maureen is not alone, new research led by the CIPD (Chartered Institute of Personnel and Development) reveals that more than 6.5 million people in the UK are expected to quit their jobs in the next 12 months and highlights “it is not all about pay”, acknowledging that salary is not a “silver bullet” for retaining employees today. What is it then? When considering the factors that drive us to work or the “why” of work, both academic research and the corporate arena reflects the sentiment that today, we are increasingly seeking more from our job that only money or advancement. Individuals in general, seek a broader meaning in their work that will let them feel that they are contributing to the broader community. The acceleration of this trends towards an increasing tendency for individuals to seek an explicit congruence between their private and professional ethical and social values, and not willing anymore to compromise between who they are at work and outside work, has significant implications for understanding what motivates and drive our motivation at work today. Corporations have understood this trend and companies such as McKinsey are investing significant time and effort to better understand the “why of work” of their A. Cnop (B) 147 Gloucester Avenue, London NW18 LA, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_2

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current (and potential employees). In Mc Kinsey podcast last year, one of their partners reports that “One of the things that we were surprised to find in the research is that about 70% of people say they define their purpose through work. And millennials, even more so, are likely to see their work as their life calling” (Naina Dhingra, MckKinsey podcast, 2021).

2.2 Work as a Calling Since over ten years I am researching, with my team of colleagues at the LSE, people who work primarily for the pursuit of a mission at work. These individuals are per essence not primarily motivated by career (advancement) or money (economic reason) but the fulfilment of a goal that transcends them. In my most recent research, conducted in the medical sector, I tell the story of the head nurse of an oncology department for children, in a public hospital. She says: “The children’s oncology department is fuller of life than any other department I have ever worked for. Here, you are not ‘the nurse who hurts the patient’. You can build a long-term relationship with the children. I have found in this department what I was looking for {when I was working for a street hospital}: the feeling of being useful.” Historically, till around the mid-nineties, most companies and academic research have been nearly solely focussing on external motivators to explain and trigger motivation at work such as pay, feedback or advancement. But since the beginning of the twenty-first century, scholars realised that we perhaps oversaw another crucial dimension in the relationship that people create with their occupation. This dimension, called ideological currency in the academic jargon, can be defined as a “a credible commitments to pursue a value cause or principle not limited to self-interest”. Research suggests that if we all have this dimension part of our relationship to our work, some have it more strongly than others. People for whom this dimension is predominant often describes themselves as “working for a calling”. Working for a calling is a specific orientation to work, and although it has become a buzzword today in the social media and press arena, it is extremely difficult to capture and conceptualise, which is part of the reason it has been overseen for so long. Some see working for a calling as something we choose to do out of personal passion while more classical definition of calling highlights the idea of duty and responsibility, where a specific work or occupation is perceives as his/her purpose in life (Hall & Chandler, 2005). In both cases, it is generally associated with “the belief that work contributes to the greater good and makes the world a better place” (Wrzesniewski, 2003, pp.301). At the heart of the notion of calling at work, there is often a sense that we are born with gifts and talents that predispose us to work in a certain type of occupation. In finding and then acting our calling, we are in a sense connecting with our ultimate

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version of ourselves, always there waiting to be discovered. Through looking for our calling we are seeing things that are not yet there. There is something profoundly free and exhilarating about the idea of finding our calling. The idea that we are building a bridge between who we want to be and what we are. Working for a calling has significant positive outcomes, at work, but also spilling over in our personal lives. Acting our calling brings us meaning and significance. It also brings self-knowledge, self-fulfilment and very often an identity we can be proud of. More importantly, at its sources lies outside the self, it elevates us and ennobles us as we are using our gifts and talents for the greater good, the society needs, helping others. For many, it crystallizes our contribution to this world, the impact we all want to make.

2.3 From the Great Resignation to the Great Exploration The revaluation of the factors underlying one’s motivation to work has been both heightened and accelerated by the recent pandemic as it forced individuals to reexamine their personal and professional priorities (and the balance between these). An example of this is “the Great resignation” a term coined by Klotz (2021), also known as the Big Quit, is an ongoing economic trend in which employees voluntarily from their jobs in masses, beginning in early 2021, in the wake of the Covid-19 pandemic. A trend so clear that companies such as Michael Page are dedicated an entire section of their website to “how to change careers in the wake of the pandemic” (Michael Page website, 2022). Take for example the story of Juan Antonio Sorto, published in the Insider in 2022, a probation officer, whom, after 12 years, become one of the millions to join the Great Resignation. He says: “I couldn’t enjoy my accomplishments because of the stress I was under,” Sorto said. “I don’t consider the past 12 years as a complete waste of time, but I told myself I would never be able to stay in that position without having to re-evaluate my happiness every five years.” The pandemic has impacted working women in particular, as they were often the ones dealing with online working and home-schooling their children, such as Danger, who loved her job as a special educator and community’s advocate but because of the stress of managing childcare during and in the aftermath of the pandemic, shifted into a stay-home parent role. She says: “Three or four weeks into the most recent school year, we had already had so much illness or exposure that I was way behind on work and completely stressed, not sleeping, I had lost 11 pounds in four weeks.” Experts had foreseen this trend to disappear after the end of the pandemic, especially in today’s context high inflation and rising basic living costs such as energy. However, as the effects of the pandemic wanes, in August 2022, with COVID restrictions mostly lifted, one of five workers globally are still planning to quit in 2022, with job fulfilment and the ability to be one’s true self at work cited among the highest factors explaining the trend (PWC’s Global workforce Hopes and Fears survey, 2022). A recent article published in BBC work life suggest that “while the

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pandemic served as a trigger, the seeds of the Great Resignation were sown well before—and until the deep-rooted factors causing workers to quit are addressed, resignations are unlikely to subside. People are also now looking at work and the role they want it to play in their lives in a different way and switching jobs that better align with their values” (BBC website, 2022). As the Fuller and Kerr states it in their article “The Great resignation didn’t start with the pandemic”, it is now clear that what we are witnessing in not just a short-term turbulence provoked by the pandemic but rather the continuation of a trend that began more than a decade ago. While it is true that the pandemic has alerted us to more flexible ways of managing the dilemma emerging from work-life balance. For example, remote work alerted us to the possibility of decoupling jobs from geography. It has also prompted a personal awakening that is reshaping how and why we work, live, and think about our futures. People today are motivated to work when they see their work as interesting, challenging, fulfilling, and something that contributes to the cultivation of their best selves. We will note that these are largely internal factors, or intrinsic incentives, as opposed to extrinsic factors that have traditionally been seen as the main drivers of employee’s motivation. Further, pursuing our calling allows us to derive deep meaning from our occupations, whatever occupation that might be. The search of meaning can be found both by experiencing reality by interacting authentically with the environment and others and by giving something back to the world through creativity and self-expression as described by Frankl, a 1953. Finding meaning and purpose at work is linked to a breath of positive consequences for the individual but also for the organization, such as higher levels of organizational performance, self-worth, retention of key employees, effective management of change, and greater commitment and engagement at work. In contrast a lack of experienced meaning in the workplace has been linked to negative consequences such as employee cynicism.

2.4 Implications for Leaders Today Interestingly, recent management research supports the idea that the post-pandemic era that seemingly led to “the Great Resignation”, might at the same time allow leaders to rethink and reposition several aspects of their organisations and most importantly, the people at their hearts. By better understanding the factors that motivate employees to work today, organisations and leaders within these organisations can create conditions for people to thrive and discover meaning. Subsequently designing new policies and introducing processes that provide employees with a sense of purpose and activate their internal motivators, prioritizing task significance, support, and flexibility. A topic so compelling today that McKinsey has recently dedicated a podcast: the search for purpose at work (McKinsey website, 2021). Bill (a partner in the Philadelphia office) articulates that: “Individuals decide what their purpose is. It’s the organization’s role and opportunity to figure out how to help people bring that purpose to a finer point of

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what matters to them and to figure out whether they can create a role or an experience within the organization that helps meet that.” But how can leaders do this? In “Common purpose: How Great Leaders Get Organisations to achieve the extraordinary”, Joel Kurtzman distils his research, interviews and interactions in a concept that he presents as “the essence” of good leadership: excellent leaders create a feeling of “we” among the members of their group, team and organisation, so that everyone is aligned around a common set of clearly articulated goals. Creating this sense of common purpose is one of the Holy Grail of leadership theory and recent research give us some of the tools that leaders can use to articulate the purpose of an organisation such as the importance of authentic leadership. Goal 1: Aim to be an authentic Leader “Authentic leaders use their natural abilities, but they also recognise their shortcomings, and work hard to overcome them. They lead with purpose, meaning and values. They build enduring relationships with people. Others follow them because they know where they stand. They are consistent and self-disciplined (…)” Bill George, 2003. The call for authentic leadership originated from deep-rooted concerns about the ethical conducts of leaders in the wake of corruptions scandals in the years following the 2008 global financial crisis. An authentic leader is often characterized by high self-awareness, relational transparency, internalized moral perspective and acting in accordance with their values, morale, but also feelings. Authentic leaders need to be selfless, honest, and honourable so these leaders provide an example to the employees in the organisation. Winton and colleagues, who researched authentic leadership in relation with making meaning and building engagement, further suggest that “in contrast to the egotistic motive pattern that characterizes power wielders and pseudotransformational leaders, authentic leaders operate from an altruistic motive pattern that is rooted for others and pursue high end values that benefits others”. In their recent article “what is the purpose of purpose” in the Harvard Business review, Knowles and colleagues suggest that even if articulating the purpose of an organisation is a daunting task, leaders need to recognize that purpose cannot be authentic if it is motivated primarily by self-interest and opportunism. Leaders need to assess for example if the usefulness of the service/good the company provides is self-evident and more importantly, if the nature if the business makes it credible to assert that the company is “out to do good”. “The full potential of purpose is achieved only when it’s aligned with a company’s value proposition and creates shared aspirations, both internally and externally. Further, in his book “for the new generation of leaders”, “Authentic Leadership, rediscovering the secrets to creating lasting value.”, Bill George dramatically departs from a definition of leadership sometimes perceived as “a good act” and declares leadership “is authenticity, not style”. He defines the five dimensions of leadership as being purpose, values, relationships, heart and self-discipline. Another crucial element, integrally part of the authentic leadership, is the consistency between the actions of leaders and the described purpose. The behaviours that bring the

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purpose to life need to be modelled by senior leaders and reflected in performance reviews, promotions, recruitment, business decisions and external and internal communications. Barack Obama, the 44th President of the United States, has spoken about the importance of having a sense of purpose in one’s life. He has said that having a sense of purpose is essential for living a fulfilling and meaningful life. In his memoir “A Promised Land”, Obama writes about how his sense of purpose has evolved throughout his life, and how he has come to understand that purpose is not something fixed but rather something that can change and evolve over time. He writes, “Purpose is an ever-shifting horizon, a constantly receding destination that must be pursued anew each day. “In his speeches, Obama often spoke about how everyone has a responsibility to serve others and to make a positive impact in the world. He has said that one’s purpose in life should be to work towards making the world a better place. He has said that “It’s not about getting ahead of yourself; it’s about doing your part.” In a speech given at the University of Illinois, Obama stated “Purpose is that sense that we are in this together… That I am my brother’s keeper, I am my sister’s keeper. That we rise or fall as one.” He also said that “Purpose is that thing that gives us meaning, that thing that gives us direction, that thing that helps us navigate the challenges and the setbacks and the difficult times.” Research suggests that authentic leadership is key in cultivating purpose, meaningfulness, and engagement among employees at work, however it is not enough to be an authentic leader, he also needs to be able to be communicating purpose. Goal 2: Communicate purpose with purpose In their research about defining organisational values, Ingram et colleagues recently stated that “Leaders must develop robust principles to guide strategic choices; address ethical issues early; consistently communicate and implement their choices; engage with and beyond the industry to shape the context; and learn from mistakes to make better choices in the future. Most business leaders believe that their job is to embrace disruption and innovation, transform their organizations, and explore new frontiers, writes Ranjay Gulati in “To See the Way Forward, Look Back.” But decades of research on companies worldwide shows that most successful ones are also guided by core values and a clear purpose (Harvard Business Review, 2022). However, even if you have core values and clear purpose, if you can’t persuade anyone else to follow your vision, your influence and impact will be greatly diminished. Jeff Bezos, the founder and former CEO of Amazon, has spoken about the importance of having a clear purpose for a company. He believes that a company’s purpose should be larger than just making money and should be something that inspires and motivates employees. In a 2018 letter to Amazon shareholders, Bezos wrote, “A company without a strong purpose can be a like a person without a soul. It can be a company that is technically successful, but not really successful.” He went on to say that a company’s purpose should be to “serve customers, to create something new and interesting, and to make the world a better place.” Bezos has also spoken about how Amazon’s purpose is to be “the Earth’s most customer-centric company” and how this purpose guides the company’s decisions

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and actions. He believes that having a clear purpose is essential for a company’s long-term success and that a company that is guided by a higher purpose will be more innovative, more successful, and more meaningful to customers, employees, and society. In another occasion, he stated “I think companies have to be willing to be misunderstood for long periods of time.” showing that he believes that a company should stick to its purpose even if it’s not understood by the masses and not be swayed by short term goals or pressures. In the age of knowledge, communication is no longer ranked as a “soft skill” among the world’s top business leaders. Leaders who want to reach the top of the corporate pyramid don’t’ underplay the importance of mastering communication, instead they strive to master and constantly improve their communications skills (Harvard Business Review, 2022). Former PespiCo CEO Indra Nooyi says “if you cannot simplify a message and communicate it compellingly, believe me, you cannot get the masses to follow you.” (Harvard Business Review, 2022). She now conducts a masterclass in impactful communication on the masterclass series. The six steps to purpose Based on recent academic and management research, they are 6 main steps a leader can follow to communicate purpose efficiently: Step 1: Clearly stating the purpose: A leader can clearly state the purpose of the organization, team, or project in all communication, whether it’s in meetings, emails, or company-wide announcements. This helps to ensure that everyone is aware of the purpose and is working towards the same goal. Step 2: Leading by example: A leader can demonstrate their commitment to the purpose by aligning their actions with the organization’s mission and values. This helps to build trust and credibility with employees and stakeholders. Step 3: Creating a sense of community: A leader can foster a sense of community by encouraging collaboration, communication, and shared ownership of the purpose. This helps to create a collective sense of responsibility for achieving the purpose and can inspire a sense of pride and commitment among employees. Step 4: Encouraging employee participation: A leader can encourage employee participation in the decision-making process and give them a voice in shaping

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the organization’s purpose. This helps to build ownership and engagement among employees and can lead to more innovative and effective solutions. Step 5: Regularly communicating progress: A leader should communicate progress regularly and transparently; this helps to keep the team focused on the purpose and on track to achieve it. Step 6: Recognizing and rewarding: A leader should recognize and reward employees for their contributions to the organization’s purpose. This helps to motivate employees and create a culture of excellence. However, there can be several obstacles a leader may face when communicating purpose. For example, lack of clarity, if the purpose is not clearly defined or communicated, it can be difficult for employees to understand what is expected of them and how their role contributes to achieving the purpose. But also, resistance to change: Some employees may resist change or have difficulty aligning their work with the organization’s new purpose. Therefore, a leader needs to understand and address the root cause of resistance and provide support and guidance to overcome it. Resistance to change can stem from a limited buy-in: Some employees may not fully understand or buy into the organization’s purpose, which can make it difficult to achieve buy-in and commitment. A leader needs to communicate the purpose in a way that resonates with employees and demonstrates how it will benefit them. Resistance to change can be aggravated by limited employee participation: Some employees may not feel empowered or encouraged to participate in decision-making or contribute to shaping the organization’s purpose, and limited resources, such as budget and personnel, which can make it difficult to achieve the organization’s purpose. A leader needs to find creative solutions to overcome these limitations and prioritize resources to align with the purpose. An effective leader needs to be aware of these obstacles and actively create and promote purpose-driven interventions to overcome them. Goal 3: Actively create and promote purpose-driven interventions There are three different levels of interventions that leaders can combine to promote purpose and meaning at work, these include: ● Basic level interventions: These interventions focus on providing basic resources and support to employees such, employee assistance programs, and mental health resources. ● Intermediate level interventions: These interventions focus on improving the physical and mental health of employees by offering programs such as fitness classes, healthy eating programs, and stress management workshops. ● Advanced level interventions: These interventions focus on promoting a positive and supportive culture within the organization by implementing practices

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such as flexible work arrangements, work-life balance programs, and employee recognition programs. These interventions focus on creating a comprehensive and holistic approach to employee wellbeing by implementing policies and practices that promote a positive and supportive culture, such as employee engagement programs, leadership development, and diversity and inclusion initiatives. In addition, leaders should examine strategies that increase the likelihood that their current work tasks align with their potential calling such as job crafting. Job crafting refers to the process of actively shaping and redesigning one’s job tasks, relationships, and perceptions to better align with one’s personal strengths, interests, and values. It involves making changes to the content, boundaries, and social context of one’s job to increase job satisfaction, motivation, and engagement. Some practical examples of job crafting include: ● Changing the tasks: Employees can take on new tasks that align with their interests and strengths, or they can rearrange their existing tasks to better suit their skills and preferences. ● Changing the relationships: Employees can build new relationships with coworkers or customers that align with their interests and values, or they can modify their existing relationships to create a more positive and supportive work environment. ● Changing the perceptions: Employees can change the way they perceive their job by reframing their perspective, setting new goals, or finding new meaning in their work. Berg and colleagues research suggest that job crafting can be a powerful tool for employees to take control of their own job satisfaction and well-being and it can also be beneficial for organizations as it can lead to increased productivity, performance, and employee engagement. It’s important to note that job crafting should not be done without the input of the employee’s manager, and it should be aligned with the organization’s goals. Leaders might advise employees to try and temporarily or permanently change tasks involved in their jobs to better reflect their callings.

2.5 Conclusion In conclusion, leaders who prioritize purpose can create more meaningful, innovative, and successful organizations. Purpose is not only a motivator for employees, but it also helps leaders to make better decisions, aligns the organization with a common goal, and enables the organization to make a positive impact on society. A clear purpose also helps to create a sense of community and shared ownership among employees, leading to increased engagement and motivation. Leaders who prioritize purpose also understand that it is a journey, not a destination and that the purpose of the organization can evolve over time. Prioritizing purpose also means being willing

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to be misunderstood for long periods of time and being able to communicate the purpose effectively and consistently. To prioritize purpose, leaders need to clearly define the purpose of the organization, align it with company values, involve employees in the decision-making process, communicate progress transparently, recognize and reward employees, and continuously evaluate and adjust as needed. In today’s rapidly changing world, organizations that prioritize purpose will be better equipped to navigate uncertainty, attract, and retain employees and to create a better future for all stakeholders. Therefore, leaders who prioritize purpose are not only creating better organizations, but also contributing to creating a better world.

References Baumeister, R. F., & Vohs, K. D. (2002). The pursuit of meaningfulness in life. In C. R. Snyder & S. J. Lopez (Eds.), the handbook of positive psychology (pp. 608–618). Oxford University Press. BBC website. (2022). why workers just wont stop quitting. Article: https://www.bbc.com/worklife/ article/20220817-why-workers-just-wont-stop-quitting Berg, J. M., Dutton, J. E., & Wrzesniewski, A. (2013). Job crafting and meaningful work Bingham, J. B., Mitchell, B. W., Bishop, D. G., & Allen, N. J. (2013). Working for a higher purpose: A theoretical framework for commitment to organization-sponsored causes. Human Resource Management Review, 23, 174–189. Bunderson, J. S. (2001). How work ideologies shape the psychological contracts of professional. Journal of Organizational Behaviour, 22(7), 717–741. Bunderson, J., & Thompson, J. (2009). The call of the wild: zookeepers, callings, and the doubleedged sword of deeply meaningful work. Administrative Science Quarterly, 4(1), 32–57. CIPD report. (2022). Last accessed 24 Feb 2023 at https://www.cipd.co.uk/about/media/press/220 622-cipd-workers-plan-to-quit#gref Dhingra, N., & MckKinsey podcast (2021). https://www.mckinsey.com/capabilities/people-andorganizationalperformance/our-insights/the-search-for-purpose-at-work Dobrow, S. R., & Tosti-Kharas, J. (2012). Listen to your heart? Calling and receptivity to career advice. Journal of Career Assessment, 20(3), 264–280. Frankl, V. E. (1963). Man’s search for meaning: An introduction to logotherapy. Washington Square Press. Fuller, & Kerr. (2022). The great resignation didn’t start with the pandemic. Harbard business review. Last accessed on 24 Feb 2023. https://hbr.org/2022/03/the-great-resignation-didnt-startwith-the-pandemic García-Alandete, J. (2015). Does meaning in life predict psychological well-being?: An analysis using the spanish versions of the purpose-in-life test and the Ryff’s scales. The European Journal of Counselling Psychology, 3(2), 89–98. George, B. (2003). Authentic Leadership: Rediscovering the Secrets to Creating Lasting Value. Jossey-Bass. Hall, D. T., & Chandler, D. E. (2005). Psychological success: When the career is a calling. Journal of Organizational Behavior, 26(2), 155–176. https://doi.org/10.1002/job.301 Kurtzman, J. (2010) Common Purpose: How great leaders get organisations to achieve the extraordinary. ISBN 978–0–470–49009–9 López-Cabarcos, M. Á, López-Carballeira, A., Ferro-Soto, C. (2020). New Ways of Working and Public Healthcare Professionals’ Well-Being: The Response to Face the COVID-19 Pandemic Morgan, K. (2022). Why workers won’t stop quitting. BBC worklife website. Last accessed 24 Feb 2023. https://www.bbc.com/worklife/article/20220817-why-workers-just-wont-stop-quitting

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O’Donohue, W., & Nelson, L. (2009). The role of ethical values in an expanded psychological contract. Journal of Business Ethics, 90, 251–263. https://www.mckinsey.com/capabilities/peo ple-and-organizational-performance/our-insights/the-search-for-purpose-at-work; https://store. hbr.org/product/defining-your-organization-s-values/r2206b?sku=R2206B-PDF-ENG Obama, B. (2020). A promised land. Crown PWC report, (2022). Global workforce Hope and Fears survey. Last accessed 24 Feb 2023. https:/ /www.pwc.com/gx/en/issues/workforce/hopes-and-fears-2022.html Saner, E. (2021). A stunning second act! Meet people who changed course in midlife and loved it. Guardian, August 2021. Last accessed 24 Feb 2023. https://www.theguardian.com/lifean dstyle/2021/aug/26/a-stunning-second-act-meet-the-people-who-changed-course-in-mid-lifeand-loved-it; https://www.businessinsider.com/quits-diaries-people-who-quit-jobs-great-resign ation-labor-shortage-2022-2?r=US&IR=T#meet-a-former-probation-officer-who-quit-after12-years-because-the-mental-exhaustion-and-stress-became-too-much-i-needed-to-achievesome-kind-of-level-of-happiness-for-myself-1 The Guardian. (2021). Article: https://www.theguardian.com/lifeandstyle/2021/aug/26/a-stunningsecond-actmeet-the-people-who-changed-course-in-mid-life-and-loved-it Winton, Whittington & Meskelis. (2022). Authentic leadership, making meaning and building engagement. European Business Review 34 (5) Wrzesniewski, A. (2003). Finding positive meaning in work. Positive organizational scholarship: Foundations of a new discipline, pp. 296–308

Dr. Aurelie Cnop is a lecturer and researcher in Organisational behaviour, working at the London School of Economics and Political Sciences (LSE) where she teaches Negotiations skills, Managing People and Teams and Organisational Behaviour since over 10 years. She also works at the ESCP Europe Business school where she is the academic director of the Specialized master’s in digital Transformation and Leadership. She graduated from the London School of Economics, from which she holds a MSc in Organisational Behaviour and a PhD in Management. Her current research focusses on how contribution, impact and meaning at work help leadership, team engagement and wellbeing and how to inspire, retain and increase motivation and performance in high pressure environments. With 15+ years of experience in strategy consulting for consultancy companies, and later change & finance management at a FTSE100 multinational company, Aurelie has been instrumental in helping companies and governmental organisations achieve strategic change and world-class performance. Currently, Aurelie acts as an adviser for governmental institutions and UK-based technology sector companies.

Chapter 3

How Leaders Can Be Better Communicators in the Virtual Era Leigh Thompson

3.1 Introduction The Covid-19 pandemic changed business… forever. There is no going back to pre-pandemic business communication, in which the dominant, preferred mode is face-to-face (FTF) interaction wherein communicators are physically co-located. During the pandemic, leaders rushed to quickly get up the virtual communication curve, adorning their workspaces with lighting, microphones, green screens, and multiple monitors. However, merely possessing state of the art technology does not ipso facto ensure that leaders are virtually intelligent. The term, virtual communication intelligence, or VCQ refers to “the ability to communicate and navigate relationships and achieve business goals when engaging with others who are not physically co-present” (Thompson, 2022). Thus, the focus of VCQ is more about the social-behavioral adaptations leaders need to make when communicating in absence of physical co-presence. Part of VCQ means adapting one’s behaviors and establishing norms that are conducive to the purpose of the communication itself. During a given week, a leader may engage in several different types of virtual communication, including meeting with teams and direct reports, delivering presentations to clients and customers, one-on-one coaching and development; and conflict resolution and negotiation. The virtually-intelligent leader proactively adjusts their behavior to optimize each of these types of communication scenarios. In this chapter, we first examine the predominant, negative bias against virtual communication. We consider the evidence that may support the widespread belief that virtual communication is less effective than in-vivo communication, and we also consider how negative beliefs may create self-fulfilling prophesies that negatively L. Thompson (B) Kellogg School of Management, Northwestern University, Kellogg Global Hub, 2211 Campus drive, Evanston, IL 60208, United States e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_3

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affect communication and performance, including awkward speak-overs, objective self-awareness, and cognitive depletion. We then consider the research evidence on how virtual communication affects us. The effects of virtual communication are not always obvious and may even occur below most people’s threshold of awareness. We then turn our attention to how leaders may overcome some of the real (and perceived) disadvantages of virtual communication. And specifically, how to best leverage the advantages of hybrid and virtual meetings. The Bias Against Virtual Communication Most people instinctively prefer in-vivo, FTF communication over virtual communication, and in particular, they prefer face-to-face, physically co-present meetings over video meetings, such as might occur on Zoom, Teams, Webex or a multitude of other platforms. People tend to perceive CMC (computer-mediated communication) to be less useful and less rewarding than FTF communication (Schiffrin et al., 2010). There is some support for people’s instinctive preference for in-vivo communication. Media richness theory argues that team performance is enhanced when members use “richer” media (Daft & Lengel, 1984); media synchronicity theory argues that communication effectiveness is enhanced by matching the media capabilities to the needs of the communicators (Dennis et al., 2008). Businesspeople often cite one of three beliefs when it comes to their strong preference for in-person communication: (a) it is easier to build rapport and trust when communicating with someone who is physically co-present; (b) it is easier to read nonverbal cues and adjust one’s own approach or message to suit the perceived state of the listener; and (c) in-person communication is inherently more rewarding and increases subjective well-being versus virtual communication which often leads to lower subjective well-being and negative affect. The strong, almost instinctive preference for in-vivo FTF communication may be explained in part by the media naturalness hypothesis, which argues that a decrease in the degree of naturalness of a communication medium (or its degree of similarity to the FTF medium) leads to increased cognitive effort, increased communication ambiguity, and decreased psychological arousal (Kock, 2005). Practically speaking, most people are accustomed to communicating in-vivo and have adapted their focus accordingly; therefore, virtual communication takes more cognitive effort, leads to greater ambiguity, and in general is not as pleasurable. Is there a body of truth to these assumptions? Let’s consider each of the three areas. Trust and Rapport. Regarding whether virtual communication hinders the development of trust and rapport between communicators, the answer appears to be largely yes. However, the bias against virtual communication may be somewhat exaggerated. Let’s first consider the evidence that suggests that virtual communication is simply less effective than is in-vivo communication. In studies of e-negotiation, wherein managers negotiate high-stakes business situations via email, phone, or text, negotiators report less trust when engaging in computer-mediated negotiations (such as via email) than those who interact FTF (Stuhlmacher & Citera, 2005). Moreover, business negotiators communicating via CMC begin with less trust toward the counterparty, and trust deteriorates during discussion (Naquin & Paulson, 2003).

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Further, people who communicate virtually regard others to be less truthful and honest, even though the research is mixed as to whether people actually are more deceptive. Yet, people often believe that they are more justified in using deception when communicating virtually (Citera et al., 2005). Nonverbal Accuracy and Persuasion. We noted above that most people instinctively believe that they are better able to read nonverbal cues and adjust to the other party when communicating in-person versus virtually. One study examined how the use of CMC affects the transmission of performance appraisal information from “judges” to “targets” in a professional setting. Judges communicated more positive evaluations in face-to face contexts (than when using e-mail); targets (receiving the evaluation) had greater meta-accuracy in FTF than CMC exchanges. This is because judges provided clearer feedback on task-relevant issues in FTF interactions (Hebert & Vorauer, 2003). Another investigation examined how CMC affects the development of dominant/subordinate status roles and the accuracy of perception and found that dominant-subordinate status roles were more clearly differentiated in CMC (compared to FTF) interactions and the accuracy of interpersonal perceptions did not differ substantially between the media (Boucher et al., 2008). Subjective Well-being. We noted above that people regard in-person communication to be more rewarding and pleasurable than most forms of virtual communication. There appears to be some evidence suggesting that virtual communication can indeed produce fatigue and frustration. As a general finding, using social media decreases subjective well-being (Kim, 2017). However, it is a separate question whether interacting via teleconferencing or virtual meetings reduces subjective well-being. In fact, people interacting via CMC over a meaningful period of time increased their relational behaviors to attain the same positive levels as FTF groups (Walther & Burgoon, 1992). In summary, the bias against virtual communication appears to have some scientific basis. However, the bias may be exaggerated in the eyes of communicators, who may fail to account for how people can meaningfully adjust their behavior over time when interacting virtually. For example, simply using a larger screen, such as a laptop versus a mobile phone leads to higher levels of trust and more profitable outcomes (Kurtzberg et al., 2018).

3.2 Behavioral Implications of Virtual Communication The pandemic quickly spurred a new vocabulary documenting the foibles and distinct disadvantages of virtual communication. Many of these virtual-communicationinduced behaviors seemed particularly virulent and suggested that people’s personality and general mental states might very well become unglued as a result of excessive virtual communication. This is certainly an exaggeration. Below is a summary of some documented implications of virtual communication. Virtual Distance: Virtual distance refers to the perceived lack of connection and rapport with others who are not physically co-located (Lojeski et al., 2006). Virtual

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distance negatively affects trust, goal clarity and organizational citizenship behaviors in virtual teams. Moreover, virtual distance has a negative impact on innovation, and the key causal factor is multitasking. When virtual distance is low, multitasking facilitates innovation, but when virtual distance is high, multitasking backfires (Lojeski et al., 2007). One study found that oxytocin (human bonding hormone) levels were distinctly lower when negotiators did not shake hands prior to an in-person interaction, such that a brief physical greeting stimulates the production of oxytocin (Schroeder et al., 2019). Other studies have found that people communicating in person touch one another quite often. Of course, this could be grounds for termination by most Human Resources departments; but most of these investigations have focused on voluntary handshakes, pats on the shoulder, and mutually appropriate displays of affection. A key difference between virtual communication and in-person communication is the distinct absence of mutual gaze. Mutual gaze, which occurs when two people lock eyes very briefly, leads to an immediate release of oxytocin and produces shared understanding (Simmel, 1969). For this reason, video conferencing systems that use augmented mutually-shared gaze, in which people can see the view that others see improves collaboration and communication (Lee et al., 2017). Absence of Collisions: Perhaps more than anything, businesspeople bemoaned the loss of collisions, or unplanned, FTF encounters that shut-downs and stay-at-home orders issued during the covid-19 pandemic produced. Collisionable hours refer to the number of profitable interactions per hour per acre. Collisions occur quite often in business interaction, such as when colleagues pass one another on the way to meetings, see each other in the elevator or coffee bar. And some research suggests that the majority of workplace interaction is unplanned, with only 34% of interaction taking place in a planned way (Waber et al., 2014). In general, collisions not only enhance subjective well-being, networking, and trust, they are directly associated with performance. For example, employees report increased feelings of well-being when utilizing flexible working choices (Bosua et al., 2013). Whereas it may be argued that the pandemic changed everything and propelled people to use email and other intentional forms of interaction, communication in the workplace is strongly predicted by physical proximity (Sailer et al., 2013). Online Disinhibition Effect (ODE). The online disinhibition effect (ODE) refers to the tendency for people to detach their behaviors when communicating virtually (Suler, 2005). Practically, the ODE means that people behave in a more aggressive, confrontational fashion and or disclose too much. According to Suler (2004), six factors contribute to the online disinhibition effect: dissociative anonymity, invisibility, asynchronicity, solipsistic introjection, dissociative imagination, and minimization of authority. The online disinhibition effect may explain why leaders give more negative evaluations of interviewees in videoconference interviews than FTF. Moreover, interviewees themselves hold more negative perceptions of the interview process. Three key contributors lead to worsened evaluations: perceived social presence, eye contact, and impression management (Basch et al., 2021).

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Zoom Fatigue. Zoom fatigue refers to a depletion of cognitive resources and motivational effort required to maintain visual communication. In one study, people played charades on zoom; during the game, two factors were investigated: latency (the time taken to send information in packets from a source on the internet to destination) and jitter (variation in latency; Garg et al., 2022). In video calls, people experience latency and jitter through dropped calls and pauses, poor audio and video quality, inability to understand visual cues, and distracting visual artifacts and disjointed or delayed video and audio. There was direct correlation between performance while playing the game and latency, suggesting that disruption of social information negatively affects performance. Facial Appearance Dissatisfaction. Another aspect of virtual communication that produces fatigue is the appearance of one’s own image during a video conference. Known as facial appearance dissatisfaction, women experience higher levels of virtual fatigue than do men as a result of looking at their own image during videoconferencing (Ratan et al., 2022). Moreover, women and newly hired people within organizations are particularly vulnerable to the debilitating effects of zoom fatigue when told they must turn their camera on (Shockley et al., 2021). Judgment and Decision making and Risk-Taking. Evidence-based decision making is a key skill necessary for effective teamwork and viable organizations. Several studies have examined differences in group risk-taking behaviors between FTF groups and CMC groups. Results from a laboratory experiment found no differences in risk-taking behaviors between CMC and FTF groups (Valacich et al., 2009). Another aspect of group decision making is group polarization, which refers to the tendency for collective group decisions to be more extreme than the arithmetic sum of individual members’ choices. One study found that group discussions conducted in an “anonymous” CMC setting led to more group polarization than when the CMC setting was “identified” i.e., not anonymous (Sia et al., 2002). Virtual Deadbeats. Virtual deadbeats is a pejorative term that refers to people who do not participate in virtual meetings, where the expectation or norm is that they should participate. One longitudinal study examined how gender affects deadbeat behavior in virtual teams and revealed that men were significantly more likely to not participate (aka be a “deadbeat”) as compared to women; of the 48 men participants, deadbeat behavior rose during the team project from 27%, to 44%, and then 52%; conversely, for women, the percentage of “deadbeat” behavior was approximately 10% throughout the length of the project (de Pillis et al., 2015).

3.3 Advantages of Virtual Communication It would seem that the disadvantages of virtual communication would essentially make a nail-in-the-coffin case for avoiding it at all costs, and re-instating one’s frequent flyer miles to attend all meetings with physical co-presence. However, research has revealed some distinct benefits or advantages of virtual communication.

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Setting aside some obvious benefits, such as reduced commuting costs, we focus on benefits that may often go unrecognized. For example, one study of decision making in FTF versus virtual teams revealed that virtual teams made more effective decisions (Schmidt et al., 2001). Task and Goal Focus. One benefit of virtual teams is that members assume that the group is goal-focused. People are more likely to assume that the behavior of a group is driven by a common goal for physically-distant groups, presumably because common goals would be the only means by which they are united (Henderson, 2009). Diversity. Another potential benefit of virtual teams is the potential diversity that they can create within the team. One study examined the association between TMT (top management team) functional and intrapersonal diversity and organizational performance. The results of the study of 207 U.S. firms in 11 industries revealed that the effects of TMT functional diversity on organizational performance were enhanced as the proportion of TMT members with offices in the same location increased (Cannella et al., 2008). Time Pressure. Generally speaking, time pressure negatively affects team performance. However, virtual teams may be less negatively affected than traditional teams. For example, a comparison of FTF, videoconference, and email teams revealed that time pressure had most negative effect on traditional (FTF) groups whereas videoconference groups displayed significantly more positive responses when working under time pressure (Caballer et al., 2005). Task Conflict. There are at least two types of conflict that can have dramatically different implications for virtual teams: relationship conflict (emotional, affectbased) and task conflict (debates about the nature of work that the group is doing). One investigation found that task conflict had a positive impact on team performance in virtual teams who use technology to coordinate their actions, demonstrating high “team virtuality”, but task conflict had a negative impact on performance when virtual teams do not coordinate their actions, succumbing to low “team virtuality” (de Jong et al., 2008). Relationship Conflict, Task conflict and Conflict Escalation. Whereas task conflict is considered a more productive (healthy) form of conflict than relationship conflict, early task conflict in a group can trigger subsequent relationship conflict in teams. One longitudinal study compared FTF, VC (video conference) and CMC groups working on a complex task over a month (Martinez-Moreno, et al., 2012). Paradoxically, task conflict in early stages predicted relationship conflict at later stages among FTF and VC teams, but not CMC teams; apparently, “leaner” forms of communication may paradoxically benefit teams by preventing task conflict from escalating into relationship conflict. Reduced Status Differences and Equalization of Participation. The uneven communication problem refers to the empirical fact that some members are significantly more dominant than others in FTF meetings. High-status people talk more than low-status and men talk more than women (Shaw, 1981). Males use communication in teams to establish dominance and position, which could have the effect of suppressing information exchange, among other dysfunctional effects. One hypothesis is that because status cues are less salient in virtual communication, combined

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with fact that people feel less inhibited, virtual communication might equalize participation. In one study of virtual teams, men were less able to dominate team interaction and asynchronous CMC communication equalized interactions among men and women team members (Furumo & Pearson, 2007). Less Inhibition. We noted that the online disinhibition effect can produce more aggressive and negative behavior. However, one potential advantage of virtual communication is that people are less likely to self-censor and are less inhibited, which may have the beneficial effect of warding off excessive like-mindedness. The reduction of social inhibition, particularly regarding the need to be liked, may foster more effective group decision making (Suler, 2005). The Barrier Effect and Communication Orientation Model. In some instances, reduced media richness may improve collaborations. For example, in acrimonious negotiation situations, a visual barrier between parties improves outcomes, because it prevents parties from escalating conflict, via threats (Pruitt, 1981). Similarly, the Communication Orientation model suggests that richer communication channels (e.g., visual, vocal, and synchronicity) increase the likelihood of desirable negotiated outcomes for people with neutral orientation; do not affect the outcomes for negotiators with cooperative orientation, but hurt outcomes when negotiators have a noncooperative orientation (Swaab et al., 2012). Trust and Respect. Typically, virtual communication leads to less trust than inperson communication. However, it is important to distinguish different types of trust. One type of trust is affective or benevolence-based trust and refers to the degree to which people can rely on others in the absence of monitoring. Another equally important type of trust is cognitive or competency-based trust and refers to the degree to which people can trust that others are capable of performing a task and doing their job. Virtual teams rely more on cognitive elements of trust than affective elements (Kanawattanachai & Yoo, 2002). In general, cognitive trust is built through knowledge-sharing, preparation, subject matter expertise and demonstrated competence. In contrast, affective trust is often heuristically based on similarity and interpersonal attraction. Because cognitive trust is more evidence-based than is affective trust, detecting breaches of trust may be more straightforward for virtual teams that focus on cognitive trust. One study found that people who rely on “cognitive trust” can accurately identify dispositional changes within untrustworthy scenarios more accurately than people who rely on “emotional trust” (Ho et al., 2012). Virtually-intelligent team leaders are keenly aware of the differences between cognitive trust and affective trust and the causal determinants that predict each type of trust. For example, leaders may want to opt for different communication media to deliver cognitive trust-oriented messages versus affective trust-oriented messages (Kauffman and Carmi, 2014). Team Idea Generation. Creativity is arguably one of the most important measures of team success. A naïve belief would hold that FTF co-located teams would be more creative than virtual teams; however, this is generally not true. For example, studies of real groups (members interacting with one another) compared to nominal groups (individuals working independently) reveal that nominal groups outperform real groups both in terms of quantity and quality of ideas (Diehl & Strobe, 1987) The

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key reason is that real groups often suppress ideas, dominate conversation, and disrupt creative idea generation. Moreover, cognition-based trust positively influences team creativity but affect-based trust does not (Barczak et al., 2010). Gender Bias. It would seem that virtual communication might provide a welcome buffer for women (and others) who might have experienced a hostile work environment. For example, one female leader commented that virtual meetings prevent male counterparties from commenting on her short stature and staring at her voluptuous figure. The research on the incidence of micro-aggression in the workplace do not paint as hopeful a story, however. A micro-aggression is a brief, but commonplace verbal, behavioral and environmental indignity whether intentional or unintentional, that communicates hostile, derogatory, or negative racial, gender, sexual orientation and religious slights and insults. One study found that gender micro-aggression occurs in virtual communication and are more likely in STEM fields (Beltran et al., 2021).

3.4 Virtual Communication Intelligence There are significant disadvantages of virtual communication. However, these disadvantages are often exaggerated, and the advantages of virtual communication are often not leveraged. A key aspect of virtual communication intelligence is the ability to not only curtail the disadvantages, but to leverage the benefits of virtual communication. The virtually intelligent leader should consider five key elements when anticipating virtual communication. Communication Media. A key choice that leader face is the meeting format itself, including traditional in-person, virtual (completely distributed) or hybrid (containing both local and remote members). When leaders opt for in-person meetings, some members of the team may be unable to attend. This leads to a hybrid format, which may be less effective than a purely virtual format. One study revealed that local members of hybrid teams had more positive perceptions of their local team members than their remote members, but traditional and virtual teams did not show this bias (Webster & Wong, 2008). Some evidence suggests that hybrid teams may be aware of their limitations, and consequently, exert compensatory effort to overcome potential dysfunctions. For example, one study investigated three types of team configurations: co-located teams, purely virtual teams, and hybrid teams. Hybrid groups that contained two co-located and two isolated members, engaged in the most “vigilant interaction” (McLeod, 2013). This finding suggests that leaders of hybrid teams can improve the performance of hybrid teams by encouraging and role-modeling vigilant interaction. Meeting Purpose and Goals. Virtually-intelligent leaders schedule meetings with a clear purpose and format. Nothing is more alarming to people than to have their supervisor schedule a meeting that has no topic, keyword, or stated purpose. Indeed, studies of virtual teams reveal that followers’ perceptions of a leader’s media savvy (i.e., adeptness at using appropriate media dependent upon the message being sent)

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influences their trust in the virtual environment (Norman et al., 2019). Indeed, a field investigation of 31 virtual teams revealed that the team effectiveness was predicted by the quality of goal setting (Hertel et al., 2004). Another study of virtual engineering project teams revealed that teams who set high-quality goals and built commitment to those goals regarded their projects to be more successful (Forester et al., 2007). Leaders of virtual teams are best advised to engage in participative goal setting with teams wherein team members take responsibility for setting specific and challenging goals. A study of the life-cycle of 52 self-directed global virtual teams revealed that VTE (virtual team efficacy) relates to goal commitment, such that teams who set and commit to challenging goals perform better (Hardin et al., 2013). Additional research reveals that high-performing virtual teams engage in significantly more “producer” behavior (leadership behavior focused on performance) and more “monitor” behavior (behavior focused on keeping track of group work) as compared to lower-performing virtual teams (Carte et al., 2006). Camera and Microphone Norms. Virtually-intelligent leaders set norms and meeting expectations to reduce ambiguity. The need for clearly-stated norms and expectations is higher for virtual meetings than in-person meetings because among other things, people who meet in-person do not have the option to disappear (via turning off their camera or microphone). For this reason, people who attend inperson meetings may be distinctly less likely to multitask (e.g., check email and make phone calls). The virtually-intelligent leader realizes that cameras may produce fatigue, a feeling of being drained and lacking energy. Specifically, zoom fatigue is more pronounced for women and people who are lower in organizational status and the fatiguing effects that hinder performance occur on the same-day and the next-day (Shockley et al., 2021). Some research suggests that whereas many people believe cameras will produce fatigue, the effects are not as great as people fear. For example, a longitudinal study of students revealed that they expected to feel both more engaged and more fatigued with their cameras on, but the findings suggest that they were not more fatigued than those with the cameras off, and in fact, they were more engaged (Kushlev and Epstein-Shuman, 2022). When it comes to visual feedback, members of virtual teams are particularly sensitive to the facial expressions of their team members. A study of 167 MBA students from five countries rated the “appropriateness” of virtually displaying positive and negative emotions in culturally homogeneous versus multicultural teams. Members desired a greater expression of positive emotions and the suppression of negative emotions in multi-cultural teams (Glikson & Erez, 2013). Speaking Turns. One of the aspects of virtual communication that produces the greatest frustration and subsequent mental fatigue is awkward speaking turns. The lack of shared mutual gaze does not allow communicators to know when a speaker has finished their speaking turn, and does not allow communicators to know who the speaker is gazing at. Moreover, when the group is large (i.e., more than 10 people) and diverse with respect to seniority (e.g., contains leaders and their direct reports), it is critical to clarify the method by which the virtual conversation will proceed,

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such as using hand signals, typing in the chat, raising one’s own hand in view of the camera. In the absence of clearly-stated norms, overly-dominant members may unwittingly usurp the meeting. Trust. In general, trust is uniformly perceived to be a positive feature of teams, whether virtual or in-person; conversely distrust is regarded to be a negative phenomenon. The virtually-intelligent leader considers three questions when it comes to trust: (1) what factors are key to developing trust; (2) are FTF meetings necessary to build trust; and (3) does trust have a uniformly beneficial impact on team decision making and productivity? With regard to the factors that are key to building trust, a field study of 55 professionals reviewing 127 team events revealed five main categories that predict trust in teams: ability, benevolence, predictability, integrity, and transparency (Breuer et al., 2020). With regard to the question of how trust impacts virtual team effectiveness, the results of a meta-analysis of 1,850 teams revealed a positive relationship between team trust and team effectiveness (Breuer et al., 2016). Moreover, the relationship between team trust and team effectiveness is stronger in virtual teams than in FTF teams. There is some counterintuitive evidence from FTF groups (where trust is often the default) that may be ultimately detrimental for effective decision making. One study found that virtual teams who were “seeded with distrust” outperformed all groups in a non-routine decision-making task (Lowry, et al., 2015). Armed with this knowledge the virtually-intelligent leader understands that trust is often not the default in virtual communication and therefore, takes proactive steps to build and maintain it. Moreover, there are three distinct components of trust: ability, benevolence, and integrity (Greenberg et al., 2007). Whereas trust in traditional, inperson teams is largely based upon benevolence (affect-based), trust in virtual teams is initially based on perceived competence. Trust can be built in virtual teams, but it takes longer than in physically co-located teams (Walther & Bunz, 2005; Wilson et al., 2006).

3.5 Conclusion In this chapter, we have considered the unique challenges that leaders face when they communicate in a virtual world. Research-backed knowledge of the limitations as well as the potential advantages of virtual communication is essential for leaders to be effective. The new leadership model prompts leaders to examine and modify their communication behaviors and strategies to successfully shift from classic in-vivo leadership to dynamic leadership that encompasses hybrid and virtual interaction. We outlined methods by which virtually-intelligent leaders can optimize virtual and hybrid communication.

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Dr. Leigh Thompson is the J. Jay Gerber Distinguished Professor of Dispute Resolution and Organizations at the Kellogg School of Management, Northwestern University. Thompson’s research focuses on negotiation, creativity, teamwork, and virtual communication. Thompson’s books include: Negotiating the Sweet Spot: The Art of Leaving Nothing on the Table, Creative Conspiracy: The New Rules of Breakthrough Collaboration, Making the Team, The Mind and Heart of the Negotiator, The Truth about Negotiations and Stop Spending, Start Managing. Thompson has authored over 150 journal articles and papers and directs several executive education programs, including: Negotiation Mastery Class, Leading High-Impact Teams, High Performance Negotiation Skills, Constructive Collaboration, and Negotiating in a Virtual World.

Chapter 4

New Leadership—Essential Leadership Skills for Interactive Daily Business Nicolas Sonder

4.1 Introduction The term “New Leadership” has become an established part of our everyday business language. This is true in both the private and the public sector alike. The discourse about the characteristics and requirements of leadership has become noticeably more multifaceted and complex. This is indeed justified as the world of work has experienced a transformation unlike any other before. Markets have experienced rapid developments relating to transformation topics such as digitalization, ESG matters and geopolitical conditions and companies have been responding to the resulting dynamics. In particular, the Corona pandemic has underscored how it is company employees that are most palpably affected by these developments. Changes in the requirements of daily business mean that the requirements of leadership have also come into focus and—against the backdrop of transformative and hybrid work environments—this is particularly apparent in the area of leadership communication. Interactivity is increasingly becoming a key topic in the area of leadership and leadership communication. Leadership in the future, i.e. “New Leadership”, will thus face the challenge of making leadership interactive and of backing this up with the appropriate forms of communication. Overcoming this challenge has therefore become part of the job profile for any manager. A key factor here is communication across all levels. In order to remain effective in a digital era, conventional leadership structures have to be adjusted to new challenges and the changed outlook of employees. Due to The original version of this chapter has been revised: The chapter author affiliation has been updated. The correction to this chapter is available at https://doi.org/10.1007/978-3-031-34314-8_31 N. Sonder (B) Friedrichstraße 14, 70174 Stuttgart, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023, corrected publication 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_4

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continuously shifting market conditions and internal requirements, it is necessary for leaders to address changes in a flexible and agile manner and to seek out the best solutions by thinking creatively and “outside of the box” while maintaining a close and trustful relationship with employees.1 This article seeks initially to address our understanding of New Leadership as well as the associated challenges (Section 4.2) and subsequently to discuss the requirements for effective leadership communication in interactive daily business and, in particular, the question of practical implementation (Section 4.3). A short conclusion then describes the prospects for the future (Section 4.4).

4.2 Understanding New Leadership and Its Challenges 1. What is Leadership? Any discussion about the topic of leadership requires us to examine what leadership means. Its meaning was originally articulated in the field of social psychology. The term leadership essentially refers to all the qualities required to be able to direct a group and, within companies, the resulting responsibilities of management, which are not always consistently defined. Leadership encompasses personal characteristics such as charisma and empathy as well as abilities such as motivation, rhetoric and persuasion. Such characteristics and abilities are the source of management skills that centre around interaction and the influencing of behaviour.2 While the field of business administration traditionally focuses on concrete factors relating to economic output, it is soft skills– especially in relation to how one deals with employees—that are decisive for leadership capabilities. The conventional term “management” therefore draws greater attention to output from day-to-day business, while “leadership” focuses on internal communication. A key characteristic of any leader is their ability to inspire others with their vision. There is therefore more to leadership than administrative management as it additionally entails a transformational component. This does not mean that leaders make good managers obsolete—both aspects are vital for successful corporate governance. In order to be able to perform day-to-day business efficiently, it is necessary to have managers who focus on existing administrative processes and who direct and coordinate existing work processes.3 Contrasting this, a leader will pay attention to the overall picture as a whole and contemplate options and risks in order to find new approaches and initiate change.4 It is necessary to find

1

Cf. Heissenberger, Führung neu definiert (Leadership newly defined), 2017, accessed from: http:/ /www.report.at/home/aufmacher/item/91228-fuehrung-neu-definiert. 2 https://wirtschaftslexikon.gabler.de/definition/leadership-54083/version-277137. 3 Fischli, Was ist Führung? (What is leadership), p. 2. 4 Fischli, loc. cit., p. 3.

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a reasonable balance between administrative tasks and work relating to innovation and transformation. 2. From Leadership to New Leadership Due to the transformation of the world of work and, in particular, the changes arising from digitalization, it is necessary to adjust our understanding of leadership to the emerging possibilities and changes in day-to-day work. The increasing complexity of markets, of business models and, not least, of employees’ tasks within companies is also giving rise to a new understanding of what leadership means. New leadership means recognizing and articulating the complexities of management while also reducing such complexity without causing decreases in efficiency. Due to the various possibilities that exist for flexible working, a significant proportion of face-to-face management is being replaced by video conferences and chats. Communication and networking are spreading to various new levels and this must take place in an appropriate manner in order to meet employees’ desires in relation to modern corporate management. Digital leaders must embrace innovative solutions while keeping the overall picture in mind. In the case of home office solutions in particular, interpersonal relationships must not be allowed to deteriorate due to digital networking and relationships of trust must be maintained between employees themselves as well as with their managers.5 Furthermore, New Leadership entails a shift away from conventional hierarchical structures towards cooperation between colleagues on an equal footing. 3. Overview of the Characteristics of Good Leadership Good leadership revolves around both leadership qualities as well as the characteristics of the managers themselves. Within the scope of this paper, it is only possible to provide a brief overview as context. In addition to conventional managerial tasks such as planning, organization and oversight, the characteristics of good leadership include overarching skills, especially with regard to the ongoing task of facilitating and organizing trustful communication. Conventional management tasks consist of formulating specific goals and ensuring that they can be achieved by organizing functions and personnel accordingly. When considering New Leadership, however, good leadership characteristics primarily centre around development and successful communication. In light of the objective of continuously developing and improving work processes, a manager must also critically evaluate existing routines and explore creative new approaches. conventional management tasks are therefore primarily concerned with day-to-day business, while leadership is future-oriented and seeks to bring about innovation and the effective communication of information. Employees prefer a 5

Weibler, Virtuelle Teams und Digitale Führung (Virtual Teams and Digital Leadership), 2017, accessed from: https://www.leadership-insiders.de/virtuelle-teams-und-digitale-fuehrung/.

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manager that provides a role model and thus motivates them (transformational leadership), formulates specific objectives and provides constructive feedback (strategic leadership) and acts in a values-oriented and transparent manner while promoting autonomy (ethical leadership).6 A negative view is taken of managers that continuously monitor employees, regulate them by means of rewards and punishment (transactional leadership) and that avoid making their own decisions while agreeing to everything (laissez faire leadership).7 Within the context of digital transformation, managers face the task of ensuring that teams can work and communicate with each other effectively and transparently via digital channels and can take advantage of new technologies.8 The ability to delegate and to place confidence in employees’ capabilities is also important.9 Individual strengths should be taken into account while individual initiative and autonomy should be encouraged. At an individual level, managers should also critically evaluate their own ideas and be open to change. Being a manager is not a question of simply assuming a role and staying in it; rather, it is necessary to remain open to learning and further develop one’s skills independently.10 Change is therefore an intrinsic component in the development of managers. At the same time, or indeed as a result of this, there is generally plenty of space for reasonable individualism. Based on the various approaches, managers should define and develop their own individual style that is tailored to the respective team and the sector of work concerned.

4.3 Leadership Communication in Daily Business 1. Significance of Leadership Communication in Daily Business The complexity and momentum of economic interconnectedness as well as virtual and agile work arrangements mean that communication is gaining even greater importance as a leadership tool. Effective communication has become the No. 1 leadership skill in recent years. Understanding employees and expressing appreciation towards them are the starting point for what is required from leadership communication. An organization’s success depends on the motivation, satisfaction and commitment of its employees.11 6

Kienbaum & StepStone, Leadership Survey 2018: Die Kunst des Führens in der Digitalen Revolution (The Art of Leading in the Digital Revolution), p. 11. 7 Kienbaum & StepStone, loc. cit. 8 Kienbaum & StepStone, Leadership Survey 2018: Die Kunst des Führens in der Digitalen Revolution, p. 24.et seq. 9 Cf. Heissenberger, Führung neu definiert, 2017. 10 Cf. Erfolg durch Führungskompetenz: Wichtige Fähigkeiten für Führungskräfte (Success through Leadership Competence: Important Skills for Managers), 2020, accessed from: https://www.spiegel. de/gutscheine/magazin/fuehrungskompetenz-wichtige-fahigkeiten. 11 Cf. Sommer, Leadership-Kommunikation im Wandel (Leadership Communication Undergoing Change), 2018.

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Emotional intelligence, social interaction and involvement are all prerequisites for leadership communication. Such communication is particularly effective when it is in keeping with the manager’s individual personality (high level of authenticity and of congruence between non-verbal and verbal communication). It is also necessary to bear in mind that employees’ productivity is increased through open dialogue with managers. Such an open dialogue has various defining features. In general, the manager communicates in a transparent and collaborative manner, seeks to do so on an equal footing and therefore avoids hierarchical forms of leadership communication.12 In this context, the manager weighs up the advantages and disadvantages of various communication and information channels and selects the most effective and appropriate option. Individual requests should be accommodated, e.g. for one-to-one meetings, in order to build and maintain trust. At the operational level, the manager should define interim goals for projects and tasks in order to boost motivation and dedication while also allowing appreciation to be expressed. This is in order to ensure that progress takes place on an ongoing basis and that employees stay motivated.13 Here it is necessary to strike the right balance between constructive enquiries and excessive scrutiny, which could impinge on the autonomy of employees. Managers should show their interest in the progress being made and explain that they are available should problems arise while also refraining from constant monitoring that could constitute excessive interference in the respective employee’s area of responsibility. Criticisms and praise should be expressed in a fair and appropriate manner. At the same time, a keen sense of cultural and social awareness is needed so that employees from all backgrounds and walks of life feel respected and appreciated. The desire for communication on an equal footing is particularly strong among younger employees.14 Misunderstandings should be promptly clarified and mistakes should be acknowledged in order to foster confidence and authenticity. In order for communication to be modern and interactive, it is essential that managers can listen actively and impartially, speak in a manner that is understood by others and can control their own emotions and recognize and respect their own needs as well as those of others so that they can be taken into consideration as much as possible when making decisions. They must be aware that their own perceptions do not necessarily correspond to those of others and be able to differentiate between observations, feelings and interpretations.15 They should also request feedback and value varying opinions as an opportunity to broaden their own perspectives. These characteristics must be clearly perceivable for employees so that they will approach the manager openly as desired. There also needs to be intrinsic motivation for deciding to use forms of communication that are on an equal footing. If this is only done performatively and is not genuinely desired, the manager will lose credibility in the eyes of the employees. Communication within the meaning of New 12

Cf. Sommer, loc. cit. Cf. Erfolg durch Führungskompetenz: Wichtige Fähigkeiten für Führungskräfte, 2020. 14 Cf. Sommer, Leadership-Kommunikation im Wandel 2018. 15 Cf. Sommer, loc. cit. 13

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Leadership thus consists of more than learnable skills, it requires new thinking both internally and externally. Ideally, these characteristics come into play as part of a holistic process. 2. Tools and Methods of Good Leadership Communication In order to bring about good leadership communication within the context of interactive daily business, scientists and experts have developed a range of methods and approaches to put into practice. The first item to note here is the communication square of Friedemann Schulz von Thun that divides communication into four aspects of content, can be easily applied and takes the interests of both communication participants into consideration. Communication is divided into the following levels: • Factual aspect: the fact being described (numbers, data and facts)—“what” • Self-expression: that which becomes apparent through the message of the speaker —“me” • Relationship aspect: what the nature of the message reveals about the relationship —“we” • Appeal: that which the recipient is called upon to do—“you” Each of these levels is vital for good leadership communication. At the same time, they should not be viewed in isolation; rather, they should be seen as the constituent parts of one cohesive tool set. When preparing for meetings, managers should therefore quickly determine for themselves what they wish to address at each level. They can thus prevent misinterpretations and ensure a clear line of communication. The relationship aspect is often seen as the core component of leadership communication. When starting, questions requiring reflection often arise, such as: how do we deal with each other and how do we behave towards one another? Why are we discussing this topic? Why are we doing so in this way?16 Nonetheless, the aspect of self-expression also reveals a lot about the leader. Good managers speak confidently and express this through their body language. They use short sentences with clear messages and provide inspiration through their own motivation. Where problems arise, they take a position, assume responsibility and specify the potential solutions.17 They demonstrate authenticity by expressing these characteristics through their style of speech and presence. Filler words and unnecessary conditional verbs should therefore be avoided. Leaders should express themselves clearly and in a to-the-point manner while specifying what needs to be done in order to achieve objectives. This provides stability and orientation. The manager should also ask questions to ensure that the intended message has been understood by the respective 16

Krechler, Leadership Kommunikation: 4 Schritte zu mehr Klarheit (Leadership Communication: 4 Steps to Greater Clarity), 2016, accessed from: https://www.beraterkreis.at/leadership-kommun ikation/. 17 Summerer, Führung und Leadership, Persönliche und Soziale Kompetenzen (Management and Leadership, Personal and Social Competencies), 2021, accessed from: https://www.haufe-aka demie.de/blog/themen/fuehrung-und-leadership/10-praxis-tipps-fuer-fuehrungskraefte/.

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interlocutor.18 It is thus immediately possible to ascertain what has been understood and to correct any misunderstandings. This means that conflicts are prevented and that participants feel included. Criticism should not be swept under the rug either. It should be expressed in plain language, although it should be accompanied by potential solutions so that the employee concerned remains both internally and externally motivated.19 By dealing with employees trustfully when addressing problems, managers simultaneously encourage them to raise any difficulties directly with their leader and make it possible to find fast and effective solutions. This results in a major advantage compared to situations where individual employees shy away from communication with management and gathering information resembles a game of “Chinese whispers” for managers. Companies with prompt bilateral communication therefore enjoy a competitive advantage and avoid wasting time when it comes to implementing solutions across various levels. A key point here is the networking of teams and the necessity of breaking through rigid hierarchy structures in today’s world. Complex and prescribed communication channels result in delays and in diffuse decision-making. Contrasting this, a leader will specify clear pathways, ensure solutions are employee-oriented and initiate changes in underlying processes where necessary. This results in long-term satisfaction among employees because tangible solutions get implemented and they are taken seriously rather than merely being served empty words. In times when there is a shortage of skilled workers, we should not underestimate the value of employee commitment to a company and its purpose. Such commitment arises from a trusting relationship with the management as well as a pleasant working environment based on open communication. Direct communication and achieving understanding are particularly conducive to the emergence of communication-based trust. In particular, communicating via the shortest channel possible eliminates the frustration and loss of motivation caused by long waiting periods and going through points of contact that lack understanding. This also sets the cornerstone for the development of communication into authentic dialogue. This in turn further increases the interactivity of daily business. Such interactivity increases the clarity of communication between managers and employees and this brings about grounded exchanges on an “equal footing”—in terms of both style and content. A major contribution towards this type of leadership communication can be achieved by consistently orienting oneself towards the aforementioned four aspects of the communication square.

18 19

Krechler, loc. cit. Summerer, loc. cit.

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4.4 Good Leadership Communication in Practice as Part of Interactive Daily Business A decisive factor for good leadership communication is whether it is applied consistently in practice as part of interactive daily business. To do so, leaders can fall back on some best practices for orientation, although these are admittedly not exhaustive in nature. Our attention now turns to a selection of best practices regarding the stylistic communication level: Active listening: active listening is essential for interactive communication. There is more to active listening than merely listening closely. In communication science, active listening encompasses the emotional reaction of one interlocutor to the message conveyed by the other. Within the tried-and-tested communication model of Lyman K. Steil, active listening consists of four elements: perception, interpretation, assessment and reaction. Leaders that conduct communication based on this model will avoid and prevent misunderstandings, achieve a better understanding of their interlocutors and thus be able to provide more fitting responses. The result of this will be a palpable increase in the interactivity of communication. Understanding and encouragement: understanding and encouragement are also of pivotal importance to interactive leadership communication. Only by gaining an understanding of one’s interlocutor is it possible to direct the course of the discussion in terms of content and find the “right wavelength”. Identifying the matter at hand means that it can be assessed and be the subject of a solution-oriented discussion. Similarly, encouragement from leaders is important for employees. Encouragement is exemplified by the sentence “I am there for you and I believe in you”. If every employee receives this type of encouragement, the resulting motivation will mean that each individual will achieve more of their full potential and this will in turn increase the efficiency of the company as a whole. Respect and expressing appreciation—including within criticisms: the final point to consider at the stylistic level of communication is that no good leadership communication can exist without respect and appreciation. Both qualities are an expression of goodwill and attention. Moreover, employees will know that they are always spoken to in a positive manner at the personal level. This is why respect and appreciation from leaders are particularly important when criticism is being expressed. This lets employees know that it is only the matter at hand that is being discussed and not themselves as persons. This is in line with the motto: “Be soft to the people, but hard to the issue”. In addition to the stylistic communication level, best practises can also provide orientation to leaders at the communication level of content: Clarity and transparency: clarity and transparency are key requirements for good leadership communication. These attributes are often viewed as obvious and even taken for granted. Time and again, however, employee surveys reveal criticisms of management for a lack of clarity and transparency. There are two main reasons for this. The first is different horizons of expectation and the second is differing horizons of understanding. This means that employees often desire more or more detailed

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information on matters than their leaders communicate. In such cases, it would do leaders well to clarify why they are providing the information that they are providing and whether further details will be communicated at a later date. Differing horizons of understanding emerge because a leader views their message as sufficiently clear and comprehensible although employees perceive this differently as recipients. In such cases, the respective leader should provide sufficient space for follow-up questions and feedback. When particularly important information is being communicated, it may be possible to test out the planned form of communication with other leaders or closely acquainted employees. Providing reasons: providing reasons for decisions is an area of particular attention in leadership communication. It is natural that the employees of a company will want to understand a decision and—in optimal cases—share this information. If they are unable to share information on a decision due to varying interpretations or assessments of the facts, it is all the more important for the decision of the leader to be comprehensible. The reasons stated in communications from leaders should therefore always be complete. In addition, they should be credible and consistent. In terms of content, such reasons may relate to material considerations, such as cost effectiveness and efficiency, or to intangible considerations, such as values. What is important is that leaders articulate their reasoning clearly in communication. Finally, at the emotional level, it is important that leaders always show conviction when providing reasons. If a leader is perceived as not being completely behind the reasoning for a decision, then their support for such a decision will lack credibility and this will weaken the value of the decision as well as the leader’s position. Continuity and personal consistency—“Walk your talk”: finally, continuity and personal consistency are also components of good leadership communication. Continuity increases the credibility and recognition factor of leaders. By contrast, those who regularly contradict the content of their prior communications will lose credibility. Personal consistency means putting that which has been communicated into action and is succinctly expressed by the phrase “walking your talk”. This characteristic is in turn a core component for the credibility of leaders—and nothing damages credibility more than leaving words hanging as a mere statement of intent. By contrast, those who follow through and put their words into action will be considered reliable and credible. In addition, certain communication situations can pose particular challenges for leaders because they entail unusual formats or have special requirements in terms of the form and content of communication. The following sections provide a brief overview of some of these situations. Wanting vs. being allowed to: in practice, it may occur that a leader would like to communicate a point of information, is capable of doing so but is not “allowed to”. This may be the case because the interests of the company call for the information to remain unannounced due to it being, for example, part of an ongoing process and any early announcement could result in the process concerned falling victim to reduced security, misinterpretations or even failure. In such cases, communication is often a question of timing. The earliest possible communication provides transparency and certainty. At the same time, however, it is only possible to communicate reliable

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information. Leaders should therefore provide reasons for being able to communicate what they can and for why other points cannot yet be communicated. A further example of when a leader regularly has to refrain from providing information is matters requiring the approval of boards or other governing bodies. This can affect communication regarding decisions on promotions or pay negotiations. In such cases, leaders can nevertheless provide a “positive signal” where appropriate while noting that the decision concerned has not yet been (formally) finalized by the board. Conflicts: a particularly challenging matter for interactive leadership communication is the moderation or oversight of conflicts. In such cases, leaders are not one of the original interlocutors and usually come into play at a later stage. Leaders generally have two options when it comes to communication: moderating the conflict actively or overseeing it passively, although the two approaches can be combined. In line with the “Harvard concept”, leaders should seek to focus the communication and reasoning of the conflicting parties on the matter at hand rather than the persons concerned. It is necessary to differentiate personal aspects from the aspects of the problem itself and to identify the interests at play. The objective here is to arrive at possible decisions that are beneficial for the parties concerned. This does not mean that it is always necessary for all parties to be satisfied when leaving the conflict situation. In such cases, leaders should explain the reasons for the outcome to the party concerned and always do so with a consistent focus on fact-based necessities. This means that the outcome aims to address specific facts rather than any particular party. Digital communication: as stated at the start of this article, digital communication in the new world of work is also posing particular challenges for leaders. Phone and video conferences as well as (group) chat platforms lack the in-person aspect of communication. In the case of remote work solutions in particular, interpersonal relationships must not be allowed to deteriorate due to digital communication formats and particular attention must be given to fostering relationships of trust between employees themselves as well as with their managers. Leaders should therefore start by paying even greater attention to their communication and to how their interlocutors respond. In particular, it is necessary to consider what is suitable for a virtual communication format and which information or content might potentially necessitate a real-world, in-person meeting—due to complexity, sensitivity or potential outcomes, for example. From a formal and organizational standpoint, it is also necessary to ensure that group sizes and scheduling are suited to the topic and content being dealt with. Various formats should be combined and (predominantly) one-sided communication via a stream is justifiable so long as sufficient opportunities for interaction are provided via other formats.

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4.5 Conclusion Good leadership and good leadership communication are essential for constructive and functioning cooperation as part of interactive daily business—although it is not a sure-fire success. It is therefore important to identify and promote good leaders at an early stage and foster the development of leadership communication skills. While the value of good leadership communication is consistently emphasized at many companies, it is nevertheless often lacking in daily business practices. This does not have to be the case and tangible changes can be achieved in future if good leadership communication becomes embedded as a matter of course within the corporate culture of companies.

Dr. Nicolas Sonder is a Partner at PwC and PwC Legal and responsible for the German legal practice on digital transformation for the public sector. He is author of an monography and more than 40 contributions on public business law and member of the government & public services leadership team. He has over 10 years experience in leadership issues.

Chapter 5

Essential Communication Skills for Emerging Leaders Michelle D. Fortin and Keith A. Frey

5.1 Introduction The 21st Century leader, in any industry and any culture, needs essential communication skills to engage, inspire and align a diverse workforce. Leadership can be defined as influence, yet increasingly as the skillful use of influence to create an environment where people can do their best work towards the goals of the team you are leading. How does such a leader influence their team?—through innovative communication skills that meaningfully connect to each unique individual (Pfeffermann, 2020). But why change? The 21st Century leader, in any industry and any culture, needs essential communication skills to engage, inspire and align a diverse workforce. Leadership should always be a relationship, and truly successful leadership will thrive when a group culture of significant openness and trust exists (Schein & Schein, 2018). Schein asserts that “the core of organizational longevity is in the interaction of social, emotional, and cooperative whole human beings in various kinds of personal relationships to each other.” Skillful communication, which includes active listening to understand, is a fundamental requirement for emerging leaders. Building and nurturing personal relationships within the work environment, rather than the traditional transactional approach alone, requires personal growth for leaders. So called “Humble Leadership” builds upon what are known as “Level 2” personal relations that depend on and foster openness and trust. Level 2 is defined as “personal cooperative, trusting relationships”, as often seen in friendships and effective teams (Schein & Schein, 2018). The process of creating and maintaining Level 2 relationships requires a learning M. D. Fortin (B) 13454 N 91st Way, Scottsdale, AZ 85260, USA e-mail: [email protected] K. A. Frey 27710 N 67th Way, Scottsdale, AZ 85266, USA © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_5

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mindset, cooperative attitudes, and skills in interpersonal and group dynamics. But more on that later… The twenty-first century workforce Unless you have been in a prolonged state of hibernation, everyone has noticed that the workplace has changed profoundly over the past 40 years: with rapid technology advances, profound globalization, and increasingly diverse demography (Pfeffermann, 2020). These changes continue to evolve. Al Lopus notes: Employers still need workers who come to jobs with industry-specific knowledge. But they also increasingly value such skills as effective communication and critical thinking to facilitate teamwork and meet expectations of ongoing innovation. As a result, some workers find that their knowledge and skills are no longer up to date or even necessary and that employers no longer offer stable employment and benefit packages. Some employers struggle to find workers who have the kinds of skills and knowledge needed to keep their companies well-staffed and competitive over the long term (Lopus, 2022).

The next generation of workers is here; Millennials (born between 1981–1996) and Generation Z (born between 1997–2012) are already making a significant impact on the future of work. Wonderfully, they bring a unique set of characteristics (Lopus, 2022). Namely: ● Digital-first: These generations are unaware of a world, let alone a workplace, without technology. Often, they are ahead of the curve when it comes to implementing and adopting new technologies. ● Organization optimization: These cohorts of young professionals, given their techsavvy backgrounds, can often see how systems and processes can be improved through technology. ● Mobile careers: These generations value flexibility and the ability to make changes that work for their changing lifestyles. Therefore, they are more likely to change jobs, roles, and/or locations rather than to stay with a single company for the long term. ● Adaptable and Agile: The millennials and Gen Z workforce expect to be able to work remotely (when possible) and will quickly adapt and adopt changes. Leadership—(re)defined Leadership can be defined as influence, yet increasingly as the skillful use of influence to create an environment where people can do their best work towards the goals of the team you are leading. How does such a leader influence their team?—through innovative communication skills that meaningfully connect to each unique individual. Yet, an individual leader—as an influencer—must pursue a lifelong journey of leadership growth. Three categories essential to support thriving, successful leaders are: Awareness, Communication Skills, and Sustainability.

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Awareness Leadership awareness has three spheres: self-awareness, other awareness, and environmental awareness. Each is critical to ensuring a strong foundation for leadership success. Self-Awareness Self-awareness as a leader runs the gamut from macro to micro. On the macro side, it begins with an understanding of one’s life purpose, because “the purpose of life is to live a life of purpose” (Maxwell, 2018a). By understanding ‘the lane assigned uniquely to me’ the leader is able to frame day-to-day work—and frustrations—in a larger context. Understanding your “bigger picture” life purpose helps you to answer these important leadership questions: Why am I doing this? What is intrinsically valuable to me about serving in a leadership role? What impact do I want to have on the individuals, teams and organizations I work in? What legacy do I want to leave? Constructing a life and career purpose statement, followed by an honest assessment of your unique talents and temperament, can lead to a developmental roadmap that provides a buffer against the everyday wear and tear of demanding leadership roles. On the less grand end of the spectrum, self-awareness involves understanding your strengths and weaknesses as a leader and communicator. To expand that understanding, a self-aware leader will want to ask: What do I do well? What needs improvement? What helps me perform and engage at my highest level? What pain points get in the way? What are the top 5 skills needed to perform my job effectively and, on a scale of 1 (low) to 10 (high), how do I rate myself? What types of recognition are essential to me and, if not met, what negative and unproductive behaviors am I likely to exhibit? This list is a starting point for leadership awareness, yet most leaders are so busy doing, they rarely take the time to contemplate even these basic questions. Answering them will identify key focus areas for improvement on a broad range of leadership awareness competencies including the now well-established need for Emotional Intelligence. Emotional intelligence (EI) is the capability of individuals to recognize their own emotions and those of others, using such emotional information

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to guide thinking and behavior. The model introduced by Daniel Goleman focuses on EI as a wide array of competencies and skills that drive leadership performance. Goleman’s model outlines five main EI constructs (Goleman, 2004): ● Self-awareness—the ability to know one’s emotions, strengths, weaknesses, drives, values and goals and recognize their impact on others while using gut feelings to guide decisions. ● Self-regulation—involves controlling or redirecting one’s disruptive emotions and impulses and adapting to changing circumstances. ● Social skill—managing relationships to move people in the desired direction. ● Empathy—considering other people’s feelings especially when making decisions. ● Motivation—being driven to achieve for the sake of achievement. An EI assessment is a helpful way to do this particular piece of self-reflection. In addition, a variety of other personality assessments provide valuable frameworks for increasing self-awareness. These include Hogan, Process Communication Model, Myer-Briggs Type Indicator (MBTI), Disc, and Birkman. If used effectively (often in association with an executive coach), these tools can do double duty—enhancing self-awareness and other awareness at the same time. Other-Awareness Your leadership role is to use influence skillfully to create an environment where people can—and want to—do their best work towards the goals of the team you are leading. Influence is the key to creating this type of achievement-aroused climate. The measure of success is not whether a leader manages to get work done, it’s whether the leader successfully influences and aligns others to get the work done. The skillful use of influence requires that you know and relate well to others. Influencing others requires a shift in focus from self—what do I want? How am I motivated?—to an awareness of and attunement with others. What do those who look to me for leadership need to perform well? What motivates them? What type and frequency of communication works with them? What resources and feedback help them? What obstacles do they face? Once we attune with those we lead by knowing the answers to some of these questions, we are better able to create an environment that drives high performance and engagement. This is particularly true in the highly matrixed organizations in which many leaders work where they have limited authority over stakeholders but nonetheless need their alignment. This does not mean a leader needs to be a friend to every colleague he or she leads. Taking the time to understand those you lead is an achievement activity. Friendships and strong professional relationships might well result and are a happy by-product of this investment, but the goal for a leader is better performance at the individual, team, department, and organizational level. Leaders who become other aware are performing an important act of service to the people they lead and ultimately to their organizations. Peters has famously said “Organizations exist to serve. Period. Leaders live to serve. Period”; then enhanced by Maxwell as “Put another way, the very heart of leadership is serving people.” (Maxwell, 2018a). “The true leader serves. Serves people. Serves their best interests,

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and in doing so will not always be popular, may not impress. But because true leaders are motivated by loving concern rather than a desire for personal glory, they are willing to pay the price,” says Habecker (1987). Such “servant leaders” should be able to listen without judgment, be authentic, build community, share power, and develop people (McGee-Cooper et al., 2002). Environmental Awareness The third level of awareness is environmental awareness. Many leaders come to their leadership role because they have demonstrated great subject matter expertise in domains other than business or leadership. An environmental scan early in a new leadership position is essential to identify gaps in knowledge and skills. Objectives for this scan should include, at a minimum, gaining a working understanding of the business model of the organization and/or department in which a leader is leading, the recent (i.e., three years) performance history of the unit, the financial drivers and cycles, and the role and impact of key stakeholders within and outside of the unit. Most leaders focus purposefully on the current state of the unit or organization enough to be able to navigate immediate concerns. Often, the broader viewfinder that includes where the unit has been and how that history affects current state and future potential is missed until a leader runs smack dab into an obstacle with historical roots or a roadblock tied to “how we do things here.” Better to ask upfront so you can be prepared for the ongoing effects—organizational and human—of what came before. The other critical area to explore in the realm of environmental awareness is culture and values. We tend to learn of these things anecdotally. As they emerge, we see that different stakeholders articulate different key values and describe in varying ways what they believe to be the “culture” of a place. Very often, these conversations come up during times of great change or loss as people lament culture or values, they perceive as changing. It’s a powerful message for a leader to focus on these things directly, proactively and explicitly. Ask: what values are essential to you in our workplace? How would you describe our culture in this unit? What behaviors align with your view of our culture and values? What behaviors are out of step with them? The goal is not to winnow the input you receive down to a single unifying message; it is to identify compelling themes. Indeed, this can be an excellent opportunity to highlight the cognitive diversity in how people approach these issues and an expansive leadership viewfinder on the different human experiences that create a living organizational culture. This may seem like an awful lot of awareness to fit into already busy days and demanding schedules, and it is. The truth is good leaders do a lot of this instinctively. While those instincts are good, they often take a back seat to the need to act and may be exercised only episodically. In short, the type of inquiry discussed above tends to get crowded out by the day-to-day press of business. Because it is foundational, a focused and structured approach to enhancing your awareness—of self, of others, and of your environment—can accelerate leadership development and ensure you are investing in building the skills for long term success. As mentioned earlier, ‘humble leadership’ requires a certain mindset, certain attitudes toward working with others, and skills in working with groups. An essential

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skill of such leadership is the ability to “…manage the balance between being too formal at one extreme and being too intimate at the other extreme” (Schein & Schein, 2018). A relationship is an interactive concept, with some reciprocity in mutual expectations. But what are the fundamental communication skills leaders need to develop these functional and productive workplace relationships? Essential Communication Skills Effective leadership requires exceptional communication skills. This begins with demonstrating communication competence—defined as “the ability to interact with others in a way that allows a person to reach his or her goals while doing so in an appropriate, effective, and ethical way” (McCornack & Ortiz, 2014). Read the room! It’s a common phrase meaning, “Do you realize whom you’re talking to?” Great communicators “read the room” before engaging in competent communication. They take an assessment of the culture, jargon, mood to ensure their message will be appropriate. They tap into their arsenal of effective communication skills to ensure their message sticks. They are above board and ethical in their communication encounters. McCornack and Ortiz (2014) explained that “During every encounter—whether it’s interpersonal, small group, or a public presentation— you need to treat others with respect and communicate with them honestly, kindly, and positively.” These competent communication skills begin with a simple concept—listening. During a communication encounter, one should not first focus on delivery or even messaging—but practice active listening to ensure the learner or leader understands their audience/team member(s). One of the best methods to practice active listening is via the acronym, RASA. Rasa is the Sanskrit word for essence or taste. As you take a moment to savor a well-cooked dish or let a fine wine roll across your palate, you should pause during a communication encounter to ensure you are taking in all that is being said. The RASA acronym is as follows: R—Receive: Be quiet and let the other person speak. Take in what they’re saying verbally, non-verbally and contextually. A—Appreciate: Demonstrate you are actively listening by responding with verbal and non-verbal cues such as head nods, and affirmative comments such as: “Okay.” “I hear that.” “Right.” S—Summarize: When the other communicator has completed their thought(s), respond with a brief summary of what you understood them to say. “I heard you say XYZ.” A—Ask: Ensure your understanding is correct by asking follow up questions such as: “Did I understand you correctly?” “Is that summary correct?” “Am I missing anything?”

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As dialogue continues, it is crucial for the leader to understand how each person filters information. Similar to a coffee maker, information—like water— flows through each person’s unique meaning system. As gravity pulls water through the coffee maker’s filters, information is absorbed in a similar manner.

Language: This includes linguistic, ethnolinguistic, non-verbal and paralanguage particulars. The communication recipient will ensure they understand what is being said from the most basic level. Culture: In our global society, it is easy to see how cultures can greatly differ. Each communicator brings their cultural background with them into each encounter. How a message is delivered—the tone, context, social hierarchy of the relationship—these cultural elements and more are part of this phase of our filter. Personality: An individual’s temperament is an important factor in how communication is interpreted. After a message is filtered through language and culture, personality comes into play. This also includes unique experiences—positive and negative. Encounter: Finally, the encounter itself impacts how the message is received. Noise, timing, fatigue, hunger—all play a role in how a message is understood. While engaged in these communication encounters, leaders must recognize the unique differences within each team member. Each person comes into a communication encounter with a different filter—as unique as their fingerprint. No two people have the same story or experiences. Simply ask a twin if they have had an identical life experience to their sibling or if they see the world the same way. They will laugh

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out loud and exclaim that—despite a close connection to this other human being— they are, in fact, quite different. Similarly, effective leaders can never assume two or more people on their team will interpret their message the same. Once a leader recognizes the need to actively listen and connect with their team in a meaningful way, they can tap into effective communication skills. For emerging leaders, these skills are evolving quickly as technology continues to snowball. First, productive communication encounters must be recognized as interactive, not linear. Due to its organic nature, ever changing with each encounter, communication is most successful when interaction is not only expected but encouraged. Rarely will a linear model of boss-bosses-subordinate with no room for feedback be successful in the big picture. Human beings are wired for interaction—and this includes workplace communication. Second, communication needs to be quick and simple. As British novelist J.B. Priestley said, “The more we elaborate our means of communication, the less we communicate.” Our brains can only process so much, and research shows you only have someone’s attention for about ten minutes. Keep your message succinct and give your recipients an opportunity to take a break, give feedback, or re-engage their attention with a topic change every ten minutes. “The brain is a sequential processor, unable to pay attention to two things at the same time. Businesses and schools praise multitasking, but research clearly shows that it reduces productivity and increases mistakes” (Medina, 2014). The messaging pyramid is a good visual cue for this concept.

The Messaging Pyramid is a great tool for simplifying a message. The organization’s name/logo and tagline take the smallest sections. They use the least amount of words and therefore take the least amount of time. The Elevator Pitch is a oneminute story about the organization as a whole. Next, the Key Messages are different aspects of the organization that can be expounded upon, which are supported by Proof Statements.

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Third, story time is good for all ages and situations. Information sticks better when we have context. Putting your message into a personal story, metaphor or role play situation will increase the chances of retention. The more emotion, the better. “Emotionally charged events are better remembered—for longer, and with more accuracy—than neutral events…. Dopamine greatly aids memory and information processing. You can think of it like a Post-it note that reads ‘Remember this!” Getting one’s brain to put a chemical Post-it note on a given piece of information means that information is going to be more robustly processed. It is what every teacher, parent, and ad executive wants’ (Medina, 2014). Effective communication begins with a competent communicator. Once a leader demonstrates the building blocks of active listening, ethical engagement, and skilled messaging—their message will stick. Remember, “Communication works for those who work at it.”—John Powell (Masters & Wallace, 2010). Sustainability The third category in this essential model to support thriving, successful leaders is sustainability. Any individual—and especially a leader—will experience seasons of success and setback. Healthy boundaries and balance between personal life (health, relationships, rest) and vocation must be established for sustainability and burnout avoidance. As mentioned earlier, the individual leader—as an influencer—must pursue a lifelong journey of leadership growth. Personal growth is the key to the expansion of the leader’s influence and effectiveness. Maxwell (2018b) presents these five keys to sustainable growth: 1. 2. 3. 4. 5.

Growth is the only guarantee that tomorrow will get better. Growth means change. Growth is the great separator between those who succeed and those who don’t. For growth to be maximized, it must be strategic. Growth is joy!

5.2 The Future We now have up to five generations in the workforce. Emerging leaders can (and must!) acquire and maintain the communication skills to both engage their teams and traverse these generational disconnects. Additionally, such leaders are balancing the call for more purposeful work from their employees with ever-increasing performance demands to succeed in their markets. Sometimes it seems these two forces are diametrically opposed, causing leaders to favor performance over purpose or pay. Gartner and Robinson, based on their applied research and consulting for as some of the world’s most progressive companies, suggest that those leaders “…that capitalize on friction between generations and use it to spark creativity flourish by instilling a sense of purpose across their whole employee base, innovating faster, and forging stronger bonds with their customers” (Gardner & Roberson, 2022).

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Here are three ways that you, as a skilled emerging leader, can leverage the value in age differences, AND drive innovation, employee engagement and customer stickiness (Gardner & Roberson, 2022): 1. Build and Capitalize on a Shared Sense of Purpose: Most employees are attracted to organizations with a noble purpose. Leaders need to articulate, reinforce and (where possible), help individuals connect their personal and professional purpose(s) to the organization’s. This overlap generates what can be thought of as creative engagement and is a fundamental role of leadership.

2. Use Team Launches to Highlight How Differences Matter—“The best teams have a mandatory kickoff meeting for every project, even if team members have already worked together. This way, they can get on the same page about each person’s expertise, including the advantages they offer as a result of their age, tenure at the company, and life and professional experiences.” 3. Launch and Sustain a Reverse Mentoring Program—“Reverse mentoring is when a more junior employee mentors someone more senior than they are. These programs can help senior executives or managers become more sophisticated about topics like social media, collaboration (younger people tend to work better on teams), work-life balance, and troubleshooting technology issues.”

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References Gardner, H. K., & Roberson, D. (2022). 3 Strategies to bridge generational divides at work. Harvard Business Review (Digital Article: December 23, 2022). Goleman, D. (2004). What makes a leader. Harvard Business Review. Special Issue: Best of Harvard Business Review 1998 (pp. 1–10). Habecker, E. (1987). The other side of leadership (p. 217). Victor Books. Lopus, A. (2022). Workplace dynamics are changing: What you need to know as baby boomers retire and generation Z enters the workforce. Mercer Island, WA: Best Christian Workplaces. Masters, A., & Wallace, H. R. (2010). Personal development for life and work (p. 88). Cengage Learning. Maxwell, J. C. (2018a). Developing the leader within you 2.0 (pp. 145–163). HarperCollins. Maxwell, J. C. (2018b). Developing the leader within you 2.0 (pp. 205–224). HarperCollins. McCornack, S., & Ortiz, J. (2014). Choices and connections: An introduction to communication. Bedford/St. Martin’s. McGee-Cooper, A., & Trammell, D. (2002). From hero-as-leader to servant-as-leader. In L. C. Spears & M. Lawrence (Eds.), Focus on leadership: Servant-leadership for the twenty-first century (p. 1623). John Wiley and Sons. Medina, J. (2014). Brain rules 12 principles for surviving and thriving at work. Pear Press. Pfeffermann, N. (2020). New leadership in strategy and communication: Shifting perspective on innovation, leadership, and system design (pp. 1–11). Springer International Publishing. Schein, E. H., & Schein, P. A. (2018). Humble leadership. Berrett-Koehler Publishers.

Michelle Fortin is an award-winning broadcast journalist, speaker, comedian, and actress. She routinely emcees events and conferences, and gives keynote addresses on motherhood, relationships, and faith. Michelle’s career includes a decade in television newsrooms across the country, both behind and in front of the camera, followed by running a PR firm for a long list of impressive clientele. Currently, she teaches future journalists and communication professionals as a professor at Grand Canyon University. Michelle received her bachelor’s degree from Biola University and Master of Mass Communication (MMC) from Arizona State University. Keith A. Frey is a healthcare consultant and leadership developer. Dr. Frey has over forty years’ experience as a physician executive, primary care physician, educator, and coach/mentor. Additionally, he has extensive experience in successful program development, leadership of healthcare teams, and technology project management. His career included major leadership roles at Duke University, Providence Health, Mayo Clinic, and most recently Dignity Health. He achieved the rank of full Professor in five, top tier academic institutions. He received his Doctor of Medicine from the Medical College of Virginia, and his Master’s in Business Administration from Duke University. Dr. Frey is certified in Hogan Personality Assessment Systems and has a strong interest in clinician well-being, particularly the leadership attributes that support healthy and functional clinical cultures.

Chapter 6

AI-Supported Communication (Models) and the Digitalization of Communication Andreas Quest and Nicole Pfeffermann

6.1 Artificial Intelligence (AI) and Communication Challenges and Ethical Guidelines Artificial intelligence (AI) originates from the realm of digitization and even the latter is initially an imposition for the man, since the phenomena of AI and digitization elude a simple understanding and, in addition to their complexity, are characterized by an extremely high degree of dynamics. Consequently, it makes sense to look for a reduction in complexity through comprehensible narratives. These phenomena have already changed a lot in corporate communications and are unlikely to lose any of their pace of development in the future. Corporate communication is understood here as the contribution to corporate or organizational success aligned with strategic goals, which contributes to internal and external coordination of action as well as to the clarification of interests between companies and their stakeholders (Mast, 2013, pp. 7f.) It therefore concerns all communication with all stakeholder groups in the procurement, capital, acceptance and sales markets. As in other areas of our society, the discourse takes place in forums, each characterized by its own channel-specific forms of expression. Communication managers for products and services that are largely convenient must find a “licence to operate” in addition to a USP in order to adequately counter the pressure on social legitimacy. This is because companies have largely lost the sovereignty of interpretation over the discourses related to them in social media (Banholzer & Siebert, 2021, p. 24). However, it is not only about the discourse directed at the companies themselves, because companies are anchored in the social context and thus depend on the acceptance of society. In order to operate in A. Quest (B) Rellinger Straße 45, 20257 Hamburg, Germany e-mail: [email protected] N. Pfeffermann Kuhhauser Weg 26, 58256 Ennepetal, Germany © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_6

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this diverse, diverse but interconnected environment, they must develop a contextual intelligence (Fawkes et al., 2018, p. 7). Therefore, these dynamic communicative relationships with diverse stakeholders in digitized environments are a challenge for corporate communications. Strategic organizational and corporate communication must therefore even meet the framework conditions of digitization (Pleil & Helferich, 2022, p. 780). An inside out perspective is no longer enough, but the feedback with the environment requires constant review by an outside-in perspective. This focuses on the use of digital tools, the automation of communication processes, the analysis of data sets and thus the use of artificial intelligence (AI). AI offers a rich spectrum of solutions and fields of application, which come into play in the areas of analytics, newsroom & content hub, media relations, strategy and skills. There is a broad discourse about what AI is, which will not be discussed further at this point, instead it is recommended to concentrate on the often synonymously used machine learning: An application with the currently most common applications of AI solutions. Here, an IT system learns to recognize patterns in existing data sets, to process them and to learn from them. This is first done in a supervized procedure with predefined in data sets and can then be applied to huge data sets in unsupervized procedures. It is always true that with such learning algorithms it is never clear what is learned from the data, and there are only rudimentary ways to find out how a system comes to its derivations. It remains to be noted with Nassehi (2019, p. 260) that AI, in the sense of a meaning-processing system, must be described as nonintelligent. In other words, a neural system on which AI is based is not a system of consciousness that distinguishes between self-reference and external reference and constitutes a continuous perception as a world (Maturana & Varela, 1990, p. 46 f.). This also makes the public handling of software such as ChatGPT from OpenAI so problematic because the knowledge about the limits of AI is limited and it comes to misjudgements due to the lack of a corresponding corrective, because in the case of ChatGPT, the software itself naturally cannot provide verification of the truth content of its results. In the broadest sense, therefore, this is about pattern search and pattern recognition in data volumes that do not have any evident, or simply calculable, correlations in the data basis, so that a basis for assessment or decision-making can be made available quickly. In this way, AI is compatible with a perceived problem and can tie in with the expectation structure and processing capacity of a society (Nassehi, 2019, p. 16). While generally the reasoned convictions can be reasoned on a case-by-case basis by humans considering the challenges of the case at hand, in AI the convictions must often be reasoned out in abstraction and embedded in data and software. In this context, AI for corporate communications offers solutions in two main areas: 1. The analysis of behaviour, expectations and attitudes on the part of stakeholders. Here, reputation-, topic- and stakeholder-analyses are created using methods of social listening, which provide information about the reputation of the company concerned as well as the contextual environment and relevant stakeholder groups.

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In this way, the management of communication with regard to topics and stakeholders can be optimized in order to increase the reputation and thus the success of the company. 2. The production and distribution of target group-oriented content, including the automation of suitable interactions with internal and external interlocutors. For this purpose, channel- and topic-specific content is created and distributed in the newroom via appropriate information hubs. All areas serve reputation building and include reputation, risk and issues management for public relations, marketing as well as investor relations and public affairs. When dealing with AI applications, however, communication should always act as a curator and never refrain from reviewing the results in order not to cause reputational damage. Even if this is initially associated with additional effort when introducing such a software, the efficiency potentials of AI solutions are obvious and also serve the demand for measurability of communication measures, which can be better controlled in the future. Of course, this increases the demands on all participants in corporate communications, especially as the review and adjustment intervals are getting shorter and shorter. On the other hand, AI applications and automation processes should create more time for communication professionals to build relationships, develop strategies, build trust and tell stories (Panda et al., 2019, p. 2). Whether this will succeed and how much of it will even be taken from AI applications remains to be seen and will probably develop very dynamically. In addition to the classic KPI-controlled evaluation of communication in the context of communication controlling, AI solutions also focus on process-oriented and formative evaluation and, according to Volk and Zerfass (2022, p. 4), open up the prospective optimization of communication measures through pretests or target group analyses. In addition, communication in the field of predictive analytics already has possibilities available that can accompany the development of the communication strategy by predicting topic developments (Oßwald & Raaz, 2018, p. 183). Thus, a simulative review of communication measures can take place before their implementation by enabling the creation and comparison of different course or effect scenarios, which in turn significantly reduces the reaction times when such developments occur (Banholzer & Fink, 2022). Corporate communications is therefore undergoing a decisive transformation process and will therefore face a changed expectation attitude of various stakeholder groups. In the battle for attention markets, however, communication can also become a trusted advisor within the company, as it can bring in the view from the outside to the inside for different departments thanks to AI analysis tools. Communication is a value creation factor. Finally, a look at the ethical implication of AI applications and how the EU and OECD guidelines address this. Basically, the ethical aspects of the use of AI solutions in corporate communications represent a challenge. As noted by Haug (2021) and Bourne (2019), there is a lack of necessary guidelines for PR practice that focus primarily on the aspect of stakeholder trust. A responsible use of new technologies by communicators requires dealing with intended and unintended effects and includes making this use transparent for stakeholders (Haug, 2021, p. 75).

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Artificial intelligence or AI solutions are man-made systems that must be applied and endured by humans. They interfere with the coexistence of people in our society and therefore require adequate rules for the use and handling of them. As part of this elaboration, the focus is on communication, which must not be forgotten that AI generally has a high degree of interdependence with other areas of life. This is already considered in the definition of AI by the High-Level Expert Group on Artificial Intelligence commissioned by the EU Commission in December 2020. (“A definition of AI: Main capabilities and scientific disciplines” https://ec.europa.eu/futurium/en/sys tem/files/ged/ai_hleg_definition_of_ai_18_december_1.pdf). See also the European Council’s “Study on the human rights dimensions of automated data processing techniques (in particular algorithms) and their possible regulatory implications. Strasbourg: Council of Europe” (2018). Looking only at the example of AI-controlled prostheses, the intervention of AI in the human body can be understood in the literal sense. The transitions are almost fluid and will be more and more so in the future with the dynamics of scientific developments. The American religious scholar Taylor (2020, p. 108) also speaks of an “intervolution” in this context. In Taylor’s vision of the future, the emerging global network forms the biotechnical infrastructure for our future cognitive and physical development. He understands this as an interlocking, a process of internalization and alienation of our bodies. The reference to Taylor is intended to raise awareness in order to show the huge framework of artificial intelligence and its ethical implications. The human being as an actor is therefore always in tension between will and should, desire and duty, interest and morality. Since interest and morality are often in tension, it is always the requirement for our legislation to create a balance. Basically, this means seeking a balance between what seems wanted and what seems necessary. Therefore, ethical guidelines, such as those currently being developed at supranational and national level, are the right way forward. Especially since this is to a large extent a path to terra incognita, because there is a lack of empiricism in dealing with artificial intelligence, and it is not yet possible to anticipate today what changes it will bring about tomorrow. On the one hand, the effects arise in the real physical world, which also and not least affect the body, and on the other hand, there are the effects on the digital, the communicative world. All communication managers of the company, the institute, the organization bear responsibility for the changes that will be shown by the application of artificial intelligence in communication. People are influenced in particular by ideas, opinions, conceptions that take place and are carried out in public discourse in a media reality. In the future, this media reality will be increasingly shaped by artificial intelligence. Therefore, the profession of communication bears a special responsibility towards its fellow human beings and towards all stakeholders. Because communication for companies, institutions and organizations decisively shapes this public discourse and thus also the media construction of reality. Without rules for the use of AI in communication, we would prepare the field for abuse and momentum. The areas of application of AI already range from manufacturing industrial to agriculture, health, research, transport, marketing, workplace optimization and security in public spaces. The depth of the applications themselves will steadily increase.

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Against this background, a trustworthy handling of AI must be ensured, because without people’s trust in AI, there will not be sufficient acceptance. In addition, tensions in society are likely to be promoted, which lead to exclusion and open conflict. That is why EU experts have coherently extracted three components of trustworthy AI from the OECD principles such as inclusive growth, sustainable development and quality of life, human-centered values and fairness, transparency and explainability, robustness and security, and accountability: ● Lawful, ● Ethical, ● Robust. These are the basic prerequisites for people and societies to be able to develop, introduce and use AI systems (OECD, 2019). The EU (European Commission, 2020, p. 9) sets seven requirements for AI: 1. 2. 3. 4. 5. 6. 7.

Primacy of human action and human supervision Technical robustness and safety Data protection and data quality management Transparency Diversity, non-discrimination and fairness Social and environmental well-being Accountability.

Communication should also adopt this claim. The use of AI solutions helps to reduce complexity and increase the efficiency and effectiveness of communication measures. These possibilities have already arrived in corporate communications and their ethical implications must always be considered and taken into account. Basically, all AI systems are only as good or bad as humans have set them up. There will always be a black box effect that makes it unpredictable whether the behavior of AI systems will be in line with man-made norms and regulations. An image of man that takes into account errors and bias in human decision-making processes must be aware of the fact that the AI system created by these people will not be immune to the same mistakes and bias.

6.2 The Need for New Communication Models (Plans) Open Communication View: Framework Understanding the new circumstances for effective communication, the open innovation view (illustrated in Fig. 6.1) provides sufficient ground to deduce seven major points for a framework of open communication: (1) constant communication with known, unknown, and new stakeholders; (2) use of network communication; (3) knowledge from inside and outside a company;

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Fig. 6.1 Open communication view, by Pfeffermann, N

(4) (5) (6) (7)

increase of issues supply and demand; best use of internal and external communication situations; moral legitimacy; and value communication.

First, nowadays companies analyse their internal and external target groups to improve their management of relationships (e.g., Argenti, 2007; Hübner, 2007; Karmasin, 2007; Schmid & Lyczek, 2006). Cornelissen (2004) mentions active stakeholders, whereas other authors describe different stakeholder groups (e.g., Belasen, 2008; Hübner, 2007; van Riel & Fombrun, 2008) or divide stakeholder groups into primary and secondary groups (Argenti, 2007). However, in the open view the company boundaries are porous (Chesbrough, 2003), which automatically leads to information exchanges with known stakeholders, but also attracts the attention of stakeholders who are unknown and not yet identified by the company’s target group analysis. According to Belasen and Belasen (2019), effective corporate executives recognize the need to adapt to a changing market-place by communicating across boundaries and by listening to stakeholders. Failing to respond to stakeholders may lead to reputational damage. Second, companies do not compete as single units to achieve competitive advantages anymore. Rather, networks are created to share knowledge and generate innovations. According to Zerfaß (2007), companies, especially DAX companies, focus on

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the implementation of integrated communication concepts, but in doing so, the challenging task is still network communication. Zerfaß (2007) defines network communication as communication actions of companies or their representatives with the aim to create close relationships in terms of cluster initiatives or virtual networks. Instead of only focusing on the internal corporate identity and the stakeholders’ perceived reputation of a company, a company’s network communication is characterised as combined communication actions with the objective of developing a network profile, which apparently leads to new challenges, especially in the areas of value creation and the evaluation of communication (Zerfaß, 2007). Third, following the line of argumentation, ideas and knowledge can be inside and outside a company’s boundaries, whereas external communication activities enable companies to find new opportunities for corporate learning (Goes & Park, 1997). Ideas and knowledge both inside and outside a company’s boundaries become important to corporate communication. For instance, communication can have an impact on the stake-holders’ existing knowledge to facilitate an innovation’s diffusion process (Moreau et al., 2001). Moreover, successful companies make use of outside technology and scientific knowledge to reach a better understanding of the needs of individuals (Project SAPPHO, 1972). Carter and Williams (1957) have already stated that technical progressive companies, with an outwardly direction, have the willingness to share knowledge and to be successful with a high quality of communication. The communication mechanism constitutes also a means for a company’s learning by shaping and influencing stakeholder groups, for instance, in network communication (Fill, 2005). Fourth, the above mentioned conditions consequently lead to an increase in issues both from a company’s perspective (suppliers) and the demand perspective (stakeholders). Wiedemann and Ries (2007) understand issues as topics of interest for stakeholders, which grasp their attention and might potentially pose a risk to a company. Thus, issues management, which is defined as “a long-term strategic management practice” is becoming more crucial for companies (Belasen, 2008, p. 96). Issues management picks up issues, which have a positive impact on the corporate reputation of a company (Kuhn & Ruff, 2007). Related to the open system view, issues management is an important element in corporate communication in order to handle the increasing supply and demands of issues in the digital age. Fifth, at first glance, the use of internal and external communication situations does not dramatically change the task of corporate communication. However, the amount of options for the use of internal and external communication situations increases with the view of open boundaries and variety of different, new communication platforms (online social media platforms). Due to a wide spectrum of new ideas and information exchange in networks, the complexity in information handling and the dynamics of communication processes increase. The complexity and dynamics in processes lead to new challenges for internal and external communication activities. Corporate communication has thereby to be more flexible nowadays (Christensen et al., 2008). Hence, the planning, execution and evaluation of corporate communication activities has to adapt to changing environments to make the best use of all communication situations, for instance, ideas or new products of a company or

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for a network’s new services. This is important for strategy communication and the applied strategy approach of a company. Sixth, moral legitimacy covers the view common in literature which describes the process of legitimation as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995, p. 574). Several authors mention the need to consider the process of legitimation as a current task in corporate communication (e.g., Cornelissen, 2004; Hübner, 2007). Related to the open innovation view, the process of legitimation is more complex in the open communication processes because the actions of an entity can represent a company or a network with several partners along a R&D process. Hence, corporate communication consists of dialogues with the company’s stakeholders by using media communication with the aim to grasp the stakeholders’ attention and achieve legitimation (Karmasin, 2007). Seventh, deduced from the open innovation view, one main aspect is the function of value communication, i.e. a company’s ability to make use of its communication capability. Value creation, value capturing, and value sustainability can be achieved, for example, by exploiting synergy effects. Several communication activities in different fields of communication can be connected to create value from a company’s communication capability. One effect might be capturing new communication markets by positioning issues for competitive advantages (Mast & Zerfaß, 2005). The open communication view encompasses both network communication and combining different fields of communication, e.g. brand communication, finance communication, innovation communication, and risk communication. Several fields of communication and their instruments will require individualization for a company and has to be linked to an overall management concept of communication, which can be understood as linked communication. Moreover, linked communication can be used in network projects and communicating a network profile. Based on the open communication view, communication is nowadays characterized as: – more complex and integrated (more information, increased number of issues, and internal and external communication situations), – open (new forms of communication strategies and activities linked to network communication), and – dynamic (constantly new internal and external communication situations with known, unknown, and new stakeholders). Strategic Open Communication View Open communication is a new framework for managers to better relate, engage and interact with others, build (corporate) reputation in the digital age and effectively communicate new ideas. Linked to leadership in the digital and human age (see Introduction Chapter by Pfeffermann), open communication positively affects leadership communication. From a strategic view, open communication influences the way how leaders express themselves more freely considering open firm boundaries and dynamic communication situations. Consequently, the shift from closed to open

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communication leads to the question how communication models have changed and how new communication models can better designed, evaluated and improved. In the next sector you learn more about Communication Model Design as a visual method to create communication models.

6.3 Outlook ‘Digitalization of Communication’ A closer look at the literature ‘Communication Model Design’ shows that research in this field is still insufficiently explored. In recent years some scientists pay attention to the development of new concepts linking corporate communication to strategy, but there is still a missing linkage between business model design (focus strategic innovation management) and communication model design (focus strategic communication management) and, hence, a strategic visual, AI-supported method to better develop and evaluate communication models (plans) based on the open communication view is still missing. Communication Model Design Communication Model Design definition Communication Model Design (CMD) is a lean, visual method to better develop, evaluate and improve a communication model (for communication model innovation see Chapter Pfeffermann). CMD shows how to successfully coordinate communication activities and address markets with the goal, for instance, to build an innovation community, bring an idea to fruition or enable adoption and dissemination processes. From top to down it is a visual communication plan that helps to understand how to create value through communication. It is a strategic management tool for entrepreneurs and managers alike who dare to re-think communication and recognize the importance of CMD as an instrument to strategically link a business model to a communication model. CMD helps leaders and other roles in a professional context to better communicate and say the right things in the right way in terms of linking goal(s), strategy, instruments and markets. CMD focuses thereby also on the linkage between planning and evaluation. Why is CMD so important for research and business practice? In sum, three main reasons are as follows: – To translate any business model into action —linkage between business model design and CMD – To effectively communicate based on a strategic plan —linkage between goal, strategy, instruments and markets – To better plan, implement and evaluate communications —linkage between planning and evaluation (management tool) Communication Model Design thinking

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CMD helps to strategically think. For instance, it describes the linkage between business model design and CMD, meaning how to translate a business model into action. Instead of design thinking, CMD uses hypothized-based thinking and critical thinking as methods to better reflect, conceptualize and analyze existing and new communication models. For instance, the full-spectrum questionnaire method to ask the right critical questions for a better outcome and critically-reflected communication model. Communication Model Design tool Communication Model Canvas, shown in Fig. 6.2, is the practical management tool for CMD. It is a visual canvas that shows the following eight elements and can be understood as a lean communication plan: Goal(s): Definition of specific achievements and values through communication, for instance, collaboration value (co-working and strategic partnerships by building strong relationships). Strategy: Pathway to achieve the goals and get a job done, for instance, community strategy (to build a community for customers and customer service by using a specific social media platform).

Fig. 6.2 Communication model Canvas, by the authors

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Strategic instruments: Specific choice of strategic communication tools to translate the defined strategy into action, such as agenda setting, framing, and issues management. Operational instruments: Determination of a toolset and communication channels to better communicate and coordinate specific communication activities, for instance, instagram. Resource, communication and sales markets: Definition of how to meet the supply and demand of specific themes, expectations of customers and prosumers (co-creators) or suppliers. Resources: Description of specific needed financial, personal and material resources, any source of supply or support, for instance, IT system, social media manager and social media budget. AI-supported Communication (Model Design) The main question is how AI can support CMD and what could be a good approach to develop a AI-CMD-Tool for communicatoion management. First of all, we need to understand where we can use AI related to the communication model canvas, as presented in Fig. 6.3. The answer is Yes! AI can support CMD and help managers to better develop new communication models based on (1) the invest in operational instruments and (2) AI-supported market analysis. A three-step approach to develop an AI-CMD-Tool is as follows: (1) CMI Journey: Communication Model Innovation (CMI) is a key task of senior management teams and leaders. It plays an important role in business Fig. 6.3 Communication model Canvas

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model innovation and communication management, for instance, to successfully transfer a business model into reality and build a culture of trust and innovation. CMI involves the following activities: – The active change and optimization of traditional communication models, which includes goals, strategy, instruments – the improvement of minimum one of specific elements of a communication model, for instance, communication markets – the consideration of business environment and critical (success) factors, such as leadership communication skills. (2) CMD Workshop: CMD as a visual, lean method to better design, evaluate and improve new communication models based on the communication model canvas tool and the 15 information-interaction designs (Appendix). A communication model helps individuals, (senior) project teams, and leadership teams of organizations to transform and balance systems. It is a basic approach to build learning organizations and reflect and work with interaction patterns. The workshop focuses on CMD and information-interaction designs so that participants learn how to better develop and reflect on communication blueprints and specific (new) communication models. (3) AI-CMD Design Study: Study to develop the AI-CMD-Tool design considering possibilities, ethical aspects and the open communication framework: a. Setting specific goals and address requirements based on ethical standards and communication values b. Development of a first AI-CMD-Tool design with functions and AIsupported CMD method application c. Presentation of the AI-CMD-Tool design including the written study report and managerial implications. (4) AI-supported Analysis in Corporate Communication: An open communication model that provides more exchange and legitimacy in the social context is also an expression of good corporate governance. In order to ensure this, the methods of AI-supported analyses are available to enrich corporate communication through the outside in perspective in many ways: 1. With explorative topic modelling, the entire socio-economic and political topic environment is illuminated via social listening. 2. Named entity recognition procedures are used to find all stakeholders associated with the topics. 3. In this way, innovative topics are found, the share of voice of stakeholders is determined and the basis for optimized issues management is laid. Open Communication Analysis related to the AI-CMD Tool: 1. Where it is worthwhile to invest communication resources, 2. Which topics must be set on, 3. Which wording makes sense in the communication environment,

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4. Which stakeholders should be discussed with or which must be taken into account, 5. Where the competition is related 6. and last but not least, how the own company is perceived. In order to design communicative strategies for reputational development, this evaluation procedure ‘Open Communication Analysis’ should be understood as a process that is not only at the beginning of strategy development for an open communication model but accompanies it.

References Argenti, P. A. (2007). Corporate communication (4th ed.). Mc-Graw Hill. Banholzer, V. M., & Fink, A. (2022). Szenario-Management als Tool der strategischen Unternehmenskommunikation. IKOM-Working Paper 4/2022. Forschungsschwerpunkt Innovationskommunikation. Nürnberg: Technische Hochschule Nürnberg. Banholzer, V. M., & Siebert, M. A. (2021). Unternehmenskommunikation zwischen Explorationsund Exploitations-Anforderungen – Vision-Communication als Mittel zur Überwindung des Ambidextrie-Dilemmas. In S. Matrisciano, E. Hoffmann, & E. Peters (Eds.), Mobilität Wirtschaft – Kommunikation (pp. 21–52). Springer VS. Belasen, A. T. (2008). The theory and practice of corporate communication. A competing values perspective. Sage. Belasen, A. T., & Belasen, A. R. (2019). The strategic value of integrated corporate communication: functions, social media, and stakeholders. International Journal of Strategic Communication. Bourne, C. D. (2019). AI cheerleaders: Public relations, neoliberalism and artificial intelligence. Public Relations Inquiry, 8(2), 109–125. Carter, C. F., & Williams, B. R. (1957). Industry and technical progress. Oxford University Press. Chesbrough, H. W. (2003). The era of open innovation. MIT Sloan Management Review, 44(3), 35–41. Christensen, L. T., Morsing, M., & Cheney, G. (2008). Corporate communication, convention, complexity, and critique. Sage. Cornelissen, J. P. (2004). Corporate communication—theory and practice. SAGE Publication. Europäische Kommission. (2020). White paper on artificial intelligence—A European approach to excellence and trust. Brüssel. Retrieved October 28, 2022, from https://ec.europa.eu/info/pub lications/white-paper-artificial-intelligence-european-approach-excellence-and-trust_en. Fawkes, J., Gregory, A., Falkheimer, J., Gutiérrez-García, E., Halff, G., Rensburg, R., Sadi, G., Sevigny, A., Sison, M. D., Thurlow, A., Tsetsura, K., & Wolf, K. (2018). A global capability framework for the public relations and communication management profession. Global Alliance for Public Relations and Communication Management (GA) Research Report. Huddersfield, UK: University of Huddersfield. Fill, C. (2005). Marketing communications. (Enhanced Media Edition). Pearson Publishing and the Financial Times. Goes, J. B., & Park, S. H. (1997). Interorganizational links and innovation: The case of hospital services. Academy of Management Journal, 40, 673–696. Haug, H. (2021). Einblick in die black box. In: A. Tomfeah, & H. Haug (Eds.), Glaubwürdige Unternehmenskommunikation (S. 69–80). Springer Gabler. https://doi.org/10.1007/978-3-65834249-4_7 Hübner, H. (2007). The communicating company. Towards an alternative theory of corporate communication. Physica-Verlag.

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Karmasin, M. (2007). Stakeholder-Management als Grundlage der Unternehmenskommunikation. In M. Piwinger & A. Zerfaß (Eds.), Handbuch der Unternehmenskommunikation (pp. 71–88). GWV Fachverlage. Kuhn, M., & Ruff, F. (2007). Corporate foresight and strategisches issues management: Methoden zur Identifikation der Trends und Themen von morgen. In M. Piwinger & A. Zerfaß (Eds.), Handbuch der Unternehmenskommunikation (pp. 303–320). Gabler. Maturana, H. R., & Varela, F. J. (1990). Der Baum der Erkenntnis: Die bioogischen Wurzeln menschlichen Erkennenens. Fischer Verlag. Mast, C. (2013). Unternehmenskommunikation. 5. überarbeitete Aufl. UVK Verlag. Mast, C., & Zerfaß, A. (Eds.). (2005). Neue Ideen erfolgreich durchsetzen. Das Handbuch der Innovationskommunikation. Frankfurter Allgemeine Buch. Moreau, C. P., Lehmann, D. R., & Markman, A. B. (2001). Entrenched knowledge structures and consumer response to new products. Journal of Marketing Research, 38(2), 14–29. Nassehi, A. (2019). Muster. Theorie der digitalen Gesellschaft. C. H. Beck Verlag. OECD. (2019). High-Level Expert Group on Artificial Intelligence–Ethics Guidelines for Trustworthy AI. Recommendation of the Council on OECD Legal Instruments Artificial Intelligence. Retrieved October 28, 2022, from https://oecd.ai/en/ai-principles. Oßwald, A., & Raaz, O. (2018). Mehr Komplexität wagen. Annäherungen an einen entscheidungsrelevanten Begriff in PR-Theorie und -Praxis. In: Wehmeier/Schoeneborn (Hrsg.) (pp. 173–192). Panda, G., Kumar, A., & Khandelwal, U. K. (2019). Artificial intelligence: A strategic disruption in public relations. Journal of Creative Communications. 1–18.https://doi.org/10.1177/097325 8619866585 Pleil, T., & Helferich, P. S. (2022). Unternehmenskommunikation in der digitalen Transformation. In: Zerfaß, A., Piwinger, M., & Röttger, U. (eds.), Handbuch Unternehmenskommunikation. Springer Gabler. Project SAPPHO. (1972). Success and failure in industrial innovation, SPRU. (C.S.I.I., Regent Street, London). Schmid, B. F., & Lyczek, B. (2006). Die Rolle der Kommunikation in der Wertschöpfung der Unternehmung. In B. F. Schmid, & B. Lyczek (Eds.), Unternehmenskommunikation. Kommunikationsmanagement aus Sicht der Unternehmensführung (pp. 3–148). GWV Fachverlage. Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571–610. Taylor, M. C. (2020). Intervolution. Smart bodies smart things. Columbia University Press. van Riel, C., & Fombrun, C. (2008). Essentials of corporate communication. Implementing practices for effective reputation management. Taylor & Francis. (reprinted version). Volk, S. C., & Zerfaß, A., et al. (2022). Kommunikationscontrolling und PR-Evaluation. In P. Szyszka (Ed.), Handbuch der Public Relations (pp. 1–19). Springer Fachmedien Wiesbaden. Wiedemann, P. M., & Ries, K. P. (2007). Issues management and issues monitoring. In M. Piwinger & A. Zerfaß (Eds.), Handbuch der Unternehmenskommunikation (pp. 285–302). Gabler. Zerfaß, A. (2007). Unternehmenskommunikation und Kommunikationsmanagement: Grundlagen, Wertschöpfung, Integration. In M. Piwinger & A. Zerfaß (Eds.), Handbuch der Unternehmenskommunikation (pp. 21–70). Gabler.

Andreas Quest is Managing Director of IMWF GmbH. In addition, he teaches communication controlling at the International School of Management and the Mittweida University of Applied Sciences. For 20 years, he has been active in various functions, including with his own companies, in the market of media analysts. Prior to 2002, Andreas worked in marketing and business development for US and UK software companies. He completed his master’s degree in history and philosophy at the Universities of Cologne and Hamburg.

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Nicole Pfeffermann has expertise in business development, specialized in strategy & innovation, innovation communication and new leadership, and professional experience in IT-driven innovation management in logistics, (high-)tech markets, and R&D transfer projects. She is a lecturer in digital business, information and knowledge management, and methodology and a (co-)editor of the international contributed volumes ‘New Leadership in Strategy and Communication’ and ‘Strategy and Communication for Innovation’, Springer, including book presentation in collaboration with University of Cambridge. She holds a Diploma in Business Economics and did her Ph.D. in an international Ph.D. program at the University of Bremen (DHL scholarship), was visiting scholar at UCLA Anderson and GREDEG CNRS, France. Nicole has interdisciplinary experience and was a community member at the Startplatz Köln (co-working space, startup accelerator).

Chapter 7

Building Trust for Better Crisis Communication: Lessons for Leadership Development Alan Belasen and Barry Eisenberg

7.1 Introduction In this chapter we explore the added significance that trusted leadership characteristics take on during crises and the ability of leaders to communicate effectively (Bundy, et al., 2017). When information is diffused or limited, or when communication is ambiguous, the desire for transparency, honesty, credibility, and accountability- the thrust of trusted leadership–increases. When the communication is clear, empathic, transparent, and frequent, internal dialogues are more positive and constructive and people show more confidence in their own ability to do what the circumstances require and, at the same time, trust the ability of leaders to avert unnecessary risks (Axelrod, 2017; Lu, et al., 2015). A crisis is an incident with a strong potential for undesirable outcomes, including threats to an organization’s reputation, financial status, or even survival (Chen, 2009; Lukaszewski, 2013). It is often characterized as a situation that has a very low probability of occurrence, produces significant psychological impacts, shatters previously held notions that bad things cannot happen to individuals and organizations, and provides little time for responding (Probert & Turnbull, 2011). How a leader manages a crisis can have significant consequences on the functioning of the organization (James & Wooten, 2005; James et al., 2011). Consider just a few such consequences: Crisis situations can damage the reputation of an organization, threaten its value proposition, disrupt operations, bring lawsuits from victimized consumers, trigger swings in asset prices, and become tipping points for stakeholders. A. Belasen (B) SUNY Empire State University, 113 West Ave, Saratoga Springs, NY 12866, USA e-mail: [email protected] B. Eisenberg SUNY Empire State University, 4 Park Avenue, New York City, NY 10016, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_7

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This is most consequential in organizations classified as High Reliability Organizations (HROs), that is, organizations in which errors can prove immensely costly, even catastrophic (Eisenberg, et al., 2014). Accordingly, HROs, such as airlines, hospitals, and nuclear power plants, must exert maximum effort and considerable resources to achieve as close to a zero-error rate as possible. They must strive to establish a culture in which homeostasis (i.e., maintenance, stability, predictability) and continuous quality improvement (i.e., evolution, adaptation) are integrated, demanding the attention of leadership that is both transactional and transformational. The challenges associated with this dual emphasis can prove formidable, particularly with respect to resource allocation, not only for the practical implications, but for the symbolism associated with the allocation. The more competitive the environment, the greater the demands for investments in R&D, market share growth, and product and/or service expansion. Could outsized attention in these areas entail compromises on operational integrity? During the Christmas-New Year period of 2022, Southwest Airlines cancelled more than 15,000 flights. Among the reasons for the fiasco was the failure to upgrade an antiquated scheduling management system. As Sociologist Zeynep Tufekci (2022) observed, pressures to demonstrate positive quarterly earnings and boost executive compensation constituted “strong incentives to address any immediate problem by essentially adding a bit of duct tape and wire to what you already have, rather than spending a large amount of money—updating software is costly and difficult—to address the root problem.” This “duct tape and wire” strategy may prove adequate for any given period of relative stability or even growth. But its shortsightedness becomes glaringly evident when a crisis hits. In the following sections, we describe the phases of the crisis management process, leadership roles, the cost of miscommunication, an organizing framework for effective response strategies, dimensions of trusted leadership, and a diagnostic instrument for leadership assessment and development. Implications for leadership development are also provided.

7.2 The Crisis Management Process The field of crisis management research has grown in recent years as organizations have had to navigate cyber-related security breaches, financial and economic disruptions, natural disasters, and serious public health emergencies such as COVID19 and SARS. Bundy et al. (2017) conducted a review of the extant literature on crisis management and provided a framework of the internal and external perspectives essential to the crisis management process. As a three-stage process–pre-crisis prevention, crisis management, and post-crisis outcomes –they identified key factors that impact each stage in the process based on their review of the literature. Pre-Crisis Stage. In pre-crisis, addressing organizational preparedness, the focus is on organizing for reliability and strengthening organizational culture and structure. Leadership plays an important role in the success of HROs that traditionally navigate

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crises more capably than non-HROs (Bigley & Roberts, 2001; Weick & Sutcliffe, 2001; Kovoor-Misra, 2019). Leadership sets the tone for how to adapt to and steer through crises and uncertainty. In this regard, the leader can either facilitate or hinder the process depending on their emotional and cognitive strengths (Kahn et al., 2013; Roux-Dufort, 2007) and how those are expressed in their communication strategy (Lukaszewski, 2013). Considering the external perspective, when there are positive relationships with stakeholders, the likelihood of a crisis can be reduced (Clair & Waddock, 2007; Coombs, 2007; Covello, 2021). On the other hand, negative relationships with stakeholders may trigger crises such as protests, boycotts, and lawsuits or even escalate a crisis (Heide & Simonnson, 2019; James & Wooten, 2006; Lind et al., 2000; McDonnell & King, 2013). In short, leadership behavior is central to the organization’s management of a crisis and, by extension, to the outcome. A leader who recognizes the paramount nature of the role in a crisis will not wait until a crisis emerges to institute trust-building communication practices with internal and external audiences. Crisis Management Stage. In the crisis management stage, attention is centered on how leaders manage the crisis in the moment. Leaders who frame crises as opportunities are more open minded and flexible (James et al., 2011; Mitroff, 2007). Other research has focused on the characteristics of the crisis leader, and how they influence leadership practices. For example, environmental uncertainty moderates the relationship between organizational performance and two forms of leadership: transactional and charismatic (Kapucu, et al., 2023; Waldman et al., 2001). Further, charisma predicts performance under conditions of uncertainty but not under certainty. Hunt et al. (1999) found that crisis responsive visionaries act first and seek ways to justify their actions afterwards. In contrast, charismatic visionaries engage in interpretation and sense-making of the situation before acting (Boal & Bryson, 1988). Leaders who can adapt and change mental models are better able to coordinate and communicate effectively during a crisis (Majchrzak et al., 2007). Moreover, the greater the leader’s active engagement with a range of the organization’s internal and external stakeholders, the greater the leader’s awareness of the situational context, a key attribute for anticipating and successfully responding to crises (Castro, 2023). Taking the external perspective into account, the focus is on how stakeholders perceive and react to crises. This can vary based on the company’s crisis response strategy, which includes the set of coordinated communication and actions used to influence perceptions by stakeholders. Responses also vary based on the type of crisis experienced; crises vary on perceived controllability, severity, undesirability, and intentionality (Bundy et al., 2017). The reputation of the organization also influences stakeholder reactions. This can include the legitimacy, status, celebrity, social approval, and perceived trust in the organization. Post-Crisis Stage. In the aftermath of crisis, the focus shifts to outcomes, particularly the organizational opportunities created by the experience and what was learned from it. Crisis management efforts are effective when operations are sustained, damages are minimized, best practices are developed for and applied to future incidents,

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and organizational members maintain balanced relational patterns of communication (Kahn et al., 2013). As the primary framers of meaning, leaders are largely responsible for constructing the narratives that organizations employ to understand the crisis and move past it. Effective leaders focus on action pathways for recovery and provide empathy, normalization, and validation of the experiences of organizational members. Renewal is central to growth from the crisis and requires the leader to exemplify hope and optimism towards a better future. They walk a fine line between operational and relational systems, addressing recovery of both operations and employees. This may involve rebuilding trust through improved communication, updating and sharing information, advancing new knowledge, and securing resources that enable learning and improve the capacity to assess and manage unexpected socio-economic shocks. From the external perspective, social evaluation, which includes assessments of the organization’s reputation, legitimacy, and trust, is a vital outcome consideration. The organization’s responses relative to its responsibility for the crisis, as well as the use of trust-repair strategies and their effectiveness (Kim et al., 2006) impact how the public perceives the organization’s ability to handle a crisis. Accountability is central to trust. An organization that seeks to deflect responsibility for a crisis that external audiences believe was at least partly under its control will have established for itself a challenge it will have considerable difficulty overcoming (Kovoor-Misra, 2019).

7.2.1 Crisis Preparedness Most crises involve a surprise or unanticipated timing, a trigger through an unexpected event, action, or incident that alters the public’s view of the organization, a threat to human lives, property, and/or the environment, and the need to respond quickly to employees, customers, and the media. Wrigley et al. (2003) found that 70% of the companies in their sample had crisis management plans in place. Yet only 12% had specific plans for dealing with bioterrorism and 90% of these same companies indicated that if this crisis was to occur it would have resulted in “severe consequences” for their organizations. Their study revealed the inclination of many organizations to employ retrospective trial-and-error methods, quick fixes, and on the fly responses rather than having effective crisis management plans. And yet, while crises vary with respect to magnitude, impact, and response necessities, their occurrence is far from rare. For example, with respect to cybersecurity, the Center for Strategic and International Studies reports that in 2022 alone, 119 cyber incidents occurred in which losses exceeded $1 million. With respect to the scope of this phenomenon, reports suggest that globally, hacker attacks occur approximately every 39 s.

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While it is challenging to plan for every crisis scenario, determining who will be involved in the decision-making process as well as the roles and responsibilities of those in charge should be clearly delineated to mitigate the potential for unpreparedness, absence, ignorance, silence, distance, untruthfulness, and naiveté. Unpreparedness involves the absence of a plan or the capacity for disseminating information and updates to external audiences. Ignorance is not understanding the priorities or informational needs of families, the media, and the public. At this point credibility and trust are at stake, and executives need to demonstrate accountability by disclosing important and relevant information. If they remain silent or avoid tough inquiries, they may lose their grip over the flow of information or suffer the consequences of tarnished credibility from which recovery can prove dauntingly challenging. Distance may involve pulling back too soon by creating unnecessary buffers between the organization and affected populations. Untruthfulness is not responding to inquiries quickly or effectively, creating unnecessary fog and adding more anxiety to the uncertainty surrounding the crisis.

7.3 Dialogic Loops How a leader handles a crisis can have profound implications for its relationships with stakeholders, especially consumers. With open access to multiple channels of communication, consumers have become major players in the mass consumption, creation, and distribution of information. Faster, immediate, and multi-directional communications spread messages beyond their targeted audiences, making it more difficult to trace attitudes or changes or monitor their direction and potential impact. An indication of this is the increase in firms’ multi-pronged efforts and investments in social media channels that help build brand recognition and loyalty and increase ROI (Lal, et al., 2020). It is therefore vital for communication strategists to create dialogic loops with useful information to all publics, employ conversational and accessible forms of communication, and post relevant and regular updates on a company’s website to generate return visits. A good example is Paul Polman, Unilever’s CEO, who engaged the media in February 2017 to rebuff a takeover bid by food industry giant Kraft Heinz, strongly arguing that it had no merit for any of Unilever’s internal and external stakeholders. Once Polman rejected the offer, he published a statement explaining to the public– and particularly the company’s shareholders–the rationale for rejecting the $143 billion offer. He ordered executives to call journalists and communicate the warning that a deal would ruin the long-term-focused business model. Since the takeover fiasco, he has used appearances on television, print media, conferences, and tweets to continue to support his objection. “Do we choose to serve a few billionaires, or do we choose to serve the billions?”, he tweeted on September 10, 2017. Polman’s discourse underscores the important responsibility of focused leadership - influencing the public’s perception and sustaining the positive image of the corporation.

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When crises strike, they tend to overwhelm the communication systems of organizations, often causing miscalculations or tendencies to fall back on inadequate or misguided responses. Communication failures may include not building trusting relationships with stakeholders (Martin & Boynton, 2005), rushing to judgment, overreacting, failing to act quickly, misreading facts, lacking empathy, deflecting responsibilities, developing tunnel vision, reluctance to involve others in decisionmaking, withholding information, and failing to plan (Castro, 2023; Stanton, 2002). The problem is compounded by the tendency of highly competitive media outlets to add flavor to the reporting, including with occasional sensationalism. As Kapucu, et al. (2023) observe: “The information delivered by mass media has the potential to be biased, inaccurate, and incomplete” (p. 37). As such, organizations are advised to be prepared with a communication program that is organized around strategic messaging, capable of being rapidly deployed, tailored to the distinct needs of different stakeholder groups, sufficiently flexible to adapt to evolving circumstances, and can be sustained. With a proactive approach, the organization’s communication is more apt to become part of the story the media report on; absent that, the media would be inclined to focus far more fully on the incident, adding their own interpretation, potentially wedging the organization into a defensive communication posture. Highly empathic CEOs are generally more adept at recognizing warning signs and noticing them more quickly, communicating skillfully with stakeholders, and initiating steps to recover their credibility. Unfortunately, and conversely, they also may be more predisposed to false alarms, more biased in processing crisis-related information, and less committed to repairing the organization’s communication system (König, et al., 2020). One example is Uber. In January 2017, an executive order that banned refugees and immigrants from traveling to the United States caused a one-hour protest organized by the taxi union in NYC in which they refused to drive people from JFK Airport. Uber, trying to capitalize on the opportunity, responded with a tweet: "Surge pricing has been turned off at #JFK Airport. This may result in longer wait times. Please be patient". The tweet stirred negative press for Uber with a Twitter user initiating #DeleteUber to urge riders to delete their app (Isaac, 2017a). Celebrities and influencers retweeting the original message started a trend with over 200,000 users deleting the app with Uber trying to salvage their reputation through corporate apology. Lyft, which had been rapidly expanding its coverage, seized on the opportunity to brand itself as a more socially conscious alternative. To restore its corporate reputation Uber replaced Kalanick as CEO with Dara Khorosrowshasi who tried immediately to rebrand Uber’s corporate identity by articulating new corporate values: “We are customer obsessed”, “We celebrate differences”, and “We do the right thing”. The efforts to regain its reputation were ambitious but insufficient as the social media-driven movement had a significant impact on the company’s U.S. operations following stories about bizarre behaviors of Uber’s executives and staff and aggressive cultural identity (Isaac, 2017b). Subsequently, Uber’s market share dropped 5% following the week of the incident and suffered a 10% decrease in riders. In 2018, Lyft experienced a 41% increase in riders narrowing the gap with its rival (Graham, 2018).

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7.4 Effective Communication Strategies When crises strike, they expose people to vulnerabilities as well as to how they access, understand, and act upon information (Hansson et al., 2020). Leaders can implement a well-synchronized communication plan that includes responses to early warning signals of a threatening crisis and that focuses on adjusting to change and uncertainty. The communication plan must be credible, and transparent, and carried out by leaders who convey honesty and inspire accountability. One way to organize the communication system during crisis appears in Fig. 7.1. Proactive measures include disclosure through the sharing of information with the public (INFORM); preparation and prevention by mobilizing employees internally, developing crisis teams and conducting training and exercises to strengthen open communication, honesty, and engagement (REFORM); containing the damage through the creation of operating rules, procedures, and codes of ethics to guide future actions (CONFORM); and recovery and evaluation by re-establishing organizational routines and feedback systems to make sense of the crisis and its impact in an effort to prevent future reoccurrences (PERFORM). The model configuration depicted in Fig. 7.1 is an adaptation of the Competing Values Framework (Cameron et al., 2014) with a construct validity well established in the literature (Belasen & Frank, 2010). Accountable leaders do not hide bad news, provide false impressions, or avoid acknowledging uncertainty because they find it stressful or because they fear igning negative reactions from stakeholders (Bies, 2013). The role of leadership in diffusing the potential negative effects of crises and in restoring the public trust is critical. It is also important for leaders to maintain a sense of continuity, be relevant and consistent in the dissemination of information, to remain calm, be visible, truthful,

Fig. 7.1 Organizing corporate response to crises

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trustworthy, and responsive. Accurate and timely communication is vital during times of uncertainty (Adams et al., 2013). Great crisis leaders earn the public’s trust; they view such leaders as acting with clarity, focus, transparency, and compassion (Dubrin, 2013). Without transparency, the public may sense deception, which can reduce the credibility of the leader. In the wake of the COVID-19 pandemic, Singapore’s political leadership delivered a series of informative and medically accurate communications and succeeded in conveying clear and trustworthy advice to the public consistent with the best available public health information. The cohesive messaging and understanding that detailed knowledge matters and that the health and economic risks were asymmetrically distributed also facilitated the process of confidence-building, enhanced leadership credibility, and boosted public trust. While Singapore had early cases of infection, it had been broadly successful in limiting the spread of COVID-19 despite the high level of socio-economic connectivity with China. The focus on facts and credible advice from the government played an important role for building trust and showing unity (Quah, 2020; Wei, 2020). The messaging was consistently clear and evidence-based, and the public has remained well-informed.

7.5 The Thrust of Trust Trusted leaders acknowledge uncertainty, communicate with compassion, show understanding and are empathic. They embrace paradoxical skills to navigate the seemingly competing tensions and demands in crisis situations (Zhang et al., 2015). They use mixed strategies of messaging through communication lines and persuasion to promote cooperation and resort to authority for lining up resources and capabilities for desired results and continuity (Arendt et al., 2017). Messaging that appeals to the collective values and history plays a key role in enhancing public trust and stakeholders’ acceptance (Belasen & Belasen, 2019). A good example of the process for regaining stakeholder acceptance involves the discovery in 2018 that Dr. José Baselga, the Chief Medical Officer of Memorial Sloan-Kettering Cancer Center (MSKCC), a world premiere healthcare organization, “failed to disclose millions of dollars in payments from drug and health care companies in recent years, omitting his financial ties from dozens of research articles in prestigious publications” (Ornstein & Thomas, 2018). Medical ethicists frown upon such arrangements, claiming that they open the door to questions about how studies on pharmaceutical products are structured and which medications will make their way to the market. Patients rightly want to believe that the sole reason for their medications is medical necessity, not because the prescriber has a financial interest in the company that manufactured it. On a more macro level, over its long history, MSKCC had cultivated a reputation for research and clinical excellence. If the public would come to believe that its medical staff is engaged in undisclosed profit-making from companies on whose

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boards they sit and, therefore, can presumably influence the direction of their product development, the potential for reputation damage can surely arise. The CEO of MSKCC, Dr. Craig Thompson, took action to contain potential fallout and restore integrity to the healthcare organization’s reputation. He and his spokespersons assembled a broad-based communications response which acknowledged the matter involving Dr. Baselga while emphasizing MSKCC’s opposition to such practice (INFORM) and convening meetings of the medical staff, board, and other internal and external groups (REFORM). Dr. Baselga resigned from the medical center. An MSKCC Task Force developed a series of recommendations, including that senior executive officers should be prohibited from serving on the boards of directors of for-profit health- or science-related companies (CONFORM). Incidentally, this action had sweeping implications for the health industry in which such board membership was not uncommon. Finally, to prevent a recurrence of the potential conflict-of-interest scenario, a host of initiatives was undertaken (PERFORM). These included, but were not limited to, the implementation of a website in which updated conflict-of-interest policies would be shared in open forums and the hosting by MSKCC of symposia “with experts and stakeholders from across the biomedical research community as a first step toward developing a common framework that harmonizes financial disclosures in research publications” (Berns, 2019). Notably, internal and external stakeholder audiences were included in the largely proactive efforts to prevent reputational damage from manifesting in a way that otherwise could have been long-lasting and immensely costly.

7.5.1 Trusted Leadership Leadership during any crisis is not an enviable position to be in. One small decision can change the outcome for better or worse. A wrong move could erode trust and trigger unrest that exacerbates the existing conditions. When organizations and their leaders are naïve, they fail to realize the importance of preparation, rely on defense mechanisms, treat the crisis with less rigor, and open themselves up to social media activism and public criticism (Roshan et al., 2016). The truest test of executive leadership does not occur when everything is running smoothly; it occurs amid the unexpected situations when it is crucial to act quickly and communicate sensibly and effectively. During uncertain and chaotic times, the need for credible and trustworthy leadership is critical as insecurity can creep into the organization, unsettling even the most successful executive. Credibility and character are perceptions held by others of a person’s combination of trustworthiness, expertise, dependability, and good will (Gass & Seiter, 2020). Under different conditions, one or more of those traits may emerge as most important. For example, we may value a vendor’s dependability more

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than their expertise if the service being provided is not technically complicated, but ongoing support of that service is. For leaders managing crises, if any one of the four traits is removed, credibility is likely to suffer. Leaders gain credibility when they project compassion and demonstrate that they understand the risks and probable impact of unanticipated consequences. They are aware of their weaknesses and have the humility to defer to experts and delegate responsibilities to competent team members (Petriglieri, 2020). The paradox here is important to acknowledge: by admitting to limitations, the leader gains strength. Enormously impactful events such as the COVID-19 pandemic highlight the crucial nature of leadership and give rise to an overarching question: can leadership meet the moment? Such events require trustful leaders who are aware of their vulnerabilities and empower and trust others to carry out critical tasks. Acknowledging weaknesses and adjusting for them in the scope of responses to crisis situations is an essence of dependability. This leadership predilection not only enhances stakeholder perceptions of the leader’s self-awareness and relational transparency but also benefits followers, paving the way for those followers to unleash their full potential. Such leaders are effective in creating positive work environments and in achieving positive and enduring outcomes when their organizations are tested. Leaders must also be adept at receiving and evaluating feedback on the effectiveness of their decisions. Absent that, how can they improve? Experience shows that shifting decisions to those closest to handling COVID-19 helps improve organizational agility and enhance innovation. The Seattle-based Swedish Health Services’ senior executives showed that delegating decision-making not only flattened the hierarchy but also empowered caregiver teams to develop creative responses to the unique challenges posed by COVID-19 (Dale et al., 2020).

7.5.2 Emotional Intelligence Having strong emotional intelligence (EI) skills can be a game changer when it comes to managing crisis. Scholars found that emotional intelligence helps leaders stay focused and adopt effective decision styles despite facing highly stressful situations (Dilawar et al., 2019). Trusted leaders make sure that their socioemotional messages promote unity and hope and reinforce the collective identity of togetherness through a shared vision. To enhance the effectiveness of crisis responses, they require a great deal of relational and emotional skills to build or restore trust among those affected by the crisis (Kahn et al., 2013). Leaders need to be sensitive, attuned, and responsive to moments of differences, and feel responsible for working with those differences. They focus on the common purpose, are inspirational, and project trustworthiness and empathy to ensure people stay calm, engaged, and motivated to perform, even in new roles as the crisis may demand. At the same time, trustworthiness depends on the extent to which leaders reveal the seriousness of the crisis (Sims, 2021). Then-President Trump embraced a public

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communication strategy built on falsehoods with respect to the severity and scope of the pandemic, admitting to journalist and author Bob Woodward that: “I wanted to always play it down” (Gangel et al., 2020). Tilting too far in the direction of seeking calm at the expense of honesty not only taints trustworthiness but can destabilize the response strategy, thereby creating confusion and exacerbating the harm rather than alleviating it. The 2021 Edelman Trust Barometer revealed that “people don’t know where or who to turn to for reliable information”. Most respondents believed that government leaders (57%) and media (59%) are purposely trying to mislead people by quoting false facts. Business leaders and their companies emerged as the most trusted institutions (61%), replacing government (53%) and outscoring government by 48 points on competency. Trust has continued to move in a local direction, with respondents placing even higher ratings on ‘my employer’ at 76%, and “my employer CEO” at 63%.

7.5.2.1

Assessment and Development

The trusted leadership assessment (Belasen, 2016) is designed to measure the dimensions that comprise the model in Fig. 7.1. Since the level of analysis is individual (micro) rather than organizational (macro), ‘honesty’ as a psychological capital, a straightforward and theoretically well explained value through traditional principal-agent theory (Kaasa & Parts, 2013), was used to replace ‘capability’. The survey questions address the extent to which managers focus on using inclusive leadership, are sensitive to stakeholders, whether they encourage feedback and joint decision making, and how well they hold themselves to high ethical standards. The 40-item research instrument reflects the values associated with transparency, credibility, accountability, and honesty and consists of Likert-style response options with answers on a scale of 1 (I do not demonstrate this behavior) to 5 (I demonstrate this behavior to a great degree). Respondents are asked to answer the questions twice, first as a manifestation of their ‘actual’ behavior; and second, as a reflection of their ‘desired’ behavior. Examples of current and desired profiles are provided in Figs. 7.2 and 7.3 respectively. Figure 7.4 transposes the two profiles to provide a single view of the gaps across the four dimensions of trusted leadership. Understandably, the ratings in Fig. 7.2, which denote current behaviors, are lower than the ratings in Fig. 7.3, which represent desired behaviors. The gap between the two figures (see Fig. 7.4) signifies opportunities for improvement. To foster the alignment between actual behaviors and expectations from others, the self-assessment can be used periodically to determine how well you have evolved and honed your leadership qualities over time. Another option is to obtain feedback from relevant constituents (e.g., stakeholders, executives, board members) using the same survey to assess the perceived trust of leaders. The differences between the self-assessment and assessment from others could be very revealing and should lead to a more valid and reliable understanding of perceptual gaps. Ideas and actions for improvement or self-development could be prioritized to reflect inputs from others

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Fig. 7.2 Current profile

Fig. 7.3 Desired profile

and eventually lead to a better alignment between the leader’s profile on the four dimensions and the perceptions of trust by others. Understanding self-perceptions of trusted leaders’ efficacy and desired behaviors helps prepare both current and future leaders to regain trust and communicate effectively (Majchrzak et al., 2007; Williams et al., 2019). The assessment framework proposed in this chapter is based on the four attributes–transparency, credibility, accountability, and honesty–that must be present simultaneously to increase the propensity to act with trust. A deficiency in transparency occurs when a leader is too inwardly focused, paying disproportionate attention to operational and financial objectives, as well as to managing internal dynamics. While these are important

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Fig. 7.4 A composite assessment of current and desired profiles

matters and they cannot be ignored, the temptation among many leaders is to act with a sense of urgency rather than strategy. This is where excess comes into play, i.e., overemphasizing certain behaviors at the expense of others. When this occurs, behaviors which are assets in non-crisis situations, now shift into weaknesses. Refocusing behaviors on purposeful ideas as the basis for strengthening equity and fairness within the organization and for a good alignment of organizational values and stakeholders’ views, are at the core of trusted leadership. Other leaders experience a deficiency in accountability. This deficiency is usually marked by a tendency to shoot from the hip, resulting in making authoritative decisions without the benefit of input from affected stakeholders or all the available information. Executives who demonstrate lower levels of accountability need to resist the temptation to make decisions too hastily, even though the urgent pressures of the moment may push them into doing so. Unless the matter is extremely urgent and a decision absolutely must be made on the spot, leaders should pause and ask a few questions: Is there information or data to support the decision? What do we know? What don’t we know? How long do we have to decide this? How long will it take to get the data? Who has it? Who is working on it? What is the risk and cost of making the wrong decision? Deficiency in honesty may prove to be the most difficult to remedy, since it relies on the individual’s emotional intelligence and the psychosocial predisposition to empathize with others, especially followers. Supervisors and leaders have tremendous impact on those who work in an organization. Recent surveys of employees have found higher levels of dissatisfaction with workplace environments that display dishonesty. For example, a report by Deloitte Global Human Capital Trends (2019) showed that 80% of business and HR leaders worldwide indicated they need to develop leadership capabilities that can help to motivate and re-engage employees.

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Transparency, honesty, mutual respect, and trust were highlighted as great mitigations for building social capital in organizations. Finally, leaders deficient in credibility often lose their reputation and ability to marshal resources for the common good. They are perceived as political and manipulative and unable to mobilize support for their vision and resort to making solo decisions. These leaders tend to withhold information and resort to secrecy and closed-door decisions. Credible leaders who lead by example are not only true to themselves but also help others to become more ethical and trusted individuals.

7.6 Conclusions Trusted leaders understand that successful leadership is a balancing act that requires strong sensitivity and communication skills. When leaders and followers are engaged in transparent, honest, accountable, and credible behaviors they also give more attention to self-reflection which can result in effective behavioral change. Leaders who share information about themselves and the organization and who tie ethics and diversity to the long-term success of the organization build a culture of trust with followers and enhance organizational credibility with stakeholders. When people are entrusted with all the necessary information to make wise choices, they are likely to act responsibly and sustain a culture of higher purpose. Trusted leadership begins and ends as an important responsibility for those holding positions of organizational authority. Responsible leaders are mindful of instilling the values of honesty, transparency, credibility, and accountability in the social fabric of the organization. In the end, we need leaders who draw heavily on self-regulation and ethical mindfulness. Mindfulness is a state of active awareness, a continual creation and refinement of these four values, an openness to new information, and a willingness to view contexts and respond to situations using multiple lenses of inquiry (Levinthal & Rerup, 2006). Mindful leaders do not think of a binary ‘eitheror’, attaching mutually exclusive categories to people and values. Mutually exclusive categories are often the cause for leadership failure. Instead, trusted leaders spark mindful learning in others as an essential part of dealing with crises. How do we measure attributes of trust during times when people lose faith in governments and leaders or when uncertainty and misinformation shape people’s thoughts and behaviors? COVID-19 has opened our eyes to a great many things about leadership. Among them is that disruptions of such magnitude require trusted leaders with appropriate mindsets and competencies for managing the different phases of crisis situations. In this chapter we offered metrics that are proxies for this question. Employee engagement, for example, is often used as a reliable metric of the quality of trust in the workplace. Neuroscientific research shows that trust reduces social frictions and that building a culture of trust can be a powerful way to improve performance (Zak, 2018). But ultimately, trust is a quality that is easier to experience than to precisely measure. The diagnostic instrument (self-assessment) for evaluating the skill set needed by leaders to build trust proposed in this chapter is one example

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to think about common characteristics associated with trusted leadership. Understanding self-perceptions of trusted leaders and desired outcomes helps prepare both current and future leaders to regain the trust of followers and communicate more effectively during crises.

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Alan T. Belasen , Ph.D., has over 25 years of experience in professional, management, and leadership development. He led the design and implementation of the MBA programs in management, global leadership, and healthcare leadership at SUNY Empire State College. Dr. Belasen has published on topics such as executive education, hospital leadership, quality of care, crisis leadership, healthcare communication, and women’s leadership. Dr. Belasen has written numerous books including Resilience in Healthcare Leadership: Practical Strategies and Self-Assessment Tools for Identifying Strengths and Weaknesses (Routledge, 2022); Dyad Leadership and Clinical Integration: Driving Change, Aligning Strategies (HAP, 2019); and Women in Management: A Framework for Sustainable Work-life Integration (Routledge, 2017). He is the recipient of the International Accreditation Council for Business Education’s 2017 John L. Green Award for Excellence in Business Education, and the 2014-2015 SUNY Chancellor’s Award for Scholarship and Creative Activities. Barry Eisenberg , Ph.D. has forty years of experience in healthcare management, consulting, and higher education. He established and directed a management development program at MemorialSloan Kettering Cancer Center in New York, and later served as vice president of human resources and vice president of operations at Union Hospital in New Jersey. In addition to directing SUNY Empire State College’s MBA in Healthcare Leadership, Dr. Eisenberg consults with health care organizations on strategic planning, mergers and acquisitions, market expansion, and board of directors’ development. Dr. Eisenberg is co-author of Mastering Leadership: A Vital Resource for Healthcare Organizations (Jones & Bartlett Learning, 2015). He also maintains a blog which addresses health issues, among many others, with a wide distribution: https://barrye isenbergauthor.com/blog. Dr. Eisenberg serves on the boards of nonprofit organizations dedicated to expanding access to scholarship, social justice, and promoting arts education.

Chapter 8

How Companies Succeed in Creating New Values Through Sustainable and Authentic Communication Alexander Bilgeri

8.1 Introduction These days we are a long way from measuring the success of a company based solely on dollars and euros—there are new currencies which also count. As reported by the Edelman Trust Barometer in 2021, 80% of the people in Germany consider trust in a company and its brands to be essential or important. What’s more, 79% of the respondents expect companies today to take action and to position themselves in areas beyond their own product chains and service offerings, and even their own fields of business. “Among other things, this means addressing societal and political challenges, telling difficult truths honestly, demonstrating transparency and, in doing so, creating positive change in society.”1 Evidently it is not only turnover and profits which are key to doing business successfully; communicated (and lived) attitudes and intangible values are just as important. Now more than ever, a company needs credibility, a good reputation and trust if it wants to be successful. So companies should and must embrace social responsibility in order to secure their business models. Furthermore, they must communicate to the public and to their stakeholders how they will fulfil this social responsibility, i.e., how they will contribute to overcoming the challenges of our time. With this in mind, successful corporate communications in the twenty-first century needs to perform two key functions: it must help build up these intangible assets for a company and it must show how and where a company fulfils its social responsibility.

1

See Edelman Trust Barometer 2021 Special-Report – Marken im gesellschaftspolitischen Spannungsfeld. A. Bilgeri (B) BMW AG, Petuelring 130, 80809 Munchen, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_8

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This paper is intended to illuminate how corporate communications can rise to these challenges, and how it can establish new PR and marketing opportunities—as part of a successful communications strategy—to fulfil these requirements. This is a decisive moment, as every company needs to sincerely integrate sustainability—as a component of societal responsibility—into their strategy. Sustainability is indispensable for companies to succeed beyond the short term, because as well as offering savings in the areas of processes and resource consumption, an effective sustainability philosophy also specifically secures social recognition and trust. Companies must acquire these intangible assets for their continued existence and to secure their business models; as such, they represent a society-issued licence to operate. The first section of this paper outlines the different forms that this “societal licence to operate” can take. Corporate communications must help to obtain this licence and safeguard it for the long term. The second section seeks to demonstrate how this can be done. Rather than prioritising transparency in communication, as is standard practice, I am a great believer in authentic, open communication because it offers reliability and is thematically flexible. The third section examines the concept of sustainability more closely. Focusing on ESG criteria—that is, globally recognised environmental, social and governance criteria—is not just advisable in terms of the public good but is also a critical factor for the success of a company. However, the narrowing of public discussion to focus on sustainability predominantly as an environmental issue causes an imbalance which threatens to obscure the other aspects of sustainability. All three sections examine the challenges that incorporating intangible assets into company strategies poses in terms of corporate communications, while also highlighting the new approaches and concepts that can help corporate communications to contribute towards securing the economic success of companies.

8.2 The Social Responsibility of Companies and “Societal Licences” In international discussion, the assumption of societal responsibility by companies is referred to as Corporate Social Responsibility, or CSR.2 It is a concept “that examines the company’s activities in the economic, social and environmental dimensions, giving particular consideration to the various stakeholder interests when evaluating those activities”.3 In this framework, companies acknowledge themselves as part

2

See Carroll, Archie B. (1999): Corporate Social Responsibility. Evolution of a Definitional Construct. In: Business & Society, Vol. 38, Issue 3, pp. 268–295. 3 Habisch, André/Wegner, Martina (2004): Gesetze und Anreizstrukturen für CSR in Deutschland, p. 12. Praxisexpertise erstellt im Auftrag der Bertelsmann Stiftung, Projektmanagement CSR.

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of society, and in their respective locations—as well as elsewhere—they assume responsibility for the environment, customers, employees, and neighbours.4 The concept of sustainability is interlinked with this topic. CSR offers a means whereby companies can hold themselves accountable, both internally and externally, for their actions and attitudes, understanding that these should contribute towards sustainability in an economic, social, and environmental sense. Here, sustainability describes a business approach “that fulfils the needs of the present without running the risk that future generations will be unable to fulfil their own needs”.5 CSR calls on companies to shape their processes in such a way that they create value for their stakeholders without reckless consumption of resources, and regarding social, economic, and environmental conditions and needs. As such, companies assuming social responsibility should be considered within the global challenge of sustainable development and can be summarised as offering “a concept for the implementation of sustainability at company level”.6 By now, this concept has long been an economically relevant factor in its own right. Without sustainability, companies cannot buy products in the medium term and services are left without consumers. Progress in sustainability enables companies to position themselves effectively and be distinct from their competitors; this illustrates how sustainability can also create a competitive advantage. To extrapolate further from this, social engagement and environmental sustainability do not exist in opposition to economic goals, but rather contribute value of their own. While this value cannot be primarily measured in figures, it does indirectly pay dividends by positively influencing a company’s image, and particularly its reputation—how it is perceived by outsiders.7 Credible and consistent sustainability measures throughout the relevant business processes are unquestionably able to directly impact the competitiveness and, as such, the future viability of the company. The success of a company and its brands is currently more dependent than ever on how the company behind the brand communicates about sustainability as well as how it implements the concept within its value chain. It must prove itself every day to be a responsible partner to society in an economic, environmental, and social sense. To win social recognition in the public discourse, it is critical that a company communicates its attitude and the added value it offers society across all of its business processes and brands. Pursuing, securing, and continually developing this recognition is the most important function of corporate communications in the twenty-first century. 4

See Arnold, Jens (2011): Die Kommunikation gesellschaftlicher Verantwortung am nachhaltigen Kapitalmarkt (1st edition), p. 61. Wiesbaden, VS Verlag für Sozialwissenschaften. 5 Rogall, Holger (2004): Ökonomie der Nachhaltigkeit. Handlungsfelder für Politik undWirtschaft, p. 26. Wiesbaden, VS Verlag für Sozialwissenschaften. 6 Schäfer, Henry/Lindenmayer, Philipp (2005): Unternehmenserfolge erzielen und verantworten. Ein finanzmarktgesteuertes Beurteilungs- und Steuerungsmodell von Corporate Responsibility, p. 18. Bertelsmann Stiftung, Gütersloh. 7 Schwalbach, Joachim (2015): Reputation und Unternehmenserfolg. Unternehmens− und CEO−Reputation in Deutschland 2011–2013. Forschungsberichte zur Unternehmenskommunikation Issue 5. In: Akademische Gesellschaft für Unternehmensführung & Kommunikation, p. 3.

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However, sustainable communication and corporate governance are subject to the sometimes conflicting demands which arise from legal requirements, societal values (which may differ from region to region) and business opportunities and challenges. To secure success, every company must recognise and avoid business risks and appropriately devise sustainable business models and strategies.8 Achieving this requires not simply “a focus on legal requirements, but also conformity with societal values”.9 While sustainability ambitions and strategies differ in intensity between companies and industries, their form can be generalised into three reference frameworks and analysed accordingly. A company must achieve and safeguard these societal licences if it is to acquire intangible assets such as trust and reputation in the public eye, and in doing so secure its survival. A. Licence to Operate/Sustainability as a Necessity If a company meets sustainability-specific operational and legal requirements and specifications, it will first be granted a “licence to operate”.10 From the UN’s Sustainable Development Goals and the EU’s European Green Deal, to Germany’s Lieferkettengesetz (Supply Chain Act) which obligates companies to meet human rights due diligence requirements within their supply chains, there is a wide range of rules and laws in existence which are aimed at ensuring a sustainable environment, society and economy. Failure to observe and implement these exposes companies to the risk of losing their licence to operate in the eyes of the public and their customers. That said, simply fulfilling legal requirements alone is not sufficient to secure lasting success. Above all, a company needs social legitimacy—which is to say, the trust and acceptance of the public, and particularly its stakeholders. Without this legitimacy, people lose faith in the business model. More than ever before, stakeholders and consumers are questioning what is actually being done by the companies whose products they use and with whose brands they are familiar, to create socially useful, sustainable added value. A company must deliver on these expectations and requirements through its credibility and an authentic corporate culture if it seeks to avoid legal risks, as well as to achieve and secure social acceptance. By doing so, it can retain its societal licence to operate and successfully implement its economic strategy in the long term. B. Licence to Grow/Sustainability as Future Viability As the next step, companies can tie their growth plans to sustainability. A company’s sustainable use of resources, sustainable employee recruitment, and offering of products or services which are sustainably produced and used unlock better positioning and higher revenues can potentially secure its longer-term market prospects. This means that the task of a modern corporate strategy must be to associate growth plans with sustainability—so that the company is granted a “licence to grow”.11 8

See Krick, Thomas (2021), Von der License to operate zur License to lead. Sustainable Value– Online-Magazin für Nachhaltigkeit in der Unternehmenspraxis, Issue 1, p. 10 et seqq. 9 ibid. 10 ibid., p.11 et seqq. 11 Ibid., p. 12.

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“Products must be manufactured using technologies and production methods that are compatible with societal and environmental load limits.”12 Obtaining the licence to grow is predicated on further development of—if not a complete break from—those traditional business models which have defined growth in exclusively quantitative terms. Economic and social sustainability have long ceased to exist in parallel to conventional operational management. Holding a licence to grow means that a company considers growth to relate to economic and social sustainability, and that it integrates both elements into its business strategy with equal importance. Ideally, this integration of sustainability into business strategy will even yield advantages in costs and competitiveness. In short, the licence to grow refers to a further step in the strategy of the company. Economic and social challenges are resolved through collaboration with governments, civil society, and other companies. From this, it follows that dialogue with societal stakeholders is a function of corporate communications. A company’s management and corporate communications should both actively address the challenges of sustainability and respond appropriately to changed market requirements, to enable it to fully tap into the innovation and growth potential of the company and maintain or even improve its social reputation. C. Licence to Lead/Sustainability as Industry Leadership One thing is clear: companies need to integrate sustainability into their business models in a credible manner. Instead of striving solely to achieve the highest returns for their shareholders, they must move towards developing their businesses in line with societal interests and objectives. This can be most easily understood as prioritising stakeholder value rather than shareholder value.13 This broadening of the spectrum also changes how we can define a company as a market leader or a leading company. Only those businesses which manage to infuse sustainability into economically viable and scalable solutions will be able to successfully access new growth potential and earn a reputation as a leading company on the market and in society. This accolade, along with demonstrable experience, qualifies a company to participate in redesigning the rules for sustainable business. At this point, such companies become holders of a new permit—the “licence to lead”.14 In summary, it is essential that companies are ready with offerings and answers concerning sustainability, for the public and their stakeholders—and that they make these clearly known by means of appropriate communication. If they fail to do so, they risk a loss of public legitimacy. The three licence types described in this piece can only be obtained if the company’s products and services meet the sustainability standards it has set itself (and communicated). In short, the company must deliver what it has promised.

12

Ibid., p. 12. Ibid., p. 12. 14 Ibid., p. 13. 13

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At the same time, these three licences highlight the tasks of corporate communications: it must create trust and acceptance among the public and among stakeholders (licence to operate), open dialogue with the relevant social groups (licence to grow) and introduce a company’s innovative practices, products or services to relevant forums and social groups (licence to lead). How can it succeed in this?

8.3 With Transparency or Authentic Communication? In its classical definition, an established task of corporate communications is to contribute to a company achieving its strategic goals; it does this by creating trust and positively influencing public opinion about the company. Targeted communication with all internal and external stakeholder groupings is central here15 — not just in terms of designing communication channels, but also with respect to appropriate instruments and content. Communication facilitates discussion, knowledge transfer and acceptance. However, stakeholder and employee acceptance are currently heavily dependent on a company’s social engagement16 : all stakeholders—internal and external—want to know whether a company has answers and solutions to meet the challenges of our time. The reality is that “business activity is no longer restricted to returns for shareholders, employee wages or providing products and services to customers, but also includes addressing social and environmental concerns”.17 As such, it has long been the case that companies are focusing not only on prospects for shareholder value, but on a broader approach that also takes into account the requirements of stakeholders—without losing sight of economic considerations.18 This perspective has expanded the role of corporate communications, too. It is now required to demonstrate that social and environmental engagement does not come at the expense of shareholder value but is in fact connected to the ultimate economic purpose of a company: it means a secure future, it means increased profits. In this context, it is important to balance the interests of society with those of a company’s owner. Where this relationship is successfully established, the very act of taking on social responsibility (particularly in the area of sustainability) demonstrates

15

Schwalbach, Joachim (2015): Reputation und Unternehmenserfolg. Unternehmens- und CEOReputation in Deutschland 2011–2013. Forschungsberichte zur Unternehmenskommunikation Issue 5. In: Akademische Gesellschaft für Unternehmensführung & Kommunikation, p. 7. 16 See Arnold, Jens (2011): Die Kommunikation gesellschaftlicher Verantwortung am nachhaltigen Kapitalmarkt (1st edition), p. 69. Wiesbaden, VS Verlag für Sozialwissenschaften. 17 Ibid, p. 64. 18 Ibid.

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that the company is particularly fit for the future.19 It can position itself as forwardthinking by actively grappling with broader societal trends and making them part of a strategy that generates value.20 Incorporating sustainability as an integral part of corporate strategy poses new challenges for communications management. Economic and social considerations can be embedded in business management decisions and operational business by means of targeted communication. For this type of corporate communications to be successful, credibility is an absolute prerequisite—and that credibility must be earned anew, over and over and again, so that “the reported information (is) rated true and free of deception by the reader”.21 Achieving this requires the company to have both expertise and trustworthiness. Several factors support the perception of a company as being professional and proficient: a precise definition, available internally and externally, of what the company understands sustainability to mean; the strategic application of this definition; and a description of the implemented and intended steps forward. The evaluation of corporate sustainability by external parties is a means of increasing trust.22 It is important to note that the reputation of the company has a considerable impact on the attribution of credibility: “This requires more than the absence of scandal; companies must also continually demonstrate, with appropriate evidence, that they are in a position to implement their sustainability strategies.”23 On the other hand, if a company’s responsible and sustainable actions are not fully embodied and implemented through its entire corporate philosophy, there is a risk that the communication will be dismissed as “‘greenwashing’ of existing activities”.24 Responsible conduct and communication about it must go hand in hand, and necessitate a “systematic management approach to responsibility-related communication, which is directly related to sustainable corporate governance and characterised by a values-based, trust-oriented communication style”.25 For corporate governance and corporate communications, as with sustainability, it is all about substance, responsibility, and trust. To attain and deliver on these credentials, a company’s engagement must be intrinsically motivated and based on a deep conviction.

19

Arnold, Jens (2011): Die Kommunikation gesellschaftlicher Verantwortung am nachhaltigen Kapitalmarkt (1st edition), p. 158. Wiesbaden, VS Verlag für Sozialwissenschaften. 20 Fieseler, Christian (2008): Die Kommunikation von Nachhaltigkeit. Gesellschaftliche Verantwortung als Inhalt der Kapitalmarktkommunikation, 1st edition, p. 151. VS Verlag für Sozialwissenschaften, Wiesbaden. 21 Spelthahn, Sabine/Fuchs, Livia/Demele, Uwe (2009): Glaubwürdigkeit in der Nachhaltigkeitsberichterstattung. In: Fachzeitschrift uwf No. 17, 2009, pp. 61-68. 22 Ibid., p. 65 et seqq. 23 Ibid., p. 67. 24 See Mast, Claudia/Stehle, Helena (2009): Kommunikationsexperten als Navigatoren. Auf dem Weg zu einer Neudefinition von Verantwortlichkeiten der Unternehmen. In: PRMagazin, Vol 40, Issue 6, pp. 63–68. 25 Ibid., p. 67.

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So, from a corporate perspective, the key success criterion when dealing with social responsibility is whether a company succeeds in establishing transparency around social responsibility- and sustainability-related corporate factors and inspires trust among investors and in corresponding investment products, as well as whether it can satisfy the information needs of the various stakeholders involved.26 There is one corporate communications tool that is widely considered to be the best option for achieving social acceptance and legitimisation of sustainable corporate conduct: transparent communication.27 This approach, which requires that the stated sustainable company strategy is genuine, also relies on frankness presented in timely and comprehensive communication which is fully shared with the relevant target groups. However, I believe that transparent communication (beyond the legal obligations for transparency) has real limitations as a strategy. On full consideration, it becomes apparent that the transparency requirement can never be entirely met. The approach implicitly suggests that critics and stakeholders can demand that a company even discloses trade secrets or future strategies to satisfy the requirement for full transparency; this very implication risks harm for a company, because even while it pursues a transparency policy that communicates information as openly as absolutely necessary, it can still always be suspected of hiding something that could damage its reputation and credibility. Rather than striving for transparency with all the difficulties and dissatisfactions that it entails, as outlined above, I believe an alternative strategy and stance is much stronger: authentic and open communication. This is reflected in a coherence between the self-declared corporate objective and the corresponding choice of medium. Authenticity is a stronger tool because it can also communicate the steps and measures that are still missing or incomplete and address the areas a company still needs to work on to achieve its vision. Companies do not need to communicate and disclose every piece of information; they do not need to answer every question to the same extent to appear transparent to the public and their stakeholders. But all information that the company does choose to share must be true and candid—this is the only way to be perceived as credible. Then, authentic communication that builds this credibility can only take place along the company’s own value chain—its internal business processes. Companies have an influence on this and can control and change it—as such, they can ensure communication about sustainability is pursued as a serious business purpose, and then it is possible to dismiss any accusation that a communication is simply PR. Simply put, if a company communicates openly and authentically about its objectives, efforts and challenges, it can claim a leadership position in the public eye—not only on the market, but in society as well. 26

Arnold, Jens (2011): Die Kommunikation gesellschaftlicher Verantwortung am nachhaltigen Kapitalmarkt (1st edition), p. 25. Wiesbaden, VS Verlag für Sozialwissenschaften. 27 See Zerfaß, Ansgar; Bentele, Günter; Schwalbach, Joachim; Sherzada, Muschda (2013): Unternehmenskommunikation aus der Sicht von Vorständen und Kommunikationsmanagern: Ein empirischer Vergleich, p. 15 et seqq. Forschungsberichte zur Unternehmenskommunikation No. 2, Akademische Gesellschaft für Unternehmensführung & Kommunikation, Leipzig.

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This way, authentic communication can convince others of the credibility of a company’s social engagement. It generates credibility and builds reputation and trust without exposing corporate communications to conflict arising from excessive demands for transparency. Applied strategically and proactively, it can contribute to a company’s image, help to distinguish it from its competitors and advance its reputation—a factor which has real relevance to economic success, particularly in terms of sustainability. To achieve this, corporate communications should be holistically coordinated and balanced in content. The vision behind the overall communication must be clear, and consistently derived from the company strategy. This effectively creates guard rails within which marketing and other functions involved in discussions with the public can move and unfold, but which protect the company’s reputation with all target groups throughout the interaction. In this scenario, corporate communications become the guardian of a company’s reputation, putting guard rails in place for all other communicating units within that company. To support this, different departments and (corporate) communication channels should collaborate in an integrated manner and merge internal and external communications for recipients by means of a cross-media approach. Also inherent to this is the implication that, in communication planning, the traditional, target-group-oriented distinction between public relations and marketing becomes obsolete to guarantee consistent communication, precisely because more and more points of contact exist between the different target groups. The establishment of the aforementioned reputational guard rails is critical. In a content-focused society, target groups are more and more frequently found in places that are continually undergoing rapid change; digitisation empowers everyone to send and receive information; willingness and appetite for dialogue is increasingly prominent and must be taken into account in campaigns and communications measures. With all this in mind, I’m talking about reorienting corporate communications— focusing less on target groups and more on topics. Why? Today, people can encounter a company at a variety of points, for example as interested members of the public, analysts or customers. For communications campaigns, it is much harder than it used to be to forge coherent target groups from these various worlds—in the sense of identifying unifying topics that are relevant to as many people as possible, and which the company authentically supports.28 PR and marketing functions within a company should instead be jointly developing ideas for how the company can use communications to position itself in terms of its products and overarching topics, and how to combine the strength of the central communicative units by means of synergistic “one-voice” communication. The Media House of BMW Group brings together the company’s external and internal communications to enable these to be more effectively orchestrated. The communication strategy instructs that individual topics are prepared for the appropriate media channels in a way that facilitates optimum acceptance and reach. This 28

See Kirsch, Werner (2001): Die Führung von Unternehmen, p. 327 et seqq. Munich, Verlag Barbara Kirsch.

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targeting of output is precisely directed and delivered to users, resulting in better fulfilment of their information expectations. The company can thereby offer its individual brands a distinct communicative framework built on conviction, history, and their vision for the future. It remains important to share these strategies and objectives by means of authentic stories and attention-worthy communication that is attuned to the individual spheres of action. This content must be both coherent and as timeless as possible, and must function across all channels, target groups and communication opportunities. Social media plays a central role. In the past, it was common practice for many companies to externally communicate a topic and then rely on the media to pick it up and spread the message. Today, we live in a content-driven society—everyone can be both a receiver and a transmitter, particularly thanks to social media. If we want to continue engaging in trust-building communication, we must accept that people these days have more knowledge about companies than they used to—simply because digital media make it possible for them to access such information quickly and from anywhere in the world. This development has had a tangible impact on corporate communications. These days, marketing needs to do more than display products and vibrant pictures with snappy slogans: there is an expectation that PR should credibly communicate the company and its objectives and take a stance on overarching issues. In this respect, social media channels offer companies a truly immediate opportunity to authentically present their positions. But rather than presenting additional content head-on as a mere transmitter, social media platforms enable users to become part of a discussion and a dialogue, making it possible to be perceived as credible and responsible. From a technical perspective, every platform presents its own opportunities for discussion; however, it can generally be said that these channels enable companies to become their own media houses on social media, and to present their unfiltered and original position without being contextualised by third parties. This offers the possibility of actively presenting information, objectives, and attitudes, and of commenting on opposing positions rather than just being passive vessels for communication. Furthermore, social media channels act as a meeting point for diverse participants and as public spaces: from DAX-listed corporate groups, medium-sized enterprises and grassroots initiatives, to consumers, employees and people who are personally involved or interested whatever reason for, all parties are united by the decision to dedicate their time and attention to a particular item or entity. For a company, and above all for its reputation, it is important to communicate with these various stakeholders on an equal footing and to be conscious and respectful of their attention, no matter how remote their worlds may seem.29

29

For more on the topic of competition among topics for attention, see Bilgeri, Alexander (2001): Das Phänomen Lobbyismus. Eine Betrachtung vor dem Hintergrund einer erweiterten StrategieStruktur-Diskussion, p. 40 et seqq.

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An appreciative exchange of this kind which is also geared towards my definition of authenticity above enables the company to develop its objectives and its strategy— for example, on the topic of sustainability—in a communicative manner. On these channels, a company is able to assume a stance and take a position—even if not always warmly received, this constitutes part of a mature and therefore respectful dialogue. Additionally, ideas by smaller initiatives would once have required support from capital and industry to reach a broader stage. Social media channels on which topics can be authentically investigated and constructively developed are particularly relevant for this type of communication. Here, in the ideal case, companies can engage in dialogue with experts, who act as disseminators. Influencers use their reach to promote a product. However, the high credibility of experts gives them greater impact and is made even more important by the fact that they are followed by people who themselves have many followers— that is, followers who can make a difference by means of their own credibility with specific groups. It is important to engage in dialogue with these disseminators to achieve a spillover effect.

8.4 Three Pillars of Sustainability Shareholders’ expectations and demands in terms of a company’s business model have undergone substantial change in recent years. Instead of measuring value based on purely material criteria, the new generation requires a company to also reckon with social and environmental challenges. Today’s reality is that companies which do not engage with the topic of sustainability “will encounter high reputational risks in the long term”.30 But the pressure on companies to take action is not solely because of changed external expectations; active sustainability is also in the companies’ own interest. Companies have recognised that they can only secure their business model if they “shape their business processes to create value for all stakeholders and positively influence their direct societal environment without consuming natural resources beyond the unavoidable level.”31 Sustainability is closely associated with the concept of environmental protection, which has altered the political discourse since the mid-1980s. However, it is worth noting that both in general discussion and in the media, sustainability is often restricted to ecology and is not considered in its entirety, which extends across environmental, economic, and social facets.

30

Rosinski, Niki (2001): Sustainable Finance. Die finanzielle Relevanz von Sustainability. nimmt zu. In: Research Report of DaimlerChrysler Research & Technology, Berlin, p. 11. 31 Grewe, Wolfgang/Löffler, Jens (2006): Aspekte der CSR aus Wirtschaftsprüfersicht. In: Gazdar, Kaevan/Habisch, André/Kirchhoff, Klaus Rainer/Vaseghi, Sam (editor): Erfolgsfaktor Verantwortung. Corporate Social Responsibility professionell managen, Berlin/Heidelberg, p. 3.

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To maintain and also succeed with their business model, it is vital that a company does not diminish sustainability to refer to environmental factors alone. With this in mind, the economic sector, companies and their representatives should not pull away from environmental and societal responsibility. If thought through to its conclusion, what is the impact of limiting sustainability to mean only environmentalism? If judgments are made solely on environmental grounds? Could the company still produce goods and generate added value, or would it perhaps be better if they immediately ceased operations? Closing production would certainly save vast quantities of carbon emissions. However, companies act in a complex ecosystem which interlinks economic, social, and environmental interests, conditions, and consequences. Businesses operate workplaces which offer economic security and prospects for employees as well as for the associated suppliers, businesses, and local authorities. Through taxes, they contribute to maintaining facilities, institutions and programs that define public, social, and cultural life. With their own, often in-house development departments or even research departments, they work to develop innovative solutions (for the challenges of our time) and new products that are future-ready. All of this requires financial commitment, awareness, and strategic decisions. It also demands reliable political and social framework conditions that permit companies to manage development cycles—which often take many years—in an economically useful way. In the absence of a functioning economic system that relies on these framework conditions, dialogue, development, and progress would probably no longer take place. Therefore, sustainability as a term cannot refer to environmental protection alone. It must be understood as a three-pronged approach embodying environmental, economic, and social responsibility. Societal groups as well as companies need to consider sustainability as a holistic concept, not in terms of mutually exclusive categories. Climate and environmental protection are at the core of entrepreneurial thought here—after all, without a healthy planet, none of us have a healthy future worth living. But society can only resolve ecological challenges through innovation, not by shutting off our economic activity. Innovations that companies can work with in a climate-friendly and environmentally aware manner are the key to ecological and social sustainability. For companies this means incorporating economic, environmental, and social considerations in a balanced way. Referred to as the “triple bottom line”, many political institutions define sustainability using this kind of three-pillar approach— as seen in Agenda 21 from the UN Earth Summit in Rio, in the EU’s Treaty of Amsterdam, and the German Bundestag’s commission of inquiry on protection of human life and the environment. The three pillars were originally ranked equally and describe the dimensions in which a company should implement societal responsibility through sustainability: ecologically by preserving nature, socially by creating equity between generations,

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and economically as a business model that is not geared only towards profit, but also to future generations maintaining a livelihood.32 This makes sustainability a key component in business strategy and identifies it as a factor which increases company value and profitability in its own right. Many companies already publish integrated business reports which include both financial data and sustainability aspects; this is predicated on the realisation that business objectives can only be achieved with progress in sustainability which is independently monitored by external specialists. Even though the three pillars of sustainability are generally given equal weight, I remain convinced of the primacy of economic concerns in companies. In saying this, in no way do I reject the environmental and social facets; rather, these will also be bolstered on the route to economic sustainability. To safeguard the business model, in the medium term companies need to give priority to environmental and social sustainability to enable them to achieve economic objectives. For example, companies need to find answers to social challenges such as shortages of skilled workers, retirement age, and the need to introduce immigrants into the labour market. They must help develop and promote social sustainability for reasons of economic sustainability alone—the alternative is that eventually, and in the foreseeable future, there are simply not enough skilled personnel available to keep companies running. Environmental sustainability will then develop along with economic sustainability—in fact, it will even lead to competitive advantages. To be able to keep a company’s business model alive, or establish it in the first place, there is a need to develop alternatives to expensive or hard-to-access raw materials and energy sources. This means that one of the central questions for companies concerns the further utilisation of raw materials in the production chain after initial use, i.e., recycling and using again. Sustainable recycling necessitates new steps in development and design and brings with it a shift from linear to circular economies. BMW Group demonstrates what a recycling economy in the automotive construction sector could look like, using the example of the BMW i Vision Circular concept study. Here, all the materials used in the car are utilised again, giving rise to a material loop: only recyclable or already recycled materials are used for production and, at the end of the car’s lifecycle, these form the basis for the further production chain in the company. Circular economic activity therefore reduces carbon emissions, waste volumes and material consumption, but also a company’s dependence on raw material prices and finite resources.

32

Cf. inter alia Gabriel, Klaus (2007): Nachhaltigkeit am Finanzmarkt: Mit ökologisch und sozial verantwortlichen Geldanlagen die Wirtschaft gestalten, p. 32 et seqq. Oekom Verlag, Munich.

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This example shows how environmental, social, and economic sustainability can be developed closely in line with a company’s business model and bring with it innovations far beyond the technological sphere. Throughout a company’s business process, socially and environmentally sustainable innovations such as modern working time models and circular production chains contribute to its economic success and make its business model crisis-proof and fit for the future. Considering altered framework conditions, new challenges and geopolitical factors, companies must therefore develop their economic business model in close alignment with environmental and social responsibility—this is the only way to achieve and maintain credibility in the area of sustainability, and to generate an advantage in the manner described. This transformation presents companies, and as such also their corporate communications, with major, but also exciting challenges. Only companies that credibly integrate sustainability into their business model, offer their stakeholders appropriate solutions, and can communicate all of this to the public consistently and authentically, will be successful in future (including in the sense of shareholder value). Corporate communications must strategically participate in developing these solutions and help companies meet their societal responsibility through their values and visions, day after day.

8.5 Conclusion The preceding pages have shown that companies can draw up a successful balance sheet with new currency columns: image, reputation, and agenda-setting drive. Every company needs these tools to survive in the medium term, because they facilitate societal legitimacy in the form of social licences. Successfully integrating sustainability into the business model is of huge importance in this context. This integration must be communicated and backed up by means of appropriate corporate communications, which should particularly focus on authenticity and openness. This approach initiates dialogue with the companies’ stakeholders and shares its sustainability objectives via multiple media guided by themes, rather than seeking to address individual target groups. When strategically and actively deployed, authentic communication contributes to building a company’s image, differentiating it from its competitors, and promoting its reputation, while also consolidating its economic success. However, it is crucial to establish a proper understanding of sustainability, which must in no way be reduced to its environmental components alone. Only when all its facets work in synergy, to form a triple bottom line, will sustainability unfold its full societal potential and enable progress and development.

Alexander Bilgeri is Vice President Communications for Human Resources, Production, Purchasing and Sustainability at the BMW Group. He is an expert in strategic, data-driven communications and public relations with over 20 years of experience in managing and leading

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organizations, from media startups to international car manufacturers. At the BMW Group, Alexander has held various international positions since 2004, including responsibility for communications strategy, product, innovation, business and financial communications, as well as in the U.S. for communications in the Americas region. Alexander holds a degree in business administration and studied at Ludwig Maximilian University in Munich and WHU in Vallendar. He is a trained journalist.

Chapter 9

Respect, Dialogue, and Innovation: Creating New Ideas and Solutions by Committing to an Ethical Culture Michelle R. Darnell and N. Benton Parish

9.1 Introduction Organizations that possess innovative capabilities expand their horizons, by creating new ideas and solutions (Lumpkin and Dess, 1996) in ways that further support both organizational performance (Cho and Pucik, 2005) and regional competitiveness (Broekel and Brenner, 2011). A robust body of literature explains innovation as a process that involves the “generation, adoption, implementation and incorporation of new ideas, practices and artifacts within organizations” (Axtell et al., 2000). Still, practical insight into what leaders can do to continuously promote innovation within their organizations is not always obvious. This chapter addresses the pragmatic question of ‘What can managers do to support innovation?’ with the two-part response of (1) establish a stable foundation in an ethical organizational culture, and (2) rely on a dialogic style of communication within the organization. Organizational culture is broadly described as a system of shared meaning that is held by members, which in turn can be used to distinguish a particular organization from other organizations (e.g. Schein,1996). Distinct characteristics may be used to describe an organization’s culture, including innovation and risk taking (the degree to which employees are encouraged to be innovative and take risks, see for example O’Reilly et al., 1991) and people orientation (the degree to which the effect of decisions on people within an organization are taken into consideration by managers, see for example Chatman and Jehn, 1994). The common approach to innovation and consideration of people, for example, will guide and shape the behaviors of members

M. R. Darnell (B) The Pennsylvania State University, University Park, USA e-mail: [email protected] N. Benton Parish Texas A&M University, College Station, USA © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_9

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within an organization. In this way, culture is tied to success of organizations in general. Culture can more specifically be leveraged as a means for goal congruence between management and employees concerning innovation activities. Büschgens et al. describe “a very heterogenous picture of what a culture for innovation could be” (2013, p. 764), but if leaders develop cultures which value innovation, or other ideals or behaviors that are linked to innovation, a strategy can be developed for leaders to actively promote the behaviors that can expand their organization’s horizons. In recent years, there has been growing acceptance that culture is more specifically tied to organizational innovativeness (see Büschgens et al., 2013, and the findings of such studies as those undertaken by Martins & Terblanche, 2003; Sarros et al., 2008; Valencia et al, 2010). For example, reliance on more formalized structures in an organization that emphasize strong constraints on employees, through an emphasis on detailed procedures and rules for example, are likely to decrease organizational creativity (see Amabile, 1988; Amabile et al., 1996). In contrast, the stronger an organization’s culture, via acceptance of shared meanings, the less management need be concerned with developing formal rules and regulations to guide employee behavior. More strongly, there is evidence that leaders seeking innovation within their organizations should develop cultures in which certain specific environmental factors are promoted. Recurring factors that influence organizational innovativeness include trust, empowerment, tolerance of error, organizational learning, open communication, participative decision making and cooperation (see Büschgens et al., 2013; Hurley and Holt, 1998; Martins & Martins, 2002; Martins & Terblanche, 2003). The factors that influence innovativeness are also conceptually linked, through the implied importance of interpersonal relationships. Indeed, Ordiñana-Bellver et al. (2022) found the highest impact research in innovative environments demonstrates the importance of personal relationships, with more direct evidence provided in the linkage between organizational supportiveness and employees’ propensity to propose new ideas (Baer & Frese, 2003). A culture that emphasizes some of the factors that promote innovation, however, may be counter effective in supporting interpersonal relationships. For example, organizations that value risk taking could threaten the health of interpersonal relationships, if the impact of that risk is not fairly distributed between stakeholders. Similarly, an “…emphasis on people issues might be a handicap for the implementation of new developments” (Büschgens et al., 2013, p. 769). For example, the adoption of new processes or systems may be hindered by concern for select persons within the organization who could be negatively impacted through job loss. There is also a concern about developing a particularly strong culture, which can serve as a barrier to change and diversity. In a strong culture shared meanings are both intensely held and widely shared. “Innovation generation requires a strong basis of shared values that support those efforts” (Büschgens et al., 2013, p. 770, italics added), yet entrenchment of expectations related to expected behaviors, for example, can become a liability if change is needed. Similarly, diversity of thought and behaviors may become diminished as employees accept shared meanings that create cohesiveness within an organization. How, then, can a leader cultivate a strong

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culture that simultaneously enables innovation, which will require change and diversity of thought? Consideration of literature in (intra)entrepreneurship, organizational behavior, and ethics reveals an answer: develop an ethical culture, grounded in the respect for the autonomy of persons. The core of organizational culture is shared values, with cultural strength describing the extent to which values are shared by organizational members (Wiener, 1988). In so far as those shared values are grounded in normative expectations, an organization’s culture transitions from merely a descriptive account of what meanings are shared among members of an organization, to a normative account of what is and is not appropriate behavior (see Trevino, 1986). Given the influence of interpersonal factors on innovativeness, a connection between an ethical organizational culture and innovativeness is not surprising, and a positive relationship between these two organizational aspects has been established by Riivari et al. (2012) and Riivari and Lamsa (2014). Puˇce˙ tait˙e et al. (2016) further show that ethical organizational culture more specifically affects process innovativeness (novel production methods, management styles and technologies that are applied to enhance production and management systems) and behavior innovativeness (employee and management resourcefulness and interest in new ideas, and organizational encouragement to think and act originally and creatively). Identification of the ethical values that serve as criteria for establishing morally (un)acceptable behavior in innovative organizations has also been addressed in a limited fashion. More specifically, existing literature implicitly references ethical values that can be widely and intensely held in a way that also promotes innovation. Significant contributions in this area are provided through the construct of Corporate Ethical Virtues (Kaptein, 2008), which is based on Aristotelian virtue ethics. This construct provides measurable characteristics, that is virtues, that organizations need in order to excel ethically: “the virtuousness of a corporation can be determined by the extent to which the organizational culture stimulates employees to act ethically and prevents them from acting unethically. Corporate ethical virtues are the organizational conditions for ethical conduct” (Kaptein, 2008, p. 924). Even with this model, however, organizational leaders must hold a logically prior understanding of the criteria for defining ethical conduct, in order to set organizational characteristics to promote specific behaviors. Mayer et al. (1995) suggests an organization’s attentiveness to ethical values includes ‘integrity’. Puˇce˙ tait˙e et al. (2016) include reference to a variety of values, including autonomy, dignity, and integrity (p. 688). Fernandez and Moldogaziev (2013) can be read as presenting autonomy, qua empowerment, as tied to innovation. Such findings conceptually may be distilled to a basic ethical value of ‘respect for persons’ (see Bowie and Bowie, 2013). Beyond this conceptual linkage, empirical findings also support ‘respect’ as a core value that can support organizational success (e.g. Pfeffer, 1998). If ethical relativism is denied, the basic moral principles used to determine the moral rightness or wrongness of a behavior does not change as situations change (Pojman, 1995). As such, an ethical culture has stability in its core values, but this does not preclude the need for more dynamic understanding of how core values are applied, which will continue to develop in new ways, as challenges—and the

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environments within which these challenges occur—develop. For example, if we accept ‘respect persons’ as the core of an ethical culture, how we display that respect in organizational policies can change over time as the empirical world changes. Thus, the stability that is found in strong ethical cultures rests in the core values that don’t change, but the systems and behaviors that result from an interpretation of core ethical values, and which further reinforce an organization’s ethical culture, can develop as conditions change. Central to maintaining an ethical organizational culture is ensuring that formal and informal systems are in alignment (see Trevino & Nelson, 2021, pp. 162–166), but the systems themselves (e.g. decision making) will necessarily be applied in distinct ways for particular situations, and will continuously develop as broader social conditions (including both social norms and technical knowledge) evolve. By creating an organizational culture grounded in the ethical value of respect for persons, leaders can benefit from both a strong culture while also supporting an innovative environment. Pragmatically, however, the core value of respect must still be operationalized. This operationalization must be undertaken with a recognition that values are “…implemented and maintained both by organizational practices and individual decisions and actions” (Puˇce˙ tait˙e, 2016, p. 687). Culture thus accounts for both how individuals internalize organizational values and the ability of individuals to affect organizational values through legitimization of new norms and behaviors (see Tajfel, 1982). As such, an ethical culture is created and sustained through the purposeful alignment of both formal and informal organizational systems, “but opportunities for misalignment abound in these complex systems” (Trevino, 1990, p. 162). A tactic to mitigate the risks of misalignment in the systems that drive an organization’s culture is suggested by the bidirectionality of influence of, and on, culture. More explicitly, formal and informal messaging of expected behaviors is sent at the organizational level, which is received and interpreted by employees; individual members of the organization, in return, must provide feedback to the ‘sender’ of these messages that will serve to either reinforce (maintain) or disrupt (do not maintain) that messaging. This is none other than a very basic conception of the process of communication. Indeed, communication is an ongoing process of interaction, with organizational members both influenced by, and influencing, the nature of the organization: “on the one hand culture is a product of social interaction mediated through communicative acts, and, on the other, communication is a cultural artefact through which organizational actors come to understand their organization and their role within it” (Brown and Starkey, 1984, p. 809). Using communication as a tactic to mitigate misalignment of systems that drive an ethical culture must consider not merely what is said, but the style of communication, “… because employees’ interpretation of supervisory communication depends not only on ‘what’ is said but also ‘how’ it is said” (Dasgupta et al., 212, p. 174). To support a culture of innovation, that communication style must both exemplify the core value of respect, but also support environmental factors that promote innovation. With respect to the former, “ethical organizations are led by people who consider ethics as important and employ ethical values in their decisions and behavior” and “in practice, this means reciprocal respect” (see Puˇce˙ tait˙e, 2016, p. 687, italics added).

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Respect is demonstrated via open communication across all levels of the organization, in which constructive criticism and feedback are welcome (see Pfeffer, 2005). Such openness promotes a norm of dialogue, which encourages both process and behavior innovativeness (Puˇce˙ tait˙e, 2016). This is possible because “…dialogue allows stakeholders to question perceived ‘truths’, thereby opening the discussion to ‘new perceptions’ and other diverse ideas that can lead to a paradigm shift” (Wright, 2017, p. 210). Dialogic communication has been studied by scholars in human communication, psychology, political science, philosophy, and public relations/organizational communication. Historically, dialogue acknowledges the relational importance of others (Arnett, 2016, p. 3) and thereby is conceptually grounded upon an ethical culture, more specifically on a commitment to mutual respect of persons. Respect disallows ‘dialogue’ to be reduced to imposed dialogue, which is “… a communicative posture of telling, undercutting the mutual communicative possibilities between and among partners.” (Arnett, 2014, p. 71). In contrast, authentic dialogue, or dialogic communication, is based on respect and trust, which enables open and honest communication to be co-created through spontaneous, intrapersonal interaction where both parties are committed to the conversation (Heath, 2005). In this way, dialogic communication is an inherently ethical practice (Aristotle, 2011). In his argument for the dialogic approach to therapy, Carl Rogers (1957), suggests that dialogue has an unconditional positive regard for the other (p. 95). Paolo Friere (1994) further suggests that a humility must be present to have dialogue. He writes, “how can I dialogue if I am closed to —and even offended by—the contribution of others” (pp. 71–72). Philosopher Martin Buber’s (1958/1996) I and Thou also calls forth the ethical dimension of dialogue by seeing the other as a “thou” (referencing the uniqueness and wholeness in a person), which validates the basic dignity and worth of others. Moreover, human communication scholars Anderson, Cissna, and Arnett (1994) suggest “dialogue is a dimension of communication quality that keeps communicators more focused on mutuality and relationship than on selfinterest, more concerned with discovering than disclosing, more interested in access than in domination” (p. 2). In this way, dialogic communication not only demonstrates a commitment to the ethical value of respect for persons, it also supports an ethical culture by supporting the ongoing alignment of aligning formal and informal organizational systems. Trevino and Nelson argue that an ethical culture is created and maintained through an interplay of both formal and informal systems (2021, p. 161). The role of dialogic communication is paramount in the interplay between these systems, which are led by executive leaders (formal systems) and role models that can be found at any level within an organization’s hierarchy (informal systems). Dialogic communication encourages stakeholders throughout an organization to be calm, respectful, and open to others, making continuous alignment of the formal and informal systems that drive culture possible. Alignment occurs when all systems consistently message the shared commitment to respecting all persons. Because information is openly shared through dialogic communication, formal systems, such as decision processes and authority structures, can be continuously developed to ensure alignment with the reality of

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lived informal systems, such as norms and rituals. Similarly, the informal systems that drive culture, such as the stories or myths that employees tell as indicative of their experience within the organization, will emerge as consistent with existing policies, reinforcing the reality of what leaders claim to value. Strong ethical executive leaders continuously promote an ethical culture through employing dialogue, while also building trust, supporting employee empowerment and promoting tolerance to error. Kent and Taylor (1998) argue that in dialogic communication there is a give-and-take that is guided by two principles. The first is that those who engage in dialogue share a willingness to try to reach a mutually satisfied position. This suggests that the communicators do not need to agree with each other (p. 324). Second, dialogic communication is about intersubjectivity or the process in which communicators come to a relationship with openness and respect (p. 324; see also Buber, 1958/1996). Thus, dialogue offers listening, attentiveness, non-possession, cooperation, and respect of communicative partners. Specifically, respect of persons throughout the organization implies that there is a quality of communication, as well as the development of interpersonal relationships, which is contingent on effective dialogic communication that involves, risk, trust, empathy, mutuality, and proximity (Kent & Taylor, 2002, pp. 25–29). Thus, there is also reason to accept that this approach to communication promotes a culture of innovation. In order for an organization to promote innovation, the company culture must possess authentic dialogue in its core. Companies that promote authentic dialogue in their company culture allow their employees to bring their authentic and genuine selves into a conversation. In participating in dialogue, employees share their ideas and opinions, and in many cases, the experiences through which they came to possess these views. Authentic dialogue allows ideas to be exchanged freely (Raelin, 2012, p. 823), while encouraging diverse thinking that allow for learning to take place on both the individual and organizational level (Wright, p. 210). For companies to be innovative, authentic dialogue should be a collaborative effort. However, if authentic dialogue is to be effective, a “collective position” of the inquiry should be one in which each member of the organization feels “competent, trusted, and valued” (Raelin, 2012, p. 821, as stated in Wright, pp. 210–211). As a social capital, trust, gained through collaborative conversations, is increased; thus, “cultivating a culture of inquiry” (Wright, p. 211). Trust is one of a company’s most important assets and is paramount for a good working atmosphere. A key component of trust is empathy, which must exist if authentic dialogue is to be successful. In short, empathy allows a person to see situations through the eyes of others (Stein, 1989/1917). When employing empathy to understand another person’s point of view, the individual will feel more appreciated and more effective, which will make them feel empowered; thus, helping them be innovative and take risks. Innovation requires taking risks and sometimes the risks create mistakes. Placing a positive outlook on error, such as the error being a great learning experience for all, encourages authentic dialogue on why things went wrong. Employing authentic dialogue when discussing the learning experience creates a culture of tolerance of error; henceforth, encouraging innovation.

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Open communication has been described as one of the most essential characteristics of an effective organization (French & Bell, 1973; Haney, 1967; Likert, 1967; Redding, 1972). Open communication or the “free flow of ideas between departments may trigger the most promising ideas” (Büschgens et al., 2013, p. 770; see also Kanter, 1988). Additionally, open communication, in which mutual understanding of the wants and desires of all the stakeholders involved is explored, promotes trust (Bradach & Eccles, 1989; Powell, 1996; Ring and Van de Ven, 1994), organizational learning (Phillips, 1997; Schein, 1993), participative decision making and cooperation. Participative decision making research interchangeably uses “employee engagement "or “employee involvement” when describing the term (Jurburg et al., 2019; van Assesn, 2021). DeMaria (2018) describes participative decision making as a process by which workers develop “new products or services and making current processes more efficient” (p. 3). Promoting authentic dialogue between all stakeholders in the process of participative decision making allows for mutuality or the sharing of goals and interests between organizations and their stakeholders to flow. This collaboration portrays equality and respect among all stakeholders involved. What we see, then, is that dialogic communication functions to (1) enact a culture grounded in respect, (2) align the formal and informal systems that sustain an ethical culture, and (3) support the environmental factors found in innovative organizations. The relationship can be set in this flow diagram:

Authentic dialogue promotes the trust that is needed for organization members to feel empowered to take risks and to be open to communication, cooperation, and tolerance of error. Authentic dialogue is grounded upon a commitment to respect persons and thereby invites active participation in conversations as well as empathetic listening, which is vital in creating an ethical culture of innovation. Authentic dialogue also promotes alignment of both formal and informal systems that drive culture. Thus, despite concerns that “some practitioners will object to implementing the practice (of authentic dialogue) due to costs, time constraints, politics, or claims that it is simply impractical” (Wright, 213–14), ethical leaders who instill the practice of dialogic communication within their organizations enable a strong culture that simultaneously promotes the environmental factors that correlate with innovation. Leaders who respect persons and commit to dialogic communication are poised to expand the horizons of their organizations.

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Sarros, J. C., Cooper, B. K., & Santora, J. C. (2008). Building a climate for innovation through transformational leadership and organizational culture. Journal of Leadership & Organizational Studies, 15(2), 145–158. Schein, E. H. (1993). On Dialogue, Culture, and Organizational Learning. Organizational Dynamics, 22(2), 40–51. Schein, E. H. (1996). Culture: The missing concept in organization studies. Administrative Science Quarterly, 229–240. Stein, E. (1989/1917). On the Problem of Empathy. Transl. by Waltraut Stein. ICS Publications. Tajfel, H. (1982). Social psychology of intergroup relations. Annual Review of Psychology, 33(1), 1–39. Trevino, L. K. (1986). Ethical decision making in organizations: A person-situation interactionist model. Academy of Management Review, 11(3), 601–617. Trevino, L. K. (1990). A cultural perspective on changing and developing organizational ethics. Research in Organizational Change and Development, 4(2), 195–230. Trevino, L. K., & Nelson, K. A. (2021). Managing business ethics: Straight talk about how to do it right. Wiley. Valencia, J. C. N., Valle, R. S., & Jiménez, D. J. (2010). Organizational culture as determinant of product innovation. European Journal of Innovation Management. van Assen, M. F. (2021). Training, employee involvement and continuous improvement—The moderating effect of a common improvement method. Production Planning and Control, 32(2), 132–144. Wiener, Y. (1988). Forms of value systems: Focus on organizational effectiveness and cultural change and maintenance. Academy of Management Review, 13(4), 534–545. Wright, J. (2017). Authentic dialogue: The communication of collaborative leadership. Advances in Social Sciences Research Journal, 4(2).

Dr. Michelle R. Darnell is Director of the Tarriff Center for Business Ethics and Social Responsibility, Honor and Integrity Director, and an Associate Clinical Professor in Management, at Penn State’s Smeal College of Business. Dr. Darnell’s primary focus is on creating and sustaining practical initiatives that actively engage and bring together stakeholders with the intent of supporting responsible business activity. She holds Bachelor degrees in Philosophy and Biology from the University of San Diego, and earned an M.A. and Ph.D. in Philosophy from Purdue University. Dr. Darnell additionally completed an AACSB Post-Doctoral Program at the University of Florida in Management and Marketing. Dr. N. Benton Parish, Ph.D. is an assistant instructional professor in the Department of Communication and Journalism at Texas A&M University, with primarily teaching responsibilities in the areas of strategic communication, social media, media campaigns, and public speaking. She received her Ph.D. in higher education administration with a minor in public relations, as well as an M.A. in public relations and sports communication, from the University of Florida, and her B.S. degree in speech communication from Syracuse University. Dr. Parish currently is also ABD at Duquesne University majoring in rhetoric and philosophy of communication with an emphasis in corporate communication and integrated marketing communication.

Chapter 10

Ground Rules for Effective Leadership Communication John A. Daly

10.1 Introduction Communication is a vital responsibility of leaders. The ability to strategize, coordinate, motivate, influence, set direction, handle people—internal and external to an organization—depends on effective communication. In a recent study of over 5000 job postings for CEO positions researchers found an increasing emphasis on strong social skills—communication skills—and a significant reduced focus on skills related to financial and technical capabilities (Fuller, 2022). This is perhaps because poor leadership communication leads to job dissatisfaction, stress, conflict, misunderstandings, poor job performance, and less profitability to name but a few consequences (Economist Intelligence Unit, 2018). When people feel they’re not getting the amounts or sorts of communication they desire, they perceive their leaders unemphatic and ineffective (Flynn & Lide, in press). Yet despite the vital importance of communication only 13% of employees strongly agree that their organization’s leadership communicates effectively (Mullin & Buono 2020). And, only 7% of U.S. workers strongly agree that communication where they work is accurate, timely, and open (Robinson, 2021). In this brief chapter we discuss sixteen practical, research-based, principles of effective communication for leaders in the workplace. Before describing specifics let’s address two major mistakes many leaders make when it comes to communication. First, they assume effective communication has taken place when the speech is delivered, the email sent, the meeting ends, the report submitted. Wrong! Just because something has been said or sent doesn’t mean anyone understood, accepted, or was influenced by that message. As George Bernard Shaw said, “The single biggest problem in communication is the illusion that it has taken place.” Leaders must J. A. Daly (B) The University of Texas at Austin, Austin, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_10

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check and recheck for understanding, agreement, and follow through on what they communicate. An important caution: Leaders tend to assume recipients of their messages have the same depth and breadth of knowledge about a subject they do. There is a “curse of knowledge”—“a bias in which the individual sending a message wrongly assumes that the audience possesses the same level of understanding, expertise, and background as the sender” (Flynn & Lide, in press). Leaders are exposed to extraordinary amounts of information that deepen their understanding of issues. They often assume, incorrectly, that people they communicate with—subordinates, customers, even fellow leaders—share the same knowledge. Second, rather than assuming responsibility for effectively communicating leaders often blame others for not attending to their messages. Reflecting this are comments like, “I said exactly that in the meeting!”; “It’s right there in the email! Why won’t people just read what we sent?”; or, “We’ve told people this three times already!” Stop! Leaders are 100% responsible for accurately and effectively getting their messages across to others regardless of people’s inattention. They have to ensure even the worst listeners or laziest readers grasp their messages. They do this by approaching communication as salespeople would. They don’t “tell”, instead they “sell”. They move from “announcing” to “marketing” their ideas and information.

10.2 Clarity Matters One challenge you face is ensuring people grasp and remember your messages. What can you do to ensure people both clearly understand and easily recall what you say or write? Effective communication is brief: People’s attention span is short. The typical length of speeches, articles, and emails is less today than in the past. People want brief, focused messages. Practically, you can craft messages in various ways to achieve brevity. Focus your message: Billboards and Web banner ads are extraordinary communication media. Most billboard include one image and perhaps 5–7 words. The wonder of a good billboard is that people almost always immediately and effortlessly grasp what the advertised business wants. Effective communicators offer, metaphorically, billboards for their messages. An exercise: Imagine you’re introducing a new policy. What’s the crucial message? Draw an image (people are visual) and then write a seven-word “blurb” summarizing your message. Ask some people to look at your “billboard.” If all grasp your message, you’re ready to go. Consider another exercise: Imagine you’re pitching a proposal next week. You’re allotted ten minutes to make your presentation. So prep a ten-minute version of your pitch. Then prepare a five-minute one. And, then a two-minute version. The twominute one may well be better—focusing on your key message. (And, by the way, people seldom complain about briefer messages).

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Chunk your message: There is compelling evidence for the value of chunking messages—collapsing a longer message into a few key points. Paragraphs chunk sentences; chapters chunk paragraphs. One interesting finding: The magic number of chunks is 3. The Romans, centuries ago, suggested, “omne trium perfectum” (“everything that comes in threes is perfect”). Folk wisdom has long celebrated 3’s (e.g., “bad things happen in 3 s”, most religions have three major God-like figures, essays have introductions, bodies, and conclusions) and empirical data on, for example, applause patterns in speeches buttresses the value of three chunks (Daly, 2013). Effective communication is repetitive and redundant: Good communicators are often both repetitive and redundant. When you think you’ve communicated your message, start communicating it again. A distinction: Repetition is saying something over and over again in the same way. Redundancy is saying something over and over again in different ways. Both enhance communication. Repetition is helpful. People often don’t “get” a message until they have heard it a number of times (Of course, there is a inverted-U relationship between repetition and message acceptance (Lu et al., 2015)). John Lilly, a venture capital leader at Greylock Partners said, “I didn’t understand the role of simplicity and messaging early on. One of the things that happened at one of my start-ups was that I would get bored saying the same thing every day. So I decided to change it up a little bit. But then everybody had a different idea of what I thought because I was mixing it up. So my big lesson was the importance of a simple message, and saying it the same way over and over.” (New York Times, November 23, 2016). An added plus, when people hear a repetitive message they tend to believe it more (i.e., truthiness) and feel more confident about what they’ve heard or read (Yousif et al., 2019). Of course, there are limits to the effectiveness of repetitive messaging. For example, repeating an argument when trying to persuade people works well when the argument is strong. But if it’s weak, repetition hurts persuasiveness (Cacioppo & Petty, 1989). A second example: When speakers perceive listeners don’t grasp their message they often default to repeating the same message using a louder voice (Berger & Battista, 1993). That’s silly. Why would someone better understand something by simply hearing it again in a louder voice? Wise communicators are also often redundant in their messaging using, for instance, multiple examples and different images to communicate their ideas. They present their key idea one way, offer an example, perhaps an analogy, and then perhaps another example of that idea. A sales leader wants her staff to understand retail customers complaints. Offering one summary statistic isn’t as effective as that statistic accompanied by a video of a complaining customer and survey results comparing satisfaction numbers between her company and major competitors. Effective communication is frequent: When in doubt, communicate more. Employees are far more concerned about under-communication from their leaders than overcommunication (Flynn & Lide, in press). Caution: This does not mean that employees want constant synchronous messages—that would distract and annoy more than help. But more asynchronous messages with opportunities for interactive sessions when desired is optimal. Equally important is the sense that leadership wants to communicate frequently. And, that communication will be proactive.

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Effective communication uses easily understood language.: Fancy words may sound good in literary novels. But wise communicators understand that simpler words and phrases communicate ideas more effectively. Try this : rather than saying, “We reached a conclusion that…” you might say, “We concluded.” Instead of saying, “We need to utilize,” why not, “We need to use.” How about, “Later” rather than, “At a later date.” It’s easy to sound complex; it takes skill to say something simply. Trust DaVinci: “Simplicity is the ultimate sophistication.” Effective communication uses multiple channels: Never in history have leaders had so many different ways to communicate. New technologies emerge constantly. And used well, the proliferation of media enhances communication (Leonardi et al., 2012). Indeed it has become a job requirement for leaders to stay current on the variety of media available to them. As a general rule the more media you use to communicate an important message the better the fidelity of your message. A senior executive described the media she used to address a single customer issue that arose one day: Discuss the issue in a face-to-face meeting, tweet out a brief headline, amplify her thoughts in her podcast, and celebrate the meeting in an Instagram video. Given the plethora of media, savvy leaders carefully choose the appropriate media for their listeners and messages. It’s silly to call a meeting to announce the cafeteria menu and equally weird to tack a poster up announcing lay-offs. There is a significant body of research that helps one determine the right media for different sorts of messages. For example, some media are “richer” than others. A face-to-face conversation is a rich media good for urgent messages that need to be tailored, private, personal, require real-time adjustments, and offer immediate feedback. On the other hand, emails are leaner, seldom offer immediate feedback (but provide a explicit record of the interaction). Consider the following variables when deciding on the best media for a message: ● The complexity of the information (e.g., written may be better for complex data) ● The importance of adaptability (e.g., face-to-face conversations are highly adaptive) ● The importance of a permanent record ● The “symbolic” impact of the media (e.g., a CEO unexpectedly stepping into a meeting) ● The familiarity of the media to participants ● Issues of time (constraints, zones) ● The necessity for an immediate or spontaneous response ● The media culture of the organization (e.g., some firms prefer text, others Slack or IM) ● The work context (e.g., face-to-face, hybrid, dispersed) ● The amount of information that needs to be communicated ● The degree to which the information is “tacit” ● The relationship you have with the other person. Effective communication is interactive: Too often executives approach communication as unidirectional: “I’ll tell them what they need to know.” Yet effective

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communication is interactive. Leaders must listen as much, if not more, than speak. In a study (being completed currently) we find average leaders seldom spend more than 10% of their presentation time answering questions. Few firms offer easily accessible forums where people can question their leadership. In fact, many leaders presume that questions are challenges and become defensive when questions are posed.

10.3 Make It Relevant Why should I listen to what you’re saying? Read that email? People are too busy to attend to messages they don’t feel are relevant. Good communicators know the wisdom of getting people’s attention when presenting their messages. Effective communication is timely.: People focus on what matters “right now.” Getting messages about things that may happen in six months or things that occurred six month prior merit less attention than messages focused about something happening today or tomorrow. People involved in an issue deeply appreciate timely information about that issue (Nartey et al., 2022). In crisis communication research, the speed of a response (assuming accuracy) is a vital predictor of successfully managing the crisis (Van Wart & Kapucu, 2011). Crises are basically a battle of stories and whoever gets their story out first tends to shape perceptions. And, delays often spawn more crises. When it comes to important issues, you want people in your organization to know before people outside the firm find out. One successful leader remarked that she never wanted any employee to be blindsided when arriving home hearing from their family about something that happened at work. Instead, when reaching home, employees should be well enough informed to carry on a good discussion of whatever is happening in their organization. Effective communication answers the WIIFT question: People pay attention to messages that are personally relevant. In the academic literature this tendency is called motivational matching (Joyal-Desmarais, et al., 2022). In popular sales literature it’s reflected in the maxim: “What’s in it for them” (WIIFT). If I receive a message that seems irrelevant, why pay attention? On the other hand, if a message is about something that directly affects me in meaningful ways, I’ll carefully attend the message. The job of any successful communicator is to ensure people want to listen to what they have to say. A few observations about WIIFTs. First, your WIIFT may not be their WIIFT. What might excite a senior leader may not excite a line employee. Savvy communicators focus on what matters to their listeners or readers or, alternatively, find ways to make their message matter to those people. Second, different people may have very different WIIFTs. If you’re speaking to twelve people in a meeting it’s possible there are twelve different WIIFTs shaping

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what people attend to. While there are an infinite number of possible WIIFTs, some common workplace ones are: ● Reputation: Some people deeply care about their organization. Will what you are discussing affect the firm’s standing? Make it more successful? ● Financial: Is this message about making me richer or poorer? Will my budget increase? ● Status: Are you communicating about things that will make me look better or worse? Will I achieve more power, get more headcount? Will it affect my promotability? ● Relationships: How will what you’re talking about affect my personal and/or professional relationships? Will what you are discussing affect my colleagues, clients? ● Effectiveness: Are you discussing something that will help me be more effective or efficient in my job? Is this information useful to me? Third, since different people have different WIIFTs it’s often smart to communicate individually with people. While one-on-one meetings take more time, they’re often more effective for connecting with people than meetings crowded with individuals with varying WIIFTs. People often listen more carefully and agree more easily when chatting one-on-one. Finally, sometimes a WIIFT is not about getting anything. Rather, it may be about not losing anything. An executive announces some impending changes. As you listen you think, thank goodness, at least these changes won’t make me lose my title, headcount, space, or budget. If you’ve known someone for a while, it may be easy to determine their WIIFTs. But what about people you have little acquaintance with? Here are a few ways to potentially sleuth out what matters to people: ● Note complaints. People mostly complain about things that matter to them. ● Observe decorations. What people put on their walls, the books that stack on shelves, may hint at what matters to them. If you have every diploma you’ve earned on your wall, education probably matters. ● Consider questions. People only ask questions about things that matter to them. ● Grasp atypical behavior. Most of us drive modern midsize vehicles. You’re the only person driving a classic 1965 Shelby GT Mustang. Cars must mean a lot to you. ● Spy what perks them up. Sitting in a meeting someone suddenly sits up and begins to listen carefully to what’s being discussed. That issue may matters to them. ● Predict and assess. Before attending a meeting guess what each attendee will say at the session. If you’re right, good for you! If you’re not right, reassess your predictions. Repeat this at every meeting until you get good at predicting what excites these people.

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10.4 Make It Trustworthy Effective communication is credible: People attend to messages and people they perceive credible. Credible messages are marked by accuracy and clarity. What makes people perceive a message is accurate? ● ● ● ●

Information is current (up-to-date) Information is well-sourced (credible sources) Information is understandable Information is accessible (is more information available? where to go to find more information) ● Information is specific (detailed, relevant) One vital aspect of a credible message is the ability of communicators to answer questions effectively. Listeners judge speakers’ credibility more on how they answer questions than the eloquence of their delivery (Daly & Redlick, 2016). Wise leaders spend time crafting compelling answers to likely questions that may arise in a meeting. Effective communication is explanatory: Effective messages offer more than a statement of a decision or event. They are also substantive (and more than 50% of employees claim the messages they receive from their organizations lack substance (VandeHei et al., 2022)) and explanatory. They offer listeners the “why” associated with decisions or events. Research on organizational fairness notes the crucial role of informational justice—people want clear and adequate explanations for why decisions are made (Narayanan et al., 2019). Contrast Brian Chesky’s layoff announcement in 2020 (https://news.airbnb.com/a-message-from-co-founder-and-ceo-brianchesky/) with the almost non-existent announcement by Elon Musk in 2022. Chesky offered logical and data-driven reasons for the decision. Musk offered basically none. Effective communication is empowering: Communication scholars T.J. Larkin and Sandar Larkin argue that the most vital communicators in any organization are not executive leaders but instead are front-line managers (Larkin & Larkin, 1994). Employees seldom directly quiz senior leaders about issues their firm is facing. Instead, they turn to their immediate bosses. So it’s essential that front-line managers can effectively communicate information to their direct reports. The challenge is that many firms disempower front-line leaders. These managers discover information about company policies, strategic initiatives, and so on at the same time subordinates do. Think about it this way: I hear rumors there may some policy changes about hybrid working. So I ask my immediate boss about that issue. She say, “I don’t know anything more than you do.” There are two ways to interpret her answer. First, she really doesn’t know more than I do. There goes my respect for her. Bosses should know things and when they don’t respect declines (Pelz, 1951). Second, she does know and isn’t telling me. There goes trust. Wise firms empower front-line leaders to communicate. They let them know early-on about important issues and prepare them for communicating with subordinate about those issues.

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Effective communication is consistent: People want consistent messages from leaders. They dislike changing messages. They feel uncomfortable hearing different things from different organization leaders about the same issue. Consider rumors: Four major variables shape rumors in organizations: (1) the amount of anxiety recipients have about the rumored issue, (2) the ambiguity of information relevant to the rumor, (3) the importance of the issue to people, and (4) the credibility of the sources of the rumor. For leaders, it’s difficult to control anxiety. People often hear what they fear and, as a hoary maxim suggests, “if people tell you not to worry, start worrying.” Nor can managers tell people that what matters to them is unimportant or that they ought to distrust people they hear a rumor from. The one variable leaders can manage is ambiguity and one of the best ways to manage ambiguity is to ensure messages about an issue are consistent. Inconsistent messages spark rumors. This is why crisis management research recommends a single source for messages (Sellnow et al., 2019). Wise leaders insure that when important issue are announced recipients all hear the same message. Savvy managers coordinate with other managers to ensure they all communicate the same messages and agree on the same answers to likely questions and concerns. Effective communication is honest: Candor is essential for effective communication. People are disarmed when leaders are open about themselves and issues facing the organization. In the last decade one of the biggest changes in what employees expect from leaders is authenticity and transparency. When in doubt, be more open. Too often messages from leaders are saccharine—let me tell you about a successful sale, a new technology, a big promotion. Honest leaders are equally open about problems and challenges.

10.5 Be Strategic A crucial question to always ask is whether you should say or write anything. Will communication improve the silence? If so, then you need to strategically frame your messages. Effective communication offers context: People want both the “little” picture and the “big” picture. The little picture is all about issues related to a person’s job or unit. The big picture is about the larger world the organization operates within. The notion of “need to know” or “above your pay grade” is gone today. Employees, at any level in the organization, feel they have a right to be interested in any information they perceive relevant. How does what is happening in Asia affect our business? What about that pending lawsuit the firm is facing? Is one of the members of our Board retiring? While a leader may say such questions are irrelevant to an employee’s job, if the employee thinks answers to these questions are relevant, they are. One other thing: There is a strong emerging trend for employees to want to know about the values of their firm and where leaders stand on social and political issues. Leaders need to know how to communicate about those issues.

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Effective communication is often symbolic: Effective leaders understand the vital role of symbols in an organization. What hangs on walls, what’s celebrated by stories, who’s promoted, what gets funded, and so on communicates far more than what’s said in speeches or emails. One executive described a former boss who was always talking about the importance of safety but seldom wore hard-hats or steeltipped boots when walking job sites. Another leader related how a past CEO spoke one year about the importance of cost-savings but at the same time purchased a new corporate plane (a great example: In 2008 the CEO’s of the Big Three automobile companies took corporate jets to Washington, DC to request government bail-outs for their companies). Effective communication is textured: Many inexperienced leaders fail to recognize how proverbially loud their voices are when they say or do something. Even an off-the-cuff comment can quickly take on a life of its own. A joke can be easily be misinterpreted. Leaders learn quickly that there’s no such thing as a private conversation. Nor are there casual conversations. A chat in the hallway may three hours later provoke a drama that was never anticipated. People read meaning into everything leaders say. So, leaders need to deeply contemplate what and how they say things. Choosing the right words, the right nonverbals, the right context matters.

10.6 Conclusion A major challenge with communication is that we all do it all of the time. So we don’t treat it as something special. Indeed, we seldom pay much attention to our communication until something goes wrong. Wise leaders treat communication as essential to their jobs. They are highly intentional in the way they communicate. The sixteen principles in this chapter offer a guide to what needs to be considered.

References Berger, C. R., & Battista, P. D. (1993). Communication failure and plan adaptation: If at first you don’t succeed, say it louder and slower. Communications Monographs, 60(3), 220–238. Cacioppo, J. T., & Petty, R. E. (1989). Effects of message repetition on argument processing, recall, and persuasion. Basic and Applied Social Psychology, 10(1), 3–12. Daly, J.A. (2013). Advocacy: Championing Ideas and Influencing Others. New Haven: Yale. Daly, J. A., & Redlick, M. (2016). Handling questions and objections affects judgments of speakers. Communication Education, 65(2), 164–181. Economist Intelligence Unit (2018). Communication Barriers in the Modern Workplace. Flynn, F. J., & Lide, C. R. (in press). Communication miscalibration: The price leaders pay for not sharing enough. Academy of Management Journal Fuller, J. (2022) The C-Suite Skills that Matter the Most. Harvard Business Review, July-August. Joyal-Desmarais, K., Scharmer, A., Madzelan, M., See, J., Rothman, A., & Snyder, M. (2022). Appealing to motivation to change attitudes, intentions, and behavior: a systematic review and

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meta-analysis of 702 experimental tests of the effects of motivational message matching on persuasion. 148(7–8), 465–517. Larkin, T. J., & Larkin, S. (1994). Communicating Change: Winning Employee Support for New Business. McGraw Hill. Leonardi, P. M., Neeley, T. B., & Gerber, E. M. (2012). How managers use multiple media: Discrepant events, power, and timing in redundant communication. Organization Science, 23(1), 98–117. Lu, X., Xie, X., & Liu, L. (2015). Inverted U-shaped model: How frequent repetition affects perceived risk. Judgment and Decision Making, 10(3), 219–224. Mullen, S. & Buono, J. (2020). Crisis Communication: How Great Leaders Stop Rumors Before They Start. Gallup. Narayanan, A., Rajithakumar, S., & Menon, M. (2019). Talent management and employee retention: An integrative research framework. Human Resource Development Review, 18(2), 228–247. Nartey, L. J., Henisz, W. J., & Dorobantu, S. (2022). Reciprocity in Firm–Stakeholder Dialog: Timeliness, Valence, Richness, and Topicality. Journal of Business Ethics, 1–23. Pelz, D. C. (1951). Leadership within a hierarchical organization. Journal of Social Issues, 7(3), 49–55. Robinson, J. (2021). Communicate Better with Employees, Regardless of Where They Work. Gallup. Seeger, M. W., & Sellnow, T. L. (2019). Communication in times of trouble. John Wiley & Sons. Sellnow, D. D., Johansson, B., Sellnow, T. L., & Lane, D. R. (2019). Toward a global understanding of the effects of the IDEA model for designing instructional risk and crisis messages: A food contamination experiment in Sweden. Journal of Contingencies and Crisis Management, 27(2), 102–115. Van Wart, M., & Kapucu, N. (2011). Crisis management competencies: The case of emergency managers in the USA. Public Management Review, 13(4), 489–511. VandeHei, J., Allen, M., & Schwartz, R. (2022). Smart Brevity. Workman. Yousif, S. R., Aboody, R., & Keil, F. C. (2019). The illusion of consensus: A failure to distinguish between true and false consensus. Psychological Science, 30, 1195–1204.

John Daly is the Liddell Professor of Communication and TCB Professor of Management at the University of Texas at Austin. He’s published numerous books, chapters, and articles on topics related to communication. He has worked with more than 300 organizations, worldwide, on topics such as leadership, communication, customer-focus, teamwork and social influence.(www.johnadaly.com)

Chapter 11

Leadership and Innovation Communication—How Companies Survive, Grow and Prosper Nicole Pfeffermann

11.1 Introduction: Innovation in the Digital Age 11.1.1 The Shift from Closed to Open Innovation What is driving transformation through innovation and the shift from closed to open innovation? To answer this question it is important to look at two fac-tors: Technology and connectivity. Fast-improving new technologies and connections among users of the World Wide Web led to more and more innovations and re-defined consumer interactions over time. In the so-called innovation economy companies had to find new ways to deal with the acceleration of changes in market structures and technologies. It required a complete new understanding of how to collaborate, interact and co-create with other companies and digital-physical users in order to survive, grow, and prosper. The development of the Web 2.0—sharing economy—with new social media platforms, such as facebook, twitter, & Co., finally resulted in tremendous growth opportunities for companies in the new economy and led to a paradigm shift in innovation management, which decisively breaks with the traditional perspective of how to co-innovate, develop and promote new products/services or expand market reach and custom-er groups. Open innovation is defined as “… the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation” (Chesbrough, 2006, p.1). According to Davenport et al. (2006) strategic innovation manage-ment thereby involves: (1) Adoption of the co-creation paradigm, (2) im-agination and instinct for innovation, (3) application of new innovation approaches, and (4) a broad spectrum of N. Pfeffermann (B) c/o codecks GmbH, Moritzstr. 14, 42117 Wuppertal, Deutschland e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_11

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innovation, for instance, strategy innovation, collaborative innovation, and business model innovation. Examples 1. Co-defining and co-creating value with consumers (Prahalad & Ramaswamy, 2004, p. 5): ‘Companies can no longer act autonomously, designing products, developing production processes, crafting marketing messages, and controlling sales channels with little or no interference from consumers. Consumers now seek to exercise their influence in every part of the business system. Armed with new tools and dissatisfied with available choices, consumers want to interact with firms and thereby co-create value. The use of interaction as a basis for co-creation is at the crux of our emerging reality. In the conventional value creation process, companies and consumers had distinct roles of production and consumption. Products and services contained value, and market exchanged this value, from the producer to the consumer. Value creation occurred out-side the markets. But as we move towards cocreation this distinction disappears. Increasingly, consumers engage in the processes both of de-fining and creating value. The co-creation experience becomes the very basis of value. The firm cannot create anything of value without the engagement of individuals.’ 2. Engaging with startups to enhance corporate innovation (Weiblen & Chesbrough, 2015, p. 66): ‘Large companies have long sought ways to be-come more entrepreneurial. They have adopted (and often later aban-doned) mechanisms like corporate venture capital, internal incubators, strategic alliances, and joint ventures. However, the growth and increas-ing viability of startup firms, and their attendant disruption, create a new imperative to develop more agile, rapid means for large companies to engage with the startup community. Instead of viewing startups as simply agents of disruption, companies are trying to collaborate with startups to transform them into engines of corporate innovation. There are three consequences that flow from this changed situation. First, corporations must be able to screen, identify, work with, and monitor larger numbers of startups than before—the startup ecosystem is growing bigger and more dispersed globally. This translates into the faster decision making required by companies across many more possible relationships. Second, they must be aware of their value proposition towards a startup—how they can add value to startups that already have access to independent VCs, incubators, and other support institutions. Finally, they should be clear of what they want to get out of their engagement with startups—the corporation’s strategic goals should determine the right model(s) of engagement they employ in working with startups.’ Information and knowledge are two main contributors to innovation and change. The ubiquitous availability of information and rapid sharing of knowledge require the ability to continuously reinvent and adapt to environmental dynamism. The organizational capability to innovate (i.e. innovation capability) has become the impact factor for business growth in the digitalized information age. In the digital age, innovation has shifted thus from new product development and open innovation to business development and business model innovation. A starting point is provided by Vanhaverbeke and Roijakkers (2014), by integrating open innovation initiatives into a firm’s strategy and differentiating initiatives according to its

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strategic role, which implies a shift away from new product development to strategic thinking in open innovation. Second, the convergences of disruptive technologies and changes in consumer demands have led to the necessity of understanding strategy, digital capabilities and ITdriven operating models. Analytical and technological capabilities alter the value creation process and redefine sustained interactions with customers, for instance, via service platforms on mobile devices to learn about new offerings (e.g. UBER, myTaxi).

11.1.2 Which Role Plays Communication in the Open Innovation Economy? 11.2 Innovation Communication: A Brief Review The four perspectives of innovation communication are: 1. Innovation view: Innovation marketing. 2. Corporate view: Innovation communication/journalism. 3. Social-digital view: Marketing diffusion. 4. Transformation view: Innovation communication/change.

11.2.1 Innovation Marketing [Steinhoff and Trommsdorff] Innovation marketing encompasses all marketoriented activities of innovation management—that is, all strategic and operative decisions for marketing new products. Innovation management implies innovation marketing as a field which includes a variety of different activities from analytical to strategic planning activities within an innovation process (e.g. situation analysis to commercialization of a new product or service). Furthermore, also marketing involves innovation marketing as a specific field of interest with several tasks from the discovery until implementation of competitive advantages through newness and new products and services. In sum, innovation marketing links innovation management and marketing, both are relevant for successful innovation marketing. The question arises when does innovation is successful. What is the approach that can help to make an innovation a success? A good approach is the so-called CIA, which focuses on competition and environment. The five key conditions that must be fulfilled are: Innovation. ● That delivers a crucial benefit to the customer; ● That the customer perceives as such; ● That the competition cannot catch up to easily; and.

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● That can hardly be invalidated in its environment. In fact, innovation marketing aims at providing early, intelligent answers to this question and support the competitive driven CIA approach. What is important for innovation marketing? Specific methods of market research can help to evaluate, analyze, and improve the understanding of customers, for instance, to better understand customer needs and the usage of new products and services. In other words, innovation marketing can use the CIA approach to become professional and consider customer-centric innovation as an important tool in innovation management and marketing to successfully launch new products and services and enhance corporate innovation.

11.2.2 Innovation Communication [Zerfass/Nordfos] Innovation communication is an essential facilitator in innovation management: “Communication has to be an integral part of the innovation process, supporting each phase from the generation of ideas to market penetration, building relationships with employees, research and development partners, customers, competitors, politics, nongovernmental organizations, journalists, and other relevant stakeholders” (Zerfass et al., 2004: 8–10). Three levels of innovation communication are as follows: ● on the macro-level it covers innovation reporting, ● on the meso-level corporate communication of an innovation, and ● on the micro-level all sorts of communications. Zerfass developed a tripartite concept related to an innovation process. The three parts of the concept encompass: (1) internal innovation communication within a company; (2) external innovation communication (marketing of innovations); and (3) public relations (see also Nordfos for innovation journalism). From the corporate communication view, communication is crucial for the investors’ evaluation to increase a company’s stakeholder value in the initial phase and the commercialization phase of innovation man-agement. Innovation communication, intra-organizational and extra-organizational, influences innovation throughout the course of innovation, mainly through individuals acting as agents of technology transfer with the coordinator function (linking internal departments, inside-outside units) and gatekeeper function. Effective open innovation communication may also contribute to new ideas/solutions, problem-solving, and experimentations throughout an innovation process.

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Key in Understanding Challenges in Innovation Communication

The value chain model by Porter (1985) shows the fragmentation of communication activities for innovations as related to the fragmentation of company’s communication systems. Communication of innovation is both a secondary supporting activity in corporate communicate on and in technology development/innovation management and a primary activity in marketing. From a functional perspective, innovation communication is also a part of marketing not only of communication management/PR. Moreover, at the micro-level ‘leadership communication’ is a supporting secondary activity in the overall value creation process in corporate strat-egy units. To overcome the fragmentation of communication systems for effective innovation communication, the new value chain of communication (see Introduction chapter) is key, which includes the coordination of alignment, expressiveness, and reputation to build trustful relationships and goodwill (strategic level) and the operational level including a mixed portfolio of communication tools, platforms, and channels to achieve de-fined goals and outcomes.

11.2.3 Integrated Innovation Communication [Bruhn and Ahlers] Integrated innovation communication is a process that aims to identify internal and external contact points in the development and implementation process of an innovation. This includes to develop and implement communication measures that guarantee the alignment of these interaction points to achieve a maximum level of development efficiency and effectiveness with respect to internal measures and market saturation. The prerequisite for successful innovation communication is the identification of the relevant integration needs. That includes the assessment of the requirements for integration from market introduction to market growth. Integrated innovation communication is thereby a multi-level process and plays a crucial role in the different phases of innovation, being defined by different goals and target groups as well as by specific communication instruments and content. Those factors affect the requirements of integration and the identification of relevant integration needs, both relevant for effective integrated innovation communication. Marketing Diffusion – Engaging customers is a key aspect of any commercialization strategy. – Customer education and collaboration build trust and commitment. – Small firms rely intensively on customer engagement and co-creation.

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11.2.4 Word of Mouth Communication (WOM) [Mazzarol] The social nature of innovation diffusion highlights an important role for word of mouth (WOM) communication as a mechanism for the transfer of ideas. Hence, WOM as a marketing communication field is a key success factor for firms seeking to launch their new products and services onto the market. What defines WOM? It is the richness, strength and valency of the message including the credibility of the sources and also the brand equity of the firm. Opinion leaders can also play an important role in fostering the diffusion process. Another important factor for WOM communication is social capital, which helps new ideas to spread within and across network boundaries (via interpersonal and intergroup relationships). The commercialization process can be positively influenced by WOM communication. Besides the social network, the two other layers are the production network and the resource network which can also support WOM. Finally, companies seeking to undertake commercialization will need to possess strong networks. Ultimately, companies need to work closely with lead customers and key suppliers to better develop their new product or ser-vice and bring it to market. Relationships here must be based on trust and a willingness to share ideas and assist with the co-creation process.

11.2.5 Change/Innovation Communication (Internal) Digital transformation is not just a small step. It is a revolution in terms of how we as human beings understand the world we live in—our navigation system or so-called world map—which ultimately affects how we work, collaborate, act and interact with individuals, for instance, living in virtual networks, joining co-working spaces around the world, and sharing our reality with our Instagram fan community. In fact, we need to better understand the difference between change communication (project management) and innovation communication (strategic management), shown in Fig. 11.2, to better collaborate and communicate for innovation. Change Communication—Project Management View Is all about managing tasks and people in different projects. Based on a communication plan, project (change) managers deal with the disfit-fit thinking and motivational programs with incentives to deliver project results, disseminate and adopt to the New and, finally, move back into the comfort zone (learning model). Innovation Communication—Strategic Management View Focuses on co-creation with individuals and building an innovation culture which allows others to grow ideas, adopt a growth mindset and carry on idea dialogs. Based on new communication models, innovation communicators have the capability to inspire others and uses specific instruments, such as scenarios and framing, to (co-) create value and stay in the growth zone (learning model).

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Fig. 11.1 Innovation communication: review, by the author

Fig. 11.2 Change versus Innovation Communication, by the author

11.3 Innovation Communication as a Strategic Capability 11.3.1 Innovation Communication Capability As a new communication field Innovation Communication can facilitate the flow of ideas, make innovative capabilities visible and inspire through exchange of thoughts and ideas with different people world-wide. Hence, managing innovation communication can represent a strategic capability to create (business) value through efficient communication management and smart innovation dialogue with stakeholder groups (strategic innovation management view).

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The Systematic Management of the Strategic Capability of Innovation Communication Can Create the Following Communication Values ● Dissemination and Diffusion Value: Innovation communication helps to foster innovation adoption processes and to disseminate successfully new ideas within and across networks including spreading newness (e.g. context-issues of innovations) ● Commercialization Value: Innovation communication can facilitate the idea and business creation process from idea to market launch; successfully promote new products and services and build healthy relationships with stakeholder groups (relating networks = systems) ● Reputation & Growth Value: Innovation communication as a new communication field aims at building trust and acceptance and strengthening (corporate) innovation and growth opportunities, which in turn lead to the enhancement of (corporate) reputation ● Knowledge & Learning Value: Innovation communication activates and modifies successfully new knowledge schemata (schema theory) and supports (corporate) learning and knowledge acquisition from inside and outside of a firm (strategic management view) ● Leadership & Vision Value: Innovation communication supports leaders at a micro-level of a company to successfully communicate new visions and talk about ideas, speaking freely about new strategic initiatives and new ways how to translate an idea into reality. Innovation communication is thereby defined as a dynamic capability with eight strategic ability dimensions that encompasses managing information transmission between organizations and individuals related to innovation: ● ideas, business models, concepts, prototypes, practices, etc., or a combination, referred to as a cluster, that are perceived as new by a recipient; ● context-issue(s) of ideas, business models, concepts, prototypes, etc. or cluster; and. (3) the innovation capability. considering openness, interrelation, and time/timing used to create value by activating and modifying knowledge schemes, improving management of strategic assets (resource set), and enhancing (corporate) reputation. The CIS cycle stands for Communication, Innovation, and Strategy and the five management principles of innovation communication, that can be deduced from the definition, are as follows: • Strategic Communication Management (SCM). • Stakeholder Relationship Management (SRM). • Intelligent Information Management (IIM). • Capabilities Management (CM). Design Management (DM).

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Fig. 11.3 Innovation Communication Capability, by the author

(Note: The B in Fig. 11.3 Stands for Basics and Represents the Management Function of a Company, Such as Tax Management, CEO Functions and Infrastructure, Etc.)

11.3.2 Five Management Principles in Detail ● Strategic Communication Management (SCM) Value: Growth—Planning, monitoring and measuring communication activities in transition phases and growth zones (learning model: comfort, growth, panic). Openness: Realities and learning. Interrelation: Activities, actions. Time/Timing: Managing activities. ● Stakeholder Relationship Management (SRM) Value: Reputation & Engagement—Emotionally connecting with individuals and ideas in (non)verbal interactions in we-level relationships and me-idea-level relationships. Openness: Relationships/Interactions. Interrelation: (Non)Verbal interaction. Time/Timing: Communication patterns. ● Intelligent Information Management (IIM) Value: Resource SetDiscovering, sharing, and co-creating ideas (= multisensory input–output) in co-innovation and data management. Openness: Co-working & creation.

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Interrelation: Data and information. Time/Timing: Matching data (ideas). ● Capabilities Management (CM) Value: Leadership—Creating new visions and viewpoints as well as establishing an innovation culture in the C-suite and new generation of leaders & co-workers. Openness: Strategic views & culture. Interrelation: (Ordinary) capabilities. Time/Timing: Doing the right things. ● Design Management (DM) Value: Image & Dialog-Communicating the New in open innovation processes and dialog tools in pitch and go-to-market situations. Openness: Open dialogs & channels. Interrelation: Lean startup tools. Time/Timing: Innovation process. As illustrated in Fig. 11.4, innovation communication is understood as an individual, organizational, and managerial capability based on the conceptual definition of innovation communication. The innovation communication capability is a specific communication capability which impacts the organization design (structure, processes, culture, management and employee relations), as illustrated in Fig. 11.5. It deeply affects (a) the growth capability of an organization and (b) establishment of a dialog culture as a catalyst for innovation. Why? Because innovation communication from the organizational view is a mediator between the individual and management view. As presented in Fig. 11.5, the innovation communication

Fig. 11.4 Innovation communication capability views, by the author

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Fig. 11.5 Organization design: communication growth capability, by the author

capability from an organizational view can positively influence business model innovation and open innovation as well as communication model innovation and open communication—it plays a key role in every organization design. But how can we manage innovation communication as a strategic capability?

11.3.3 Management Framework’ICOM Cap’ (Pfeffermann, 2014a, 2014b) The management framework of innovation communication capability (ICOM Cap) helps leaders and managers to effectively manage innovation communication as a strategic capability to create (business) value through efficient communication management. The management framework considers three important phases: (1) (Re)Design, (2) Implementation, (3) Measurement, as shown in Fig. 11.6. ● (Re)Design: The strategic capability of innovation communication with its five management principles will be integrated in the business model design and linked to information management (IT) ● Implementation: The implementation phase for innovation communication management includes three key tasks: ● (i) Innovation communication plan = Communication model design as a visual, lean method to better develop, evaluate and improve communication models (plan) ● (ii) Innovation communication tools = Portfolio with specific tools for innovation communication, such as context-issue mapping, to effectively manage innovation communication as a capability

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Fig. 11.6 Management framework ICOM Cap

● (iii) Innovation communication guidelines = A tool for employees, partners and managers in strategy and innovation to successfully co-create and engage with others, build healthy relating networks ● Measurement: This part describes three important measurement tools to evaluate, plan and improve innovation communication as a strategic capability (e.g. index, scorecard, integrated reporting).

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References Bruhn, M. & Ahlers, M. (0210). An Integrated Approach to Communication in the Open Innovation Process. In M. Hülsmann & N. Pfeffermann (Eds.) Strategies and Communications for Innovations (pp. 133–152). Springer: Heidelberg. Chesbrough, H. W. (2006). The Era of Open Innovation. Managing Innovation and Change, 127, 34–41. Davenport, T. H., Leibold, M., & Voelpel, S. (Eds.). (2006). Strategic Management in the Innovation Economy. Strategy Approaches and Tools for Dynamic Innovation Capabilities. Publics Publishing and Wiley-VCH. Mazzarol, T. (0210). The Role of Word of Mouth in the Diffusion of Innovation. In M. Hülsmann & N. Pfeffermann (Eds.) Strategies and Commuunications for Innovations (pp. 117–131). Springer: Heidelberg. Nordfors, D. (2004). The role of journalism in innovation systems. Innovation Journalism, 1(7), 1–18. Nordfos, D. (2005). The potential of innovation journalism as a driver for economic growth. In C. Mast, & A. Zerfaß (Eds.), Neue Ideen erfolgreich durchsetzen. Das Handbuch der Innovationskommunikation (pp. 210–213). Frankfurt am Main: Frank-furter Allgemeine Buch. Nordfos, D. (2006). PR and the innovation communication system. Innovation Journalism, 3(5), 1–9. Pfeffermann, N. (2014a).The Scent of Innovation. Towards an Integrated Management Framework for Innovation Communication. In. N. Pfeffermann., T. Minshall., & L. Mortara (Eds.) Strategy and Communication for Innovation (pp. 205–224), Springer:Heidelberg. Pfeffermann, N. (2014b).Innovation Communication as an Integrative Management Capability I Digital Innovation Ecosystems. In. N. Pfeffermann., T. Minshall., & L. Mortara (Eds.) Strategy and Communication for Innovation (pp. 241–269), Springer:Heidelberg. Porter, M. E. (1985). Competitive advantage creating and sustaining superior performance. The Free Press. Prahalad, C. K., & Ramaswamy, V. (2004). Co-creation experiences: The next practice in value creation. Journal of Interactive Marketing, 18(3), 5–14. Steinhoff, F..& Trommsdorff, V.. (2014). Innovation Marketing: An Introduction. In. N.Pfeffermann., T. Minshall., & L. Mortara (Eds.) Strategy and Communication for Innovation (pp. 161–172), Springer: Heidelberg. Vanhaverbeke, W. & Roijakkers, N. (2014). Enriching Open Innovation Theory and Practice by Strengthening the Relationship with Strategic Thinking. In. N. Pfeffermann., T. Minshall., & L. Mortara (Eds.) Strategy and Communication for Innovation (pp. 15–25), Springer: Heidelberg. Weiblen, T., & Chesbrouugh, H. W. (2015). Engaging with startups to enhance corporate innovation. California Management Review, 57(2), 66–90. Zerfaß, A., Sandhu, S., & Huck, S. (2004). Innovationskommunikation - Strategisches Handlungsfeld für Corporate Communications. In G. Bentele, M. Piwinger, & G. Schönborn (Eds.), Kommunikationsmanagement. Strategien, Wissen, Lösungen (August 2006; 1.24) München: Luchterhand. Zerfass, A. (2005). Innovation Readiness. A framework for enhancing corporations and regions by innovation communication. Innovation Journalism, 2(8), 1–26.

Dr.-Ing. Nicole Pfeffermann has expertise in business development, specialized in strategy & innovation, innovation communication and new leadership, and professional experience in ITdriven innovation management in logistics, (high-)tech markets, and R&D transfer projects. She is a lecturer in digital business, information and knowledge management, and methodology and

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a (co-)editor of the international contributed volumes ‘New Leadership in Strategy and Communication’ and ‘Strategy and Communication for Innovation’, Springer, including book presentation in collaboration with University of Cambridge. She holds a Diploma in Business Economics and did her Ph.D. in an international Ph.D. program at the University of Bremen (DHL scholarship), was visiting scholar at UCLA Anderson and GREDEG CNRS, France. Nicole has interdisciplinary experience and was a community member at the Startplatz Köln (co-working space, startup accelerator).

Chapter 12

Strategy and Communication in Organizations. Acts Better Than Words Inés Alegre and Miguel Ángel Ariño

12.1 Introduction Some companies are known to be a great place to work. Their policies, organizational culture and economic conditions make them attractive for external candidates as well as friendly for current employees. Other companies are known for their prestige and contributions. Others are known to be aggressive or to have a culture of working long hours, sometimes compensated by high salaries. Every organization has its own identity and conveys a certain image that is perceived by all stakeholders, both internal, as employees or suppliers, and external, such as competitors, shareholders or media. In addition to the main responsibility of defining and executing the organizational strategy (Porter, 1996), another critical task of top managers is to communicate it well. Communicate what should be done, that is, explain the strategy to employees and stakeholders so that it is fulfilled. But also communicate how things are done, which creates a certain organizational culture, and why are things done, which is related to the organizational mission (Ariño & Alcat, 2005). We know a company from what it communicates. And communication happens not only through words and written documents. All processes and decisions of an organization are communicative acts that convey information inside and outside the organization. External communication refers to all the organizational actions that affect the perception and opinions third parties (external actors) have about the focal organization. Accordingly, internal communication refers to all actions an organization performs that affect the perception the organizational members (internal actors) I. Alegre (B) Lagos Business School, Lagos, Nigeria e-mail: [email protected] M. Á. Ariño IESE Business School, University of Navarra, Barcelona, Spain © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_12

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have about the organization. Verbal and written communication is just a small part of all the communication that happens within a company. Communication, therefore, not only includes intentional communicative actions, but also strategic choices and organizational actions that unconsciously convey information and communicate organizational values and priorities to the parties involved. Every organizational action is a communicative act. Given that, is not easy to communicate a message that is not aligned with the real organizational way of doing. Greenwashing, for example, happens when companies try to communicate some concern and action towards fighting climate change when in reality their actions show otherwise (Huang & Chen, 2015; Walker & Wan, 2012). In the long term, a misalignment between communication and actions, between communication and strategy, between communication and mission and values, is not sustainable long term. The best communication strategy occurs when organizational values, mission and strategy are aligned with the message the company wants to convey and how the company it would like to be perceived. Honesty always works best. If a company wants to be perceived as good, fair and competent, the best way to communicate it is by being a good, fair and competent company. Therefore, the question is, how can a company be good?

12.2 Organizational Strategy and Internal Communication Good management implies taking into account all necessary aspects for the well functioning of a company or organization. First, an organization needs to be efficient, that is, capable of achieving the planned objectives. Second, a company needs to learn and evolve, be innovative, stay up to date and avoid getting obsolete. Last, a company needs to enhance teamwork and team engagement, so that the employees are motivated and willing to work towards the achievement of the objectives (PérezLópez, 2018).

12.2.1 Efficiency A company is efficient if it attains its objectives. The objectives are a consequence of the strategy that defines the organizational goals and how to reach them. From the strategy, all the objectives and sub-objectives are derived. Through strategic planning, the strategy is adapted over time face changes in the environment and ensure that the overall goals are attained. A hospital is more efficient if it can provide care for more people. A school is efficient if its students learn at the level required. A company is efficient if it realizes profits. Companies have different ways to formally communicate the strategic plan to their stakeholders. Nevertheless, the real way that the strategic plan is communicated is through the operational day-to-day company decisions. The ongoing managerial

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decisions are the ones that allow organizational members to fully understand what are the organizational goals and how to attain them. Trust and confidence is destroyed when these, sometimes small, day-to-day decisions do not follow what has been communicated. And, on the contrary, if actions and words follow the same path, trust and confidence are strengthened among organizational members.

12.2.2 Learning Organizational learning is the second condition a company needs to fulfill to be considered good. For an organization to learn, the members of the organization need to be offered learning opportunities. If organizational members, employees in the case of a commercial venture, learn, the company will be able to stay up to date and improve its processes, products, or services. If a company is not able to generate the necessary organizational learning, it will eventually become obsolete and displaced by competitors and thus, in the mid-term will also lose efficiency. In addition, organizational learning is not only good for the proper evolution and functioning of the company, but also for improving employee engagement. A company that does not promote learning is silently sending to its employees the message that their professional development is not needed or not important and that the future of the company is relatively limited. This will in turn affect its motivation and productivity, compromising again the mid-term organizational efficiency. There is tough a certain trade-off between organizational learning and organizational efficiency. Learning requires an investment in time, effort, and sometimes other resources as well, that might imply less focus on the current daily obligations. In addition, learning is uncertain. Time and effort do not guarantee learning, even less, success. A simple example might clarify these points. A local small or medium company (SME) is considering whether to internationalize and start selling its products in a neighboring country. After studying the market, evaluating pros and cons, hiring the appropriate people and training some employees the company decides to launch an international division and start exporting its products to the neighboring country. The first year they lose money but, eventually, they start selling bigger quantities and in the long run they are very successful. They have learned how to export and can probably apply all this learning if they would like to internationalize even further by exporting to other new countries. Another scenario could be though that after all the effort, the company loses money on the first year but also in the subsequent years and the company decides to stop its internationalization and call the trial a failure. Although in both scenarios the company has invested time, effort and resources, such as hiring new employees, training current employees, maybe also opening a new office in the target country, etc., all these investments do not guarantee the acquisition of all the necessary learning, neither success as a consequence of the learning. Trying does not guarantee learning that, at the same time, does not guarantee success. But not trying does not even open the possibility of learning. The trade-off between organizational learning and organizational efficiency is clear.

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If a company is fully centered in maximizing short-term profits, will not invest in employees’ learning, training, and development. In addition, if learning is uncertain and does not guarantee success, companies with an extreme focus on profits will minimize learning opportunities so as to diminish the risk of investing in projects that might require valuable resources with an uncertain monetizable return. An excessive focus on efficiency, most often profits in the case of for-profit companies, will hinder organizational learning, employee development and innovation and growth in the mid- or long-term creating the paradoxical situation that extreme focus on today’s profits diminish the chances of future profits. There is another aspect of learning worth taking into consideration. Learning implies that someone is willing to learn. And not everyone is willing to learn or finds learning valuable. Another example will do: in many countries law firms offer internship opportunities for recent graduates with little or no experience. Usually, these internship opportunities are linked to a very low salary. Despite the low monetary incentive, many law students and recent law graduates apply for these internships with mainly one motivation: learning. These interns value the learning they presumably will acquire there so much that the monetary incentive being low is not an impediment for them taking the job. However, other people might rather take a job well paid elsewhere that work as an intern in a law firm. Not everyone has the same preferences, interests, and willingness to learn. In conclusion, for a company to generate organizational learning two conditions need to be fulfilled. One is that the company is willing to sacrifice some organizational efficiency and provide learning opportunities to its employees. And two is that there are employees that value these learning opportunities and are willing to learn from them.

12.2.3 Engagement Organizational engagement, called sometimes organizational unity (Pérez-López, 2018), is the third characteristic, together with efficiency and learning, indispensable for an organization to be good. Organizational engagement is the degree of identification of the members of an organization with the organizational objectives, as Kahn (1990) put it, organizational engagement is employee’s willingness to fully invest themselves physically, cognitively, and emotionally into their work roles. PérezLópez (2018) preferred to call it unity because he wanted to stress that ideally this organizational engagement should not come from extrinsic reasons such as salary or other type of compensation. Neither from intrinsic reasons, such as learning. But unity would refer to the organizational engagement generated by the sincere overlap of personal objectives with organizational objectives. An employee that values mostly salary, would leave the organization as soon as he gets a job offer economically more advantageous. An employee mostly engaged with the organization because of the learning he/she can acquired there would be demotivated when learning slows down. An employee whose values overlap with organizational values is engaged

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with the organization for what it represents and it does. This type of organizational engagement, or unity, can also be achieved when the organization communicates and demonstrates true care for each individual involved in the organization. Employees that do not feel valued, recognized, and dignified, will never develop unity. Organizational efficiency, learning and unity are the three most important constructs upon which depends the quality of an organization. These three constructs are not independent from each other. As mentioned earlier, there is a trade-off between efficiency and learning. There is also some dependency between efficiency and unity, since unity affects productivity and in turn, productivity affects efficiency. However, if a company tries to increase unity just to increase productivity and be more efficient, it will rarely succeed. Employees will soon realize that the company is not really caring about them but about the company’s profits and will feel deceived, manipulated and frustrated. Remember that acts communicate far more than words. In one of his teaching cases, O’Reilly and Pfeffer (1995) explain a story about SouthWest Airlines in its good old years. Apparently at SouthWest Airlines they needed to hire a new pilot. A candidate was interviewed. Initially his CV and qualities seemed perfect for the job, but he was finally not hired. While leaving the interview he had been quite rude to the receptionist that was outside the meeting room. Managers at SouthWest Airlines considered that, if he was rude to a receptionist, he did not have the values they considered important in the organization, values related to treating everyone with respect and dignity. The receptionist would have probably left that they feeling that he/she mattered for the company. And not only him/her, the other receptionists as well as the rest of the employees would have felt that they were important and that the way they were treated was important in that company. That decision made by SouthWest Airline’s managers contributed to increase unity in the organization. The relationship between unity and learning is also clear. A company can offer great organizational learning opportunities but employees, if they do not feel engaged and sharing the organizational values, might profit from the learning just to acquire new competencies and have greater value in the job market instead of using the new capabilities developed to help the company grow. In this case individual learning has taken place, but not organizational learning. For organizational learning to occur, individuals need to learn and need to be willing to put this learning at the service of the organization, something that they would be happy to do if the level of unity is high. In turbulent times, a company with high unity will be able to count on their employees, while if unity is low, employees might be more concerned about leaving the company than about fighting for its survival. Unity does not mean though loyalty at all costs. In a company with high unity an employee with a lot of potential that cannot develop in his/her current job will be moved to a different department or position. If the company cannot offer a suitable position to develop all his/her capabilities, the employee can be offered the possibility to leave the company with recommendation letters and help, in the moment where a new employee has been hired and trained and the leave creates less disruption. This is not insignificant, since a critical employee leaving in a critical moment can create a lot of trouble.

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12.3 Organizational Strategy and External Communication External communication refers to the company communication targeted to external stakeholders such as suppliers, clients or society at large. A company success not only depends on its strategy, resources or its employees knowledge and effort, but also on more intangible things such as company reputation and credibility. A bad external communication can make fail a good strategy. External communication is especially critical in times of crisis (Ariño & Alcat, 2005). Business crisis include cyberattacks, closing a production plant, large employee lay-offs, defective products, malpractices, accidents and so on. Crisis tend to create a lot of alarm and noise. The probability that a company suffers one of these crisis in the near future is small, but the probability that a company suffers one of these crisis in the whole company history is high. Still, very few companies have a crisis plan, even less a crisis plan that includes communication strategies as an important part of it. In the moments of crisis the level of stress is high, and if a plan is not prepared before hand, thinking in the appropriate manner in the middle of the crisis is not an easy task. Several experts in crisis management underline the importance of communication (De La Cierva, 2018) in the early stages of a crisis. Some points are stressed by all of them: the company needs to explain what has happened as soon as possible. Otherwise, others, usually the press, will do so with its own interpretation. If there is not enough information to explain the reasons why the crisis has happened, the consequences that might be expected and the actions to be taken, at least the company needs to explain what it knows and make clear that an investigation will proceed. The information needs to be always clear and truthful. Trying to cover the truth is always counterproductive. The company needs to assume responsibility if necessary and be coherent with company values and way of doing. If those points are followed, the company transmits a certain control of the situation, which tends to be good in those cases. Famous examples of good crisis management such as the Johnson & Johnson Tylenol crisis in 1982 as well as bad crisis management such as the Nike child labor crisis in 1996 are studied in business schools worldwide and the key differences are mostly related at to how the companies reacted to the crisis and communicated its responsibility and actions.

12.4 Conclusion Communication is always critical for the well-functioning of a company. In the first part of the chapter we have stressed the importance of actions as communicative acts. Then we have defined three constructs that are necessary for a company to be doing good and finally we have stressed the importance of internal and external communication.

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Communication always affects company reputation. Reputation is related to the perception other people have about the company and the gap between what the company really is and what the company communicates. If a company has an image worse than reality, the company has a communication problem as it is not transmitting properly and accurately its value. On the contrary, if a company has a better image or perception that what it really is, in the long term will have a problem of credibility that will, sooner or later, arise. A solid and good organization can always make a mistake or a bad decision. A single bad decision can rapidly escalate and create a reputation and credibility crisis. That is why it is extremely important to have a good internal and external communication plan. And all communication needs to be real, credible, transparent and trustworthy. A company that tries to communicate something that is not, will soon be discovered and the crisis will be even bigger and harder to surmount.

References Alcat E .(2005). Y Ahora Qué. Colección Empresa Activa. Ediciones Urano, Barcelona. ISBN: 8495787687. Ariño, Miguel Á. (2005). Toma de decisiones y gobierno de organizaciones. Ediciones Deusto, Barcelona. ISBN: 8423423158. Ariño, Miguel Á y Alcat E .(2005). Revista de Antiguos Alumnos del IESE, Julio-Septiembre 2005. De La Cierva, Y. (2018). Leading Companies through Stroms and Crises: Principles and Best Practices in Conflict Prevention, Crisis Management and Communication. Ed. Pearson Education. ISBN: 978–1–78726–427–4. Huang, R., & Chen, D. (2015). Does environmental information disclosure benefit waste discharge reduction? Evidence from China. Journal of Business Ethics, 129(3), 535–552. Kahn, W. A. (1990). Psychological conditions of personal engagement and disengagement at work. Academy of Management Journal, 33, 692–724. O’Reilly, C. & Pfeffer, J. (1995). Southwest Airlines. Case Study No. HR1A Stanford GSB. Pérez-López, Juan Antonio (2018). Fundamentos de la dirección de empresas. Séptima edición. Ediciones Rialp, Madrid. ISBN: 9788432149184. Porter, M. (1996). What is strategy? Harvard Business Review, 74(6), 61–80. Walker, K., & Wan, F. (2012). The harm of symbolic actions and green-washing: Corporate actions and communications on environmental performance and their fnancial implications. Journal of Business Ethics, 109, 227–242.

Inés Alegre holds a Phd in Management from IESE Business School and a MSc in Industrial Engineering from Universitat Politecnica de Catalunya (UPC). She is currently Adjunct professor at Lagos Business School. Before that, she was Assistant Professor at IESE Business School—Universidad de Navarra. Her research and publications are focused on the area of social entrepreneurship, social businesses and sustainability. She has published several book chapters and research papers in addition of presenting her research at conferences such as the Academy of Management, EGOS or INFORMS.

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Miguel A. Ariño is a professor in the Managerial Decision Sciences Department at IESE Business School. He is PhD in Mathematics from the University of Barcelona. He has numerous articles published both in scientific and outreach journals. Regular speaker in different forums. He is also the author of several books. He has previously been a professor at the University of Barcelona, at the Polytechnic University of Catalonia and at the Carlos III University of Madrid. He is a visiting professor at various business schools in China and America. His current área of interest is the management and governance of organizations.

Chapter 13

Effective Top-Management Communication for Consultants and Other Practitioners Heinrich Rusche

13.1 Introduction Communication is arguably the most important skill to master for anyone working in professional services. The best concepts and strategies are worthless if no one acts on them. Communication closes the gap between theory and practice, as good communication influences people to act and get things done (Boies et al., 2015). Contrary to line managers, consultants have no formal authority over their client counterparts. They are not part of the chain of command of the client organization. This creates a special challenge for everyone working in professional services: Consultants are held accountable by client sponsors and internal leadership for the impact they have on their client’s organization. Though consultants have only indirect ways to create this impact—they need to influence without authority and heavily rely on their communicative abilities (Cohen & Bradford, 2011). Consulting projects are regularly sponsored by senior leaders of a client organization. To justify hefty consulting fees, consultants are usually asked to work on toppriority projects which require involvement of senior clients. This introduces several challenges: Senior leaders of large organizations often get bombarded with meetings, written memos, slide presentations and other documents. They rely on relevant, timely and concise communication to get their job done (Walgrave & Dejaeghere, 2017). In addition, expectations towards external service providers are often extra high, they are expected to adhere to highest professional standards. This also applies to their communication. It is therefore no surprise that communication is among the most common feedback points for junior consultants. Trainings for first year hires in consulting heavily focus on professional top-management communication (Rasiel, 1999). H. Rusche (B) Philipp-Loewenfeld-Straße 11, 80339 München, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_13

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Though what exactly constitutes effective top-management communication? This chapter aims to shed some light on this question, drawing from best practices applied by leading strategy consulting firms such as McKinsey, BCG or Bain. First, the principle of top-down communication is introduced. Top-down communication is arguably the most ubiquitous communication principle in consulting. Mastering top-down communication is key for successful top-management communication. Second, structuring techniques to communicate insights in a well-organized way are discussed. For successful written and oral communication, messages and documents need to be structured in a sound and logical way. Third, important slide writing principles to create slide presentations in the style of leading consulting firms are shared. It is no cliché that many consulting firms heavily rely on slide presentations. These firms mastered a technique called slide writing to communicate insights on slides in an effective way. This chapter focuses on practical strategies and tips to help practitioners improve their communication abilities. Many examples and exercises draw from the professional services industry. Though the learnings will be applicable across industries and functions. This chapter ends with a reflection how new leadership innovations can add value to consulting-focused classic leadership principles.

13.2 Communicate Top-Down For a junior consultant, it would not be uncommon to be taken aside by the project lead after a meeting to receive feedback on his or her communication. “You need to communicate more top-down!” is an expression that many professionals are familiar with. Arguably, it is the most common feedback point received by new hires. CEO Communication Exercise To learn more about top-down communication, it is helpful to familiarize yourself with an exercise commonly conducted in training programs for junior consultants. Imagine you are part of a project team that is evaluating the opportunities for introducing a new product line to the market. To provide a recommendation, you conducted interviews with internal and external experts and analyzed data across departments (Marketing, Customer Success, Finance). Based on first results, you hypothesize that Italy would be a suitable market to launch the product line. You are working in the office together with your team members. Suddenly the CEO walks in and asks about the status of the project: “Hi! You’re working on the market entry project, right? Any results yet?”. Take a moment to think about how you would respond to this question. Feel free to write down your answer before continuing to read. Are you done? Excellent! Surely there are several possible answers to the CEO. Let us investigate two potential options:

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First Potential Answer During recent weeks, our project has been our top priority and caused us to work long hours. In the beginning, I consulted with Tom from Finance to acquire market data. However, upon analyzing the information, it became evident that the data from the Marketing team was more favorable. With the assistance of the new Marketing data and our interviews with experts, we have been able to obtain a comprehensive understanding of the various market opportunities. We are still in the process of refining our analysis. Nonetheless, based on our initial findings, we have determined that Italy may be a suitable market for our project.

How do you evaluate this potential answer? Is this effective top-management communication? The answer focuses on the specific steps taken to arrive to the current hypothesis. It highlights whom the consultant has talked to, the order in which individuals were approached, the data analyzed, and the relevance of the information obtained. The focus is primarily on the process rather than the content of the recommendation. It is hopefully not surprising that this answer is the opposite of top-down communication, indeed it is considered bottom-up communication. Let us next evaluate an alternative answer to the CEO: Second Potential Answer We currently believe that Italy would be the optimal market to launch our new product line. This hypothesis is based on 3 reasons: First, our research on consumer behavior indicates that our offering would be wellreceived by Italian consumers. Second, the competitive landscape in Italy is largely underdeveloped, and we would be the pioneers in providing such an offering. Third, our logistics and distribution infrastructure is well equipped to cater to the demands of the Italian market.

What is your assessment of this answer? Is this answer superior to the first option or not? Notice how most points raised in the initial response are not addressed in this response at all. This answer does not discuss the process of how you conducted interviews or analyzed data. It solely concentrates on your suggestion and the underlying reasons behind it, the content of your work. In addition, this answer puts the key message of your communication first—your recommendation. Most people will consider this answer superior to the first option. Indeed, it is a good example of top-down communication. Principles of Top-Down Communication Your senior leadership will in general not be interested in how many hours you worked last week, whom you talked to, what data you analyzed and what analyses you considered most helpful. Instead, in outcome-oriented organizations they are primarily interested in the results of your work (Van Knippenberg et al., 2006). Topdown communication ensures that this is the focus of your communication. It relies on the following key principles:

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Focus on Key Message Key messages that you want to convey should be mentioned rather early in your communication. Many people like to start with lengthy introductions and explanations of supporting arguments before they introduce the key message. Though this does often not meet the expectations of your audience. Imagine you are preparing a meeting with a C-level person in your organization. The meeting is scheduled for 60 min, and you are planning accordingly. You are preparing a lengthy document with a detailed presentation of all major arguments, followed by the conclusion at the very end. The meeting starts, though at the beginning of the meeting your C-level contact tells you that unfortunately something urgent came up and you need to shorten the meeting to 15 min. Situations like these are very common in consulting and corporate environments. Sharing the key messages early on will be expected from you, and you should prepare your presentations and other documents accordingly. Content Over Process When communicating with top-management, it is important to focus on “Content” considerations instead of “Process” considerations. Content refers to the key messages, arguments and other supporting evidence you can produce to support your communication. Process refers to the individual steps taken to arrive at a solution. Senior leaders are typically more interested in results and implications instead of the details of how exactly a solution was developed (Verbeeten & Speklé, 2015). They want to know what the proposed solution is, why it matters, and how it will impact the organization. There is no need to explain the process you used to derive your conclusions, unless someone asks you to. By keeping the focus on the content, you can help ensure that your communication is relevant and impactful for senior leaders. Pyramid Structure Top-down communication relies on a sound and logical structure of the messaging. Communication without structure might be helpful in creative settings (Binnewies et al., 2007), but surely not in top-management communication. The image of a pyramid has been popularized to visualize the ideal structure of both oral and written top-management communication (Minto, 2009), as illustrated in Fig. 13.1. At the very beginning, the key message of your communication is shared. This message is followed by individual sections outlining the arguments supporting this message. Within each of these sections, evidence is presented to substantiate the presented arguments. This structure can serve as blueprint for effective top-management communication. In written documents, these main arguments should form the basis of the chapter structure. At the beginning of each chapter, key messages and lines of argumentation

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Fig. 13.1 Pyramid structure for document outline, by the author

should be summarized (Minto, 2009). This way, information can be quickly accessed by your audience with the option to read up on the details only if required.

13.3 Structure Your Insights As discussed above, structuring your insights is a key requirement of top-down communication. Though what are strong insights, and how can they be organized in sound pyramid structures? This section will first provide an overview of three different levels of insight and how they should be leveraged for top-management communication. Second, this section introduces the MECE principle, a helpful rule for structuring messages and documents. Levels of Insight Information can be divided into three main categories, based on the level of insight the information is contributing to the communication. Fact: Facts are raw, unordered data points. These can be numbers in a spreadsheet, a long list of unordered bullet points in a slide presentation or an information collection in an email. Facts are important building blocks for your analyses and serve as inputs for your work. Though they can be considered the lowest level of insights, as they require significant interpretation and cognitive energy to extract the data points or identify patterns relevant to the issue at hand. Summary: Summaries are organized, condensed restatements of facts. They aim to separate relevant from less relevant information and focus on the facts that matter most. Summaries do not aim to synthesize conclusions from the facts but rather provide an information basis which can be leveraged by decision makers to derive conclusions and other relevant insights.

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Synthesis: Syntheses focus on the implications of facts. They go beyond summaries, as they not only condense or restate facts, but explain what can be derived from them. For this reason, syntheses are usually more subjective than summaries as they combine raw data with your judgement. Syntheses are considered the most elaborate level of insight as they provide your perspective on what facts actually mean for the organization you work for. It is typical behavior of more junior professionals to provide detailed summaries of a problem, but expect senior leadership to actually solve this problem and conclude what needs to happen based on the shared information. Such a behavior is often frustrating for top-management, as these leaders are confronted with a vast variety of different topics and issues every single day. It is not realistic to expect that they know best how to deal with all challenges an organization is facing. Instead, senior leaders will expect consultants to present well-reasoned solutions to the issue at hand. As a consultant, cutting through complexity and providing sound recommendations on complex topics is exactly the value-add that you can provide. This is why your communication should always focus on synthesis when communicating with senior audiences. While the synthesis will surely rely on facts and summaries, make sure that your communication does not stop at these levels of insight but pushes one level further. MECE Principle It will take quite some time to find a seasoned management consultant who has never heard of the term MECE. The MECE principle is commonly applied in professional services to ensure documents and messages are structured in a compelling way (Rasiel, 1999). It is a rule of thumb that can be used whenever some higher-level structure needs to be decomposed into smaller parts. MECE tells us, whether such a breakdown into smaller parts is a logically sound decomposition. MECE is only a necessary condition for a sound decomposition, not a sufficient condition. It is an acronym standing for “Mutually Exclusive, Collectively Exhaustive”. The MECE principle can be applied whenever a topic is broken down into smaller parts. It does not only apply to the high-level structure of documents, but also to individual pages if e.g., different categories or buckets are used on a slide to decompose aspects of a topic. The practical merits of the MECE principle will be demonstrated based on an example. In this exercise, you are tasked with writing a publication about the marketing mix, a business framework commonly taught in business schools (Constantinides, 2006). The marketing mix outlines the four main levers available to everyone trying to market a product or service—Product, Price, Placement, Promotion (“4Ps”). You are asking a member of your team to provide a suggestion for the table of contents for the publication, to help you structure your thoughts. This is what your team member created for you:

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Marketing Mix—Table of Contents 1. Product strategy 1.1 Product innovation 1.2 Product pricing 1.3 Product placement 2. Pricing strategy 2.1 Theory of price policies 2.2 Penetration pricing 2.3 Market-skimming pricing How would you assess this table of contents based on the merits of the MECE principle? In the following, the table of contents will be evaluated based on the two criteria of the MECE principle. Mutually Exclusive The first MECE criterion is “mutually exclusive”. If you break down a higher level topic into smaller parts, you need to make sure that the smaller parts are mutually exclusive from each other, i.e., that they do not overlap. In this example, the higher level topic is the marketing mix, and the smaller parts are the individual chapters created to break down the topic into its components. The two main branches created in this table of contents are “1. Product strategy” and “2. Pricing strategy”. While a whole chapter on “Pricing strategy” exists, the chapter on “Product strategy” contains a subchapter on “1.2 Product pricing”. The pricing topic is discussed in two different chapters of this outline, without apparent differentiating factors between them. The chapters are therefore not mutually exclusive from each other, as they overlap in the pricing topic. This constitutes a violation of the MECE principle. Collectively Exhaustive The second MECE criterion is “collectively exhaustive”. If you break down a higher level topic into smaller parts, you need to make sure that all the smaller parts together collectively exhaust the higher level topic, i.e., they need to be complete. In this example, the table of contents aims to structure a publication about the marketing mix. As the marketing mix mainly discusses the four levers Product, Price, Placement, Promotion, it is important that the table of contents covers these topics. Though the table of contents only contains sections on Product, Price and Placement—Promotion is missing. The structure is therefore not collectively exhaustive. This constitutes another violation of the MECE principle.

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13.4 Convince with Slides Consultants commonly use slides to communicate their results. These business presentations are the de facto standard for creating documents for top-management audiences in many organizations (Zelazny, 2001). It is therefore worthwhile to familiarize oneself with slide writing techniques of leading consulting firms. Though what exactly constitutes a strong slide presentation? This chapter shares an overview of characteristics of business presentations, how action titles can help to bring your storyline to life and helpful layout principles for professional slide presentations. Characteristics of Business Presentations Who has ever heard a version of this common saying: “A good presentation should consist of as many pictures as possible, and as little text as possible.” Is this saying true or not? Likely, it depends on the type of presentation you are creating. It is possible to distinguish at least three different presentation archetypes, as illustrated in Fig. 13.2. Keynote presentations are intended to be delivered in front of large audiences. These typically happen in company townhall meetings or for product launches in front of the press and selected customers. For this presentation archetype, picture-heavy slides are commonly used. The slides rely on someone delivering the presentation in front of an audience. It would be difficult to understand all key messages without listening to the talk. The slides typically do not speak for themselves but are dependent on the soundtrack of the presenter. Informal business presentations are intended to be used with colleagues or other team members as an informal way to put something in writing before a meeting. They serve the purpose of structuring a discussion and having a few talking points to steer the conversation. Typical of these documents is that they are often only created for single use, to be presented in front of peers. Formal business presentations are intended for sharing information with senior leadership and other stakeholders. They are used in more formal meetings to provide an update on projects or document results. Consultants frequently use formal business presentations to report on progress of key initiatives and provide a final report at the end of the engagement. This chapter focuses on techniques helpful to create formal business presentations. These presentations will typically be more text heavy than the other discussed archetypes. These documents are forwarded to other people in the organization who

Fig. 13.2 Slide presentation archetypes, by the author

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Fig. 13.3 Comparison of slide with and without action title, by the author

might not have attended a meeting. Indeed, sometimes no meeting took place at all to discuss the document. Recipients usually expect to be able to read the slide presentation and extract all key information without any additional verbal explanations. This requires more detailed written information on the pages—every single slide needs to stand on itself. Introduction to Action Titles Action titles are arguably the most important recurring elements used in formal business presentations. The term refers to a special technique of writing slide titles in top-management presentations. Slide titles are instrumental in framing the contents of a slide. If the slide title is missing, it is often difficult to intuitively grasp the meaning of a slide, as illustrated in Fig. 13.3. Action titles aim to summarize the contents of a slide in a complete sentence. Though why should one use action titles? Senior leaders receive new emails, memoranda, slide presentations and other documents every day. Not every document can be read cover to cover. The intuition behind action titles is that the reader can just read the titles of the slides, and by just reading the titles understand all key messages of the document. This way, readers can skip through the majority of the presentation and only focus on selected slides that especially sparked their interest. The use of action titles can therefore also be considered a form of top-down communication, as it enables the reader to quickly understand your key messages. Strong action titles focus on the implication of the slide. In consulting, this is often called the “So What”. Imagine your top-management client looks at information on the slide and asks you: “So What?” What would you tell that person? How does the information matter to your client? What does this person need to do differently tomorrow after reading your document or listening to your presentation? This key insight of your slide is the “So What”—and this is exactly what should be stated in the action title. Slide Layout Principles In professional services, workload and pressure can at times be very high. Consultants might regularly find themselves in the situation that they need to create a document for the next day with very little time available. Though creating compelling slide

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Fig. 13.4 Stylized table structure for slide layouts, by the author

layouts can be difficult. It is easy to spend long hours just on the arrangement of information and the associated visual appeal of the slide. For these situations, consulting firms rely on simple recipes to layout their slides. One of the most fundamental slide writing principles is that—in most cases—slides should be structured in the form of a table, as illustrated in Fig. 13.4. Information should be arranged in rows and columns on the slide. The rows should contain the main elements of the slide that need to be discussed, e.g., different initiative ideas, product lines, geographies. In the columns, different types of information are separated regarding the main elements of the slide, e.g., recommendations, examples, dates, impact estimates. Long lists of unordered bullet points should be avoided. Those “laundry lists” are generally considered unstructured and create the impression of a brainstorming result instead of an elaborated business document. Instead, aggregate bullet points into groups, organized in the rows, and separate information types in the columns, as illustrated in Fig. 13.5. For both quantitative and qualitative slide types, it is possible to arrange information in this table structure. Leveraging table layouts will reduce the cognitive effort for professionals to create new slides, and improve clarity and readability for the audience of your presentation.

13.5 Reflections on New Leadership Communication Top-management communication is traditionally rooted in classic leadership communication principles such as effective organizational communication or the importance of presenting with impact. Though modern business challenges such as

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Fig. 13.5 Example slide following table layout, by the author

innovation management require novel communication approaches as well (Pfeffermann, 2013). It is therefore worthwhile to investigate how the key new leadership communication skills of (i) listening and responsiveness, (ii) authenticity and (iii) communication model innovation can influence top-management communication as well. Listening and responsiveness: Good leaders are known to be empathetic listeners (Kellett et al., 2006). Leadership is about getting things done in a team, which requires communication and collaboration. While top-management communication focuses on sharing messages with senior leaders of an organization, effective communication can never be a one-way street. Besides quantitative analysis, consulting methodology relies on interviews with clients as well as internal and external experts to synthesize findings and iterate results. It is a widely adopted best practice in the industry to disseminate preliminary results with key stakeholders of a project, before these results are presented in a formal meeting. Work in professional services would be virtually impossible without responsive client collaboration and empathetic listening. Authenticity: Consultants need to be people leaders. Due to their profession, in most cases they do not have formal authority over their clients. They need to influence people without authority. Building trust with colleagues and clients is one of the key levers to bridge this challenge, and trust requires authenticity (Maister et al., 2001). Authenticity can be conveyed by opening up and showing personality as well as vulnerabilities in communicative encounters. While formal business documents should strive for a more rational stance, consultants are well advised to engage in activities contributing to authenticity while verbally interacting with clients. Communication model innovation: The way of working has changed this decade. New work paradigms shaped by home office, remote-first teams and flexible work arrangements impact the business world. Consultants need to not only follow

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but spearhead innovations in this area to justify their claim of thought leadership on business and organizational topics. This can include adoption of asynchronous work tools and less reliance on in-person or even live meetings with colleagues and clients. Communication in professional services is changing. Classic leadership communication principles will retain its relevance in top-management communication. Though they will be influenced by cultural changes and new leadership communication paradigms. This is great news, for top-management communication will become even more effective in the process.

References Binnewies, C., Ohly, S., & Sonnentag, S. (2007). Taking personal initiative and communicating about ideas: What is important for the creative process and for idea creativity? European Journal of Work and Organizational Psychology, 16(4), 432–455. Boies, K., Fiset, J., & Gill, H. (2015). Communication and trust are key: Unlocking the relationship between leadership and team performance and creativity. The Leadership Quarterly, 26(6), 1080–1094. Cohen, A., & Bradford, D. (2011). Influence without authority. Wiley. Constantinides, E. (2006). The marketing mix revisited: Towards the 21st century marketing. Journal of Marketing Management, 22(3–4), 407–438. Kellett, J., Humphrey, R., & Sleeth, R. (2006). Empathy and the emergence of task and relations leaders. The Leadership Quarterly, 17(2), 146–162. Van Knippenberg, B., Martin, L., & Tyler, T. (2006). Process-orientation versus outcomeorientation during organizational change: The role of organizational identification. Journal of Organizational Behavior, 27(6), 685–704. Maister, D., Green, C., & Galford, R. (2001). The trusted advisor. Simon and Schuster. Minto, B. (2009). The pyramid principle: Logic in writing and thinking. Pearson Education. Pfeffermann, N. (2013). The scent of innovation: Towards an integrated management framework for innovation communication. In N. Pfeffermann, T. Minshall, & L. Mortara (Eds.), Strategy and communication for innovation (pp. 205–224). Springer Verlag. Rasiel, E. (1999). The McKinsey way. McGraw-Hill. Verbeeten, F., & Speklé, R. (2015). Management control, results-oriented culture and public sector performance: Empirical evidence on new public management. Organization Studies, 36(7), 953–978. Walgrave, S., & Dejaeghere, Y. (2017). Surviving information overload: How elite politicians select information. Governance, 30(2), 229–244. Zelazny, G. (2001). Say it with charts: The executive’s guide to visual communication. McGraw-Hill.

Heinrich Rusche is a former McKinsey project lead. He currently works as Chief Revenue Officer at Building Radar, a construction technology company. Covering communications, problem solving and slide writing skills, Heinrich Rusche delivers corporate training sessions for organizations around the world. He runs online courses on essential consulting skills with 40k+ enrolled students. Heinrich Rusche is the creator of the social media platform Firm Learning, with 200k+ subscribers on YouTube. Heinrich Rusche holds an MBA from INSEAD, an M.Sc. Accounting and Finance from London School of Economics and a B.Sc. Business Admin-istration and B.A. Philosophy from University of Munich.

Chapter 14

Digital Information Overload: How Leaders Can Strategically Use AI to Prevent Innovation Paralysis Jamey A. Darnell and Shalini Gopalkrishnan

14.1 Introduction Information overload has been an academic area of inquiry for many decades. It has probably been an issue for human beings since the beginning of civilization. One can imagine information overload occurring when humans started adding mediums of communication like painting glyphs on cave walls or making impressions on clay tablets, let alone when Gutenberg invented the printing press making books ubiquitous. However, in the so called ‘digital age’ the seemingly infinite amounts of information that the average employee is exposed to is daunting. There are literally billions of current internet users around the world, billions of people using social media everyday, and billions of people sending trillions of emails every year. It is estimated that globally several zettabytes of data are produced annually. How is an organization to respond? Leaders need to have a specific policy for handling all this information or their organizations will be plagued by informational paralysis. Strategies are needed that will encourage innovation and entrepreneurship. Innovation is not only necessary to survive and thrive as an organization, but it is necessary for societal advancement (i.e. solving the world’s problems). However, good policies and strategies are not be by themselves enough to solve the information overload problem. Put quite simply, there is too much digital information. Information overload can occur at both an organizational and individual level (cf. O’Reilly, 1980). However, much of the prior research on this subject (not specifically digital) has been addressed at an organizational level, like with entrepreneurial orientation for example. Less research has focused on what the individual leader, manager, founder, etc. can do about this issue. Some prior research shows that Top Management Teams (TMTs), that can effectively search through information to acquire J. A. Darnell (B) · S. Gopalkrishnan 452 Business Building, University Park, PA 16802, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_14

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knowledge, are better at innovating and making strategic decisions (Li et al., 2013). Literature has also shown that TMTs gather new knowledge and information that lead to innovation (cf. Bantel & Jackson, 1989). Organizations are information processing systems and organizations that face uncertainty need to adjust their processing capabilities to successfully adapt to the changing environments (cf. Galbraith, 1977). As uncertainty increases, more information must be processed (cf. O’Reilly, 1980). This information processing view suggests the need to match an organization’s capabilities to the amount of information encountered (O’Reilly, 1980). Otherwise, information overload ensues. Communication overload is of course a very common phenomenon in organizations (cf. Hall, 1977), so it would seem that capabilities and amounts of information are mismatched. The search for new information and knowledge has been thought of as a human capability and ultimately the capability of individual employees not an organization (cf. Li et al., 2013). But what happens when we reach the limits of a human’s capability in this area? Is the answer just more humans? There are a lot more humans since the 1970s and 80s when some of this research was conducted and yet the problem only seems to be getting worse. What about a solution other than human capabilities? Could the solution be in the digital technology that is responsible for this exponential proliferation of information. We argue that leaders need to harness the very power that potentially causes information overload in order to prevent innovation paralysis. Digital information processing like the field of business analytics, sometimes referred to as artificial intelligence (AI), can be used effectively by leaders to overcome information overload. To put this into context, the fastest supercomputer in the world right now has the processing power of over 400 petaflops. In this chapter we explore a potential digital information overload solution of combining strategic policy and the use of AI. Innovation and Information Overload As of 2021, it is estimated that there are approximately 4.8 billion active internet users worldwide, with over 3.6 billion of them active on social media. The number of email users is also in the billions. In terms of time spent on digital communications, it varies depending on the person and their habits, but on average people spend a significant portion of their day on digital devices. The amount of information produced each day is extremely large and constantly increasing, with estimates of several zettabytes of data being produced annually. As for the power of the fastest supercomputer, it changes frequently, but as of 2021, the fastest supercomputer is the Fujitsu A64FX, with a performance of over 400 petaflops. Innovation can happen at any size of firm, but the key is to have a culture and environment that fosters innovation and encourages experimentation and risk-taking. In addition, companies can leverage their size and resources to invest in R&D, to create a culture of innovation, to hire experts and professionals, to establish partnerships and collaborations, to create opportunities for employee empowerment and to provide the necessary resources for innovation to take place. Overall, the role of top management in innovation is to create a culture, environment, and strategy that encourages and supports innovation, and to ensure

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that the organization is able to capitalize on new ideas. This can be achieved by setting the strategic direction, providing resources, creating a culture of innovation, building partnerships and networks, lead by example, encouraging experimentation, empowering employees, allowing for failure, and communicating the importance of innovation. The number of channels and the amount of information can vary from person to person and from organization to organization, but it is important to be aware of the signs of information overload and take steps to manage it. Some signs of information overload include feeling overwhelmed, having trouble focusing, feeling like there is not enough time in the day, and having trouble sleeping. To combat information overload, it is important to set boundaries, prioritize what information is most important, and use tools and strategies to manage the flow of information, such as setting specific times to check email, muting notifications, and setting specific times to check social media. Additionally, organizations and individuals should have an effective communication strategy in place, which includes clear objectives, clear and concise messages, and appropriate channels of communication. Digital information overload can impede innovation in a few ways: 1. Difficulty finding relevant information: With so much information available online, it can be difficult for individuals and organizations to find the specific information they need to innovate and make decisions. This can lead to wasted time and resources. 2. Decision paralysis: The abundance of information can also lead to decision paralysis, where individuals or organizations have trouble making decisions because they have too many options to choose from. 3. Lack of focus: Digital information overload can also lead to a lack of focus, as people are constantly bombarded with new information and notifications, making it difficult to concentrate on a single task or idea. 4. Burnout: Constant access to information and the pressure to stay informed can lead to burnout, where individuals become overwhelmed and unable to think creatively or come up with new ideas. 5. Over-reliance on technology: With so much information available, individuals and organizations may become overly reliant on technology to provide answers, rather than thinking critically and coming up with solutions on their own. Overall, Digital information overload can lead to a number of negative consequences that can impede innovation, such as difficulty in finding relevant information, decision paralysis, lack of focus, burnout, and over-reliance on technology. It is important for individuals and organizations to find ways to manage their digital information intake in order to foster innovation and creativity.

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Strategic Policies to Combat Digital Information Overload Leaders can take several steps to combat digital information overload and foster innovation: 1. Encourage mindfulness: Leaders can encourage their employees to be more mindful of their digital habits, encouraging them to be more intentional about when and how they consume information. 2. Set boundaries: Leaders can set boundaries around the use of digital devices and communication, such as not expecting employees to be available 24/7, or not allowing the use of personal devices during certain times of the day. 3. Prioritize information: Leaders can help employees prioritize the information they need by providing guidance on what is most important and what can be disregarded. 4. Foster collaboration: Leaders can foster collaboration among employees by encouraging face-to-face communication and teamwork, rather than relying solely on digital communication. 5. Provide training: Leaders can provide training on effective information management techniques, such as how to filter and organize information, how to prioritize tasks, and how to manage distractions. 6. Set up routines: Leaders can set up routines in their organization to help employees manage their digital information intake. For example, they can set specific times of the day for employees to check and respond to emails, or encourage employees to disconnect from technology during certain hours. 7. Lead by example: Leaders themselves should also practice good digital habits, such as disconnecting from technology when not needed, and prioritize face-toface communication over digital communication. By implementing these strategies, leaders can help their employees manage their digital information intake, foster innovation and creativity, and ultimately improve productivity and well-being of their employees. Digital information (or channel) overload can lead to innovation paralysis, as it can be difficult for employees to focus on a single task or idea, and also can lead to decision paralysis, with too many options to choose from. To combat this, leaders can create an internal strategic policy on communication between employees responsible for innovation. An internal strategic policy on communication can help employees to better manage the flow of information and prioritize the most important information. It can also help to establish clear lines of communication, so that employees know who to go to for specific information or to share their ideas. In addition, the policy can also help to establish guidelines for how employees should communicate with one another, such as when to use face-to-face communication, when to use email or instant messaging, and when to use other forms of digital communication. This can help to reduce the amount of unnecessary information and distractions that employees have to deal with on a daily basis. Moreover, the policy can also help to establish guidelines on how to handle sensitive information, such as confidential data or proprietary

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information. This can help to protect the organization’s intellectual property and prevent the leakage of sensitive information to third parties. Overall, having an internal strategic policy on communication can help leaders to combat digital information overload, foster innovation and creativity, and ultimately improve productivity and well-being of their employees. Leaders can create an internal strategic policy on communication that focuses on several key areas to foster innovation: 1. Clear lines of communication: Establish clear lines of communication between employees, so that they know who to go to for specific information or to share their ideas. This can help to reduce confusion and ensure that employees have access to the information they need. 2. Prioritization of information: Establish guidelines for how employees should prioritize the information they receive. This can help employees to focus on the most important information and reduce distractions. 3. Encouragement of face-to-face communication: Encourage face-to-face communication between employees to foster collaboration and creativity. This can help employees to build better relationships with one another and come up with new ideas. 4. Communication guidelines: Establish guidelines for how employees should communicate with one another, such as when to use face-to-face communication, when to use email or instant messaging, and when to use other forms of digital communication. 5. Handling of sensitive information: Establish guidelines on how to handle sensitive information, such as confidential data or proprietary information. This can help to protect the organization’s intellectual property and prevent the leakage of sensitive information to third parties. 6. Flexibility: Encourage employees to be flexible with communication methods and channels, and be willing to adapt to new technologies and tools as they emerge. 7. Encourage feedback: Encourage employees to provide feedback on the communication policy, so that it can be continuously improved and adapted to meet the needs of the organization. 8. Lead by example: Leaders should lead by example and adhere to the policy themselves, and be open to feedback, suggestions and changes on the policy. Overall, an internal strategic policy on communication should be focused on clear lines of communication, prioritization of information, encouragement of face-toface communication, communication guidelines, handling of sensitive information, flexibility and encouraging feedback. By implementing such a policy, leaders can help to foster innovation and creativity among employees, and ultimately improve productivity and well-being of their employees.

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14.2 Using AI to Combat Digital Information Overload Currently ‘general’ business analytics is moving towards ‘decision’ analytics. Due to the massive scale of data being generated, humans simply cannot process all of it and need help. This new field of decision analytics is where AI will make decisions for employees thus freeing them from cognitive overload. To demonstrate this, we have taken a rather unconventional approach to this paper. Everything in the preceding sections, after the introduction section (except the headings), was written by Artificial Intelligence (AI) software. One of the authors used ChatGPT to generate all of the text in those two sections. So none of it was ‘written’ by the authors. Below we will explain how we believe leaders can use AI to overcome digital information overload, but first we would like to explain the reason why we used this rather unusual approach. As we were working on this manuscript we came up with the idea of using AI to help with the information overload problem, in addition to good organizational strategy and policy (i.e. we argue organizations need both). We then decided to conduct a quasi or pseudo experiment to see if current AI capability was a plausible solution. Part one would be to see if we could get AI to write a paper on our original topic idea (i.e. freeing us from cognitive overload). Part two of the experiment would be to see if we could convince the reader of AI’s effectiveness for combating digital information overload by more than just ‘saying’ it was so. We decided that we could get maximum effect by a demonstration that included not alerting the reader to our plan ahead of time. The alternative we thought may get many ‘20/20 hindsight’ responses from readers (e.g. “I knew it was AI the whole time…”). Only you truly know whether or not our experiment was a success (i.e. we used AI undetected). Leaders need to develop their communication strategy for preventing information overload (e.g. a decision analytics strategy) in conjunction with AI, not separate from AI. This idea of developing an organizational strategy in combination with new technology is not new to the 4th industrial revolution and was actually present in many organizations in previous industrial revolutions (e.g. railroads). The nascent literature on AI and strategic management indicates that forming organizational strategies with AI are potentially more important for organizational success than only forming strategies for AI (Kiron & Schrage, 2019). Additionally, with strategies require different leadership skills than for strategies (Kiron & Schrage, 2019). The crucial thing for managers to learn is how to ask good questions, which they really are already doing if they lead a group or team of people. In our experiment above, we needed to ask the machine the ‘right’ questions, to get good answers, such as “what are Strategic Policies to Combat Digital Information Overload”. This is a crucial part of what managers need to learn; how to communicate with the machines. For example, there is a new job evolving called a ‘prompt engineer’ which basically is ensuring that the machine is asked the ‘right’ questions. This is a skill that mangers need to develop. Strategies that are important to organizations depend on the things, like Key Performance Indicators (KPIs), that leaders identify and promote. Achieving KPI outcomes is something that smart machines can learn (and be taught) to do (Kiron &

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Schrage, 2019). It is important to note that AI can optimize, but not necessarily maximize, these KPIs which is significant for our focus on digital information overload. Using the example of KPIs and AI, we can infer some important implications for combating digital information overload. As we established earlier, it is impossible for humans to receive and comprehend all of the information that is now available. Some sort of trade off must be made, but leaders can make smart tradeoffs by using AI to optimize outcomes. AI can assist with which information employees should be exposed to, including internal and external sources. A strategy for dealing with digital communication overload should be a priority for leaders. Porter (1996) describes good strategy as what not to do. Leaders, and really all organizational members, should not be wasting time sorting through vast amounts of information available on the internet when AI can do it faster, cheaper, and better. We previously demonstrated the effectiveness of currently available AI to process external information (i.e. on the internet) on a specific topic. Leaders will also need to establish policies and methods for processing internal information. Many organizations around the globe have vast amounts of internal data, but a recent survey indicates only 11% have implemented an organizational wide strategy incorporating AI (Kiron & Scrhage, 2019). Now is the time for organizations to adapt and start using AI. However, many firms, as high as 95%, are taking the ‘wait and see’ approach (cf. Bughin, 2018). Not only will the wait and see strategy hamper communication, but these firms will miss out on accessing a global profit pool estimated to be worth one trillion U.S. Dollars (Bughin, 2018). Specifically, “communicating” with AI is a new area for growth. In this approach AI gives managers some base information and then they decide based on their experience and judgment whether the output is good, where are the gaps in the data output, or what seems wrong with the output. Now that a majority of a manager’s cognitive work has not been engaged in creating this base information, they now have (more) capacity to build on the knowledge available in the world and are less restricted by time, space, ability, etc. Successful managers will need new skills for the future of AI integration and organizations will need specific policies or steps managing the integration (see Fig. 14.1). The three main skills we believe managers will need are questions, judgement, and experience (QJE). 1. Mangers need to learn how to ask good questions of the AI to get good data output. 2. Managers need to learn how to exercise good judgement to evaluate the output to determine if it is possibly good, bad or ugly. 3. Managers need to gain sufficient experience to be able to assess numbers one and two.

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1. Use Internal data 2. Assess External sources to include 3. Train Managers 4. Create Scenarios 5. Iterate

Fig. 14.1 The QJE framework for AI integration with strategic communication policy

Firms should not try to fight this new technology but embrace it. As Satya Nadella, CEO of Microsoft, says “we cannot defy gravity”. Firms should create policies to help managers utilize this technology to create further innovation. Steps include: 1. Use your internal data/archives/history and apply the “Transformer” technology along with the world of external information. Transformer technology is essentially an algorithm that can interpret text and speech in almost real time. 2. Assess which external sources need to be incorporated for accuracy and integrity. 3. Train managers on using the system. Training should consist of using communication methods that are adapted to effective use of AI; so preciseness, nonsemantic words will elicit good responses. These are almost the opposite of good communication with humans where preciseness is not necessarily valued and repetition is key. 4. Create scenarios to help managers judge and discern output, and get feedback if their queries and answers are good (e.g. like organizational training to thwart phishing scams). This should be accompanied by hands on experience in managers’ area of expertise/innovation. The above should be an iterative process for greater experiential learning and effective use.

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14.3 Conclusion Organizations must incorporate AI, regardless of platform, into their strategies for dealing with digital communication overload before it is too late. The big bang like explosion of digital information has surpassed physical human processing capabilities. At the beginning of 2023, when this manuscript was originally written, it is estimated that there are now 5.16 billion internet users with 4.76 billion using social media (Kemp, 2023). Organizations have no choice if they want to continue to innovate. In this chapter we have demonstrated the effectiveness of one such platform that is getting a lot of attention, ChatGPT, although others are in development. Microsoft has recently announced an increased investment in ChatGPT and integration with Bing, while Google has announced their own AI platform is forthcoming. No doubt other established companies and startups will be working on AI platforms as well. Organizational competitive strategy in the early part of the twenty-first century must include integration with AI and not merely for AI.

References Bantel, K. A., & Jackson, S. E. (1989). Top management and innovations in banking: Does the composition of the top team make a difference? Strategic Management Journal, 10, 107–124. Bughin, J. (2018). Wait-and-see could be a costly AI strategy. MIT Sloan Management Review, 59(4), 1–4. Galbraith, J. (1977). Organizational design. Addison-Wesley. Hall, R. (1977). Organizations: Structure and process. Prentice-Hall. Kemp, S. (2023). Digital 2023: Global overview report. Datareportal. https://datareportal.com/rep orts/digital-2023-global-overview-report Kiron, D., & Schrage, M. (2019). Strategy for and with AI. MIT Sloan Management Review, 60(4), 30–35. Li, Q., Maggitti, P. G., Smith, K. G., Tesluk, P. E., & Katila, R. (2013). Top management attention to innovation: The role of search selection and intensity in new product introductions. Academy of Management Journal, 56(3), 893–916. O’Reilly, C. A. (1980). Individuals and information overload in organizations: Is more necessarily better? Academy of Management Journal, 23(4), 684–696. Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61–78.

Jamey A. Darnell is currently the assistant director of the Center for Penn State Student Entrepreneurship (CPSSE) and a Clinical Assistant Professor of Entrepreneurship in the Smeal College of Business at the Pennsylvania State University. He holds a bachelor’s degree in International Business from Pepperdine University, an MBA in International Management from Thunderbird, and a DBA from the University of Florida. Dr. Darnell has 20+ years of experience working in higher education as both an instructor and administrator. He has taught courses at both the undergraduate and graduate level including (but not limited to) Principles of Management, Strategic Management, International Management, Entrepreneurship, and Managerial Ethics at institutions such as Penn State, the University of South Florida and Pepperdine. He is familiar with a variety of pedagogical techniques and technology tools. He has presented and conducted workshops at international conferences including USASBE and AOM.

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Dr. Shalini Gopalkrishnan is a professor, educator, startup founder and consultant. Her areas of interest and expertise are the metaverse, technology for social enterprises, analytics, women’s leadership, design thinking and entrepreneurship. Dr. Gopalkrishnan is also a judge at the UC Berkeley BIG IDEAS competition. She has founded startups such as Metaverse University (VRU), freelancemoms.com, Introspect and Lexion Global, and worked as a consultant for the Big 4 on projects with USAID, Fortune 500 firms and the Government. She has volunteered with Statistics without Borders, Datakind, Americorps, Junior achievement, Big Brother Big Sister, Page 15, World Affairs Council, Girl Scouts, Hands on Atlanta and Orlando.

Chapter 15

New Leadership and the Communication of Social Support Scott E. Shank Jr. and Vernon D. Miller

15.1 Introduction Numerous challenges accompany the transition to a first-time leadership position. Individuals must adapt to their new environment while also learning to “wear multiple hats” as they coordinate processes to attain production and/or service quality, demonstrate leadership to motivate and inspire, and coach members toward greater learning to enhance individual and team performance (Gaynor, 2004). Similarly, experienced but recently promoted leaders may face new expectations, tasks, and skill requirements where they cannot simply reprise developed patterns and priorities (Nicholson, 1984). Those assuming or transitioning to leadership positions are also likely to be further pressed to develop new communication competencies rather than replicate prior communication patterns that worked well in their past (Jablin & Sias, 2001). A particularly important requirement of incoming leaders is conveying and providing social support. Recent meta-analyses and integrative reviews underscore the catalyzing impact of social support in organizational contexts (Jolly et al., 2021; Kurtessis et al., 2017; Mathieu et al., 2019). Social support refers to an individual’s perceptions of being valued and cared for, which may be conveyed explicitly or implicitly through the actions of a support provider. Employees perceive social support from their leaders, for example, when they have close or proximal access to the leader, the leader is receptive to their concerns, or the leader transfers a desired resource (e.g., additional personnel for a project) to reduce stress. Yet not all attempts to convey support are effective. Some actions by leaders can exacerbate stressful situations and create a “reverse buffering” effect where efforts to be supportive frustrate employees or adversely impact their mental health (Kickul & Posig, 2001). S. E. Shank Jr. (B) · V. D. Miller Department of Communication, Michigan State University, East Lansing, MI 48824, USA e-mail: [email protected] V. D. Miller Department of Management, Michigan State University, East Lansing, MI 48824, USA © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_15

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By many accounts, leadership support remains difficult to enact and the onesize-fits-all “how to” approach to providing support falls rather short (Bavik et al., 2020). There are often incongruencies between recipients’ social support “need” and the leaders’ inclination, ability, and contextual constraints. This chapter addresses conceptions of social support by first-time leaders, what social support does, and what distinguishes effective from non-effective support attempts. Although materials here focus on first-time leaders, they also apply to experienced leaders newly promoted to higher levels or assigned to oversee different units. We build upon earlier theorizing on leaders’ interpersonal behaviors (Likert, 1967; Taylor & Bowers, 1972) and summarize more recent conceptualizations (e.g., Rooney & Gottlieb, 2007) while integrating research on those new to leadership responsibilities. Practical matters are then considered with the aim to help managers and leaders enhance their ability to provide support by learning to assess the support situation, recipient’s need for support, and the appropriate match between need and resource.

15.2 Challenges Associated with New Leadership A variety of challenges greet those transitioning from individual contributor status to leading others (Crane, 2022). First-time leaders must manage uncertainty and unrealistic expectations about their new role. At the same time, they face an imperative to develop and enact interpersonal communication skills necessary to motivate, instruct, and assist subordinates (Pearce, 1982). Leadership responsibilities require transformation in these individuals’ mindsets on how to act among former peers and colleagues. Moreover, leadership inauguration challenges are amplified by “sink or swim” transitions related to a lack of training and mentoring, pressure for unit performance, and little time to learn and adjust (Gentry & Walsh, 2015). Other tests include addressing time pressures, a lack of appreciation of their efforts, need to please many stakeholders, learning to disciple subordinates, discerning the extent of their authority, and learning how to give instructions (Pearce, 1982). These individuals also face forming new identities as manager, leader, or supervisor versus a follower, finding the contextually appropriate approaches to encouraging employees, and engaging in emotionally laden discussions or listening to employees’ personal problems—such as parenting or divorce (Bolander et al., 2019). Fortunate are first-time managers who have supervisors that role model and explain leadership behaviors (Dragoni et al., 2014), though many report receiving little to no training (Gentry & Walsh, 2015). Rather than receiving support in their leadership journey, first-time managers are placed in the role of support providers to those they lead. Serving as a primary source of support requires considerable attention, communication acumen, and ability to match relevant resources to the needs of individuals or workgroups. Though enacting support is only one aspect of leadership, understanding what constitutes social support, how it works, and what makes it effective can prove insightful for first-time managers’ development.

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15.2.1 Conceptualizations of Social Support Though not exhaustive, three common indicators of social support involve access to or the frequency with which one receives (a) information/advice, (b) emotional and esteem messages, and (c) instrumental assistance (Sarason et al., 1990). Informational support broadly includes receiving useful information, advice, or guidance regarding a relevant matter. A second type of support validates the recipient’s emotion, conveys concern, or communicates the belief that one can get through the stress-inducing situation. Instrumental support can be thought of as actions that assist the recipient in meeting a tangible need (i.e., financial help) or accomplishing a goal (i.e., completion of work tasks). Organizational researchers often collapse the categories into socio/emotional and instrumental support (Mathieu et al., 2019) or as job-enabling and personal-emotional support (Rooney & Gottlieb, 2007). Other operationalizations of support include: the extent to which an employee feels concerned for and valued by their organization (Eisenberger et al., 2002); the leader’s friendliness, approachability, and listening skills (Taylor & Bowers, 1972); and leader’s empathy, trust, and confidence (House, 1971). Leader supportiveness has two, potentially concurrent facets: perceived availability and received enactments. Employees’ anticipation of support they will receive refers to a confidence regarding anticipated difficulties, a sureness that their leader has the ability and resources to help and will do so. Received support refers to the enacted behaviors intended to aid the support recipient by a provider. The former tends to be associated with a host of positive outcomes such as satisfaction, well-being, and feelings of personal accomplishment (Halbesleben, 2006; Kurtessis et al., 2017). The latter (i.e., received support) can be perceived as a positive or negative experience (Deelstra et al., 2003; Gray et al., 2020; Mathieu et al., 2019). For example, when under pressure to meet a deadline, leaders’ support might interfere rather than help and result in greater emotional exhaustion (Kickul & Posig, 2001). Similarly, offering an alternative perspective for why one was not selected for promotion may not be received well though the leader meant to provide support to the recipient (Gray et al., 2020). To understand why employees do not receive the support they desire, it is helpful to consider, first, why leader supportiveness is often viewed positively and then what contributes to ineffective support. Thereafter, we provide contextual and interpersonal considerations for first-time leaders’ enacting support to employees.

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15.3 Why Leader Support “Works” or “Fails” 15.3.1 Effective Support Simply stated, employees view leader actions of support (i.e., information resources, esteem messages, instrumental assistance) positively because of the value received. One way that support brings value is by buffering stressful situations (Cohen & Willis, 1985). The reduction of stress can occur by elemental acts such as clarifying for new employees how to perform an important task. A clearer understanding enables newcomers to better manage or even reduce their uncertainty. Alternatively, employee stress may lay beyond their ability to control. Actions that promote psychological safety, for example, during organizational change do not remove employees from the stressful situation, but rather aid them in coping with the changes. Leaders’ social support messages can reframe recipients’ interpretations of the stress-inducing event by offering plausible, alternative perspectives of an event’s meaning or consequences. Leader support in the form of access to training also serves as a catalyst of opportunity and development (Xerri et al., 2020). For example, leaders enroll or connect employees to training opportunities for new or reinforced skill development that will provide greater autonomy or career development. Research suggests that posttraining transfer can be enhanced through socially supportive leadership communication in the form of goal setting, informal reinforcement, opportunity to practice the newly acquired skills, and alignment of training and practice (Govaerts & Dochy, 2014). In addition, these supervisory communication behaviors further reinforce employees’ generalized perception of the supportiveness of the organization (Eisenberger et al., 2002). Leader supportive behaviors also convey social integration and acceptance (Sarason et al., 1990; Sarason & Sarason, 2009). These actions signal, to recipients and to others, that recipients are accepted members and thus should expect forthcoming assistance from others in the workplace community. Consistent messages of welcome and respect further embed newcomers and established members alike into the organization’s social fabric. Even impersonal actions such as providing an access card to use organizational recreation resources can evoke perceptions of community with other members. In sum, perceptions of support vis-a-vis the leader’s information sharing, facilitating access to resources, and inclusion show consistent and positive effects on various attitudinal outcomes.

15.3.2 Ineffective Support Explanations for ineffective support attempts include cases when there is a mismatch between what is needed and provided, whether support is imposed when unwanted, when the support threatens the recipients’ image or self-esteem, inappropriate timing in high-pressure situations, and where the support provider is also the source of the

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stress (Cohen & Willis, 1985; Cutrona & Russell, 1990; Gray et al., 2020). It is critical to identify and provide the type of support that is needed. For instance, leaders may feel that they should only occasionally attend to the needs of a “high maintenance” employee. Yet, the high frequency at which support is sought may reflect an individual’s consistent need for high levels of support (Mathieu et al., 2019). Not only do some employees require a different frequency and intensity of support, but employees may differ in the types of support needed, which is a testament to the inherent difficulty in providing relevant and timely support in an appropriate manner. Mismatches can evoke a reverse buffering effect, where the attempt to provide support backfires and make the situation worse (Tucker et al., 2018). Another form of mismatch occurs when advice and guidance is given when emotional reassurance or consolation is needed during a difficult situation. Though likely well-intended, the mismatch between what was offered and needed backfires, potentially making the situation more stressful. Similarly, financial stress is more likely to be relieved by overtime opportunity rather than greater job flexibility, and uncertainty regarding task mastery is more likely to be relieved by shared technical and procedural information and opportunity to practice rather than kind words. At other times, taking over and completing another’s work task leads to recipients’ frustration when they did not wish for assistance (Deelstra et al., 2003). The idea of matching support may feel like common sense in retrospect yet is often overlooked when support is about to be enacted. Efforts to provide support also go awry when public performances of assistance threaten the recipient’s image (Bolger et al., 2000). Recipients often associate forms of support that are visible to others with an appraisal that the support provider views them as lacking efficacy to resolve a stressful situation. “Support attempts that avoided evoking this appraisal in recipients were more likely to be beneficial than those that did not; support attempts that evoked this appraisal were more likely to be detrimental than those that did not” (Bolger & Amarel, 2007, pp. 471–472). Thus, it is especially important for first-time leaders to learn how to communicate support in a subtle manner that does not draw attention to others of the recipient’s need. Messages or acts of support can also boomerang by leading recipients to become more attentive to the sources of their stress (Tucker et al., 2018). Individuals might be coping with stress through avoidance or distraction. When support attempts disenable the continuance of these coping strategies, recipients’ “support” experiences are likely ill-received. Everyone at some point likely makes missteps in their efforts to be helpful. Being mindful of potential pitfalls would be a first step in enacting support to others. The next section identifies other considerations when leading others and efforts to provide them support.

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15.4 Leader Considerations When Enacting Support 15.4.1 Assessing the Context First-time leaders would do well to assess their own needs for support as they begin their new role, which requires considerable personal development at the very least (Nicholson, 1984) and likely requires development of new skill sets (Crane, 2022). Leaders’ assessments of additional structural factors, such as the level of discretion in managing their unit differently than the previous leader may be particularly important in their own adjustment. Informally, the extent to which first-time leaders recognize differences in how they are expected to communicate and awareness of where their communication skills need improvements (Jablin & Sias, 2001). As first-time leaders acclimate to their setting, it is vital that they identify potential systemic sources of stress upon their employees. Those stresses induced by the organizational structure, or its production processes include the level of dependence upon other units or individuals, reward structures, or cyclical patterns associated with deadlines or client demands (Morgeson & Humphrey, 2006). Awareness that systemic stressors are outside the control of individuals can enable leaders to develop ways that employees can be buffered from undue pressures (Cutrona & Russell, 1990). If the source is outside the recipient’s control, support that assists coping will be more useful than problem solving advice. On the other hand, if it is within the recipient’s ability to change the sources of stress, then coaching or practical problem solving may be more appreciated. Similarly, it is critical that new leaders recognize their own workgroup processes. The support needs accompanying routine work with specified standards of performance differ from those individuals who are given flexibility and autonomy to meet work objectives. Employees in the former setting are likely to experience uncertainty regarding the “right way” to perform tasks and pressure to conform to existing workgroup norms. They may also experience sanctions for intentionally or unintentionally violating standards. Leaders who communicate clear and relevant direction while affirming the individual as a valued member offer greater role clarity, mitigate the task and social uncertainties, and facilitate adjustment. In short, assessing employees’ needs at individual, group, or organizational levels can assist the types of support needed and act appropriately and efficiently to match those needs.

15.4.2 Interpersonal Dynamics Support visibility, and the consequent efficacy appraisals, are of particular relevance given the emphasis placed on competence and performance. Concerned with maintaining a competent image, individuals may be reticent about directly seeking information from their supervisor due to perceived social costs (Miller & Jablin, 1991). Newcomers may experience an introductory period where they feel it is okay to seek

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support yet discontinue the use of information seeking after it is assumed they have been socialized. First-time leaders can address support visibility concerns by considering how the provision of a given supportive message will affect the recipient’s need to maintain a positive self-image. For example, framing an instructive comment with “Many others have found it helpful to…” draws attention to other’s past inefficacy rather than directly calling out the newcomer’s lack of experience. Providing feedback that encourages a learning orientation, in addition to performance, may also encourage members to disclose issues in which they are unsure so growth and development can occur (Sujan et al., 1994). Taking heed to the social costs attached to receiving support, leaders can adjust the way they communicative interpersonal messages of support while cultivating a supportive learning climate. Making effort to afford all employees unconditional positive regard in interactions is likely to reduce defensiveness in information seeking and information sharing (Jablin & Sias, 2001). A major challenge faced by all leaders, in how leader supportive communication is performed and received, is the perception of favoritism or differential treatment. For example, leader-member (LMX) relationship quality implies that some employees have greater access to supportive resources. Higher levels of differentiation between “in” and “out” groups damage perceptions of leader fairness (Martin et al., 2018). Although perceptions of favoritism may be rooted in interpersonal idiosyncrasies rather than fact, it behooves leaders to make efforts to build relationships with all direct reports and be knowledgeable of all employees’ concerns. The myriad considerations that a leader can engage to communicate support more effectively might feel debilitating. Understanding the appropriate amount of support that matches employee needs and preferences may not always be attainable (Cohen & Willis, 1985). Absent of immediate and urgent stressors, leader communication is likely to influence general perceptions of support availability. An important takeaway is the simple fact that the frequency of communication from a leader is impactful in and of itself. According to Flynn and Lide (2022), leaders who communicate an appropriate amount or who over-communicate were viewed as more empathetic and thus more effective. Leaders who under-communicated received poor ratings. Employees may be forgiving to leaders who, though not perfect, consistently enact supportive communication. The belief that one’s supervisor values and cares for them is associated with a generalized sentiment of trust and commitment to the organization, as well as job satisfaction (Ng & Sorensen, 2008).

15.5 Conclusion Leadership supportive communication has potential to buffer negative work stress, reinforce and enable the development and mobilization of network and human capital, and signal social acceptance and inclusion into a recipients work group and organization. Positive attitudinal effects accompany perceptions of support availability from one’s supervisor (Eisenberger et al., 2002). Further, supportive leadership is shown

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to reduce or buffer the negative effects of job demands on burnout and work strain, as well as bolster perceptions of personal accomplishment (Halbesleben, 2006). Leaders who desire these positive effects should become attentive to the matching of supportive resources to recipients’ needs while mitigating the negative social costs associated with receiving help.

References Bavik, Y. L., Shaw, J. D., & Wang, X. H. (2020). Social support: Multidisciplinary review, synthesis, and future agenda. Academy of Management Annals, 14(2), 726–758. https://doi.org/10.5465/ annals.2016.0148 Bolander, P., Holmberg, I., & Fellbom, E. (2019). Learning to become manager: The identity work of first-time managers. Management Learning, 50(3), 282–301. https://doi.org/10.1080/ 1360144X.2018.1549046 Bolger, N., Zuckerman, A., & Kessler, R. C. (2000). Invisible support and adjustment to stress. Journal of Personality and Social Psychology, 79(6), 953–961. https://doi.org/10.1037//00223514.79.6.953 Bolger, N., & Amarel, D. (2007). Effects of social support visibility on adjustment to stress: Experimental evidence. Journal of Personality and Social Psychology, 92(3), 458–472. https://doi. org/10.1037/0022-3514.92.3.458 Cohen, S., & Willis, T. A. (1985). Stress, social support, and the buffering hypothesis. Psychological Bulletin, 98(2), 310–357. https://doi.org/10.1037/0033-2909.98.2.310 Crane, B. (2022). Leadership mindsets: Why new managers fail and what to do about it. Business Horizons, 65(4), 447–455. https://doi.org/10.1016/j.bushor.2021.05.005 Cutrona, C. E., & Russell, D. W. (1990). Type of social support and specific stress: Toward a theory of optimal matching. In B. R. Sarason, I. G. Sarason, & G. R. Pierce (Eds.), Social support: An interactional view (pp. 319–366). Wiley. Deelstra, J. T., Peeters, M. C., Schaufeli, W. B., Stroebe, W., Zijlstra, F. R., & van Doornen, L. P. (2003). Receiving instrumental support at work: When help is not welcome. Journal of Applied Psychology, 88(2), 324–331. https://doi.org/10.1037/0021-9010.88.2.324 Dragoni, L., Park, H., Soltis, J., & Forte-Trammell, S. (2014). Show and tell: How supervisors facilitate leader development among transitioning leaders. Journal of Applied Psychology, 99(1), 66–86. https://doi.org/10.1037/a0034452 Eisenberger, R., Stinglhamber, F., Vandenberghe, C., Sucharski, I. L., & Rhoades, L. (2002). Perceived supervisor support: Contributions to perceived organizational support and employee retention. Journal of Applied Psychology, 87(3), 565–573. https://doi.org/10.1037//0021-9010. 87.3.565 Flynn, F., & Lide, C. (2022). Communication miscalibration: The prices leaders pay for not sharing enough. Academy of Management Journal. https://doi.org/10.5465/amj.2021.0245. Gaynor, G. H. (2004). What every new manager needs to know: Making a successful transition to management. AMACOM. Gentry, W. A. B., & Walsh, R. J. (2015). Mentoring first-time managers: Proven strategies HR leaders can use [White paper]. Center for Creative Leadership. https://www.ccl.org/wp-con tent/uploads/2015/06/Mentoring-First-Time-Managers.pdf. Govaerts, N., & Dochy, F. (2014). Disentangling the role of the supervisor in transfer of training. Educational Research Review, 12, 77–93. https://doi.org/10.1016/j.edurev.2014.05.002 Gray, C. E., Spector, P. E., Lacey, K. N., Young, B. G., Jacobsen, S. T., & Taylor, M. R. (2020). Helping may be harming: Unintended negative consequences of providing social support. Work & Stress, 34(4), 359–385. https://doi.org/10.1080/02678373.2019.1695294

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Halbesleben, J. R. (2006). Sources of social support and burnout: A meta-analytic test of the conservation of resources model. Journal of Applied Psychology, 91(5), 1134–1145. https:// doi.org/10.1037/0021-9010.91.5.1134 House, R. J. (1971). A path goal theory of leader effectiveness. Administrative Science Quarterly, 321–339. https://doi.org/10.2307/2391905. Jablin, F. M., & Sias, P. M. (2001). Communication competence. In F. M. Jablin & L. L. Putnam (Eds.), The new handbook of organizational communication: Advances in theory, research, and methods (pp. 819–864). Sage. Jolly, P. M., Kong, D. T., & Kim, K. Y. (2021). Social support at work: An integrative review. Journal of Organizational Behavior, 42(2), 229–251. https://doi.org/10.1002/job.2485 Kickul, J., & Posig, M. (2001). Supervisory emotional support and burnout: An explanation of reverse buffering effects. Journal of Managerial Issues, 13(3), 328–344. https://www.jstor.org/ stable/40604354. Kurtessis, J. N., Eisenberger, R., Ford, M. T., Buffardi, L. C., Stewart, K. A., & Adis, C. S. (2017). Perceived organizational support: A meta-analytic evaluation of organizational support theory. Journal of Management, 43(6), 1854–1884. https://doi.org/10.1177/0149206315575554 Likert, R. (1967). The human organization: Its management and value. McGraw Hill. Martin, R., Thomas, G., Legood, A., & Dello Russo, S. (2018). Leader–member exchange (LMX) differentiation and work outcomes: Conceptual clarification and critical review. Journal of Organizational Behavior, 39(2), 151–168. https://doi.org/10.1002/job.2202 Mathieu, M., Eschleman, K. J., & Cheng, D. (2019). Meta-analytic and multiwave comparison of emotional support and instrumental support in the workplace. Journal of Occupational Health Psychology, 24(3), 387–409. https://doi.org/10.1037/ocp0000135 Miller, V. D., & Jablin, F. M. (1991). Information seeking during organizational entry: Influence, tactics, and a model of the process. Academy of Management Review, 16(1), 92–120. https:// doi.org/10.5465/AMR.1991.4278997 Morgeson, F. P., & Humphrey, S. E. (2006). The work design questionnaire (WDQ): Developing and validating a comprehensive measure for assessing job design and the nature of work. Journal of Applied Psychology, 91(6), 1321–1339. https://doi.org/10.1037/0021-9010.91.6.1321 Ng, T. W., & Sorensen, K. L. (2008). Toward a further understanding of the relationships between perceptions of support and work attitudes: A meta-analysis. Group & Organization Management, 33(3), 243–268. https://doi.org/10.1177/1059601107313307 Nicholson, N. (1984). A theory of work role transitions. Administrative Science Quarterly, 29(2), 172–191. https://doi.org/10.2307/2393172 Pearce, J. A. (1982). Problems facing first-time managers. Human Resource Management, 21(1), 35–38. https://doi.org/10.1002/hrm.3930210108 Rooney, J. A., & Gottlieb, B. H. (2007). Development and initial validation of a measure of supportive and unsupportive managerial behaviors. Journal of Vocational Behavior, 71(2), 186–203. https://doi.org/10.1016/j.jvb.2007.03.006 Sarason, B. R., Sarason, I. G., & Pierce, G. R. (1990). Social support: An interactional view. Wiley. Sarason, I. G., & Sarason, B. R. (2009). Social support: Mapping the construct. Journal of Social and Personal Relationships, 26(1), 113–120. https://doi.org/10.1177/0265407509105526. Sujan, H., Weitz, B. A., & Kumar, N. (1994). Learning orientation, working smart, and effective selling. Journal of Marketing, 58(3), 39–52. https://doi.org/10.1177/002224299405800303 Taylor, F. C., & Bowers, D. G. (1972). Survey of organizations: A machine scored standardized questionnaire instrument. Institute for Social Research. Tucker, M. K., Jimmieson, N. L., & Bordia, P. (2018). Supervisor support as a double-edged sword: Supervisor emotion management accounts for the buffering and reverse-buffering effects of supervisor support. International Journal of Stress Management, 25(1), 14–34. https://doi.org/ 10.1037/str0000046 Xerri, M. J., Farr-Wharton, B., & Brunetto, Y. (2020). Nurturing psychological capital: An examination of organizational antecedents: The role of employee perceptions of teamwork, training

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opportunities and leader–member exchange. Personnel Review, 50(9), 1854–1872. https://doi. org/10.1108/PR-05-2019-0222

Scott E. Shank Jr. is a Ph.D. candidate at Michigan State University. His research interests involve the use of quantitative and qualitative approaches to understand and explain the efficacy of communication to acquire social resources necessary for organizational adjustment, advancement, and wellbeing. Prior work on the topics of anticipatory socialization and hospitalist physicianpatient communication appears in Management Communication Quarterly, Management Research Reports, Hospital Topics, and the Joint Commission Journal on Quality and Patient Safety. Vernon D. Miller received his Ph.D. in Speech Communication from The University of Texas at Austin. He is a Professor in the Department of Management and the Department of Communication Michigan State University. His research focuses on the communicative aspects of the employment interview, organizational entry, and role negotiation, and large-scale organizational change processes. His work appears in the Academy of Management Review, Journal of Applied Communication Research, Management Communication Quarterly, Human Communication Research, Communication Monographs, Project Management Journal, International Journal of Project Management, and Journal of Managerial Issues. His most recent book collaboration is the Handbook of Organizational Communication Theory and Research (DeGruyter, in progress). Dr. Miller is a former Associate Editor to Management Communication Quarterly.

Chapter 16

Unleashing Aspirational Capital: Sparking Innovation and Engagement Through Communication Brian T. Moriarty

16.1 Introduction In 2022, 50.5 million workers in the U.S. quit their jobs. These all-time high attrition numbers are not an anomaly. The prior year, 47.8 million people in the U.S. left their employers, a phenomenon widely called the Great Resignation (Iacurci, 2023). The Great Resignation was not only an American trend but also one that stretched across European economies. For example, in 2021, roughly a third of companies in Germany reported experiencing difficulty finding qualified people to replace the large numbers of skilled workers who had recently resigned (IFO Institute, 2021). While the tragedy of the Covid-19 that caused millions of deaths around the globe accelerated job exits, the problem of employee disengagement was a pre-existing challenge. The pandemic magnified the visibility of long-standing issues. An analogy to the effect of the pandemic on illuminating engagement issues is how economic downturns tend to expose individual businesses that are performing poorly. Berkshire Hathaway CEO Warren Buffett uses a colorful metaphor to describe the effect economic downturns have on creating greater transparency regarding the actual state of company balance sheets. “After all, you only find out who is swimming naked,” Buffett (2001) said, “when the tide goes out.” The awareness of human fragility wrought by the pandemic provided a stark picture of human balance sheets. It demonstrated that the strength of the communities we have created within many of our organizations is profoundly wanting. Multiple studies from a decade ago indicate that poor employee engagement numbers are not new. For example, a Gallup study from October 2012 found that only 29% of employees claim to be actively engaged in their work. Likewise, a study from the Corporate Executive Board found that 21% of high-potential employees were disengaged at work, and a quarter of this group was looking for alternative B. T. Moriarty (B) 202 Chaucer Road, Charlottesville, VA 22901, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_16

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employment (Moriarty, 2014). This latter study is alarming since it indicates that many individuals with the highest potential to drive innovation were among the most disengaged and seeking opportunities elsewhere. When the metaphorical tide goes out, we see what may be lacking in our organization and have a chance to remember that companies are human organizations through and through. The current landscape of our organizations is not some changeless monolith that we need to accept, but rather, something that we can co-create and change to foster greater engagement. When people view an organization as providing an environment where they can best realize their aspirations, this perception will have a strong gravitational pull on current and potential employees. Business is a form of social cooperation where people join forces to create value that no one of us can create on our own. It is an enterprise that is inherently innovative and human. In other words, business is a humanity (Donaldson & Freeman, 1994). When it comes to employee engagement that drives innovation, the central question for companies is: “What can we do to make our organization a magnet for talented people and to inspire them to do their best work?”. Scholarship in business and from various humanities disciplines provides road markers for creating work environments and cultures where individuals and teams can thrive. No single branch of scholarship alone offers comprehensive guidance. Instead, we must assemble knowledge from multiple fields of study to develop a usable map to guide our actions. In attempting to improve employee engagement, many business leaders and commentators have focused on tactics such as increasing flexibility around where and when employees are expected to work. While there is nothing wrong with testing hypotheses about which actions might be effective, there is a more profound question about the underlying motivations driving employee attitudes and behaviors that we should address. Toward that end, this theory chapter considers an emerging stream of research rarely employed in organizational contexts—aspirational capital—and argues the relevance of this scholarship to business. This study area speaks to these current challenges in ways that reveal opportunities for creating organizations where people thrive. This chapter shares insights from the existing scholarship in this research area, demonstrates its relevance to business, and hypothesizes how organizations might use the knowledge they have created to improve engagement and innovation.

16.2 Definition of Aspirational Capital The academic literature on aspirational capital began with Tara J. Yosso’s work on community cultural wealth. Yosso (2005) expanded Pierre Boudieau’s theory of social capital to recognize the various forms of social wealth that exist within underprivileged and politically disempowered communities. Yosso refocused discussions of the social capital of marginalized groups away from deficit thinking—such as

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communities of color in the U.S.—to emphasize the strengths these communities possess and acknowledge additional forms of social capital that are often not seen and underappreciated. Yosso (2005) defined aspirational capital as “the ability to hold onto hope in the face of structured inequality and often without the means to make such dreams a reality.” These dreams to which people aspire, Yosso asserted, are not merely the product of individual desires but rather emerge in social and familial contexts. Communities create aspirational capital through communication, sharing stories, and advice that provides “specific navigational goals to challenge (resist) oppressive conditions” (Yosso, 2005). Yosso (2005) further defines aspirational capital as “the ability to maintain hopes and dreams for the future, even in the face of real or perceived barriers.” In this model, aspirational capital is held not only by individuals but also by the communities to which they belong (Basit, 2012). It is about readiness to be vulnerable, in a sense, by continuing to contemplate a better future despite current obstacles. This definition provides a gateway for thinking about the role of aspirational capital across organizations.

16.3 Aspirational Capital in Business The forms of social capital Yosso (2005) identified are not only unacknowledged and underappreciated for the roles they play within marginalized groups but also for how they impact the communities within the walls of corporations, universities, and NGOs—in short, all the places where people work. I hypothesize that recognizing and tapping these resources will result in a greater sense of engagement and belonging, leading to more significant innovation. While scholars developed the concept of aspirational capital in a critical race theory framework, there is no reason to believe that aspirational capital is not also a crucial resource in communal environments where equity and justice are more pervasive. Unless we recognize this, we will continue to overlook the incredible potential of unleashing aspiration capital and exclude it as a crucial element of organizational strategy. Doing so would be a mistake. Unlocking the aspirational capital of your people is a highly complex task, but it’s potential to supercharge innovation and engagement is worth the effort. This argument is not strictly theoretical. Freeman (2009) tells the story of Anne Mucalhy’s efforts to lead Xerox Corporation out of an existential crisis and into a better future. Mulcahy took the reigns as CEO and Chairman of Xerox in 2001 when the company was “over $17 billion in debt, bankruptcy appeared inevitable, and the U.S. Securities and Exchange Commission was investigating alleged accounting irregularities (Freeman et al., 2009).” In the aftermath of an accounting scandal, top talent at Xerox—including several members of the senior leadership team and board of directors—left the company for other opportunities. The company was bleeding cash, the stock price dropped

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significantly, and industry analysts recommended that it cut funding to research and development efforts to shore up its financials. Mulcahy ignored this advice, believing that the most crucial objective she and her leadership team needed to accomplish was to envision a credible story about the company’s future that would convince employees to stay and help rebuild the organization. Toward this end, Mulcahy and other senior leaders at Xerox drafted a fictional Wall Street Journal article about the company they imagined would be published five years later. Their imaginary article chronicled how Xerox revitalized itself by doubling down on its investments in research and development, garnering new recognition as a leading “services-led technology company (Freeman et al., 2009).” Mulcahy’s gambit proved successful because it created aspirational capital through a shared vision of a better future. This vision persuaded employees to remain at Xerox, shifting their mindset from fears about a threatening future to a focus on the opportunity to create new lines of innovative products that would reinvigorate the business. The plan worked, with the company launching several new products that answered unmet needs in the marketplace. Within a few years, Mulcahy was being lauded for leading one of the most extraordinary turnarounds in corporate history. Xerox gained recognition as a company that fueled innovation and as a place where employees could thrive (Freeman et al., 2009). By creating a compelling narrative about the future, Mulcahy and her leadership team were able to tap into the aspirational capital already present among the company’s employees—their hopes for a prosperous future and their desire to make a meaningful impact on the world through their labor. Lest readers interpret this narrative of Anne Mulcahy and Xerox’s creation of aspirational capital as an outlier in business, we should consider entrepreneurs as another example. Entrepreneurs have hopes and dreams for the future that they attempt to actualize. When entrepreneurs pitch to potential investors, they try to socialize further their aspirational capital to gain more significant financial capital. Their hopes and dreams for a better future help to make successful entrepreneurs resilient, continuing to drive them in the face of barriers. This is true whether the entrepreneur in question is Steve Jobs seeking investors for Apple or a line employee pitching an idea that they hope will make their workplace more equitable for people of color.

16.4 Signs of a Performance Gap in Practice While there are several examples in business history of aspirational capital being created and deployed, there is also abundant evidence to suggest that it is underutilized in practice. Surveys of practitioners suggest there is a performance gap with the current capacity of organizations to unleash and generate aspirational capital among their people. For example, many employees aspire to become highly-skilled, elite professionals (Caprar et al., 2022). People not only hold visions of who they are in the present

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but also cultivate visions of who they wish to become. These aspirations are often connected to desires for agency and opportunities to contribute creatively. A study from Deloitte (2023) found that while 84% of business leaders recognize worker agency as a “potent source of motivation” that contributes to innovation, only “17% feel they are very ready to address the issue.” The results of this gap are not surprising. In 2021, the two most significant drivers for employee exit were lacking “opportunities for advancement (63%) and feeling disrespected at work (57%)” (Deloitte, 2023). The Deloitte study also indicated that the opportunity to co-create new products, services, policies, and operating models contributes to employee resiliency in the face of change. Fostering employee creativity and voice can have profound secondary effects on companies. The study notes that “organizations that cultivate this creator’s mindset are 1.8 times more likely to delight customers and 2.8 times more likely to innovate versus those that don’t” (Deloitte, 2023). Despite these benefits, more than a third of survey respondents did not believe their organization’s leadership team is ready to endorse a co-creation mindset in their companies. Resistance to fostering a co-creation mindset in companies may be partly due to the new efforts such change will involve. In particular, successful co-creation that leads to innovation begins with investing in developing deeper employee relationships. Investing in relationships means not only “cultivat[ing] a more intimate knowledge of the workers with whom you build those relationships” but also “giving others agency, ownership, information access, and a path to achieving their own personal aspirations” (Deloitte, 2023). Organizational leaders are not fully utilizing the aspirational capital of their people in part because they are largely unaware of its importance and lack knowledge about how to engage this resource. This gap is partly because aspirational capital is an underdeveloped concept within managerial academic literature. Scholars will need to develop and test hypotheses about the dynamics of aspirational capital to provide organizational leaders with practical guidance. The next section of this chapter presents some initial hypotheses about how communication can enable the flow of aspirational capital.

16.5 Aspirational Capital Flows by Communication How leaders and team members communicate with one another is critical for unleashing aspirational capital. Communication involves not only speaking and other channels people use to signal meaning, but also inquiry, listening, and ongoing dialog. Appadurai (2004) argues that our visions and ideas of the future are shaped by culture and community and that our capacity to aspire is social. When people join an organization, they bring aspirational capital with them as they enter the company’s doors. To benefit from other people’s unique perspectives, we need to listen to them. More than that, we need to maintain dialogical relationships

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with them, not simply reactively listening to what they offer but proactively seeking to understand their perspectives by asking them questions and sharing our perspectives. A—Recognize Uniqueness as a Valuable Gift Managers serve as essential guides who help their direct reports to make sense of the work they do and understand the value they co-create (Gibson et al., 2021). As Axtell (2019) argues, communication skills such as giving permission and creating a safe space for conversation can help improve innovation. Direct supervisors tend to play an outsized role in creating safe spaces where people feel free to share their thoughts and ideas without adverse repercussions. A crucial factor in creating a safe space is acknowledging the uniqueness of every person on the team. The captivity to norms which fails to recognize and celebrate difference, Yosso (2005) argued, is deadly to innovation, collaboration, aspiration, and belonging. Here, Bakhtin’s (1986) concept of “benevolent demarcation” is helpful. Bakhtin argued that every person has a unique viewpoint through which we interpret our environment and create meaning due to how we all experience the world differently. Our differences should not lead to conflict, but we should view them benevolently as a gift that drives innovation and knowledge creation (Emcke, 2002). Decrying the intellectual violence of those seeking the “total destruction of the other viewpoint,” Bakhtin asserts that “the merging of all trends into one and only one would be fatal to science.” From this standpoint, each person’s uniqueness is a task and a calling, the aspiration of a self that we must accomplish not on our own but in social cooperation with others. Instead of viewing individuality as isolating—or something that people must overcome—Bakhtin considered it as critical for our ability to gain knowledge about the world. Our uniqueness is what enables our capacity to see what others do not. This fact, combined with the ability to communicate, allows people to share the world, work together, innovate, advance knowledge, and create value for each other (Bakhtin, 1986). The challenge for leaders is balancing a broader sense of belongingness with recognition of each person’s uniqueness (Canlas & Willams, 2022). Aspirational capital is an underutilized resource, primarily because people have overlooked it. Every person is unique. That is a significant part of the value they bring to our communities and organizations. How can the aspirational capital within our organization ever be unleashed if people believe they must mask themselves at work to fit in with expected norms? B—Signal Empathy by Being Vulnerable Recognizing each employee’s uniqueness is even more crucial for organizations operating in global contexts. Global teams unite people whose hopes for the future have been shaped within various cultural contexts. With this challenging level of differentiation in mind, Reiche (2017) redefines global leadership as “the processes and actions through which an individual influences a range of internal and external constituents

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from multiple national cultures and jurisdictions in a context characterized by significant levels of task and relationship complexity.” The complexity of leading global teams raises the importance of empathy. Here, empathy is a matter of recognizing and responding to people’s suffering and anxiety and learning and acknowledging their identities, hopes, and dreams in ways that foster trust. Signaling empathy through vulnerability is critical to establishing relationships based on trust. Leaders who want team members to share their hopes and dreams should first be willing to share their own. Sharing pieces of our identity involves vulnerability. Trust is the willingness to be vulnerable, and research has shown that the best way to signal that you are worthy of another person’s trust is to exhibit your willingness to be vulnerable. Recent studies have found that team members who experience respectful environments communicate more openly about challenges, improving the team’s performance (Gibson et al., 2021). C—Enable Voice in Shaping an Organizational Narrative Appadurai (2004) asserted that “culture is a dialogue between aspirations and sedimented traditions.” Often there is tension between the operating procedures and communication norms predominant within a company and efforts to innovate and create a new future. Working in an environment where employees have “a chance to be fully heard, which is what we all want—to say exactly what we are thinking” is what people want most from their workplace, according to Axtell (2019). While the focus of many companies on defining corporate purpose is a valuable trend, it will be most meaningful when employees believe the organization has included their voices in the process. We now have the technologies to make our organizations more dialogical. Most internal communications no longer need to be unidirectional, and therein lies their enormous potential. Imagine if leaders could unlock the intrinsic motivations of their people, connecting employees’ hopes, dreams, and aspirations with their efforts on behalf of the organization. Leaders engaging in such efforts must build this connective tissue, not once but constantly. This is the communication and leadership challenge of a lifetime. It is not an impossible challenge because aspirations are always social and form from the cultural milieu in which a person develops (Appadurai, 2004). Likewise, ˇ Capek (2017) points out that the narrative unity of a self “is not really the result of the activity of the person.” Instead, social dialogue contributes to identity and is the source from which identity emerges. “The unity of the life is to be taken as a story in ˇ which the person is but a character,” Capek argues, and “the unity of one’s life does not result from one’s plans and deeds, but emerges from the complex concurrence deeds and events.” Scholars like McAdams and McLean (2013) have argued that our identities are narratively constructed. So are aspirations tied to cultural views about happiness, the types of relationships one seeks, views about labor, understandings of values and vices, and how people view freedom and rights (Appadurai, 2004). In creating a narrative identity, people recount their past and project concepts for who they would like to become or what they would like to accomplish in the

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future. In other words, narrative identity typically includes personal and professional aspirations (McAdams & McLean, 2013). D—Recognize and Navigate Barriers Taking actions to enable aspirational capital flow is necessary but insufficient. Leaders must also consider the policies, practices, habits, and other cultural elements that act as barriers to the movement of aspirational capital. Many of these disablers are deeply engrained in our organizations’ fabric and the broader social contexts within which our organizations exist. As Appadurai (2004) asserts, “the capacity to aspire is thus a navigational capacity.” Likewise, Yosso (2005) critically linked navigational capital to aspirational capital in her Community Cultural Wealth (CCW) model since it involves the ability to chart a course toward one’s goals while avoiding obstacles that might thwart progress. For Yosso, this is particularly challenging for marginalized groups since they are trying to navigate social structures that were not designed for them but rather for privileged groups. Some barriers restricting the flow of aspirational capital in the workplace—such as racism, gender bias, and a lack of civility—are prevalent and pronounced. Unsurprisingly, the Deloitte (2023) study reports that when employees feel disrespected or encounter unethical behavior, such “toxic corporate cultures … are 10.4 times more powerful than compensation in predicting a company’s attrition rate compared with its industry.” Encountering unethical behavior that can result in moral wounding is especially detrimental to aspirational capital. Litz et al. (2009) defined moral wounding as “intense human suffering and cruelty that shakes [people’s] core beliefs about humanity.” It occurs when people do or witness behaviors countering their deeply held morals. Svoboda (2022) contends that moral injury is an unrecognized epidemic impacting millions. Fully considering the connection between aspirational capital and moral injury is not in the purview of this chapter. Still, there is a clear need to gain knowledge about this critical relationship.

16.6 Conclusion One meaningful measure of organizational health is the type of conversations people can have within the company. As Axtell (2019) reminds us, “People don’t just want to belong, they want to contribute.” What will move us along this road are authentic dialogs that result in actions that unleash aspirational capital, recognize barriers to its flow, and create a renewed sense of purpose and belonging. In turn, these actions fuel innovation and engagement. Fostering dialog is not the task of professional communicators alone but the charge of all leaders. Leadership and communication are inseparable.

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The onus is not only on organizational leaders but also on academics to study the phenomena of aspirational capital and the factors that impede its free flow in business settings, develop and test hypotheses, and recommend specific actions. This chapter is an early step in that endeavor.

References Appadurai, A. (2004). The capacity to aspire: Culture and the terms of recognition. In V. Rao & M. Walton (Eds.), Culture and public action (pp. 59–84). Stanford University Press. Axtell, P. (2019, April 11). Making your meetings a safe space for honest conversation. Harvard Business Review. https://hbr.org/2019/04/make-your-meetings-a-safe-space-for-honest-conver sation. Bakhtin, M. M. (1986). In C. Emerson & M. Holquist (Eds.), Speech genres and other late essays (V. W. McGee, Trans.). Austin: University of Texas Press. Basit, T. (2012). ‘My parents have stressed since I was a kid’: Young minority ethnic British citizens and the phenomenon of aspirational capital. Education, Citizenship and Social Justice, 7(2), 129–143. Buffett, W. (2001). Chairman’s letter. Berkshire Hathaway Inc. https://www.berkshirehathaway. com/2001ar/2001letter.html. Canlas, A. L., & Williams, M. R. (2022). Meeting belongingness needs: An inclusive leadership practitioner’s approach. Advances in Developing Human Resources, 24(4), 225–241. https:// doi.org/10.1177/15234223221118953. ˇ Capek, J. (2017). Narrative identity and phenomenology. Continental Philosophy Review, 50, 359– 375. Caprar, D., Walker, B., & Ashfort, B. (2022). The dark side of strong identification in organizations: A conceptual review. Academy of Management Annals, 16, 759–805. Deloitte. (2023). 2023 global human capital trends. Deloitte. https://www2.deloitte.com/us/en/ins ights/focus/human-capital-trends.html. Donaldson, T., & Freeman, R. E. (Eds.). (1994). Business as a humanity. Oxford University Press on Demand. Emcke, C. (2000). Between choice and coercion: Identities, injuries, and different forms of recognition. Constellations, 7(4), 483–495. Freeman, R. E., Moriarty, B., & Stewart, L. A. (2009). Ethical leadership. In Research companion to corruption in organizations. Edward Elgar Publishing. Gibson, C., Thomason, B., Margolis, J., Groves, K., Gibson, S., & Franczak, J. (2021). Dignity inherent and earned: The experience of dignity at work. Academy of Management Annals, 7, 218–267. Iacurci, G. (2023, February 21). 2022 was the ‘real year of the Great Resignation,’ says economist. CNBC. https://www.cnbc.com/2023/02/01/why-2022-was-the-real-year-ofthe-great-resignation.html. IFO Institute. (2021, August 12). More and more companies lament lack of skilled workers. IFO Institute News Release. https://www.ifo.de/en/press-release/2021-08-12/more-and-more-com panies-lament-lack-skilled-workers. Litz, B. T., Stein, N., Delaney, E., Lebowitz, L., Nash, W. P., Silva, C., & Maguen, S. (2009). Moral injury and moral repair in war veterans: A preliminary model and intervention strategy. Clinical Psychology Review, 29(8), 695–706. McAdams, D. P., & McLean, K. C. (2013). Narrative identity. Current Directions in Psychological Science, 22(3), 233–238.

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Moriarty, B. (2014). Creating thriving organizations: The bedrock of trust and reputation. In B. B. Kimmel (Ed.), Trust Inc.: Strategies for building your company’s most valuable asset. Trust Across America. Reiche, B., Bird, A., Mendenhall, M., & Osland, J. (2017). Contextualizing leadership: A typology of global leadership roles. Journal of International Business Studies, Palgrave Macmillan; Academy of International Business, 48(5), 552–572. Svoboda, E. (2022). Moral injury is an invisible epidemic that affects millions. Scientific American. https://www.scientificamerican.com/article/moral-injury-is-an-invisible-epidemicthat-affects-millions/. Yosso, T. J. (2005). Whose culture has capital? A critical race theory discussion of community cultural wealth. Race Ethnicity and Education, 8(1), 69–91. https://doi.org/10.1080/136133205 2000341006.

Brian Moriarty is an Assistant Professor at the University of Virginia Darden School of Business. He teaches courses in Leadership Communication, Strategic Communication, and Ethical Leadership and is the Giving Voice to Values Case Collection director. Previously he served as Director of the Institute for Business and Society and the Business Roundtable Institute for Corporate Ethics. He has been selected as one of the “Top 100 Thought Leaders in Trustworthy Business” by Trust Across America four times. He is a member of the advisory council for Ethisphere Magazine’s list of the world’s most ethical companies. Moriarty is the lead editor of Rutledge’s Giving Voice to Values Book Series. His research interests include developing executive presence, storytelling, and navigating social narratives. He is the author of several articles, chapters, and reports on communication, business ethics, and business and society issues. Brian’s book from Cambridge University Press, Public Trust in Business, provides business leaders with insight into the creation of this critical asset. In addition to his teaching and research, Brian is a consultant to corporations, non-profits, and think tanks. He is a member of the Arthur W. Page Society’s Page-Up division.

Chapter 17

Ambivalences of Leadership Communication in the Digital Age Veronika Kneip

17.1 Introduction Digital changes and their impact on work environments have been studied in social science research for more than 20 years. Nevertheless, the field is described in various meta-studies as fragmented and inconsistent as well as still open (Avolio et al., 2014; Cascio & Montealegre, 2016; Cortellazzo et al., 2019; Schwarzmüller et al., 2018). Leadership and communication are inextricably linked. Communication is the instrument for performing essential leadership tasks, such as establishing acceptance, delegating tasks, advising, leading discussions, making decisions, giving feedback and making goals transparent (Regnet, 2016). Accordingly, Hackman and Johnson (2013, p. 11) state that “Leadership is human (symbolic) communication that modifies the attitudes and behavior of others in order to meet shared group goals and needs”. This was already true in the pre-digital age but perhaps gains even more importance in digital or hybrid settings, in any case, (leadership) communication changes when it takes place entirely or predominantly by means of digital communication media. In this context, various ambivalences can be identified that leaders must take into account if they want to communicate successfully in the digital age.

17.2 Rapid Decision Making versus Long-Term Vision Leaders in the digital age must first maintain a balance between flexible and quick decisions on the one hand and stable and lasting solutions on the other hand. This is not least a challenge for leadership communication as it must be structured consistently V. Kneip (B) Faculty of Business and Law, Frankfurt University of Applied Sciences, Nibelungenplatz 1, 60318 Frankfurt am Main, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_17

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and authentically despite the continuous dynamics and the ambivalence between short- and long-term orientation. For example, the high availability of information and data does not necessarily ensure that all the necessary data are accessible in decision-making situations or that they are free of contradictions (Cortellazzo et al., 2019; Schwarzmüller et al., 2018). In this respect, on the one hand, it is a matter of processing information within a short time frame and distinguishing between useful information and ’background noise’ to make timely decisions and to communicate them accordingly (Breuer & Szillat, 2019). On the other hand, it is crucial for leaders to have the courage to change their own opinion in the light of new information and not to insist on decisions once they have been made out of principle (Neubauer et al., 2017). This is obviously a particular challenge for communication as taking back or revising decisions is often perceived as a leadership weakness. The complexity and dynamics associated with digitization processes also mean that leaders often no longer have a knowledge advantage over their employees and must rely on their expert role (Schwarzmüller et al., 2018). For this reason, it is important that leaders signal their own willingness to engage in lifelong learning and establish a fault-tolerant communication culture. Successful leaders in the context of digital transformation need tolerance of ambiguity. They must give their team responsibility, offer room for creativity, and accept that ideas can fail. At the same time, they are responsible for providing stability within a dynamic environment and for keeping an eye on and communicating the company’s long-term vision beyond necessary ad hoc decisions (Cascio & Montealegre, 2016; Neubauer et al., 2017; Schwarzmüller et al., 2018).

17.3 Hierarchy and Collaboration Digitization processes continue to be closely linked to a trend towards more fluid organizational structures. This change is accompanied by a decline in hierarchical structures, while cultures of cooperation and self-organized collaboration are on the rise (Daheim et al., 2019; Schwarzmüller et al., 2018). This trend poses significant challenges for leaders in terms of their roles in hierarchical and non-hierarchical structures. Leadership is becoming more complex and diverse (Schoemaker et al., 2018). Gebhardt et al. (2015) and, in accordance with them, Graml (2021) refer to this with the two-world model of leadership. According to this model, leaders are confronted with two diametrically opposed worlds. The world view of hierarchically legitimized leadership focuses on authority and goal enforcement and emphasizes the controllability and plannability of leadership. The opposing world of discursive, consensus-oriented leadership is about finding shared solutions through discussion with and the collaboration of all the participants. However, despite the contrary ideas of the two world model of leadership, in practice there is a necessary simultaneity of hierarchy and collaboration, which is currently becoming particularly clear in the

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debate on the concept of shared leadership. Defined as early as 2002 as a “dynamic, interactive influence process among individuals in groups for which the objective is to lead one another to the achievement of group or organizational goals or both” (Pearce & Conger, 2002, p. 1), it is the epitome of a decentralized leadership theory in which several people take on leadership tasks and the leadership process becomes a group phenomenon. Various recent studies consider the influence of shared leadership on team performance and reach the conclusion that shared leadership is positively related to team performance (D’Innocenzo et al., 2016; Klasmeier & Rowold, 2022; Lorinkova & Bartol, 2021). Accordingly, a team performs better if it relies on the leadership of the team as a whole and not just on a single leader, regardless of the team’s degree of virtuality (Hoch & Kozlowski, 2014). However, shared leadership is generally embedded in hierarchical structures and not detached from them even though the influence of hierarchical leadership on team performance is weakened when teams are more virtual in nature (ibid.). In fact, underlying hierarchical structures are partly responsible for the success of shared leadership. For example, the transformational leadership style of a manager favours shared leadership by strengthening the collective identification of the team through the communication of a strong vision and the formulation of collective goals (Klasmeier & Rowold, 2020). Similarly, perceived organizational support promotes shared leadership (ibid.) while the willingness to assume leadership responsibility decreases when critical resources, such as information, help, and support from the leader, are unequally distributed (Wang et al., 2017). Leaders are thus faced with different requirements and expectations of their role. Meeting them is a challenge. For example, despite the increasing importance of collaboration, teamwork, and participation, an important leadership task is still to provide orientation and set goals, even though employees are becoming freer in how they implement these goals in concrete terms since digital technologies enable them to obtain information quickly and easily as well as to communicate across different hierarchical levels (Schwarzmüller et al., 2018).

17.4 Trust and Control Ambivalences in leadership communication in the digital age arise not least from the increasing flexibilization of the place of work, that is, digital or hybrid settings. The digital infrastructure creates the material prerequisites for working from home with effectiveness and efficiency comparable to working in the office. This includes appropriate mobile hardware equipment, access to corporate drives (or the basic availability of relevant information on these networks), a stable internet connection, and digital collaboration and communication options. With regard to the latter category in particular, the COVID-19 pandemic can be seen as a boost to digitization. Whereas previously it had been possible to carry out primarily conceptual activities or other tasks without direct contact with (several) employees, colleagues, or customers, the COVID-19 pandemic shifted the area of meetings of all kinds into

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the virtual space. A central finding of many companies that started to establish flexible working options as a crisis intervention is that fewer activities than previously assumed need to be performed in the office and more—especially demanding—tasks are suitable for mobile work (Stürz et al., 2020). In this context, leaders are faced with the challenge of maintaining an overview and control of work progress and results while at the same time establishing a new culture of trust specifically tailored to the new forms of work. Digital communication can in principle contribute to better transparency and control of communication processes, for example by establishing chat channels or documenting work results on digital team platforms. However, for many leaders, physical distance reduces the perceived control over the work of their employees. Physical distance, that is, not being able to pass by employees’ offices, encourages behaviours such as micromanaging as leaders are afraid that employees might be lazy or not responsible enough, which, in turn, causes employees psychological stress and impedes the well-being and productivity of the team (Sengupta & Al-Khalifa, 2022). Currently, leadership communication is in a crucial phase regarding the tension between trust and control. Technological capabilities enable flexible working; likewise, flexible working has proven to be both efficient and effective. In contrast, however, there is a stable stereotype of the ideal worker is accompanied by appreciation of face-time and a general mistrust of flexibilization in working time or working space (Golden & Eddleston, 2020). To develop the indispensable culture of trust while maintaining control of their area of responsibility, leaders need to abandon the idea of being able to monitor the direct execution of work (which has probably never been possible, anyway). Instead, the evaluation of work needs to be distinguished from the informal process of ‘showing one’s face’ and integrated into a structured process. Therein, leaders must clearly break down the goals and visions of the company into their respective areas and derive operational goals for the respective employees from them. Continuous exchange and mutual feedback between leaders and employees are essential in this context to create a common understanding of the goals and to assure the fundamental appreciation of the other. This is also important against the background that physical distance can contribute to employees becoming alienated from the corporate culture by working in their private environment and not being surrounded by the visible artifacts of the corporate culture or assured of the corporate values and norms in informal exchanges with each other (Newman & Ford, 2021). In the light of this, Newman and Ford (ibid.) recommend regularly scheduled one-on -one calls or video-enabled meetings with each direct report as well as regular occasions for personal interaction within the team to create and maintain a culture of trust and belonging. As equally important, however, they consider ground rules for responding times, situation-adequate use of communication tools, and a continuous flow of information, and it is the particular obligation of leadership communication to ensure that team members can see how they collectively and individually connect to the organizational strategy and goals. To some extent, these rules shift the dimension of control from the individual manager to the team. In this respect, it is now less about controlling the work of an individual team member and more about greater transparency and thus reliability within the

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team. Implemented in this way, the control function itself can inspire trust. In this sense, Breuer et al. (2016) conclude that, for instance, documenting team interactions seems to be a viable complement to trust-building activities, particularly in virtual teams.

17.5 Closeness and Distance Furthermore, leaders find themselves in an area of tension regarding how much closeness they should establish in the context of their communication in virtual or hybrid teams and how much they should rely on the self-organization of the employees. In principle, flexibilization of working time and place comes with more working time control. Hence, employees are able to manage tasks more in line with their own biorhythm and individual preferences, which can contribute to greater autonomy and job satisfaction. Conversely, the lack of spatial and temporal separation between work and personal domains of life can lead to physical and psychological overload (Nandan & Madan, 2022; Wöhrmann & Ebner, 2021). Mobile technologies enable continuous accessibility. This may even lead to the employer’s perception that employees are available at all times, which increases their stress and anxiety levels (Sengupta & Al-Khalifa, 2022). Many leaders are aware of the afore mentioned risks, and, particularly during the COVID-19 pandemic, they were concerned about their employees’ health and other personal problems (Nandan & Madan, 2022). Likewise, employees benefit from personalized interaction with their direct supervisors, particularly in times of crisis or uncertainty (Mihalache & Mihalache, 2022). However, a challenge for leaders is that subtle signs of stress and excessive demands are less easily recognized and thus less frequently addressed in the digital context. At the same time, employees are less likely to ask for support, which increases the risk of negative health consequences (Antoni & Syrek, 2017; Breuer et al., 2016; Kneip et al., 2022). Moreover, leaders’ concern about their employees’ well-being and their willingness to maintain a close relationship conflicts with their insecurity regarding whether they even have the right to address actively issues of physical health or mental distress. While they want to fulfil their duty of care, they do not want to intrude on their employees’ privacy. This dilemma is exacerbated by the question of which media should be used to contact employees. According to media richness theory (Daft & Lengel, 1986), media vary in their interactivity, language variety, and personal proximity. This variety in turn influences the richness of the information that the media convey. Basically, virtual media are less rich than face-to-face interaction. In particular, elements of body language can only be conveyed by media to a limited extent but are relevant precisely for establishing personal closeness. Here, at best, videoconferencing can be a viable substitute for face-to-face communication. Creating closeness is thus a challenge per se in the digital space and becomes even more difficult when leaders fear that rich media, such as video conferencing, will intrude

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too much into employees’ private space. This invasion of privacy was particularly problematic during the COVID-19 pandemic, when the working space at home was often shared with other family members (Sengupta & Al-Khalifa, 2022).

17.6 Emotion and Rationality Leadership communication in the context of digitization finally poses the question of how leaders shape their communication in terms of content and tone of communication. Here, leaders are particularly faced with the challenge of balancing rational and emotional communication. With the help of decentralized and digital communication, communication processes can initially be structured simply and comprehensibly, thereby becoming more efficient. Virtual tools, such as cloud solutions or virtual meetings, support remote work, and leaders are expected to organize the process, and relate individual tasks to the company’s goals to guarantee effective and transparent communication (Sady & Sedlak, 2022). Thus, in principle, digital communication favours taskoriented leadership behaviour. This becomes visible, for example, through the fact that in digital settings, the number of participants per meeting increases while the overall duration of the meeting decreases significantly. Employees therefore take part in more meetings, but these are shorter and tend to be more anonymous (DeFilippis et al., 2020). Moreover, computer-mediated communication offers advantages when it comes to developing ideas and completing tasks that require divergent thinking (Elyousfi et al., 2021; Kerr & Murthy, 2004). Hence, digital communication enhances fast, transparent, and efficient processes and facilitates different ways of thinking and points of view. However, relationship building becomes more difficult in the virtual sphere. Opportunities for rational communication are often accompanied by downsides, such as more strategic and defensive (even rude or aggressive) communication behaviour (Gentilin & Madrigal, 2021). Within the virtual sphere, the social context and emotionality of personal communication are missing, making it more difficult to build mutual understanding and solidarity (Gentilin & Madrigal, 2021; Nandan & Madan, 2022). In general, motivational language that also addresses employees’ emotional needs is said to have a positive effect on employee performance (Doreen et al., 2022; Thelen et al., 2022; Yue et al., 2021). The need for emotional stability through motivational language has been demonstrated not least in the wake of the COVID-19 pandemic (Men et al., 2022; Wang et al., 2022). Leaders must thus take care not to limit themselves to task-oriented leadership behaviour that is obvious and ’naturally’ supported by digital communication, but to consciously take care to implement emotional aspects of communication in the context of digital exchange as well. This becomes particularly valuable when the virtual or hybrid team has to deal with complex tasks. Here, leaders’ team development functions play a major role (Bell & Kozlowski, 2002). However, as leaders cannot physically observe their team members, they need to become creative in identifying ways to build cohesion

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(Gentilin & Madrigal, 2021). In this context, it is particularly important that leaders do not take a pure management approach, that is, focusing communication on passing on rational information, but instead engage in conversation with employees, listen and ask questions (Heide & Simonsson, 2021). Again, in this context, media richness plays an important role both in team conferences and in one-to-one meetings (Ben Sedrine et al., 2021). Creating emotion and a productive team spirit in the virtual space, however, is not exclusively a matter of leadership communication. For instance, Elyousfi et al. (2021) conclude that perceived team collaboration and support even have a greater effect on virtual team member performance than perceived leader communication. In a similar vein, Bell and Kozlowski (2002) point to the leadership task of creating clearly defined role networks to facilitate cohesion among team members. Particularly in a crisis situation such as the COVID-19 pandemic, employees and the internal communication between them have a central role to play in not denying uncertainty in the ambiguity of the crisis but rather accepting it and in this way enabling genuine sense making and work-related social identity continuity (Bell & Kozlowski, 2002; Krug et al., 2021).

17.7 Conclusion The preceding considerations have shown that leadership communication in the digital age is characterized by numerous ambivalences, which leaders must deal with to communicate authentically and successfully. The first task is to master the fundamental areas of tension that arise from the highly dynamic and complex nature of information in the digital age. Specifically, this involves making day-to-day decisions under time pressure and with incomplete or conflicting information while maintaining a long-term and consistent vision for the company. In this context, it is also essential to deal with more fluid forms of organization, which are made possible not least by faster and easier access to information. Leaders must succeed in balancing hierarchy and collaboration, that is, they must hand over leadership tasks to the team and thus focus on consensus-oriented leadership communication. At the same time, leaders must continue to offer orientation and credibly link the hierarchical structures that still exist with shared responsibilities. Further ambivalences and areas of tension arise from the challenges of leading virtual or hybrid teams. In terms of management communication, the task here is to replace the traditional culture of presence with a new culture of trust. This involves systematically creating communication occasions that either serve to establish or strengthen this trust at the personal level or ensure that the flow of information in the team is maintained and work results are documented in a comprehensible manner. Since team members are physically dispersed and informal exchanges are eliminated, it is much more difficult for both the leader and the team members to keep track of who is working on which tasks, what results have been achieved, or what problems have arisen. It is therefore of high importance to ensure a continuous exchange and

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to establish a systematic flow of information. This helps to monitor work progress and results, but can also serve as a trust-building measure. In addition to building trust, a question in virtual and hybrid teams is how and how much closeness can be built up in the virtual space. Due to the low media richness of virtual communication, it is initially more difficult to build connectedness and closeness in these teams. However, even recourse to particularly rich communication media needs not always be the best choice, as these can be associated with an unwanted invasion of employees’ privacy especially if working from home is used to achieve a better balance between work and other areas of life (e.g., care tasks) and working hours are flexibly distributed throughout the day. This also became clear in the course of the COVID-19 pandemic when, for example, homeschooling led to a significant overlap between work and family time. Leaders must therefore succeed in the balancing act of granting employees who work outside the office the necessary autonomy, while at the same time actively establishing closeness so that, for example, signs of overwork or psychological stress are not overlooked. Finally, leadership communication in the virtual space is challenging in terms of tone and, again, related media use. Digital media initially support rational, contentoriented communication in particular, which goes hand in hand with more taskoriented leadership behavior. Digital collaboration has many advantages when it comes to collecting ideas, synchronizing information and making it available transparently. However, the team spirit can suffer if communication is too matter-of-fact or even tends towards destructiveness. In this respect, it is a vital leadership task to give communication the necessary emotional component in the digital space as well. When leaders use motivational language, for example, they serve as role models for communication among employees, which is also essential for cohesion in virtual or hybrid teams. Communication as a meta-competence for leaders has always been challenging and it is even more so in hybrid or virtual settings. However, the fact that communication is becoming more ambivalent is not necessarily bad news. In fact, ambivalence and the associated need for balancing offer the opportunity for leadership communication to become more reflective and conscious in practice, which is perhaps even more important than finding the perfect way of expressing oneself or the optimal medium in every situation.

References Antoni, C. H., & Syrek, C. (2017). Digitalisierung der Arbeit: Konsequenzen für Führung und Zusammenarbeit. Gruppe. Interaktion. Organisation. Zeitschrift Für Angewandte Organisationspsychologie (GIO), 48(4), 247–258. https://doi.org/10.1007/s11612-017-0391-5 Avolio, B. J., Sosik, J. J., Kahai, S. S., & Baker, B. (2014). E-leadership: Re-examining transformations in leadership source and transmission. The Leadership Quarterly, 25(1), 105–131. https:/ /doi.org/10.1016/j.leaqua.2013.11.003 Bell, B. S., & Kozlowski, S. W. J. (2002). A Typology of Virtual Teams. Group & Organization Management, 27(1), 14–49. https://doi.org/10.1177/1059601102027001003

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Veronika Kneip is professor of Organisation and Human Resource Management at Frankfurt University of Applied Sciences. Her main fields in teaching and research are leadership and communication with a focus on gender and digitalisation. She has professional experience in management and leadership and serves as a director of the Institute for Mixed Leadership (IML) at Frankfurt UAS.

Chapter 18

Transcendent Communication in the Company: An Indispensable Leadership Competency for Sustainability Nuria Chinchilla, Pilar Garcia, and Alvaro Lleo

18.1 Introduction The twenty-first century has brought increasingly complex challenges for modern societies. No one can now doubt the need for a profound change towards a more sustainable, just and inclusive model, and it is time to design long-term strategies that, without losing sight of the present, will allow us to move forward with a sure step towards the more humanized world we all desire.1 Sustainability has gained absolute prominence in the design of any strategy. It is basically a matter of building the present and the medium term without sacrificing the long-term future, seeking balance in all areas. In this sense, environmental sustainability is not the only one that should guide development strategies; social and human sustainability is also a cornerstone of the debate. What role do leadership and communication, the subject of these pages, play in the implementation of sustainability and resilience strategies? Overcoming the challenges posed in this twenty-first century requires a leadership style capable of truly putting people at the center of decisions, and capable of considering the effects of business decisions in the medium and long term, for all stakeholders. This broad,

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WEF (2020). Stakeholder Capitalism: A Manifesto for a Cohesive and Sustainable World.

N. Chinchilla (B) 508021 Barcelona, Spain e-mail: [email protected] P. Garcia Avenida de Europa 25, 28023 Madrid, Spain A. Lleo Torre.1.Campus Universitario Sn, 31009 Pamplona, Spain © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_18

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analytical and profound perspective is the essence of the anthropological or humanistic paradigm of leadership, developed by Juan Antonio Pérez López2 , from the perspective of human decision theory. As the title of this chapter states, communication plays a leading role in the development of anthropological leadership. In these pages we intend to show precisely that the exercise of managerial action within the framework of leadership makes communication the very essence of management. Providing managers with an anthropological model of interpersonal communication enables them to contribute successfully to the achievement of the company’s mission through the generation of unity and trust. Communication in Human Organizations Human communication is the most important manifestation of the social and gregarious condition of our species. It is a complex category in which there is room for numerous forms of exchange of information, emotions and feelings, as well as different languages and channels. From cave paintings and the first pictograms to the most modern solutions of telecommunications science, human beings have expressed an innate need to interact and communicate with others. Communication has served and continues to serve, among other things, to organize collaboration and jointly address the solution of complex problems, and it can be said that, without such communication, the existence of organizations would be a chimera. Human organizations are basically a group of people who stably organize their decisions and actions around the achievement of an objective, designing more or less formal mechanisms to ensure cooperation. Companies, as complex organizations, need communication to keep the fabric of their activity together and, to this end, they design and establish internal and external communication systems. But companies, like any organization, are not just a formal structure, but are made up of specific people, with their decisions and behaviors, and the relationships between them. This is the informal organization of a company, in which communication also plays a leading role. Within the framework of the informal organization, the relationship between managers and their subordinates is of fundamental importance. Regardless of the formal rules, policies and procedures that give structure to the company, the particular management style of those in charge of the teams will determine the degree of commitment and trust between the people who make up the companies and, in turn, this commitment and this trust will have a fundamental impact on the income statement and, therefore, on the very viability of the company. Leadership, understood as the ability to inspire high ideals in collaborators, is manifested in a specific way of performing the different managerial functions, from delegation to work organization or performance evaluation. The leader makes decisions and acts considering not only immediate effectiveness and his own benefit but, above all, considering the long-term sustainability and well-being of those who

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Pérez López, J.A. (1993): Fundamentos de la Dirección de Empresas, Rialp, Madrid.

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collaborate with him. The incorporation of the well-being of others into the decisionmaking criteria is based on knowledge of the needs, desires and interests of the collaborator, something that can only be obtained through honest and fluid communication, based on trust. The relationship between leadership and communication, within the framework of the managerial functions in the company, is so close that we can affirm that one cannot exist without the other. In the specialized literature we find many references to the communication styles of certain renowned leaders; their speeches and public interventions are analyzed, placing communication as just another managerial competence or skill. From this perspective, communication appears as a unidirectional process, in which it is easy to lose sight of the interlocutor. Without denying the importance for a manager to develop his or her ability to transmit ideas and emotions brilliantly, the true and profound relationship between communication and leadership lies beyond these considerations. Leadership style and communication style go hand in hand in building a solid and sustainable company, based on the trust and commitment of all its members. A leader who is truly a leader uses communication to drive and promote the personal and professional development of his subordinates, encouraging them to incorporate the appropriate values and criteria in their decisions. In order to delve deeper into the question of how communication can become a leadership tool, it is convenient to dedicate a few lines to delimit what we mean when we talk about the leader. Communication is one of the main managerial functions, the most basic one, which penetrates transversally into all areas of the organization and has an impact on all areas of people’s lives. The manager who communicates best is the one who has a real interest in people, in his collaborators, and thus achieves a type of communication capable of generating unity and trust.

18.2 Keys to Leadership for the Twenty-First Century: Human Motives and Motivation Our day-to-day life is a continuous process of decision making, culminating in our actions and behaviors. Understanding why and why we do what we do, i.e., knowing the motives and motivation for behavior, is the key to anthropological leadership. Although it may seem that the variety of motives that drive human action is vast, in reality we can group this variety into three broad categories: ● Extrinsic motives: those that come from outside, from the environment, for example, money, fame, position, recognition, etc. ● Intrinsic motives: these are those motives linked to the action itself and their origin is internal, such as learning, overcoming a challenge or, in general, the pleasure involved in carrying out the action itself, which makes us feel good.

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● Transcendent motives: they also have their origin within the person, but the “addressee”, the one on whom the action has repercussions, is outside (a relative, a friend, …)3 . These three types of motives can simultaneously influence a decision, with different weights. A simple example is to consider the reasons that move me to work every day. On the one hand, there are extrinsic motives related to earning a salary and having a certain economic position, which allows me to survive. On the other hand, it is possible that the performance of my profession leads me to feel good, learning and improving my technical skills every day, and these would be intrinsic motives. But, in addition, it may also happen that there is also the desire to provide a good service to my clients and to help my collaborators to develop their potential and improve their lives. The latter type of motives would be transcendent and are very present in the manager-leader. On many occasions, deciding may involve a certain conflict of motives. This happens, for example, if at a given moment, I feel like having a longer chat with a colleague after lunch (intrinsic motive) instead of going back to the office and working with the rest of the team on a pending project for the client (transcendent motive). A leader is a leader, among other reasons, because the motivational structure of his decisions is based on transcendent motives and, in addition, he is capable of inspiring these motives in his collaborators. His concern for the well-being of his team members is not only based on ensuring that they are adequately compensated for their work and proposing interesting challenges for their development. The leader is also concerned with promoting decision-making environments in which his subordinates make increasingly better decisions, i.e. decisions driven by transcendent motives.

18.3 Reflections on Leadership Currently, we find in the literature on leadership a considerable variety of approaches and perspectives. Its study has evolved in the sense of expanding the variables that are considered relevant: from the first research on the innate traits and personality characteristics that leaders should share, to external factors, relationship with subordinates and, in recent years, factors that include an ethical dimension of leadership. In a certain way, the different theories of leadership, rather than entering into direct opposition with each other, are complementing and enriching each other, producing an increasingly integral vision of the leader as a human being. In other words, the study and practice of leadership has evolved from a mechanistic approach, in which the leader is a “great man” with a series of innate capacities, with no other context than that of effectiveness in achieving short-term goals, to an anthropological paradigm that encompasses all dimensions of human action. 3 Chinchilla, N. and Moragas, M. (2007): Dueños de nuestro destino. Cómo conciliar la vida profesional, familiar y personal, Ariel, Madrid, p. 73.

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It was in the 1970s when authors such as Burns noted a differential fact: there can be no leader without subordinates, leadership is not a unidirectional action, but a set of interactions. In 1978, Burns defined leadership as “the process by which leaders induce and encourage followers to achieve certain objectives that embody the values, motivations, needs and expectations of both parties, leader and followers. The relationship that binds them together is not based solely on power, but is underpinned by mutual reciprocity of the real needs to be met”4 . Burns’ approach to leadership represents the first stage in the so-called relational approach to leadership. Within the framework of this approach, Burns considers the existence of two leadership styles: transactional and transformational. Both are the opposite ends of a continuum. The transactional leader “motivates individuals primarily through rewards and punishments (…), is directed to the achievement of objectives, articulating the explicit agreement on the system that rewards what the leader expects from the followers”.5 We are dealing with a leader who uses the system of rewards and punishments to motivate his subordinates. His managerial style is one of command and control, with a strong use of formal power. The transformational leader, on the other hand, is engaging and motivates people. He is nonconformist, visionary and charismatic: he transforms both the state of affairs within the company and the aspirations and ideals of his followers. These two types of leadership -transactional and transformational- are basically distinguished by the way in which the leader influences the collaborator6 . He motivates his collaborators to go beyond their own self-interest through idealized influence (or charisma), inspirational motivation, intellectual stimulation and individualized consideration. The transformational leader is a charismatic leader, who pulls his followers, while the transactional leader “pushes” them. In both cases, we are dealing with a relationship of influence, a relationship that according to Rost7 is what really defines leadership: “leadership is a relationship of influence between leaders and collaborators, who attempt real changes that reflect mutual interests”. These leadership models do not, however, encompass the full richness and complexity of human action and its motivations. In the first case, the transactional manager focuses on economic and short-term relationships, offering rewards and punishments to achieve his objectives. The transformational manager appeals to professional motives, challenges of individual improvement and the like, and can have a large dose of attractiveness. It is possible to go a step further. Juan Antonio Pérez López’s anthropological model of leadership8 incorporates a third motivational dimension: transcendent motivation. In this case, leadership is defined by a relationship of personal influence: the 4

Burns, G. J. (1978): Leadership, Harper New York, Touchbooks. Vera, D; Crossan, M.: “Strategic Leadership and Organizational Learning”, Academic of Management Review, 2004, vol. 29, iss. 2, pp.: 222–240, p. 223. 6 Cardona, P.: “Liderazgo Relacional”, in Pérez López, J. A. et al. (2001): Paradigmas del Liderazgo, McGraw-Hill, p. 132. 7 Rost, J.C. (1991): Leadership for Twenty-First Century, Praeger, New York, p. 102. 8 Perez Lopez, J.A. (1993): Fundamentos de la Dirección de Empresas, Rialp, Madrid. 5

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collaborator is personally committed to the leader to carry out a worthwhile mission. This is a much deeper relationship than the one described in the case of transactional leadership (economic relationship) or even than the relationship proposed in the case of transformational leadership (professional relationship). This leader, who should be called this, generates a type of commitment among his collaborators based on personal trust and transcendent motivation. In this anthropological model, leadership is precisely the leader’s ability to inspire high ideals.

18.4 Communicative Function and Types of Motives The alignment of employee objectives with the purpose and objectives of the company is undoubtedly a basic principle of the formal structure of any organization. In other words, the manager must make the employee want to do his job, and do it well, and for this he can use extrinsic (salary, for example), intrinsic (learning, selfimprovement) and/or transcendent (providing a service to customers and contributing to the company’s common mission) motives. Modern theories of organization and leadership show that the first level (mechanistic) is clearly insufficient and ineffective in achieving the expected results. The second model, the psychosocial model, although superior to the mechanistic one, does not open the door to collaboration and the full development of the individual. Only the last level, the anthropological model of leadership, gives rise to the real and deep commitment of people within the company, who share a mission and, in moving towards its achievement, achieve the full development of their motivational quality. Pérez López defines managerial communication as a way of acting: “communication (…) consists of the whole set of actions by which the manager tries to get subordinates to be moved by rational motivation for transcendent reasons, that is, to be moved by the value of what they are doing by cooperating”9 . This communication or way of acting occurs at the three levels of the managerial function: (a) In the formulation of the purpose. The manager conveys what is to be done through the company’s formal communication systems. (b) In the communication of purpose. Different management styles allow for more or less employee participation in decision making. (c) In motivation for the purpose. The manager (leader) transmits the company’s values, helping subordinates to discover them and incorporate them into their decisions, improving their motivational structure. The manager establishes communication through the company’s formal and informal systems. The former establishes the actions and procedures to be carried out, i.e., what has to be done. In the informal system, interpersonal communication takes shape and through this channel, subordinates participate in decisions and motives are put in value. It is there, in the informal system, where the how and why of actions 9

Pérez López, J. A.: op.cit p. 259.

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take place. The following table shows the location and objectives of communication in the different managerial functions.10 The different dimensions of the functions of the manager in Pérez López’s anthropological model are cumulative, i.e., the leading manager is also an executive and a strategist. The manager, in the performance of his role as strategist, must focus on the formulation of the company’s purpose, i.e., the design of a strategy to achieve the established results. This strategy must be communicated to the rest of the company, and, therefore, the formal system is used. This is a level of communication in which the objective is really to transmit information and the quality criterion is effectiveness and is unidirectional. The executive manager transcends the formal structure and uses the informal organization and interpersonal relationships to transmit the strategy to his collaborators. In other words, he no longer has in front of him only the structures of the organizational chart, so to speak, but individuals. Its objective is to achieve the collaboration of subordinates through attractive communication and a management style that allows a certain degree of participation in decisions. Communication at this level is a tool, a technical skill of great value. However, we must not lose sight of the fact that the executive’s objective is to achieve participation, not the personal and professional development of his collaborators or their growth in values. Communication as a tool for achieving the collaboration of subordinates entails certain dangers, especially the risk of manipulation. The executive manager is not moving for transcendent motives at this level, but for extrinsic and intrinsic motives. This does not mean that there is necessarily negative manipulation, but it does mean that there is no control mechanism to prevent it. Subordinates will not collaborate because they share the company’s values or mission, but because of the remuneration and the challenge or learning involved. The leading manager, however, uses communication to generate motivation, specifically rational motivation for transcendent reasons. Everything in his behavior is part of this communication that generates unity: his actions, his words and his decisions form a coherent whole, which is what constitutes communicative behavior. As mentioned, this does not mean that he is incapable of formulating a strategy or of using attractive communication: these attributes are cumulative. The leader formulates effective strategies and communicates them to his team through attractive language and a participative management style. But, in addition, his way of deciding and acting, his way of living values in a coherent way, allows subordinates to trust the quality of his concern for them: he does not seek their collaboration without more than that, but that they also live those values and are moved by transcendent motives.11

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Moragas, D. (2010): Communication and managerial motivation. Un modelo antropológico, Doctoral Thesis, Universitat Internacional de Catalunya. 11 Cardona, P., Rey, C., & Craig, N. (2019). Purpose-driven leadership in Purpose-driven organizations: Management ideas for a better world, 57–71.

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18.5 Communication-Union Communication plays a major role in the governance and management of organizations and its development goes hand in hand with the development of leadership. Even the first theories of organization, from the mechanistic model, emphasize the importance of formal communication when transmitting, through the formal system, the company’s strategy. In addition to being formally effective, communication must be attractive, and this is something that is soon highlighted by the first approaches to relational leadership. It is not only a question of transmitting information in a neutral way, but also necessary to convince and persuade. To this end, communication is analyzed and studied as a technical skill. Active listening, argumentation, presentation techniques or feedback processes are undoubtedly of great interest and relevance for a manager to be able to establish effective communication with his collaborators. But communication at the level of the true leader goes beyond persuasion. The relationship between communication and leadership in the anthropological model of human action is profound and generative. On the one hand, it encompasses all facets of human expression, i.e., it is a behavior that is present not only in language, but in action itself: by deciding and acting, the leader communicates his or her way of living certain values. Moreover, it is generative because it generates motivation, it gives rise to something new that develops in interaction. Communication-union also generates unity among the interlocutors and improves the quality of the motives of all of them. The leader, through this communication-union, is able, in short, to help each of the people with whom he collaborates to find the meaning of their work: “once he has discovered the meaning of the work, he must know how to transmit it–communicate it–to each of the participants (…) so that each of them can find meaning in their specific contribution to the organization. If he fails to do so, he will be unable to manage them well”12 . This leadership competency is crucial in order to implement the corporate purpose.13 Deploying the purpose by generating a shared sense of purpose among employees means gaining awareness by seeing the contribution that daily tasks generate in other people. Being clear about the why and for whom of actions impacts on how we do them. Thus, we conclude that communication is the tool that allows the leader to lead his collaborators, precisely because it is through communication that he manages to raise the quality of their motives, generate trust and help each of them discover the meaning and value of their contribution. This is the essential unit for the success of a company’s and a society’s long-term sustainable strategies.

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Pérez López, J. A.: op.cit, p.260. Lleó, A.; Montaner, A.; Edmondson, A.; & Sotok, P. (2022). Unlock the Power of Purpose. MIT Sloan Management Review, 63(4).

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18.6 Wrap-Up: Communication and Leadership for Sustainability Communication constitutes an area of knowledge that is almost incomprehensible, inherent and inseparable from human action. Its function goes far beyond the primary utility of transmitting information. It is the vehicle that links people’s emotions, feelings, aspirations, and values in interpersonal relationships. In the framework of that special type of human organizations we call "companies", communication runs through the formal system, giving life to the internal and external communication systems through which the participants know their functions, their remuneration and, in short, the established rules of the game. It is a unidirectional path that does not wait for a response. But communication in the company also feeds the informal system, which is inseparable from the specific people who make up that specific company. People with names and surnames, who interact with each other. And it is in this informal system, alive and organic, where communication meets anthropological leadership. The use of communication for persuasion and the dragging of wills can be a double-edged sword when this function is carried out outside the Ethos, without a clear reference point in the values of the person and the company. The charismatic leader, who achieves the collaboration of his subordinates through brilliant and inspiring speeches, represents an obvious risk which, although it should not lead us to reject the more instrumental facet of communication as a technical skill, does suggest the convenience of going a step further. The true leader, the one who knows the real needs and capabilities of his collaborators and shows a real and deep interest in their personal growth and learning in values, uses communication tools with a clear goal. Communication becomes the driving force for building trust between the leader and the other stakeholders when it shows the coherence between what is said and what is done, i.e. the integrity of the decision-maker, who puts his rational motivation into action for transcendent reasons by taking into account the real needs and the impact of the decision on the various stakeholders. This is because the leader’s transcendent motives refer, first and foremost, to his collaborators. But they are not limited to them but include all the stakeholders affected by his decisions. The natural environment? Of course, the sustainability and growth of suppliers? The well-being of customers? Essential. Thus, the leader’s decision-making process includes not only the effectiveness and efficiency of the company’s production process as relevant criteria, but also the relevance and impact on all stakeholders whose survival and well-being are affected (Table 1).

Nuria Chinchilla is professor in the Department of Managing People in Organizations of IESE Business School, holder of the Carmina Roca and Rafael-Pich Aguilera Women and Leadership Chair, and Director of the International Center I-WiL. Degree in Law from the University of Barcelona, MBA from IESE Business School, Doctor in Economic and Business Science from

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Table 18.1 Managerial communication in Pérez López’s theory of managerial action Paradigm

Type of manager

Management function

What is to communicate

How How it does it To whom it communication communicates should be

Mechanic

Strategist

Formulation of the purpose

Formal system Logos

Effective

Information

Psychosocial

Strategist Communication Technical + of purpose ability Executive Pathos

Attractive

Transmission/ To an Dialog individual

Anthropological Strategist Motivation on + for purpose Executive

Communicative Unifying behaviour o Ethos

Integral development communica tes values

To a function

To a person

the University of Navarra. She also holds a Ph.D. in Business Management from IESE Business School (University of Navarra). Diplomas from Harvard Business School and Stanford Graduate School of Management. Executive Program in Organizational Change. Stanford University (1986). Strategic Perspectives in Non-profit Management. Harvard Business School (1995). Her areas of research include boards of directors, change management, organizational development, professional careers, work and personal life balance, corporate social responsibility, management competencies, time management, interpersonal conflict and the management of non-profit organizations. She has served on steering committees, boards and advisory councils such as the Council of Experts of the Generalitat of Cataluña, the Commission of Honor of the Business Forum of Spain, the board of directors of the Fundación + Familia, of the advisory board of the Quality Agency of the University System in Castilla and León (ACSUCYL) and of the board of directors of the Agrarian Family Schools of Cataluña. Pilar Garcia is Associated Researcher at IESE University of Navara, at the Carmina Roca and Rafael-Pich Aguilera Women and Leadership Chair. Degree in Sociology and Politics from the Universidad Nacional de Educación a Distancia (UNED), Doctor in Human Behaviour and Organizacions from the University of Navarra. She also holds a Ph.D. in Business Management from IESE Business School (University of Navarra). Diploma in SPSS Data Analysis from Essex University (1991) Her areas of research includes competences evaluation and development, Desarrollo del liderazgo en las organizaciones, diseño y gestion de Sistemas de SCR and diversity management in large organizatios. She is the author of numerous scientific publications, articles in specialized magazines and books related to the labor market, leadership and personal development. Alvaro Lleo Ph.D., is an Associate Professor at the School of Economics and Business of the University of Navarra and affiliated research Scientist at Shine of Harvard University. He completed two bachelors’ degree in Industrial Engineering and in Industrial Management Engineering at the Polytechnic University of Valencia. He holds his Ph.D. at the Polytechnic University of Valencia analyzing trust relationships between managers and subordinates. Previously, he worked as a continuous improvement engineer in the assembly line of Ford (Spain). His main research has focused on the study of the human factor in organizations aligning people’s potential for the benefit of a shared project. Currently, his research is centered on organizational purpose. He is the principal investigator of the Purpose Strength Project, an observatory for generate evidencebased knowledge about purpose implementation and the generation of more purpose-driven organizations. He was Fellow Researcher at the RCC at Harvard University (2014), Visiting Scholar in the Hoffman Center for Business Ethics, at Bentley University (2010, 2018) and Visiting Faculty at the Human Flourishing Program at Harvard’s Institute for Quantitative Social Science (2020).

Part II

Communicative Perspectives on Innovation, Strategy

Chapter 19

Modern Leadership in Regulation; Lessons from Moral Education Han de Haas and Martin de Bree

19.1 Introduction 19.1.1 Problem “Just imposing big fines, if that is the only way, that is the way it has to be. But I doubt whether that is the way to get companies on the straight and narrow.” In the Dutch national daily newspaper NRC Handelsblad on 11 April 2015, Chris Fonteijn, former Chairman of the Board of the Netherlands Authority for Consumers & Markets (ACM), wondered whether there were other ways to get and keep companies on ‘the right and narrow path’ rather than simply administering fines. If, in the event of noncompliance with the law and the rules derived from it, the government intervenes, this usually takes place in the form of sanctions or the threat of sanctions. An example of this the Dutch National Enforcement Strategy for Environmental Law. This is a sanction strategy, which was adopted in 2014 by all inspectorates in the domain of environmental law, lays down the assessment framework for the application of retaliation and deterrence by these inspectorates. Punishment, or the imposition of sanctions, is a moral process. However, the justification of punishment, or the imposition of sanctions, entails moral problems because it is all about actions or behaviours which, in morally sound relationships, are considered wrong. It is usually wrong to shut people up or to take their money without return (Duff & Garland, 1994). The motivation to punish anyway has to do with preserving the social order (Deigh, 2014).

H. de Haas Laan Van Klarenbeek 130, 6824JV Arnhem, The Netherlands M. de Bree (B) Marshalllaan 9, 3223HC Hellevoetsluis, The Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_19

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It is assumed that the imposition of sanctions by the government, or the threat of such sanctions, will deter the infringer and any other potential infringers so that they will comply with the rules in the future (Wingerde, 2012). This reasoning follows the rational choice model and assumes that, under certain conditions, punishment contributes to compliant behaviour (Balliet et al., 2011 and Erp et al., 2008). The rational choices are categorised as the chance of being caught, the chance of being sanctioned and the severity of the punishment. The severity of the punishment indicates the degree of social disapproval of the actions or behaviour in question. In criminology, this is termed the communication effect of deterrence, in particular aimed at the potential offender (Zimring, Hawkins & Vorenberg, 1973). The call for stiffer sentences in response to malpractices in the corporate sector is usually substantiated by politicians on the basis of the conviction that punishment has a deterrent effect and thus preserves the social order (Wingerde, 2012). There are, however, significant objections to the application of sanctions by the government. Pligt et al. (2007) conclude that control and punishment have a limited deterrent effect and, moreover, a limited effect on regulatory compliance. Winter and May (2001) takes the view that the imposition of a fine by an inspectorate may be regarded as bullying. Research carried out by Mulder et al. (2014) show that a sanction often has more negative effects in terms of the infringing company’s sense of justice and moral consciousness than a warning. Mascini and Van Wijk (2009) argue that warnings and punishments can be regarded as much more negative by the company in question than intended by the regulator. According to Ayres and Braithwaite (1992) sanctions are therefore only initiated if other, non-punishmentbased, interventions do not work. The limited effectiveness of the sanctions-based regulatory strategy is also experienced in practice. In its 2014 annual report, the Netherlands Authority for the Financial Markets (AFM) points out that informal measures may be more efficient than more formal ones. These signals imply a need for a different approach, one which goes further than merely imposing sanctions and hoping for results. In addition to sanctions, interventions are required that more cleverly contribute to better regulatory compliance.

19.1.2 Question If sanctions are applied in isolation and have only a limited value, what then are the options for increasing their effectiveness? Some authors (Huisman & Beukelman, 2007; Mulder et al., 2014; Treviño et al., 2006; Wingerde, 2012) suggest that a moral message can contribute to regulatory compliance by companies, but research into the use of a moral message in a relationship in which one party supervises another (hereinafter referred to as a ‘regulatory relationship’) is very scarce. In this chapter, we use a metaphorical comparison between the upbringing of a child and the use of punishment, on the one hand, and the use of a moral message in combination with a sanction by a public regulator, on the other. To this end, we

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studied the educational literature in respect of the mechanisms of moral development of children in combination with punishment. To our way of thinking, there are various similarities between bringing up children and supervising companies. Firstly, there is the matter of a vertical, hierarchical relationship. One party has authority over the other in both relationships. Secondly, a standard is passed on in both relationships. And, thirdly, a punishment is applied if the standard is infringed in both relationships. Inherent to the use of metaphors is recognition of the fact that there are indisputably differences between the two matters being compared. But already Barnard (1968) recognized the complexities of the human element in organizations and the psychological forces of human behaviour (Gabor & Mahoney, 2013). Research work on organizations by March and Simon (1993) showed that the most important aspect of behaviour and decision-making in organization was its essential irrationality. In relation to the Bounded Rationality Theory (March & Simon, 1993), the individual is posited to be involved in activities that are the result of psychological factors. Individual judgements come from the heart or from the deepest depths of our experience (Barnard, 1968; Gehani, 2002). The organization as a cooperative system can be seen as overcoming an individual’s physical and cognitive limitations: bounded rationality (Gabor & Mahoney, 2013). Keeping the Bounded Rationality Theory in mind, companies and managers might have a lot in common what is found out by education research because decision making in a company is complex and often not rational (March & Simon, 1993). We look at the factors we have found in educational literature which, in combination with punishment, influence moral development and examine the extent to which they can be applied to public regulation. Initially, we discuss how education looks at the seemingly contradictory connection between punishment and moral development. Subsequently, we pursue the question of whether findings from education can be applied to public regulation.

19.2 Educational Vision on Punishment and Morality The moral development of children and the relationship between moral development and punishment have been comprehensively studied. The conditions under which punishment and moral development can or cannot go hand in hand and the applicable dependencies have also been examined. In this section, we analyse the literature in this field and arrive at conditions for moral education. Weijers (2000) argues that the value of punishment is that it is an element of the communication between the parent who punishes and the child who is punished. According to him, the value of punishment lies not only in the child being punished but also in the intentions of the punishing parent. The purpose of the punishment is to ‘heal the infringement’. Not to be punished if one deserves it is, in fact, the same as the non-imposition of a punishment by the person with the responsibility for doing so. Weijers stresses that punishment in the bringing up of children leads to a reciprocal relationship: the concept of the teacher or parent and his or her responsibility for the

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moral development of the child and the child’s recognition of the fact that the child he or she is responsible for his or her own mistakes. Helm et al. (2014) discuss the advantages and disadvantages of punishment in relation to secure youth care. There is, according to Singer (1970), a minority movement in the world of education with the view that behaviour can be effectively influenced by punishment. This movement (Dari-Mattiacci & Geest, 2009) believes that punishment is more effective than rewards because the latter run out and the former do not. Helm et al. claim that the mainstream in the world of education does not endorse this view. As early Peters (1966) showed that the positive educational value of punishment is doubtful and that it causes alienation. Punishment teaches chiefly what not to do instead of what to do Helm et al., (2014) and punishment obscures the value of the behaviour to be learned (McCord, 1997). Furthermore, punishing children leads to an increase in lying. If the child is honest, he or she will be punished; by lying this consequence is avoided. A metaanalysis of punishment by Andrews and Bonta (2010) shows that punishment without rehabilitation has no effect. Approaching the child positively and customising the correction, that is, not punishing him or her in a hostile or violent manner; give the best results in terms of achieving the intended change in behaviour (Helm et al. 2014). The correction of the child thus targets learning the right values, values which are elements of moral education. Before we analyse punishment in relation to moral education, we first describe the concept of ‘moral education’ based on the educational vision. Marshall (1984) considers moral education to be the instilling of respect for rules. Olthof (1999) deems moral education, or moral upbringing, to be the teaching of the child him or herself to consider certain behaviours as ‘good’ or ‘not good’. The child is taught to judge situations and behaviours. The question is whether punishment and moral education go together from an educational standpoint. Marshall (1984, 1989) has considerable problems with this position because punishment impairs the ‘development of the rational autonomy’ of the child. Punishment, or threatening with punishment, undermines moral education or the instilling of respect for rules. Hobson (1986), on the other hand, finds Marshall’s analysis too rigid and contends that punishment and moral upbringing are compatible and exchangeable. He argues that punishment can help moral upbringing because it creates the preconditions for the successful start of moral education so that the child gets to know morally relevant information. Punishment plays an essential role in the socialisation process of children. Living in a social context entails restrictions and that can involve sanctions if certain behaviour is shown which impairs the well-being of the community. Hobson (1986) puts forward three arguments for why punishment can support moral education. Firstly, very young children, who cannot understand the reasons why certain things are wrong, can often only be taught this by some form of sanction or punishment. Secondly, punishment teaches the child to understand the relative seriousness of the different infringements (small things, light punishments; large infringements, more severe punishments) and that this is taken seriously when it comes to the action taken. Thirdly, the use of equivalent punishments, i.e. doing to a child what he or she has

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done to another, e.g. smacking a child who has smacked another, can teach them the consequences of their behaviour. Hobson (1986) concludes that punishment in relation to moral education must take place carefully and responsibly. If a parent or teacher punishes a child, it must be made clear that ‘they still have a basic sympathy with the child and an interest in his or her future progress’. In the debate between Marshall and Hobson, instead of using punishment, Marshall (1989) endorses a contemporary authoritative educational role which promotes the right attitude by means of influence and training. Marshall’s vision is in line with the communication theory of punishment described by Ward and Salmon (2009). In this theory of ‘communication being the justification for punishment’, they explain that the focus is on the relationship. The person to be corrected is approached with respect and dignity, any punishment given is proportional to the infringement and the behaviour of the individual being punished is involved, the showing of remorse and reform being particularly important.

19.3 Conditions for Punishment in Education 19.3.1 Educational Punishment On the basis of our exploration of the relationship between moral education and punishment, we will now look into the conditions punishment must meet, before we can call it ‘educational punishment’. On the basis of the educational literature reviewed, we arrive at four factors in the use of punishment which are relevant for the teacher or parent in the moral upbringing of a child. The debate between Marshall and Hobson yields two factors. First, punishment must take place in a situation which is based on trust (Weijers, 2000). The concept of trust is described more precisely by Weijers as ‘mutual trust’ or the trust between the teacher or parent and the child. Trust is someone’s expectation that the individual he or she trusts will act in a manner which will not harm him or her in any way. Mutual trust is therefore all about the mutual expectations of the parent and child regarding the actions of the other. The second factor is that the parent has moral authority. A person has moral authority if he or she is genuine, makes big sacrifices, not for his or her own enrichment, but for others (Demaerel, 2015). By extension, Hobson (1986) names the third factor: punishment must be related to love for the child. Hobson explains this as follows: it must be clear that the punishing parent loves the child, has a basic sympathy for him or her and an interest in his or her development. Punishment may perhaps seem contrary to the child’s interests, but if the punishment is intended to convey to him or her the difference between conduct which is socially acceptable and conduct which is not, it will ultimately help him or her to be able to function in society. A parent therefore punishes a child to instil values and standards.

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The fourth factor comes from Weijers (2000). He draws attention to the factor ‘recognition of the person’. Recognition of the person or identity concerns guilt without shame. This factor is important because the concepts of guilt and shame have implications for moral upbringing. Guilt is linked to the infringement of the rules, shame is linked to a personal failure and, or inadequacy. Guilt can be punished and forgiven and the acknowledgement of guilt can, in turn, make someone a fullyfledged member of the community. Shame has no relation to forgiveness; shame places someone outside the community and, in doing so, leads to moral exclusion. Feelings of shame may also feature in the case of guilt, but this form of shame does not lead to moral exclusion. It supports rehabilitation and the moral development of the individual punished. Recognition of the person’s identity is realised by focusing on his or her behaviour and, or actions and holding him or her morally responsible. Based on the educational literature analysed, we conclude that, under certain conditions, moral education can go hand in hand with punishment. The factors which determine the effectiveness of moral education are moral authority, mutual trust, love for the child and recognition of the identity of the individual in question. In the following section, we examine whether these insights from education can be applied to public regulation on the basis of the realisation that a child cannot automatically be compared with a company.

19.4 Moral Communication in Public Regulation In this section, we examine more deeply the effect of moral messages, in combination with a sanction or an intervention, in public regulation. We use the factors found for moral education to create a model for public regulation. A regulator uses a moral message to enhance the moral development of the company. In his or her moral message, the regulator delivers judgement on the ethical actions of a company. The content of the message can comprise the naming of ‘the error’ of the infringement, an explanation of the harm caused to people and society, an appeal to look at the actions differently and the pointing out of the responsibility of the company in question (Erp, 2013). Moral development is the improvement of the ethical behaviour of the company under regulation. Improving moral development is necessary because it is assumed that a sustainable improvement in compliance by companies can be achieved by this means. The ideal situation to realize, is the need of the company to comply with the rules; the company wants to comply because they agree with the just and fairness of the rules (Elffers, 2014). To create this intrinsically motivation of the company, the measurable outcome of moral development is the acceptance of the rules. As regards the process of moral development and decision-making Jones (1991) developed the model suggested by Rest (1986), in which the latter analyses in four steps how an individual arrives at an ethical decision and subsequent action. The models by Rest and Jones fall back on Kohlberg’s (1976) Cognitive Moral Development (CMD) model. This CMD model is based on the assumption that a child’s

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morality develops towards ‘higher’ ethical considerations. According to Rest’s and Jones’ models, a higher moral development provides the basis for the improvement of ethical decision-making which, in turn, results in better moral actions and behaviours. It would be incorrect to assume that the factors which are deemed relevant for moral development in relation to punishment in education automatically apply to public regulation. This is why we have explored the applicability of these factors in more detail and have subsequently developed a model with factors which influence moral development in a regulatory relationship: Moral Education and Regulation. We use this model to derive propositions regarding these factors.

19.4.1 Conditions The model discussed next (Fig. 19.1) focuses on promoting moral development in the party subject to regulation, that is, the company, by means of a moral message. Our proposition is that the four aforementioned ‘educational factors’ also apply to the use of a moral message by a public regulator. In this context, we define the promotion of moral development by means of a moral message as ‘moral education’. This formulation of the concept of moral education implies that the important thing is to instil respect for the rules and for the party concerned to learn to judge the values and interests which the rules are intended to protect. Subsequently, we go into each of the four factors in the model in detail. We substantiate the model and arrive at propositions concerning the giving of a moral message by the regulator in relation to an intervention or sanction.

Fig. 19.1 Moral leadership and communication model for regulators

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Mutual trust, concerns the relationship between company and regulator. It assumes decisions by both actors to trust the other. The other three factors concern the regulator’s behaviour, behaviour which may contribute to mutual trust. Love implies that the regulator is well-disposed towards the company. Recognition of the company’s identity implies that only the company’s behaviour is being criticised and not its identity. Moral authority means that the regulator and the inspectorate give a good example with regard to ethical behaviour. All these four factors, in combination with the moral message incite intrinsic motivation. This can lead to acceptance of the rules: improvement of compliance. We discuss the meaning and effect of the separate factors in the regulatory relationship below.

19.4.2 Moral Authority Educational theory shows that a child being able to recognise the moral authority of the teacher or parent is a basic condition for punishment to result in moral development (Weijers, 2000). Only if the teacher or parent shows moral authority, can the child be expected to take responsibility for his or her bad behaviour. By analogy with the parent–child relationship, we would therefore expect that the regulator must also have moral authority and display this with respect to the company. How likely is it that the company’s perception of the regulator’s moral authority contributes to moral development? A regulator, who does not give the right example and, for example, is in the news for infringing rules, will lose authority and, if he or she calls upon a company to respect the rules, he or she will probably be considered hypocritical. Conversely, a regulator who demonstrably keeps to the rules will have the authority to call parties to account with regard to their ethical behaviour. Earlier, Stoopendaal et al. (2014) have pointed out that people tend to follow the example of regulators. This suggests that a regulator who behaves ethically invokes similar behaviour in the organisation under regulation. In relation to this Barnard (1968) states that: “I know nothing that I actually regard as more ‘real’ than ‘authority’”. The Behoorlijkheidswijzer (Dutch Code of Good Administrative Behaviour) drawn up by the National Ombudsman of the Netherlands can be seen as an interesting guideline for regulators. The concept of integrity plays an important role in honest and reliable conduct in the ‘Dutch Code of Good Administrative Behaviour’. On the basis of the fact that people tend to follow the example of others, it is beneficial if a parent does not smoke if he or she want to dissuade a child from smoking. So the expectation is that it will be beneficial if a regulator acts ethically if he or she wishes to promote ethical actions by a company. Integrity requires that the regulator acts in accordance with moral values and standards which are ethical. Kaptein (2013) has elaborated on the concept of integrity for the government. Kaptein describes integrity as a moral concept: “Someone with integrity acts consistently in accordance with the moral values and standards which apply to the position”. The public regulator must therefore know what moral values apply and act accordingly. Integrity is, however,

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not just acting in accordance with what is moral but also, and primarily, with what is ethical. Ethics reflect on morality. Ethics act as an imaginary judge who assesses what is good and bad, responsible and irresponsible and acceptable and unacceptable. As stated by Barnard (1968), the moral factor can be the power of individuals to inspire cooperative personal decision by creating faith. The considerations above seem to indicate that regulators, who give a good moral example and, as a result, enjoy moral authority, can achieve the faith they sent the ‘just’ message.

19.4.3 Mutual Trust Research carried out by Helm et al. (2014) and Weijers (2000) has shown that, on the basis of the educational concept, punishment must take place in a situation based on mutual trust, the teacher or parent being responsible for the moral development of the child, and the child recognising the fact that the child him or herself is responsible for his or her own mistakes. In the context of public regulation, mutual trust means a reciprocal relationship between the party under regulation, the law and the regulator. Trust is the belief that the other party will not disadvantage the party who trusts unnecessarily. The relationship between regulation and trust is a much discussed theme. Although traditionally it is said that regulation must be based on ‘healthy distrust’, some researchers and regulators recognise the value of the concept of trust in regulation. Both parties in a regulatory relationship can help build trust by keeping to the agreements made, ensuring that there is expertise, being open about any problems and showing self-reflection (Haas et al., 2011). Mutual trust will grow as a result of this behaviour on both sides. More trust leads, in turn, to more openness, which leads to more trust, and so on. A spiral of positive feedback of this kind can assure greater regulatory compliance. Gunningham and Sinclair (2009) claim that trust is essential for assuring compliance. Justice plays a large role in the extent to which those involved trust the regulator. On the basis of his study of regulatory compliance, Tyler (2006) emphasizes the importance of a ‘just law’ and a ‘just’ regulator. Voermans (2007) endorses Tyler’s research and the conclusion that the morality and inherent justice of legislation are major determining factors for compliance with it. He also supports Tyler’s conclusion that it is not deterrence which determines compliance with legislation but legitimacy. Voermans has this to say about the matter: “A legitimised legislator is often taken at his word, and almost automatically obeyed—without any further deliberation—by the general public: this forms, as it were, the x-factor of legislation.” Six (2013) contends that trust and control do not have to conflict with one another but can be applied side by side and that they may even reinforce one another. Trust in an organisation is reinforced by the interpersonal trust between the individual inspector and the individuals at the organisation under regulation. Six states that the balanced application of checks creates a sturdy foundation for the regulator’s trust in the company and that of the company in the regulator.

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19.4.4 Love At first glance, love and regulation seem to form a strange combination. In this section, we first examine the concept of ‘love’ in more detail and subsequently establish the link between it and regulation. Based on the educational concept, punishment must be linked to the love for the child in question. The child, when punished, must have the conviction that the parent has no alternative but to punish him or her and that the parent is acting in his or her interest. It will undermine the development of moral values if, when the child is punished, he or she is not convinced that the punishment is deserved. The child must realise that the parent is correcting him or her on the basis of the loving relationship between them. The ancient Greeks characterised the concept of love in four ways (Lewis, 1960): ecstatic love (Eros), love as friendship (Philia), love as unconditional surrender to God (Agape) and love for one’s family members (Storge). The concept of love referred to in the regulatory relationship is similar to that termed ‘Philia’, a form of love described by Aristotle as being well-disposed towards others (Hughes, 2001). Aristotle points out that Philia goes further than simply liking someone. He interprets it as wanting good for others, wanting their well-being and not one’s own and being willing to act accordingly. Hobson (1986) interprets love as a combination of basic sympathy and having an interest in the future development of the other. In keeping with the concept of ‘Philia’, and in accordance with Oord’s (2010) approach, we define love as that which entails acting intentionally, in sympathetic response to another person, to promote their overall well-being. How can a ‘loving regulator’, contribute to moral development of a company? The Dutch Code of Good Administrative Behaviour 2016 is a useful guide to this end. This document states that the government must act proportionally. It literally recommends that ‘to achieve its objective, the government must choose a means which does not intervene unnecessarily in citizens’ lives and which is proportional to that objective’. It would seem obvious that a punishment is easier for the punished individual to accept if he or she is convinced that the aim of the individual imposing the punishment is to improve the punished individual’s well-being. It seems likely that a regulator who is seen to take the well-being of the company into consideration when imposing a sanction can count on more understanding than a regulator who does not. A ‘loving regulator’ will pay demonstrably more attention to the interests of the company. Pérezts and Picard (2015) describes the positive effect of what he calls ‘comfort zones’ in which regulators and company representatives engage in talks. A comfort zone makes it possible to discuss the interests of both the company and the regulator at a more personal level. Confronting the company representative about the fact that a standard has been exceeded and explaining the rationale for the standard, will help the company to understand why the regulator is intervening. This regulatory interview will, furthermore, lead to improved risk analyses, compliance and moral development of the company in question.

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19.4.5 Recognition of Identity Educational and general literature about punishment in relation to morality indicates that recognition of the personal identity of the infringer must be the key element. The important thing is therefore that he or she is held morally responsible for the behaviour and, or actions in question. Only the behaviour is condemned and not the person who acts in an unacceptable manner. Weijers (2000) links condemnation of the behaviour to guilt, without there being any question of shame, which is linked to the person in question. For public regulation, this factor means that the behaviour and/or actions of the company is/are judged and not the personal identity of the company. This is effective because behaviour, including the underlying values and standards and culture, can be changed, whereas identity cannot. If the company does not act or behave in accordance with the law or rule or what is socially acceptable and expected, the behaviour is highlighted as being the problem. This approach is in keeping with Braithwaite’s (2014) theory of Restorative Justice which focuses on the problem instead of ‘getting personal’. If regulatory bodies focus on behaviour and, or actions and tackle the company in question about it/them the morality of the behaviour and/or actions can be opened up for discussion. Also Mooijman et al. (2017) suggest that sanctions are not targeted towards the self. This method is consistent with the Communication Theory of Punishment described by Ward and Salmon (2009). This theory focuses on the relationship between the party imposing the punishment and the one being punished. As regards relationship, there is an equal moral status. This means that the punished party is called to account as a person of value and approached with respect. The difference with love is that here the punished party is recognised as a person, whereas in the case of love, the regulator is well-disposed towards him or her and the concerns of the company. The approach based on Restorative Justice and the communication theory is also in line with the management studies on feedback. In the case of constructive feedback, the focus is on the deviation from the standard the employee must meet and criticism of the personal identity must be avoided (Aguinis et al., 2012). The company ‘is’ not bad but the bad behaviour is condemned, so that there is room for other behaviour by the same recognised identity.

19.5 Implications for Regulators A regulator who shows ‘love’ for a company, demonstrates moral authority, calls the company to account for its actions and behaviour and approaches it in an atmosphere of mutual trust will be able to support the company’s moral development. The enhancement of moral development will benefit compliance and, in turn, the public interests the regulator serves.

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In this chapter, we examined whether the application of a moral message by a public regulator, can promote a company’s moral development. On the basis of insights from education, we arrived at the conclusion that four factors play an important role in moral education. An enhanced moral development leads to an improvement in the company’s ethical decision-making and moral actions and behaviour. The improvement in ethical decision-making provides the basis for a durable improvement in compliance because the company becomes more deeply aware of the ‘just rule’. We would like to close this chapter with a few comments relating to the limitations of a moral message. The first concerns the danger of regulatory capture. The regulator will have to guard against strategic behaviour from the company to prevent him or herself from going too far in terms of loving behaviour and being led on; he or she will be wise to guard against naivety (Huisman, 2001). Our second comment concerns the notion that the sensitivity for moral messages varies from company to company and can vary in a particular company at different times, depending on the circumstances. Research from Desmet et al. (2015) has shown that ethical considerations ‘fade into the background’ in the case of companies which operate in highly competitive environments. Finally, our third point is that specific competences are probably required of a regulator if he/she wishes to effectively influence a company’s moral development and intrinsic motivation. We assume that a regulator who has insight into the effect of moral development at companies and knows how to convert this knowledge into effective action to promote moral development will improve their compliance and so carry out his/her regulatory duties more professionally. This regulator demonstrates modern leadership, has a substantial impact on compliance and promotes the intrinsic motivation of companies.

References Aguinis, H., Gottfredson, R. K., & Joo, H. (2012). Delivering effective performance feedback: The strengths-based approach. Business Horizons, 55(2), 105–111. Andrews, D. A., & Bonta, J. (2010). The psychology of criminal conduct (5th ed.). Routledge. Ayres, I., & Braithwaite, J. (1992). Responsive regulation: Transcending the deregulation debate. Oxford University Press. Balliet, D., Mulder, L. B., & Van Lange, P. A. (2011). Reward, punishment, and cooperation: A meta-analysis. Psychological Bulletin, 137(4), 594. Barnard, C. I. (1968). The functions of the executive (Vol. 11). Harvard University Press. Braithwaite, J. (2014). SPECIAL ISSUE: Evidence for restorative justice. The Vermont Bar Journal, 40(2), 18–22. Dari-Mattiacci, G., & Geest, de G., (2009). Carrots, sticks, and the multiplication effect, Journal of Law, Economics, and Organization (p. 365–384). Deigh, J. (2014). Punishment and proportionality, criminal justice ethics (p. 185–199). https://doi. org/10.1080/0731129X.2014.988429 Demaerel, I., (2015). Dringend gezocht: morele autoriteit! [Wanted urgently: moral authority!]. Retrieved from http://www.socialevraagstukken.nl/dringend-gezocht-morele-autoriteit/

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Han de Haas is senior policy officer at the Dutch Province of Utrecht. He conducted academic research on modern public regulation at the Erasmus University Rotterdam. He is especially interested in innovative regulation policies that engage regulated companies in order to cooperate in achieving higher levels of sustainability. Martin de Bree is post-doc researcher at the Rotterdam School of Management, Erasmus University Rotterdam. After his Ph.D. at the Technical University Delft, he has published in various international peer reviewed journals about metaregulation, system-based regulation and innovation of law making processes.

Chapter 20

Creative Activism: Engaging Intrapreneurs in Organizational Achievement Henrik Totterman

20.1 Introduction This chapter presents how organizations can benefit from nurturing intrapreneurship and internal crowdsourcing to solve pressing business challenges. Indeed, executives can motivate employees by engaging them in co-creating a vision, co-defining value, and delivering desirable solutions to problems worth solving. Also, employees can act entrepreneurially when allowed to develop and create new business opportunities within given strategic, resource, and operational boundaries. I define such activities broadly as intrapreneurship, which implies the act of an entrepreneur by employees or immediate partners of an established organization (Antoncic & Hisrich, 2003). Unlike independent entrepreneurship, executives set strategies and milestones in corporate intrapreneurship. Employees act entrepreneurial when improving, developing, and creating new business opportunities within the given strategic, resource, and operational boundaries. The creative and managerial freedom, as is the riskreward ratio compared to the alternative of becoming self-employed, is limited. On the flip side, intrapreneurs are, at best, backed up by extensive financial, human, and social resources typically inaccessible for most self-employed. Access to corporate re-sources is, at best, a blessing. However, intrapreneurs may also experience corporate bureaucracy, and similar to self-employment, they still need to secure funding and deal with associated uncertainty. Past research on innovation and corporate entrepreneurship focuses primarily on incremental and disruptive innovation efforts to sustain, survive, and thrive in dynamic market conditions (e.g., Christensen, 1997). Intrapreneurship research is still emerging and interdisciplinary in terms of theoretical perspectives, methodological approaches, and appropriate levels of analysis (Åmo & Kolvereid, 2005). In order to narrow the focus, Blanka (2009) distinguishes between corporate entrepreneurship, H. Totterman (B) 3 Emerson Rd., Winchester, MA 01890, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_20

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entrepreneurial orientation, and intrapreneurship. Accordingly, they are all related, but intrapreneurship is foremost an individual or team rather than an organizationlevel activity. This distinction is essential, as I assume that under the right kind of circumstances, individuals or small teams of employees can be encouraged and harnessed to think and act as part of a larger organization with intrapreneurship ambitions. Imagine the potential, at any given time, if most employees act and behave as if it is their money and company while focusing on customer-centric problem-solving. The chapter unfolds as follows: Next, I introduce the four dimensions of organizational achievements: priorities, people, performance, and partners, and I define a shared vision of impactful customer problem-solving. After that, I provide a few examples and a pathway toward increasing organization wide engagement by empowering and engaging the organization in digitalization enhanced creative activism. Finally, in the last section, I conclude with implications for executives and aspiring intrapreneurs.

20.2 The Four Domains of Organizational Achievement I strongly advocate for a mission-driven organizational culture, where decisions and explorative actions originate in the core mission and build on realistic assumptions of the future, backed up by a strong culture of engagement and effective communication. According to Rand Corporation’s over 50 years of corporate studies: alertness, agility, adaptability, and alignment for success are the key pillars of high-performing organizations, and continuous transformation is inevitable in this day and age (Light, 2005). Creatively active leaders can embrace the opportunity to drive sustainable change and growth through responsive management practices. In times of disruption, an explorative affordable loss mentality, typical for entrepreneurs, can keep the organization agile yet prepared and in a controlled change mode, which can gradually accelerate when unexpected circumstances warrant. Despite March’s (1991) influential paper on organizational learning, still today, surprisingly, few organizations are good at balancing innovative customer-driven innovation with exploitative customer-driven problem-solving. For instance, design thinking offers a well developed framework for continuously exploring and driving improvements in an iterative process (cf. Martin, 2009). In my upcoming book on intrapreneurship, creative activism, and impact systems (Tötterman, Forthcoming), I advocate that creatively active people can operate across the organization in all business modalities. They are known for envisioning the unexpected by exploring possible futures, setting priorities, and defining actions for each objectively identified reality as they are forecasted and unfold in real time. Business thinking is backed up by design, future thinking, and quickly adaptable plans, processes, and structures for sudden change situations. One thing is to design solutions and define future scenarios. Another is to remain ready for any customer demand shifts or unexpected emergence of alternative realities and competing solutions. Wise strategic pivots require readiness, which most organizations need to improve in

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Fig. 20.1 Customer driven organizational achievement (Tötterman, Forthcoming B)

their business core and customer-facing activities (Abbosh et al., 2019) as shown in Fig. 20.1. Aptitude for high performance requires consistent development of the organization’s culture, where people feel appreciated for taking proactive initiatives that favor the customer without sacrificing the organization’s integrity. Creative leaders recognize the importance of building a trustful and motivated work environment where people feel that the organization’s best interest aligns with their motivations and desires to make a difference and impact. Arguably, constant alertness, agility, adaptability, and alignment are essential priorities. However, constant adaptation can start wearing on the organization and its strategic partners. It is wise to isolate change-related initiatives initially and gradually expose more significant parts of the organization. Regarding performance, we need to realize the importance of a vital mission backed with clear objectives and metrics that motivate a cross-organizational determination to reach success as a starting point. Creative leaders are essential, but comprehensive organizational support is detrimental to success. It certainly helps with intelligent, disciplined, and focused creative leaders who can motivate the organization around its specific purpose despite ongoing transformation. They apply a different approach to business decisions and see business challenges holistically than managers, who may see issues primarily through functional domains (Greenberg et al., 2011).

20.2.1 Priorities: Aligning the Organization with Customer Problem Solving The overarching objective of innovation is to shape, promote and secure the success and survival of the organization. Strategy drives long-term goals based on core values

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and a robust situational awareness with room for adaptation. The strategy needs to align with the vision and goals. It interacts with the talent process and deploys through the organization supported by targeted communication. Today, strategy is a practical and continuous activity that has progressed from isolated expertise in rational and analytical capabilities to harnessing creative and adaptive capabilities powered by tacit knowledge crunching. This shift is increasingly necessary so organizations can deal with rapidly shifting uncertainties rather than optimizing risks and direction by analyzing rich sets of previously collected and typically outdated data. A risk is that the strategy development process standardizes how priorities are determined. Instead, each opportunity needs to be approached with a suitable emergent/ explorative strategy and to realize when it is time to shift to a deliberate strategy to drive the winning plan (Christensen & Raynor, 2003). I believe in stating clear ambitions and making a solid commitment to achieving these, calling it the mission, and defining why and what kind of activities we plan to engage in, calling it a business idea. Then before liberating people to do what they please, I favor some firm guardrails that spell out the boundaries within which we collect input, act, and behave but also show what is outside our scope and call these norms and values. I want people to feel liberated to act and behave in the customer’s and employer’s best interest. Set rules must always impact their decisions as responsible leaders, employees, and fellow humans. As a leader, by emphasizing the value base in my actions and behavior, I can genuinely impact others and, in turn, their motivations and behavior. When the majority of the organization accepts the values and given norms, it becomes a powerful self-enforcing strength that ensures we are true to our mission and business idea. Simply put, there are limits to forcing a strategy, so instead, manage proactively any conflicts of interest while ensuring people feel involved in strategy-building activities (Burgleman & Sayles, 1986). Over the years, I have created facilitation techniques that allow the engagement of all levels in envisioning and setting concrete goals. The board sets the agenda, while leaders should engage people broadly across ranks in cross-organization teams, encourage people to take strategy formulation to the personal level, and eventually back to their response areas and the organization/unit level for formalized action. I can feel the difference in insights, impact, and motivation when people feel genuinely connected. Let us call it the passion for driving the change, where people are helping to define and then execute by taking leadership. Creative activism, in this sense, means that within the capacity of leader and employee roles and responsibilities, they have the liberty and responsibility to help shape the strategic future through creative inputs and outputs. In that sense, we can help individuals to identify their internal creative and action-oriented leader persona and to formulate a vision for their response area that aligns with the customer needs and the organization’s overall objectives.

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20.2.2 People: Emotionally Engaged in Solving Customer Problems In the past decade and more recently, there has been a rapidly accelerating need for self-managed individuals and preferably teams in the corporate landscape. Companies increasingly struggle with talent scarcity and accelerated competitive, disruptive behaviors, while stakeholder demands for sustained profitable growth remain largely intact. Intrapreneurs and entrepreneurially-thinking people are incremental in aligning organizational renewal with customer-centric value creation and as essential for change and innovation activities in established organizations (Blanka, 2009; Burgelman, 1983; Shane & Venkataraman, 2000). I emphasize that the critical responsibility of any leader is to ensure that the organization attracts, maintains, and develops the right mix of human resources to execute the vision, goals, and strategy, with customer problem-solving at the core. For instance, internal crowdsourcing can catalyze an emotionally engaged and customer-centric organizational culture (Ulbrich et al., 2021). Everything else is almost always secondary because good people in the right roles can move, build, and transform mountains together. The key is attracting and nurturing diverse and complementary talent that supports the values and culture as cornerstones of successful execution; concrete skills include the association between different contexts and questioning, observation, and networking skills to cross-fertilize thinking (Dyer et al., 2011). Driving high performance requires that people generally have positive experiences based on their working conditions and well-being, as well as the application of their capabilities and possibilities to enhance their competence level, work-related procedures, and recognition. In an engaged organization, people are empathetic, problem solvers, risk-takers, networkers, observers, creators, committed residents, and reflectors (Couros, 2015). Engagement is significant in increasingly knowledge-intensive industries, where people work with complex, challenging, and constantly adapting client needs. Building a solid reputation in the job market is vital for corporations and applicants since it directly impacts top-talent recruitment and retention possibilities. Stars attract stars, but the opposite is, unfortunately, also true. People working with talent should plan for the long term and continuously refine processes to ensure a healthy life cycle from initial interest to retirement or resignation while encouraging proactive succession planning and a coaching culture. The essential knowledge for an organization is created and fostered among its people. However, systematic management of the underlying information is needed to utilize it for the full benefit of the company. The increasing uncertainty level and rapid business accelerations call for a new blend of people skills. The call for action-oriented creativity spans all levels of the organization, including analysts, subject matter experts, administration, manufacturing, and executives of varying ranks. In fact, for successful and sustainable rollout, forget management and regard instead inspirational leadership and organization-wide

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creative activism as ways to reach goals and, at times, pass them. So the C-Suite rightfully is concerned with the people aspect and pressure business units to make smart recruitments and grow talent with retention in mind.

20.2.3 Performance: Sustainable Growth Metrics and Identity Building The executive responsibility is to build sustainable and well-performing organizations that provide solutions to customers, growth opportunities for employees and returns to investors and society. Decisions leading to highly explorative actions should originate in the core mission and preferably be measured with leading indicators. As Keeley et al. (2013) point out, downward corporate pressures are typical in innovation efforts, especially (premature) cash-flow requirements can strain the innovation ambitions. We need to build on realistic assumptions of the future but also measure performance as engagement unfolds and communicate effectively what leading indicators tell about our performance. Creatively sound leaders and employees embrace sustainable growth through responsive management practices rather than hunt for windfall opportunities or ignore changing realities to savor achieved objectives. In times of disruption, an explorative affordable loss mentality can keep the organization prepared, and in a controlled and steady change mode, which can gradually accelerate when typically unexpected circumstances warrant. In order to keep the hand on the pulse, it can help to measure the success, especially of intrapreneurial activities with a metered funding approach, which resembles more a venture investment than a typical budgeting process in a corporate setting (Ries, 2017). As an executive, you must encourage the organization to operate productively in all business modalities. Start by envisioning the unexpected, preferably by engaging people widely in exploring possible futures and defining leading performance metrics and actions for each scenario-specific reality. Treat this as significant input for generating adaptable plans, processes, and structures for sudden change while focusing on relevant performance metrics. Positively you already have wide-going buy-in from those you have asked to help. The challenge is preparing the rest of the organization to recognize weak signals of change. In more extensive organizational settings, the management system plays a vital role so that everyone understands the order of significant decisions and has clarity on the relationship between decisions and performance across the organization, with clearly defined execution and communication responsibilities. A high-performing organization typically attracts people who are firm believers in the culture and values of their employers and the surrounding society. They apply a different approach to measuring performance and greater independence in business decisions. They also ensure that performance metrics capture institutional knowledge and how it has been refined through data collection, analysis and distribution through effective

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communication across all levels. The customer needs are the focal point of all actions, realizing that there are competing and substituting ways of solving the problem.

20.2.4 Partners: Customer Commitments Supported by the Ecosystem In recent years, companies have shifted from keeping everything in-house and building competitive advantages by engaging in ecosystems for ideas and resource exchanges. What truly fascinates me is the shared complexity of some of these industry, market, and cooperation level exchanges, which I call ‘industry honeycombs.’ Co-existence and partnering can be necessary when providing value to customers. Nevertheless, stakeholders interact on an uneven playing field with reliance on written and verbal commitments, often between people who are only partially governed by management structures and partnership agreements. Especially in large organizations with a global reach and several business units, cross-unit cooperation is sometimes treated more or less as equivalent to partnering with external companies or competitors. In other words, business units are free to call on partnerships if they serve the unit-specific strategic objectives, even if expected outcomes gain one business unit more than the other, or even if unintended, the organization as a whole. Regardless of the setting, to succeed in the long term, we must actively promote effective communication of goals and other content to internal and partnering stakeholders. We know this is a challenge within an organization, and communication is one of the classic internal issues to improve. The challenge grows in magnitude when we start communicating with external partners and stakeholders with differing agendas and priorities, especially in highly volatile markets with rapidly changing customer needs and competitive landscapes. Making this work is much easier said than done, especially when a partner today can be a fierce competitor in tomorrow’s business setting. A concrete example is how Sonos and Alphabet (Google) transformed from strategic collaborative partners into opposed parties in a fears patent law case case involving wireless speaker technology. Despite evident challenges, I am particularly excited about this era we live in, where openness and cooperation are seen increasingly as a way to gain insights and share our resource base to stay relevant in our network. Of course, rivalries and competition continue to co-exist, but to survive and thrive, we must rely on something other than our closed bubbles. We should be aware that collaboration and partnership, by definition, create strong interdependencies. If one link in a chain is weak, it will most likely negatively impact all others. So the key becomes to monitor relationships and the ongoing strength of partnerships and ensure you remain trusted by others as someone who continuously promotes win–win thinking and collaboration. Reputation is hard to build and takes time. It can also be lost quickly if one party crosses or jumps on a windfall opportunity disfavoring the other party. The focus of executives across partnering entities

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is on functionality, effectiveness, and improving the impact of available resources through employee self-management when possible. Once established, such collaboration builds on trust more than mere contractually defined rules and norms. I am often surprised by how precisely companies negotiate around the current but fail to define how changing market conditions will impact the foundations of their partnership.

20.2.5 A Shared Vision of Impactful Customers Problem Solving It is essential to get the organization focused on the same objective and aligned to support the success of the client-facing managers and employees. One way is to get all levels of an organization co-ordinated along a shared manifesto, as conceptualized in Table 20.1.

20.3 The Pathway Towards Creatively Active Leadership Business leaders face many challenges in todays competitive land-scape, and to profit from the opportunities, they must make bold committed choices. They need to trust others while being accountable for the success of guiding the organization toward an unpredictable future. Building an intrapreneurial culture starts from an organization-wide commitment to customer centricity. Every employee can be an entrepreneur in their own right and capacity, even when focused on disciplined and Table 20.1 The Dr. Tötterman Organization Manifesto (Forthcoming B) Front of the House EXPERIENCE (Customer Facing)

1. Demand: Create something new, respectable, and durable which is needed 2. Relations: There is only business when addressing customer problems 3. Identity: Strive to be a thought leader, seen as a forerunner who shares insights 4. Segments: Explore and commit to market types where you genuinely contribute

Key Touchpoints OFFERING

5. Solution: Design, business, and future thinking to nurture customer solutions 6. Offering: Strengthen the core offering and partner if helpful

Back of the House 7. Activities: Strive to work less IN and more ON developing a desirable CONFIGURATION business (Business Core) 8. Operations: People need to feel and act like it is their money and business 9. Key Metrics: Sustainable growth and broad stakeholder wealth generation 10. Ecosystem: Serve the community and earn support in return

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rigorous execution as part of the core business. In order to boost internal creative activism, executives should encourage more exhaustive experimentation with appropriate liability constraints, uncertainty acceptance, and professional entrepreneurship skills development and coaching (Ries, 2017). For instance, as an external training director for TeliaSonera Plc., I helped cross-national executive teams transform from a product technology-first to a customer and digital-first business acumen along the tiers of high-performance organizations displayed in Table 20.2.

20.3.1 Early Phase (Tier 1–2): Risk, Management, and Transparency Tier One type of companies, in Table 20.2, see the office and production/distribution facilities as definitions of success. Management spends significant time on task management and quality-checking. Some digital tools are typically used, but physical presence is at the core, and people set their work rhythm only when necessary. Tier Two companies see the physical presence extended with digital means, often facing the challenge of combining well-established processes and routines with a digital or modern leadership reality. In both instances, people may experience frustration due to micro-management and procedural dysfunction, with overlapping manual processes and bottlenecks. For instance, people and customers sit in seemingly unnecessary coordination meetings, communicating primarily verbally and via email with potential version control issues. As customers, we see foremost the customer-facing side of things, but we tend to feel that the business is not fully synced across crucial touch points. A saddening example is how the world-famous retail company Toys-R-Us went out of business when investors could not capitalize on the closeness to customers at a time when the market dynamics shifted drastically. Instead of revitalizing a unique value proposition, the investors liquified critical assets and indebted the company to insolvency through leveraged buyouts (Cover, 2018). At the same time, companies like Imaginarium, ironically originally inspired by then-successful Toys-R-Us and IKEA, show that they can operate in stores and online by motivating creativity across their organizations, despite the market disruption, competition, and risk of commoditization. I know from experience that it takes careful planning and genuine effort to build the business core and product system to support the client’s needs. Very few organizations, small or large, can offer customer service excellence on a scale and over time without continues incremental and at times major adjustments. So make sure your people feel part of the operations and the process of making and executing decisions while shifting the organizational mindset from a product orientation to customer-centricity and a service mindset.

1 Controls Quarters Compliance Functions Hierarchy Bottlenecks Micro-Manage Costs focus Marketshare Compliance Efficiency Funding Secrecy Competition Advantages

Tiers

Business model Product system

Organizational structure Service culture

Network Engagement

Process Outcomes

Ecosystem Reputation

Table 20.2 Tiers of high performance organizations

External input Sharing Interdependence

Scale Controls Large programs

Multitasking Budget Commitments

Recruitment Training Retention

Operations Development New Methods

2

Satisfaction Engagement Empathy

Rewards Progress Predictability

Change Wellbeing Performance

Mobility Competences Systems

Growth People/clients Problem Solving

3

Communication Platforms Resources

Iterative Scientific Speed

Sponsoring Self-manage Engagement

Space Recruitment Talent

Future Mindset Industry lead Innovations

4

Networks Stakeholders Industry

Innovation Future focus Experiment

Founders Mind vision Agility

Values Engagement People

Transform Direction Strategy praxis

5

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20.3.2 Developing Phase (Tier 3): Growth, Responsibilities, and Commitment Tier Three companies are the most common ones around. They see self-management as a source of several competitive benefits. They strive to improve continuously and do not see transformation as a necessary evil but as a drive for survival and performance. Indeed, for these reasons, investors and analysts now expect and often demand evidence of organization-wide creativity and innovation activities. The leadership challenge is to continuously improve individual processes while avoiding increasing variation due to individual thinkers, whose performance can and will be measured based on outcomes rather than compliance with existing routines. Recently, I had the pleasure of working closely with my Harvard University management degree capstone students on conducting well over twenty stakeholder interviews to write a business case and creating a video case (Tötterman & Harvard Extension Capstone Class, Forthcoming A) on the ambition to expand Zullee Mediterranean Grill from five restaurants in Washington State to a nationwide chain with around 1.000 units in less than ten years. Zullee’s is an excellent example of an organization where customer needs and people are front and center of daily operations improvements and in preparing the organization for rapid expansion and long-term success.

20.3.3 Maturing Phase (Tier 4–5): Experimentation, Fit, and Reversed Leadership Tier Four companies generally have a strong self-image. People feel trusted and motivated to work in a highly hybrid fashion and do more than expected, encouraged by clear objectives and metrics. Tier five companies are often digital native organizations where human–machine interaction is routine; customers do not even realize or at least think about when automation kicks in. The focus is on nurturing a cross-organizational culture of innovation with a strong emphasis on the future, and constant investigation of alternatives as strategic and operational plans face the ever-changing surrounding reality. As stated by VP HR Sanna Lindner from TietoEvry Plc. 10–15 years ago, we started to talk about change management. It is now business as usual, as this environment requires much creativity. (Tötterman, 2019). The goal is to remain relevant across stakeholders as a priority, which requires organizational agility and engaging actively with the client mindset in action-oriented planning, execution, and reflection. Otherwise, it is almost impossible to align client expectations with business realities. In order to address this issue in 2015, Martin á Porta, then the new CEO and President of nearly bankrupt Pöyry Plc. introduced intrapreneurship as the vehicle to energize and empower the company’s 5500 employees in almost fifty countries to put the client first. The company leadership defined a high-level ten-point growth and continuous improvement program as the internal manifesto (similar to Table 20.1), ensuring employees understand their role

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and responsibility as intrapreneurs and their performance towards clear metrics. In line with the Pöyry employee DNA, the ambition should always be to execute projects flaw-lessly, achievable with upfront expectations management and a balanced risk approach.

20.4 Implications for Company Leaders and Aspiring Intrapreneurs In the end, beyond satisfied basic needs, employees, like most other stakeholders, like to be on winning teams. Stakeholders across the board value clear expectation setting even when facing significant risk and uncertainty. In times of high volatility, I advocate for an explorative approach, where we can see different alternative futures and play it safe by threading with agility and options available as reality unfolds over time. Organizations must develop competencies and prepare people to advance many intertwined priorities. It often helps to develop a washing machine approach similar to smaller businesses, which are nimbler in weeding through garbage, salvaging the valuables, and quickly circulating waste into value generating activities. The approach requires lean administration and a strong focus on engaging people from all parts of the organization to drive culture, satisfaction and business performance. Getting everyone to focus on the customer and stakeholder journeys helps develop scale in solutions delivery. We can count on every-one looking for the customer and organization’s interests. We can also reuse proven concepts and implement quality assurance processes used in parts to cover more significant parts of the organization. As proactive business leaders, we aim to reach for the moon and then be ready to celebrate when landing among the stars. For our actions to have any impact, we can promote simple developments across the organization, which are often meaningful yet rarely enough standing alone. Installing some form of transformational action is always advisable to make a lasting difference and to boost their impact. I am a big fan of minor improvements and daily innovations. The worst we can do is discourage our people from striving to impact their roles and responsibilities. Encourage your good people to help your organization stay on course by allowing them to have an impact, encouraging them to seek early victories, and sponsoring their advancement and avoid transactional relationships. The business development process builds on lean principles with acceptance of agility and iteration at its core. I have worked for over two decades solving businessrelated executive challenges by combining creativity with action orientation in an iterative fashion. My method derives from strategic market intelligence, defining the challenge or problem, and validating stated assumptions for solutions development and high-performance implementation. More specifically, each phase plays an essential role. They are not linearly connected, and the focus shifts between understanding and exploring (rethink, reimagine, reframe) to refining and implementation (engage,

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extend, expand). Finally, remember that this is an ongoing iterative process that will help your organization, unit, team, or your progress from one tier to the next in any given area of concern.

References Åmo, B.W. & Kolvereid, L. (2005). Organizational strategy, individual personality, and innovation behavior. Journal of Enterprising Culture, 13(01), 7–19. Antoncic, B., & Hisrich, R. D. (2003). Clarifying the intrapreneurship concept. Journal of Small Business and Enterprise Development, 10, 7–24. Blanka, C. (2009). An individual-level perspective on intrapreneurship: A review and ways forward. Review of Managerial Science, 13, 919–961. Burgelman, R. A. (1983). Corporate entrepreneurship and strategic management: Insights from a process study. Management Science, 29(12), 1349–1364. Burgleman, R. A., & Sayles, L. R. (1986). Inside corporate innovation: Strategy. Free Press. Christensen, C. M. (1997). The innovator’s dilemma: When new technologies cause great firms to fail. Harvard Business School Publishing. Christensen, C. M., & Raynor, M. E. (2003). The innovators solution: Creating and sustaining successful growth. Harvard Business School Press. Cover, B. (2018). The demise of Toys ‘R’ Us is a warning, the Atlantic July–August, 2018. Couros, G. (2015). The innovator’s mindset: Empower learning, unleash talent, and lead a culture of creativity. Dave Burgess Consulting, Inc. Dyer, J., Gregersen, H., & Christensen, C. M. (2011). The innovator’s DNA: Mastering the five skills of disruptive innovators. Harvard Business School Press. Greenberg, D., McKone-Sweet, K., James, H. (2011). The new entrepreneurial leader: Developing leaders who shape social & economic opportunity. Berrett-Koehler Publishers. Keeley, L., Walters, H., Pikkel, R., & Quinn, R. (2013). Ten types of innovation: The discipline of building breakthroughs. Wiley. Light, P. C. (2005). High performance: How robust organizations achieve extraordinary results. McGraw-Hill. March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87. Martin, R. (2009). The design of business: Why design thinking is the next competitive advantage. Harvard Business School Press. Ries, E. (2017). The startup way: How modern companies use entrepreneurial management to transform culture and drive long-term growth, currency Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. The Academy of Management Review, 25(1), 217–226. Tötterman, H. (2019). Pöyry Plc: Creating an ‘intrapreneurial’ culture in international consulting. Hult Publishing. Tötterman, H., & Harvard Extension Capstone Class. (Forthcoming A). Zullee’s mediterranean grill: Disrupting the competitive midcap restaurant landscape. Hult Publishing. Tötterman, H. (Forthcoming B). Unleashing intrapreneurship: Introducing a system for creative activism in organizations. Routledge and Taylor & Francis Group. Ulbrich, H., Wedel, M. Dienel, H-L. (2021). Internal crowdsourcing in companies: Theoretical foundations and practical applications, Contributions to Management Science series, Springer.

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Henrik Totterman A renowned Finnish/American professor (and former Dean and Executive Director) at triple-accredited and top ranked Hult International Business School. Instructor at Harvard University, teaching industry leaders to activate creativity in business. Chair of Leadx3m—a modern market exploration-expansion and business acumen company. Henrik Totterman, D.Sc. Studied entrepreneurship and management and worked as director of the EMBA at the triple-accredited Hanken School of Economics and program director at Hanken & SSE (FT #1 Northern European executive education since 2005). He was on the global executive team building the top-ranked (FT #44 Masters in Management 2022) and triple-accredited Hult International Business School with a global campus network. After successfully selling two family businesses, he moved to Boston in 2010. He fosters design, interaction, and future thinking along a 25+ year trajectory of business ownership, strategy consulting and teaching business leaders. He is also on the advisory board of Ascendus in New England and a member of the Hanken School of Economics International Advisory Board.

Chapter 21

How the Most Future-Ready Companies Innovate and Communicate with the External World Howard Yu, Jialu Shan, Zuriati Balian, and Lawrence Tempel

21.1 Introduction Like a human being, a company has to have an internal communication mechanism, a ‘nervous system’, to coordinate its actions.—Bill Gates

Strategic planning is not the same as strategic thinking. The gap between corporate planning and reality has never been wider. No supply chain expert could have predicted the timing of the recent chipset shortage. No politician will be able to quantify the exact degree to which our global economy might decouple due to geopolitics. And naturally, no CEOs could have anticipated the arrival of the COVID-19 Pandemic and subsequent lockdown of every corporate headquarters. Even so, every company in would still have a yearly planning process in 2023. The most stubborn companies would have their managers spending months forecasting demand, sizing up a market, planning various initiatives, and locking them into a budget. They would then execute the plan as if a rigorous analysis could eliminate any surprises they encountered down the road. This is not to say that planning doesn’t help one prepare, but being prepared is different from just making forecasts. The real value of planning lies in achieving strategic preparedness. Through planning, one can understand the need to rewire the organization, which is the nervous system of a firm. Take the world of finance as an example. Like many other industries, finance is an industry that has been on a wild swing. Early on in the pandemic, with lockdowns and all, mobile payments and services went through the roof. E-commerce jumped, and the food delivery market surged. Payment companies like PayPal and Block (formerly

H. Yu (B) · J. Shan · Z. Balian · L. Tempel Lausanne, Switzerland e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_21

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Square) took off. The privately held startup Stripe (another payment processing platform) achieved a valuation as high as $95 billion in March 2021.1 Then reality hit. Fintech and hi-tech were all laying off people. Any unicorn that only had one killer app now looked like nothing more than a one trick pony.2 The new urgency was to diversify revenue streams, demonstrating to investors that they had the ability to branch out to new business areas. All of this does not mean the new environment will favor every old incumbent— far from it, in fact. The acceleration of technology and shift in consumer habits will continue to replace old business models. Brick-and-mortar retail branches of a bank, or even the physical plastic credit cards themselves, will still diminish. What the new environment will favor, however, are forward-looking incumbents who have spent disproportionate efforts in scaling up new capabilities. Those are the ones who actively rewire themselves in order to accommodate the new environment. The biggest winners are those who have persevered over the long haul.

21.2 How is Mastercard Becoming Future-Ready by Communicating and Innovating with Outside Developers At IMD Business School, we have been ranking companies in terms of their “future readiness.” Think of this as a balanced scorecard. Measures include (1) financial fundamentals, (2) investor expectations and share price performance, (3) business diversity, (4) environmental, social, and governance (ESG), (5) research & development (R&D), (6) early results of innovation efforts, and (7) cash and debt positions. These seven pillars are weighted equally, with each one comprising several variables. Altogether, we are tracking some 29 variables.3 Why a balanced scorecard, you might ask? Obviously, you need to have a strong cash flow and healthy profit to invest in the future—but you also need to have a diverse team of board members to embrace change. After all, we are interested in the actual results of a company’s innovation. With this in mind, we look at a company’s new products or services and see if they are scalable. When all things are on track, investors’ expectations will naturally rise, which is reflected in a company’s share price performance. And we have found that future readiness transcends industries. That is, future-ready companies, whether they are in the sector of finance or technology or pharmaceutical, exhibit very similar traits. 1

Weinberg, Cory. “Stripe Burned through More than $500 Million in Cash Last Year.” The Information. The Information, February 16, 2023. https://www.theinformation.com/articles/stripe-bur ned-through-more-than-500-million-in-cash-last-year. 2 Vedantam, Keerthi. “Tech Layoffs: US Startups and Tech Companies with Job Cuts in 2022 and 2023.” Crunchbase News, February 24, 2023. https://news.crunchbase.com/startups/tech-layoffs/. 3 “Our Research Methodology—Future Readiness Indicator.” IMD Business School. Accessed March 1, 2023. https://www.imd.org/future-readiness-indicator/home/our-research-methodology/.

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Fig. 21.1 Future readiness indicator—financial industry (2018–2022)

In the financial sector, Mastercard and Visa have topped our rankings for the last eight years. Looking at their more recent economic downturn in 2022, both companies have done an excellent job in minimizing negative impacts, with Visa down 3.7%, compared to Mastercard’s 2.9% loss.4 However, when it comes to revenue per share, earnings per share, and revenue growth, Mastercard outperforms Visa. The reason? Mastercard has embraced fintech innovation more aggressively than anyone else, while at the same time never losing sight of their core business (see Fig. 21.1). Mastercard and Visa were quick to realize they couldn’t outrun other fintech upstarts or tech giants. They must instead innovate with their rivals. The key takeaway in this instance is to make your own infrastructure useful to your enemies, so that when they prosper, you do too. Finance is an industry that is full of “frenemies,” said Al 4

Keithen Drury. “Will Visa or MasterCard Have a Better 2023?” Nasdaq. Accessed March 1, 2023. https://www.nasdaq.com/articles/will-visa-or-mastercard-have-a-better-2023.

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Kelly, Visa’s chief executive, when asked about their relationship with PayPal.5 You don’t just fight for existing market share; you create a new market together. And it’s not just PayPal. Whether it’s Apple Pay, Samsung Pay, Google Pay, Facebook Credits, Stripe, Block, or even Coinbase (an upstart cryptocurrency), they all work with Visa and Mastercard. The major breakthrough here is the realization that a product’s best feature will never be invented in-house. Both Visa and Mastercard understand that killer apps must be invented by third parties who are closer to their customers. It would be too slow for them to sign up end consumers one by one. For someone running a legacy infrastructure, the best strategy is to allow others to discover new uses for the existing system—and more importantly, to co-opt any significant third-party. That is why both Visa and Mastercard focus on expanding their Application Programming Interfaces (APIs). These are interface standards that make their networks simple and powerful to work with, thus making them even attractive to any fintech upstarts. Both networks are launching “tokenization services” that generate a unique token for each individual credit card, rather than using conventional credit numbers, in order to prevent hackers from accessing important information. And both networks are vying to become the standard-setting organization for the entire payment sector, publishing a standard and then disseminating it at low cost, or even for free. They would be fine with industry observers giving credit to Apple, Google, Facebook, and other startups for coming up with great mobile payment methods. But Mastercard did all of this one level higher. According to the fintechs, a major part of Mastercard’s selling point is that it treats them like it would any other large enterprise client. “We’ve been receiving support from Mastercard almost as if we were JPMorgan,” said Henrique Dubugras, co-founder and co-CEO of $3 billion Brex.6 When Dave (another personal finance startup) was looking for a card issuer to provide their new product—Dave Banking, an innovative spending account with debit cards—former Mastercard CEO Ajay Banga went the extra mile and personally courted Jason Wilk (co-founder and CEO of Dave), taking him out to dinner as part of his pitch. And that’s more than just verbal communication at the top. Engineers at Mastercard work as if it were a technology company in the IT space, treating third-party developers as their most important stakeholders. People can find all the documentation, APIs, software development kits (SDKs), sample code, and support all in one place: internally, it’s called “One Front Door.” As a result of this ethos, it is simpler 5

Gelles, David. “Al Kelly of Visa on the Reagan White House and the Politics of Guns.” The New York Times. The New York Times, July 1, 2019. https://www.nytimes.com/2019/07/01/business/ al-kelly-visa-corner-office.html. 6 Balogh, Shannen. “Inside MasterCard’s Playbook for Attracting Fintechs. An Exec Outlines the Strategy That Has Helped the Card Giant NAB High-Profile Startups like Brex, Sofi, Moneylion, and Dave.” Business Insider. Business Insider. Accessed March 1, 2023. https://www.businessinsi der.com/fintechs-brex-dave-moneylion-sofi-switching-visa-mastercard-2020-9.

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for outsiders to find the necessary information. This developer-friendly communication approach has been designed to make it easy for anyone to integrate Mastercard’s technology into their applications and services. Because of this, any fintech, whether big or small, can work independently to tap into a range of features such as security or support for multiple currencies and payment types. They can mix and match according to their needs by leveraging Mastercard’s open Application Programming Interfaces (APIs), which are ways for different applications to communicate with one another by following a set of rules. Developers can access data or services without having to know how they work internally. They can also automate tasks and workflows that would otherwise require manual intervention or duplicate efforts. For example, Mastercard’s Payment Gateway API provides a microservice that enables businesses to securely process payments. This microservice can be combined with Mastercard’s Fraud Detection API to provide a comprehensive payment solution that includes fraud detection and prevention. Then, there are APIs that provide access to a range of data and analytics services. These services enable businesses to gain insights into customer behavior, spending patterns, and other key metrics. For example, Mastercard’s Spending Pulse API provides real-time insights into consumer spending patterns, empowering businesses to make data-driven decisions about their marketing and sales strategies. Think of it as playing with LEGO bricks. Mastercard is essentially creating an inventory of its internal processes and then making them available to external developers. These services are small and self-contained. Anyone can recombine them to create more complex solutions without having to worry about the underlying technical details. To facilitate interoperability, everything is based on open standards. It comes with support for the top six programming languages, including Java, Python, NodeJS, Ruby, PHP, and C#.7 The most powerful aspect, however, is that these APIs can easily integrate with other services not provided by Mastercard. For example, a startup can use Mastercard’s Payment Gateway API to easily integrate with FedEx’s shipping service and provide customers with real-time tracking information for their orders. As a result, everything feels highly modular and flexible. The world of fintech finds Mastercard’s infrastructure very easy to customize their payment solutions according to their unique needs. Still, there is one last problem. For a startup, it’s critical to understand how to properly pull on those levers; the order of operations, how to sequence them, how to put them in front of consumers, what has worked in the past, what best practices are, and how to get top-of-wallet spend characteristics. All of these things require both creativity and deep domain knowledge in finance. That’s why Mastercard runs a startup program. Originally launched in 2014, the Mastercard Start Path is a six-month accelerator program designed to assist fintech 7

Mastercard. “MasterCard/Mastercard-API-Client-Tutorial: Generating and Configuring a Mastercard API Client.” GitHub. Accessed March 1, 2023. https://github.com/Mastercard/mastercard-apiclient-tutorial.

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startups in scaling. It’s a virtual program that doesn’t require equity from startups. It features different tracks that focus on different aspects of fintech, such as open banking, inclusion, and capital. Over 350 companies from 40 countries have participated in the program since its inception.8 They include GK8, Mintable, and Uphold—startups that focus on crypto and blockchain solutions.9 Then you have Hoolah, Kasha, and MoCaFi—startups that offer innovative payment and lending services.10 Or Billee.ai, FanAI Inc., and Influitive Corporation.11 These startups leverage data and analytics to enhance customer engagement and loyalty. And since funding is not the primary concern, what Mastercard often provides is technology and expertise. Mastercard knows more than a fintech startup about the global regulatory environment related to payment flow. It also has more regulatory expertise to monitor ongoing changes in cyberspace across the world. It can provide mentorship, guidance, and exposure to Mastercard customers, helping startups ensure that their final product is safe and secure. Looking back—is it any wonder why Mastercard managed to nab high-profile upstarts like Revolut, SoFi, MoneyLion, and Grab? Doing the above requires time and commitment and beyond putting out a press release statement. No company can do all of this overnight. Even in Mastercard’s case, it took them decades of persistence to reach where they are now. They had to excel in their existing business. For a long time, that was processing payments between banks and merchants during face-to-face sales. During that extended period, however, they consistently invested in new areas such as web-based APIs. They need to try different modes of communication—face-to-face workshops and asynchronous exchanges via documentation libraries. This process of constant trial and error and persisting in building up new capabilities is what future readiness is all about. What we have discovered is that the financial market can actually understand this, and that it is less short-term than we might have thought.

8

Vicki Hyman, “What Happens after the ‘Aha’ Moment?,” Startups and fintechs: What happens after ‘aha’? | Mastercard Newsroom, April 20, 2022. https://www.mastercard.com/news/perspecti ves/2022/mastercard-start-path-startup-engagement-program-wave-2. 9 Mastercard, “MasterCard Announced Today a New Start Path Global Startup Engagement Program Dedicated to Supporting Fast-Growing Digital Assets, Blockchain and Cryptocurrency Companies.,” Mastercard Newsroom, July 27, 2021. https://www.mastercard.com/news/press/ 2021/july/mastercard-launches-new-start-path-cryptocurrency-and-blockchain-program-for-sta rtups/. 10 Mastercard, “Mobility Capital Finance Inc. Receives Capital Investment from MasterCard,” Mobility Capital Finance Inc. Receives Capital Investment from Mastercard | Mastercard Newsroom, February 26, 2021. https://www.mastercard.com/news/press/2021/february/mobility-capitalfinance-inc-receives-capital-investment-from-mastercard/. 11 “Fanai Inc. | LinkedIn,” accessed March 1, 2023. https://www.linkedin.com/company/fanai-inc.

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21.3 Does the Financial Market Understand if a Company is Innovating to Become Future-Ready Think of future readiness as a general climate. It’s the baseline in which a company operates. Under such a climate, corporate events unfold. This is why future readiness can be a gauge of the long-term viability of the main source of the company’s earnings. That’s why our Future Readiness Indicator in the first diagram is much more than a mere ranking. If judged correctly, such measurement should reflect share price movement. Specifically, it should indicate how the top-ranking companies’ share prices will trend relative to those of their industry peer group. We seek to answer questions such as this: if the share price of a company rises quicker than that of others, how likely is this outperformance to last? In seeking these answers, however, we must also take care to avoid a kind of circular thinking. One of the seven pillars in our calculation relates to investors’ expectations of future growth. That is, we take into account factors such as P/E ratio, Price to Book Value, Market Capitalization in terms of CAGR, and Enterprise value/EBITDA. Note that these measures don’t directly relate to the growth rate of a stock. Moreover, all of our 29 variables also exclude measures that directly relate to share price movement, since this is an outcome value we are trying to predict.12 And, to be very precise, for each period, we will roll up all the historical data of the prior year and observe the share price movement of the upcoming year. For example, we would use our Future Readiness Indicator based on the information from January to December 2021. Then, we would compare the share price movement—or, more precisely, the stock return—from January to December 2022. In other words, our hypothesis is that being future-ready in 2021 has a spillover effect for share-price performance in 2022. This is exactly what we have found. If we divide the sample into five quantiles, we can then compare the stock price performance of the top five and the bottom five. Just like an index fund, the fund manager would allocate investment dollars passively every year by buying those of the top quantile. The result of doing this passively would outperform the industry average, and certainly the bottom five.

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What this all means is that future readiness is indeed quantifiable, as we saw in our readiness indicator, and that being able to perform while transforming can be quantified as well. This is similar to what Mastercard has illustrated: you need to scale up future capabilities ahead of others, and the financial market will take notice of your efforts and reward you in the long run. It is important to remember that future readiness is not something that can be achieved overnight, however. It takes persistence and dedication and the right communication from all levels of the company to make it happen.

Howard Yu is LEGO® Professor of Management and Innovation and heads IMD’s Center for Future Readiness. He specializes in technological innovation, strategic transformation, and change management. Author of the award-winning best-seller LEAP: How to Thrive in a World Where Everything Can Be Copied, he was named by Poets&Quants as one of the world’s leading business school professors under 40 in 2015, and in 2018 he was included on the Thinkers50 Radar list of management thinkers to watch in the year ahead. His work as Director of the IMD Center for Future Readiness focuses on firms’ capacity to sustain new growth. The Center, which was established in 2020 with the backing of a multi-million-dollar grant from the LEGO Brand Group, aims to help companies spur innovation and thrive amid uncertainty by quantifying which organizations are most ready for a changing future and exploring the lessons that other firms can learn from them. The Center produces Future Readiness Indicators for various sectors to measure how prepared industry incumbents are for coming challenges. Yu’s work has been published in journals such as Harvard Business Review, MIT Sloan Management Review. He is also regularly interviewed and quoted by news organizations such as the Bloomberg, CNBC, and the BBC. Jialu Shan is a research fellow at IMD’s Center for Future Readiness. Her research areas include digital business transformation, business model innovation and new practices, and corporate governance practices. She is particularly interested in the Asian market. Her work has been published in quality journals including Sloan Management Review, MIS Quarterly Executive, Industrial Marketing Management, Harvard Business Review, Information Technology &

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Tourism, Journal of Business Strategy, and Journal of Strategy and Management. Jialu has a Ph.D. in economics (management) from the Faculty of Business and Economics at the University of Lausanne. Before joining IMD she worked as a lecturer at the International Hotel School of César Ritz Colleges in Brig, Switzerland. Zuriati Balian is a data scientist and researcher at IMD’s Center for Future Readiness. She is a passionate NLP enthusiast and machine learning expert with a strong love for coding. Currently, she is finishing her Master’s degree and working on her thesis, which focuses on multilabel classification of news articles using different word embeddings. She is constantly exploring new techniques and algorithms to enhance her knowledge and skills. She has more than 10 years of experience in business development in the technology sector across Southeast Asia. Lawrence Tempel is Research Assistant at IMD’s Center for Future Readiness. He holds a Master’s degree in International Business. Before joining IMD, he worked on a pioneering longitudinal research study that was commissioned by the Swiss government to study the evolution of living conditions and improve the quality of life of its citizens. This experience honed his skills in research design and execution and gave him a deep appreciation for the importance of data analytics in driving evidence-based policymaking. Lawrence is passionate about analytics, innovation, and communication. He is committed to helping organizations leverage the power of cutting-edge technologies and best practices to achieve their strategic objectives.

Chapter 22

The Entrepreneurial Innovation Value Model and the Importance of Entrepreneurial Leadership, Knowledge, and Learning, in Commercialisation Peter Malone, Tim Mazzarol, and Sophie Reboud

22.1 Introduction This chapter examines the Entrepreneurial Innovation Value (EIV) model, a conceptual framework designed to provide a strategic analysis tool for the commercialisation of innovative small firms (ISFs). The EIV model focuses on the importance of ‘hard’ and ‘soft’ systems in shaping successful commercialisation. The ‘soft’ systems are found within the firm’s Capabilities Architecture, comprising knowledge management (KM), organisational learning (OL), open innovation (OI) managerial competence (MC), entrepreneurial cognition (EC), entrepreneurial orientation (EO), social capital (SC) and networks and alliances (N&A). The focus of this multiple case study analysis is on the role played by Capabilities Architecture within the EIV model, and the impact on successful ISF commercialisation. Particular attention is given to the roles of managerial competence and entrepreneurial cognition (leadership) and the importance of social capital and networks and alliances (communication) are examined in detail.

P. Malone · T. Mazzarol (B) University of Western Australia, Crawley, Australia e-mail: [email protected] S. Reboud Burgundy School of Business, Dijon, France © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_22

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22.2 The Entrepreneurial Innovation Value Model (EIV) The Entrepreneurial Innovation Value (EIV) model (see Fig. 22.1) provides a conceptual framework for how an ISF might navigate the process of commercialisation. It identifies the need for both an operational and strategic understanding of the commercialisation process. This Model has emerged from research work undertaken by the authors into commercialisation behaviour of ISFs (Malone & Mazzarol, 2022; Malone et al., 2015; Mazzarol et al., 2017). The EIV model brings together new thinking to a range of theories and conceptual frameworks that explains how an ISF must proceed through the complex pathway of commercialisation and how if applied appropriately will deliver success.

22.2.1 Introduction to EIV Commencing with the innovation rent concepts, EIV highlights the importance of the ISF project team in assessing the innovation in terms of its innovation rent profile. The anticipated volume of sales, rate of profit, and length of product-technology lifecycle are the key initial attributes (Santi et al., 2003; Mazzarol & Reboud, 2006, 2011; Do, 2014; Do et al., 2014; Duhamel et al., 2014). This provides an initial anticipated entrepreneurial rent valuation prior to market insertion. After market insertion a validation of the anticipated rent outcome can be ascertained, with customer feedback and likely competitor response impacts now being better assessed against initial assumptions. This re-assessment of rent returns generates a residual or ‘quasi-rent’ outcome (Alvarez, 2007; Alvarez & Barney, 2004). As shown in Fig. 22.1, the initial innovation value assessment is a rapid iterative process that moves quickly from an early assessment of entrepreneurial rent assumptions made under conditions of uncertainty to a better understanding of the ISFs final residual rent made under conditions of risk (both market and technical in nature) (Schoemaker, 1990). The model highlights the importance of testing the market with customer engagement and feedback in conjunction with the product technology development. With appropriate market insertion knowledge now available to the commercialisation project team, the EIV then assesses whether the team has sufficient information to fully assess what technical, marketing, financial and strategic resources will be required to enable future commercialisation of the innovation. This includes the ‘soft’ issues such as technical, managerial, financial, marketing, and entrepreneurial competence required for success, as suggested by the resource-based value (RBV) theory (Barney, 1991). This assessment can be made by utilising screening tools such as the Innovation Diagnostic Diamond (IDD) (Mazzarol & Reboud, 2020). This is a 40-item scale that examines the firm’s commercialisation readiness with assessments of its understanding of the key things it must possess or know in relation to the market, innovation (e.g., R&D/NPD), resources, and strategy activities.

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Fig. 22.1 The entrepreneurial innovation value model

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Depending on the firm’s resources and product/market conditions, the ISF project team will have five generic commercialisation pathways (development options). These are abandon the innovation, proceed alone, seek an alliance partner (e.g., formal, or informal), delegate the development (e.g., license), or transfer the development (e.g., trade sale). It is here the EIV includes the opportunity for the project team to review and rejuvenate their project’s potential through applying both dynamic capabilities (Teece et al., 1997; Teece, 2007, 2009, 2014, 2016, 2018), as an organisation, and absorptive capacity (Cohen & Levinthal, 1990; de Jong & Freel, 2010; Deeds, 2001; Gray, 2006; Zahra & George, 2002) as a project team. These processes will allow the project team and company to rapidly pivot both their technology and market engagement, overcoming resource constraints. The ability of the ISF to pivot between residual and appropriable rent is determined by how well it manages the product-market development strategy (e.g., using the NPD techniques and business model design), as well as its Capabilities Architecture (CA). This comprises a range of ‘soft’ skills (e.g., knowledge management, organisational learning, open innovation, managerial and entrepreneurial competence, entrepreneurial orientation, social capital, and the related formation of networks and alliances). These are the ‘soft skills’ that usually determine success for any ISF.

22.2.2 The Capabilities Architecture For an ISF to successfully navigate the commercialisation pathway and scale-up the business the firm’s management needs to build up a strong capabilities’ architecture (Malone & Mazzarol, 2022) being the key components to the ‘soft skills’ of the EIV model. And they comprise Knowledge Management, Organisational Learning, Open Innovation, Managerial Competence, Entrepreneurial Orientation, Entrepreneurial Cognition, Social Capital and Networks and Alliances.

22.2.2.1

Knowledge Management (KM)

Knowledge Management (KM) is defined by Civi (2000) as the way in which an organisation captures, stores, analyses, and disseminates information and intellectual property, skills, competencies, and knowledge (Pillania, 2008). Within ISFs due to the small team structure of the firm, the generating and disseminating of knowledge is usually undertaken via knowledge management systems which are generally highly idiosyncratic and informal (Wong & Aspinwall, 2005, 2006; Mohannak & Mathews, 2015). Knowledge can come from internal and external sources (De Zubielqui et al., 2014), strategic alliances and networks with key suppliers, lead customers and resource network actors (Holmlund & Törnroos, 1997). The transfer process of KM within ISFs can be understood through the SECI model (Nonaka & Takeuchi,

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1995). This model details four elements to knowledge transfer, namely initially tacit to tacit transfer (socialisation), tacit to explicit transfer (externalisation), explicit to explicit (combination) and explicit to tacit (internalisation) (Polanyi, 1962).

22.2.2.2

Organisational Learning (OL)

Organisational Learning (OL) details the ISFs ability to use knowledge to inform and educate its workforce and receive ideas and knowledge back in return. The success of OL is influenced by internal factors such as the firm’s culture, leadership, and environment. The greater the level of management support for learning and the facilitating of a barrierless approach to knowledge transfer and integration, the greater the ISFs opportunity for commercialisation success (Malone & Mazzarol, 2022). In the initial stage of an ISF’s operations the commercialisation environment is one surrounded by uncertainty. Creating an effective OL environment requires a clear understanding of the ISFs strategic objectives by all, with learning based around the ISFs goals, values, and strategies as well as a process of learning that seeks to change and improve the business (Templeton et al., 2004).

22.2.2.3

Open Innovation (OI)

Open Innovation (OI) is the key to speed to market and relates to an open approach to innovation. Introduced by Chesbrough (2003) who saw competitive success was contingent on enhancing the flow of knowledge between a wider network of customers, suppliers, and third-party actors (Parida et al., 2012). The capacity to utilise OI well depends upon the ability of the ISF to manage the flows of information and knowledge (Parida et al., 2014). And the speed which it does acquire, assimilate, transform, and exploit knowledge from external sources, directly relates to commercialisation success (Laperche & Liu, 2013).

22.2.2.4

Managerial Competence (MC)

Managerial Competence (MC) is the experience and expertise of the management team in control of the ISF with research highlighting the critical importance of the business founder (Morrison et al., 2003). MC relates to the ISFs leadership management of resources, project coordination, undertaking R&D programs as they iterate through product development (NPD), market insertion and testing in the pursuit of commercialisation success (Do et al., 2018). Management teams that possess strong MC are likely to operate firms that are well run, efficient and profitable (Penrose, 1959).

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Entrepreneurial Orientation (EO)

Entrepreneurial Orientation (EO) refers to the processes, practices, and decisionmaking styles of organisations that act entrepreneurially (Lumpkin & Dess, 1996). It relates directly to innovativeness, proactiveness and risk-taking propensity of the ISFs management (Wiklund & Shepherd, 2005). Innovativeness being the tendency to pursue new ideas, creative processes, and experimentation. Proactiveness defined as the tendency to anticipate and act on future opportunities rather than rely solely on existing products and services (Wong & Tong, 2012). Risk taking is the tendency to take bold actions rather than be cautious (Altinay et al. 2016). ISF management proactivity is also considered a major influence in the motivation to innovate (Olivari, 2016).

22.2.2.6

Entrepreneurial Cognition (EC)

Entrepreneurial Cognition (EC) is the managers ability to use biases, heuristics, and belief in the law of small numbers to operate within conditions of high uncertainty when making decisions such as whether to innovate (Simon et al., 2000). EC reflects strong innovative management, willing to take on calculated risks, and keen to pursue new opportunities that are likely to generate high profits and growth (Malone et al., 2022). The EC decision process is more likely to see decisions made where the information is limited and imperfect (Busenitz & Barney, 1997). The ability to apply counterfactual thinking which is to think about a situation contrary to the existing facts (Gaglio, 2004). This thinking enables ISF leadership to make faster decisions in relation to the process of sensing, seizing, and exploiting opportunities to deliver competitive advantage (Alvarez & Barney, 2004).

22.2.2.7

Social Capital (SC)

Social Capital (SC) stimulates the creation of trusting and supportive environments that improve market performance leading to more rapid or more effective introduction of new innovative products and improving firm competitiveness (Chen et al., 2006; Partanen et al., 2008). SC networks play an important role in the commercialisation process (Lehtimäki et al., 2008; Mazzarol, 2011, 2013).

22.2.2.8

Networks & Alliances (N&A)

Networks & Alliances (N&A) include strategic networks of alliance partners and third-party complimentary actors that enable the ISFs to secure access to resources, market intelligence, and knowledge (Malone et al., 2022). To facilitate access to resources the ability to geographically cluster ISFs to become focal areas for

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innovation has been shown to deliver opportunities for growth (Bresnahan et al., 2001).

22.3 The Case Studies Three ISF case studies Skin Elements Ltd, Scanalyse Pty Ltd., and Live Technologies Pty Ltd. were selected for the study. All three provide longitudinal and polar cases to assist in observing patterns in the data (Yin, 2009; Pettigrew, 1988). These cases were analysed within the EIV framework, which describes the way an ISF can navigate through the complex and uncertain environment associated with commercialisation and deliver value.

22.3.1 Case Study 1—Skin Elements Ltd. Skin Elements Ltd is a small, publicly listed biotechnology company headquartered in Perth, Western Australia, which produces a range of natural organic products under the Soléo Organics (sun care) and McArthur (skin care) brands (Malone et al., 2020). It represents what Mazzarol et al. classify as an inventor-integrator ISF. This type of firm is a hybrid of two types of ISF. The first is the Inventor ISF, characterised by using an analytic knowledge base1 to create small or batch production of ‘pure play’ high-tech prototypes that are stand-alone innovations, The second is the Integrator ISR, which is characterised by drawing upon a synthetic knowledge base2 to create large-scale production of product innovations that integrate into existing processes and services supported by consulting and training. The company was founded in 2006 as a biotech start-up by global technology entrepreneur Peter Malone, Leo Fung naturopathic chemist and Craig Piercy financial specialist. The venture set out to develop a safe all-natural organic sunscreen formulation to combat the escalating rise of skin cancer from increasing UV radiation in the atmosphere. The disruptive program garnered market support from the global conscious consumer movement’s call for a shift from the toxicity of existing chemical sunscreens to a new natural safer formulation. Figure 22.2 shows the historical timeline of Skin Elements from the initial R&D to the commencement of international market expansion.

1

Analytic knowledge base builds on the creation of knowledge via formal scientific research that is highly codified. 2 Synthetic knowledge base builds on the novel combination of existing knowledge through application to problems.

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Fig. 22.2 Timeline of the skin elements case study

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Phases 1 and 2—2006–2012 Product Creation, Market Launch, Small Scale Production

The evolution of Skin Elements took place in four stages over a period of 12 years. Phase 1 involved initial R&D, proof-of-concept, and initial market testing. This was a period of significant work with the initial R&D involving the invention of the Soléo Organics formulation, concurrently with market testing across Australia. Phase 2 involved international market testing, global market entry, and product development. Critical to these market testing and initial launch of the sunscreen product, was the securing of approvals from the Australian Therapeutic Goods Administration (TGA) and the United States Federal Drug Administration (FDA). This allowed the company to commence sales in Australia, the USA, Canada, and Japan. Extensive market testing was carried out over this phase as early adopters took up the new natural sunscreen. The segment of babies, children and people with sensitive skins sought the product out immediately. Product issues of safety to skin being a paramount requirement while price of less importance. The US surfing industry took up the natural sunscreen quickly and this provided a broader market take up from US pharmacy retailers. Over this period market feedback saw further development work on the formula that delivered an extended shelf life.

22.3.1.2

Phases 3 and 4 2013—2018 Scaling up with Automation, Company IPO, Stock Market Listed and Acquisition

From Phase 3 Skin Elements commenced the scaling up of the business. Agreements were signed with Baxter Laboratories for manufacturing with pre-launch sales exceeding $3.5 million. Skin Elements began to accelerate its marketing program with a major push into the UK market that saw the retailing of the Soléo Organics sunscreen to all Holland & Barrett health stores nationwide. Parallel the company invested in new packaging design and materials to meet market demand moving all labelling of tubes over to screen printing direct. The collaboration between Skin Elements and Baxter Laboratories was operating under an Open Innovation (OI) program between both companies. This enabled production and formulation issues that surfaced over the scaling up processes to be resolved quickly and amicably between the businesses. Phase 4 saw Skin Elements commence the planning for Listing on the Australian Stock Exchange (ASX). The listing closed oversubscribed late 2016 with trading on the ASX commencing in January 2017. Within six months of listing Skin Elements acquired a complementary business in natural skin products, the McArthur Skin Care company. This company had a range of natural therapeutic skin creams focussing on arthritis, psoriasis, and eczema skin conditions. This saw the company’s product range broaden to both sun care and skin care products during 2018.

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Phase 5 and 6 2018—2023 Expansion, Pandemic and Further Diversification of Products

Phase 5 saw the opening of further markets for the Soléo Organics and PapayaActivs brands, only to come to an abrupt halt with the impact of the COVID-19 pandemic in 2020. The company moved quickly when it was evident there was an opportunity for safe sanitising disinfectants internationally. The coronavirus was virulent, and countries globally sought the need for sanitisers and disinfectants that could kill the virus. The only effective disinfectants available were strong chemicals with toxicity levels too high for human skin exposure. This left only alcohol-based products (with many side risks) that also created disabling skin conditions for those required to repeatedly clean with these alcohol rinses. Skin Elements, leveraging its existing knowledge of developing organic skin care products, rapidly developed an all-natural COVID-19 sanitising, disinfectant product for global use. By May 2020 product testing of SuprCuvr was being undertaken in the UK with the product tested and submitted to the Australian TGA in September 2020 for approval. During Phase 6, TGA approval was delayed due to the enormous workload within that organisation, which did not issue approvals to Skin Elements until August 2021. The results supported the strength of the company’s formulations technology delivering the highest kill capacity ever against the virus—over one hundred times better than any of the highly toxic chemical market alternatives. During 2022, after COVID lockdowns were lifted globally the opportunity for SuprCuvr and its agriculturally based equivalent, Eco-Nurture, were distributed into international markets. The SuprCuvr and Eco-Nurture products provide a major opportunity for Skin Elements due to the demand within worldwide markets for safe disinfectant products that kill bacteria and viruses within buildings, and provide ecologically safe disinfecting agents for agricultural, horticultural applications in fruit crops and native forests. These industry applications address the need for treatment of bacterial and viral outbreaks. The all-natural Eco-Nurture product provides a replacement for the highly toxic heavy metal chemicals currently in use that cannot be applied on a prolonged basis before the toxicity exceeds safe levels.

22.3.2 Case Study 2—Scanalyse Pty Ltd. Scanalyse was an Integrator ISF, which evolved into what Mazzarol et al. classify as a Niche Specialist ISF. The Integrator ISF has been described above and reflects the way in which the company was spawned from the R&D work undertaken in its early years, but evolved into a Niche Specialist ISF after the initial market insertion of its technology. This type of firm draws on a synthetic knowledge base to create or co-design either small or large-scale production of product or service innovations within specialist markets. The company was a spin-off from a research program undertaken within the Department of Spatial Sciences (DSS) at Curtin University of Technology in Perth, Western Australia. As part of the School of Surveying the DSS

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is a major partner with the State Government of Western Australia’s digital spatial industries cluster. A key role played by the DSS was through its applied research in looking for the applications for digital spatial technologies in collaboration with local industry and other universities (Mazzarol et al., 2004). The historical timeline of the Scanalyse case is illustrated in Fig. 22.3.

22.3.2.1

Phase 1 2004—2006 R&D, Proof of Concept and Spin-Off

The Curtin University research team acquired a $250,00 state of art digital 3D laser scanner in 2004 with the aim of determining the best applications for this technology with local industry in Western Australia, particularly the mining sector. With substantial mining groups in and around Perth city, the DSS selected a local company Alcoa who have extensive bauxite mining operations throughout the southwest of Perth. From a number of mining applications at the Wagerup alumina refinery, the DSS was able to identify a requirement to better predict the wear and tear on the internal liners of their big grinding mills. These mills have huge crushing drums with internal steel liners that constantly get worn out grinding bauxite ore. The DSS team applied a process for the 3D laser technology to effectively scan within the 15 m grinding mills measuring all points of the steel liners (Mazzarol et al., 2017). During 2005 the DSS team saw the opportunity as one of processing data from the 3D scanner for Alcoa so it could replace liners on a just in time basis. Offering the company this flexibility would save substantial costs attributed to early replacement of underused liners or conversely from failed liners that break before being replaced requiring extended shutdown and attendant delays before coming back into service. This ability to model and track changes providing superior asset protection and proactive management was considered a big advantage. In 2006 Curtin University decided to spin-off the technology into a new company. Scanalyse Pty Ltd was created with the new business set up in Technology Park separate from the University. Inaugural staffing included the appointment of a CEO Peter Clarke and the transfer from the University of the engineering project team. The launch of MillMapper saw the first product available to the market and four operational staff.

22.3.2.2

Phase 2 2007–2009 Development of the Product, Expansion Funding

Scanalyse commenced marketing of MillMapper with its lead customers that grew to three during 2007. However, the usefulness of MillMapper was proving to be limited as Alcoa was having difficulty operating the 3D laser scanner and training their engineers on how to interpret the data output. It became obvious to Scanalyse that for this opportunity to proceed they would need to undertake the data interpretation and deliver reports on the thickness of the crusher steel liners. This saw

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Fig. 22.3 Timeline of the scanalyse case study

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the Company redesign its product into a service offering, undertaking a ‘customer needs pivot’ (Mazzarol et al., 2017). It was now a niche specialist business subcontractor rather than technology developer. This change brought significant adjustment to the way Scanalyse operated and changed the financial outlook and exit strategy for the owners. Over the course of the next twelve months the company successfully gained additional equity capital and set about redirecting its energies to expanding the product line and workforce. By 2009, the arrival of new products CrusherMapper and TransferMapper saw sales expand with new markets in South America, US, South Africa. Scanalyse was now an international specialist service provider to the global mining industry.

22.3.2.3

Phase 3 2010–2012 Market Expansion and Exit Through Trade Sale

During 2010–2011 Scanalyse set to consolidate its operations before embarking on further market opportunities. Limited operations in Brazil and the US were expanded with first real commercial success in early 2012. It was then that the company expanded its European operations and South African. The company’s Board faced with need to retire Venture funds at this time took the opportunity to pursue a trade sale, particularly as Scanalyse was now a profitable business with significant growth options. The Finnish mining technology group Metso Outotec acquired the company delivering a significant return to the investors of Scanalyse.

22.3.3 Case Study 3—Live Technologies Pty Ltd. Live Technologies was an Inventor ISF that commenced operations in Perth, Western Australia in 1996. Founded by Roland Butcher, a self-employed graphics designer, it set out to develop and commercialise a digital lens filter for use with conventional film and high-definition digital cameras to counter the effects of extreme contrast, caused by under or over exposure (dynamic range). The film and television industry has been the most affected by issues of dynamic range with alternative options involving time consuming and expensive post production work. The product—known as the Live Lens Smartfilter was the breakthrough the market needed. Figure 22.4 shows the historical timeline for the Live Technologies case.

22.3.3.1

Phase 1 1996–2004 Initial Setup, R&D

The Smartfilter concept conceived by Roland Butcher progress through phase 1 as he assembled a network of research specialists that enabled him to create an informal

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Fig. 22.4 Timeline of the live technologies case study

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R&D team to develop the technology. This network consisted of leading research Professors within the Microelectronic Mechanical Systems Research Group at the University of Western Australia, together with the Liquid Crystal Institute at Kent State University in Ohio USA and the X-fab microchip foundry in Germany. They provided Roland with the necessary advice, technical support, and testing to enable him to develop a concept prototype by 1997. Patent applications were filed, and the project proceeded until the breakthrough working protype received sign off in 2003. A board of directors was formed, although by the time of the New Product Development (NPD) program completion funding had yet to be secured for market testing. The product remained under wraps by the board who were reluctant to seek market exposure.

22.3.3.2

Phase 2 2005–2007 Proof of Concept, Market Development, Production Status

In 2005 with a working version of the product technology it was finally able to be demonstrated to OEM manufacturers. However, as stated above, the company board was unwilling to seek customer feedback due to their having not identified a clear commercialisation strategy. Discussions were taking place about licensing to large OEM camera or lens manufacturers, but no decision was made. This delay in seeking market feedback was to prove costly. Over the ten-year product development period three competitors, namely Sony and Panasonic from Japan and Pixim from the USA had entered the market. Further, the global camera industry was changing from ‘wet’ film platforms to HD digital ones. This required additional R&D. Live Technologies saw its future partnering with an OEM in the HD video camera segment (market size US$2.8 billion) followed by a further OEM partnership for digital SLR camera and CCTV applications (market size US$11.8 billion) (Mazzarol, 2019). It commenced Voice of Customer (VOC) marketing and soon realised the retail price of the Smartfilter was undervalued. The significant increase in value was attributable to the ease of attachment of the filter to all existing cameras and lenses. With a change of CEO in 2006 the company acquired an experienced ISF manager who went about industry education and marketing and restructuring production away from R&D businesses. Smartfilter went from a working prototype to becoming progressively production ready.

22.3.3.3

Phase 3 2008–2010 Commercialisation Ready, Window of Opportunity Closed

During 2008–2009 the company had progressed to manufacturing ready status, with its own lens microchip designed and a commercial manufacturing consultancy contracted to undertake commercialisation. Additional investment funding was secured which supported the commencement of commercial negotiations with OEMs in the USA, South Korea, and Europe. Parallel marketing saw Roland and

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the Smartfilter gain national visibility on a TV program, the ‘New Inventors” in Australia. However, the company was not able to secure a commercial outcome. The world was changing in camera platform technology—digital cameras were arriving throwing all OEMs into a turbulent period. The industry platform change overtook the Smartfilter lens opportunity as digital platforms received the investment funds going forward.

22.3.4 Case Study Analysis Using the EIV Model Table 22.1 provides a summary of the three cases within context of the EIV model. The main points to note within the table are that all three cases assessed their innovations to be Champions, which are projects where it is anticipated that the innovation will generate above average sales and profits, while enjoying a long lifecycle (Mazzarol & Reboud, 2005). However, while both Skin Elements and Scanalyse undertook early market insertions, working with lead customers and key suppliers, while developing their products, Live Technologies focused on the technology without seeking market insertion or customer feedback. The outcome of the market insertion for Skin Elements and Scanalyse was a confirmation that the residual (quasi) rent would still meet the profile of a Champion. However, for Scanalyse the customer feedback required the company to undertake a customer needs pivot, shifting from a product-centric business model to a professional advisory service model. When Live Technologies eventually undertook VOC engagement they were rewarded with evidence to support their anticipation that their innovation was a Champion. Yet, they also became aware of the need to raise capital to fund the R&D, NPD and market development required for commercialisation. It is also worth noting the scores for each firm in relation to the RBV-IDD profile. While both Skin Elements and Scanalyse had high scores for all four of the IDD indices, Live Technologies scores were only average. This highlights the problem facing that company in pursuing commercialisation. Although its technology was making steady progress, it lacked the foundations required across the four areas examined by the IDD analysis that make successful commercialisation possible. As shown in Table 22.1, Live Technologies lagged behind the other two cases in relation to its dynamic capabilities, absorptive capacity, and capabilities architecture. Skin Elements concurrently engaged the market while developing its products and raising the necessary capital to fund its commercialisation process. It displayed a strong and well-balanced capabilities architecture. Scanalyse, which had spun-off a large university, secured venture capital funding, and appointed a professional and experience CEO, demonstrated a similar strength in these areas. However, its early realisation following customer feedback that it had to pivot from a productcentric to a professional advisory services business model, impacted its original commercialisation strategy. Although the company successfully built a global market presence within the mining sector, its shareholders (e.g., Curtin University and the

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Table 22.1 EIV analysis of the three cases Model process

Skin elements

Anticipated Champion (Innovation) rent Market insertion

Scanalyse

Live technologies

Champion

Champion

Early, global and Early and local but aligned with rapid NPD resulted in a customer process needs pivot impacting the business model

Residual (Quasi) Confirmed a Champion rent rent configuration within a global market requiring significant resources such as capital

Delayed just as the market faced disruptive changes in technology from film to HD digital formats

Supported a Champion rent configuration, but with a different business model requiring a service focus

Supported a Champion, but also the need to raise more capital for R&D, NPD, and market development

High = 8/10

Average = 5/10

RBV—IDD profile Market index

Very high = 9.4/10

Innovation index High = 7.8/10

High = 7.2/10

Average = 5.8/10

Resource index

High = 7/10

High = 7.6/10

Average = 5.4/10

Strategy index

Average = 6.6/10

High = 8.2/10

Average = 5.8/10

Dynamic Capabilities SCST

Rapid across product, Rapid within market, operations, and technological financial areas development, but moderate within market development

Moderate within technological development, but weak within market development

Absorptive Capacity

Rapid and developed Rapid and developed both internally and with both internally and with key stakeholders key stakeholders

Slow and poorly developed internally

Capabilities Architecture

Strong and well-balanced

Strong but unbalanced

Weak and unbalanced

NPD Techniques Informal but understood

Formal and understood

Informal and misunderstood

Business Model Design

Agile, entrepreneurial, and responsive to market feedback

Formal but responsive to Informal and not customer-market aligned with company feedback and strategy shareholder pressure

Development option

Autonomous (ongoing) Transfer (trade sale)

Abandon

Appropriable rent

High

Not realised

Source Malone et al. (2022)

Moderate

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VC company), required an early exit strategy for their funding, leading to the trade sale in 2012. By contrast, Live Technologies, despite having a technology that showed significant promise, commenced its market insertion later than it should, and seemed to have experienced a lack of coherence within its development of a commercialisation strategy. Too much relied upon the founder Roland Butcher to move the technological, market, and venture financing forward. Although the change of directors and injection of new market-oriented advisors enhanced the company’s commercialisation progress, the market and technology windows were closing. This ultimately resulted in the abandonment of the project despite its promise.

22.3.5 The Findings and Conclusion The ability to have strong and informed leadership is the key to commercialisation success. Together with the importance of social capital, and communication with the ISF operating in an OI mode create better opportunity for commercialisation success. Organisational learning is broader within the ISF allowing for faster decisions in relation to the process of sensing, seizing, and exploiting opportunities to deliver competitive advantage (Alvarez & Barney, 2004). The three ISF case studies, Skin Elements Ltd, Scanalyse Pty Ltd and Live Technologies Pty Ltd, were examined for this study. These cases provided good comparisons of relative success, managerial style, organisational configuration, and entrepreneurial orientation. Finding 1—The innovative technology is just a start and even the best technology will not commercialise itself The EIV model addresses the issues of dealing with the complexity and uncertainty that is common in commercialisation. The issue of early market insertion to identify customer-market perception of value using an MVP is critical. The EIV recognises that a continuous dialogue between the ISF and its potential lead customers is essential to success. Live Technologies sought to develop its prototype Smartfilter lens technology in a vacuum and failed to see the market shift in camera technology. In the case of Scanalyse, the project team demonstrated that though they believed their laser technology was significant in being able to measure the thickness of metal liners in rock crushing mills the customers, while recognising the value of the technology, customers did not want to purchase the device and use it themselves. This forced the company to undertake a customer-needs pivot that had a significant influence on their business model and overall commercialisation strategy. In relation to Skin Elements, the continuous customer and market feedback that was secured by the project team when developing their sunscreen product proved valuable. The open innovation (OI) program between the company and Baxter Laboratories allowed for a rapid formulation development process that involved mixing batch after batch of product. This close relationship between Skin Elements and Baxter Laboratories enabled a continuous learning loop that rapidly fine-tuned the

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manufacturing process to deliver the commercially suitable version of the sunscreen the market required. Skin Elements and Scanalyse had rich data supporting the conclusion that without operating consistent with the EIV model the commercialisation would more than likely have failed. Live Technologies, while collaborating with universities and other centres in the R&D process, did not invest sufficient attention to customer, market development. Finding 2—The technology must be developed concurrently with market insertion, resource, and capabilities development Developing a technology without concurrent assessment of customer and market needs, as Live Technologies did illustrates the risks of focusing too much on the technology and too little on the customer and market environment. The Smartfilter was created and developed with the board of the company actively insisting that no pre-marketing be done. In the end what was thought to be a $400 product was considered by the market to be at least a $4,000 product. An earlier understanding of the market’s perception of value through an MVP insertion would have allowed for options for the company to pursue. In the Scanalyse case it relied heavily on social capital and networks and alliances to succeed. A university spin-out, Scanalyse had good R&D competencies and good financial resources. However, the soft skills capabilities as found within the capabilities architecture of the EIV model were less developed. The academic literature is limited on understanding what enables successful commercialisation in ISFs the relatively high failure rate of such businesses has been attributed to lack of financing, or lack of a systematic product-technology development road map (Deschamps, 2017). Although these factors are important, they reflect primarily on operational rather than strategic issues, and ignore the importance of having the right soft skills capabilities within the project team and company. Skin Elements had the ability to understand and apply knowledge management (KM) and allowed the commercialisation of the sunscreen technology to continually move forward in development. Although Skin Elements had many problems to solve during the commercialisation journey, the project team’s ability to apply KM and absorptive capacity in a continuous learning loop was a key to success. Building a technology from scratch as a start-up venture and delivering a quality product or service with global market potential in highly competitive markets is a major challenge for ISFs. Both Scanalyse and Skin Elements were able to achieve this. Without their strengths in capabilities architecture their technologies would more than likely not have reached commercialisation. Finding 3—NPD techniques and business model design are valuable tools but like any tools they are only as good as the skills of the craftsman The NPD techniques element within the EIV model recognises the need for a “toolbox” that provides the project team with appropriate tools and techniques for the product-technology development. However, the business model design is a strategic process that must be undertaken with the firm’s overall corporate strategy in mind

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(Teece, 2018). Employees within the organisation operating with these tools need to be an experienced team. The smaller the team the more the level of understanding needs to be at the skilled level. Penrose (1959) detailed the need for companies to train and upskill employees and allow time for new information to be accumulated. This remains true today, notwithstanding the added complexities with sophisticated technology. Likewise, the entrepreneur’s skill is also needed to leverage resources and employ entrepreneurial actions that will assist the NPD process (Fisher, 2012). In the case of Live Technologies, Roland Butcher was not experienced in NPD, but compensated for this by collaborating with experts from local and overseas universities and research laboratories, as he progressed the development of his Smartfilter technology. His progress in this regard was impressive. He also had a board that comprised a cross-section of entrepreneurial and managerial expertise to advise him, though the board was reluctant to simultaneously engage in the process of customermarket development. The case illustrates the importance of having a balanced group within the project team. Skin Elements successfully undertook NPD program as the company went through to commercialisation. The Skin Elements case demonstrated that to succeed in the commercialisation process complementary specialists are needed within the business. Scanalyse in its path to commercialisation was forced to pivot from a technology to an advisory service provider after customer needs feedback. This change significantly reduced the value of the technology from the anticipated rent expectation determined before market insertion of an MVP. Without a significant understanding of the customer needs the business model design will be insufficient (Teece, 2018). Notwithstanding this lack of NPD process, the company was ultimately able to extract an appropriable rent from the market, though at a lower value point than originally anticipated. This evidence reinforces the position that a program is needed to provide a guiding path over the complex strategic process of commercialisation. Finding 4—The training and education provided to start up entrepreneurs focuses too much on NPD techniques and business model design (also design thinking), and not enough on the elements of the capabilities architecture The use of business model design for strategy formulation, and the application of NPD techniques such as StageGate® to assist in moving a project forward on an operational basis, remain important (Cooper, 2019). Their presence in the EIV model reflects this. However, in most cases these techniques are not sufficient to guarantee the successful commercialisation of an ISF project. Complexity and uncertainty are features of commercialisation and this requires ISFs to adopt these operational and strategic tools to be supplemented by the components of the capabilities architecture. These are the cognitive and cultural human attributes that are the key to success. Further, they need to be applied within the dual cycles of the dynamic capabilities process (e.g., sensing, co-creating, seizing, transforming), and the absorptive capacity process (e.g., acquisition, assimilation, transformation, and exploitation of knowledge). These key aspects of capabilities architecture include a wide range of

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cognitive and cultural components which bring dynamic capabilities and absorptive capacity into play within the ISF thereby enabling commercialisation success to occur. Finding 5—The firm’s RBV is important, and the IDD framework provides a useful screening tool to assess the firm’s launching pad starting point. However, the dynamic capabilities process offers a means of mitigating any resource weaknesses and scarcity within the ISF in the commercialisation process The importance of dynamic capabilities theory cannot be overstated in commercialisation in ISFs. The need for better internal and external business skills was first detailed by Teece et al. (1997) in acknowledging the rapidly changing environments within which business operates. Unlike ordinary capabilities which are akin to best practice, dynamic capabilities are idiosyncratic, unique to each company and are the way things are done (Teece, 2012). Four types of activities make up dynamic capabilities, namely sensing—identifying and assessing opportunities outside the company; co-creating—applying OI in the development of new products, systems; seizing—mobilising resources to capture value from these opportunities; and transforming—involving a continuous updating of the company’s IP and business systems. Several paradigms fall under the dynamic capabilities’ framework: the SECI model—sensing and seizing (Takeuchi & Nonaka, 1986; Nonaka & Takeuchi, 1995); Disruption—sensing (Christensen et al., 2002); Open innovation—sensing and seizing (Chesbrough, 2003); Ambidexterity—sensing and co-creating, seizing, and transforming (O’Reilly & Tushman 2004); Obliquity—transforming (Kay, 2011); Lean Start-Up—sensing and seizing (Ries, 2011); and Remix—transforming (Gomes-Casseres et al. 2015). As Teece (2014) notes, there has been some debate about the value of dynamic capabilities delivering a sustainable competitive advantage. Teece clarifies the differences in the two distinct classes of capabilities (Table 22.2). He defines ordinary capabilities as “doing things right” compared with dynamic capabilities as “doing the right things at the right time.” Also needed are VRIN resources (valuable, rare, imperfectly imitable, and non-substitutable) (Barney, 1991) and good strategy. Together they deliver sustained competitive advantage to the enterprise. Examining the EIV analysis of Skin Elements, Scanalyse and Live Technologies (Table 22.1), it is evident that Skin Elements and Scanalyse had good IDD capabilities as compared to Live Technologies. The dynamic capabilities rating for Skin Elements however, stood out across the three cases in all areas of the company with a “rapid” assessment. Skin Elements worked closely with third parties in the formula testing, market development and followed this practice by bringing Baxter Laboratories into a manufacturing scale-up program assisting in perfecting processes and specifications. This co-specialisation of both formula development and manufacturing was brought about by the high entrepreneurial cognition of the Skin Elements’ management team. By comparison, though Scanalyse had strong managerial cognition, it relied on a customer-driven pivot of its market offering for commercialisation success. Live Technologies, although it had the basis of ground-breaking camera technology, it

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Table 22.2 Some differences between ordinary and dynamic capabilities Ordinary capabilities

Dynamic capabilities

Purpose

Technical efficiency in business functions

Achieving congruence with customer needs and with technological and business opportunities

Mode of attainability

Buy or build (learning)

Build (Learning)

Tripartite schema

Operate, Sense, seize and transform administrate, and govern

Key routines

Best practices

Signature processes

Managerial emphasis

Cost control

Entrepreneurial asset orchestration and leadership

Priority

Doing things right

Doing the right things

Imitability

Relatively imitable

Inimitable

Result

Technical fitness (efficiency)

Evolutionary fitness (innovation)

Source Teece (2014)

only had moderate capabilities within the technology sphere while its market development skills were limited. The “art and intuition” that lies within the project team, and company leadership’s entrepreneurial cognition, social capital and networks and alliances are the essential ingredients found in the ISF’s capabilities architecture. When combined with appropriate use of dynamic capabilities and absorptive capacity, the success rate of commercialisation is likely to increase. Finding 6—Governance and ownership structure are important to the long-term success of the ISF in extracting value from an innovation As identified in varying degrees in the three cases, the entrepreneurial managers’ abilities were seen to co-create value with stakeholders by “bundling resources” that had the result of generating greater value than if had they worked alone. Skin Elements rapidly sought and gained an alliance with Baxter Laboratories that provided the ability to solve problems quickly as the formulation technology developed. This cooperative relationship through entrepreneurial management is what delivers competitive advantage and allows the ISF to supersede the burden of contract costs. Similarly, this pattern was reflected in the Scanalyse case that saw the ISF advance rapidly through to commercialisation after the development of a cooperative operational relationship with its customer Alcoa. Yet, in the case of Live Technologies, the entrepreneurial leader sought out and brought together the MEMS Research Group at

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The University of Western Australia that assisted in developing the microchip specification for the Smart Filter technology. The EIV model proposes that this ability to form cospecialised bundles of resources is a capability of entrepreneurial management and allows for the generation of economic profits. The ability of entrepreneurial management to measure marginal productivity more accurately throws support to how they can co-create value with stakeholders by bundling resources to generate more value that would be the case if undertaken in isolation. Finding 7—The capabilities architecture is the key to success, and while these are ‘soft systems’ that can be nebulous, they should be recognised and actively developed from the firm’s inception Capabilities architecture refers to the soft skills and systems that without them make the complex task of commercialisation too difficult to reach success. Firms that do not have, and therefore are unable to apply, these soft systems of capabilities architecture should approach commercialisation with care, and review the expertise, skills and competencies of their project team and board, seeking to fill gaps in their capabilities architecture where identified. The key capabilities comprise knowledge management, organisational learning, open innovation, social capital, networks and alliances, managerial competence, entrepreneurial orientation, and entrepreneurial cognition. It is the use of these capabilities that impact on how well the firm applies dynamic capabilities and absorptive capacity to the commercialisation venture. The three cases examined in this study have demonstrated the importance of these soft skills and systems in commercialisation by ISFs. Skin Elements demonstrated strength in all capabilities and possessed a balanced and experienced team. A key lesson from this case is that the earlier the firm has these capabilities, the higher the chance of dealing with all the challenges associated with commercialisation. The capabilities also need to be understood by the development team so that they have the cover and the abilities to deal with commercialisation. It is the combining of operational and strategic management. Scanalyse was a spin-out from a university research program, and after inserting the technology into the market found the product model needed to move to a service model. Once the innovation had pivoted to a service offering, the firm was able to demonstrate its capabilities architecture and commercialised the service. The success in the commercialisation of the Scanalyse technologies was due to the building up of social capital, strategic networks and alliances, and the willingness to rapidly adapt and reconfigure the firm’s resources as it built a global network of partners able to use its product technologies in a professional advisory service business model. In the Live Technologies case, the commercialisation program lacked balance. The R&D and NPD process to create the Smart Filter product demonstrated a good application of capabilities architecture skills, along with the dynamic capabilities and absorptive capacity processes. However, the caution displayed by the board appears to have been motivated out of a desire to keep the innovation confidential until the NPD process had generated a working prototype. However, the patents were rapidly ageing, and without customer-market feedback the commercialisation strategy was unable to push through the “fuzzy front end” of the NPD process.

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The EIV model highlights the need for both an operational and strategic understanding when launching a commercialisation project within an ISF. If the capabilities architecture is not well developed within the ISF management and project team, then the ability to apply absorptive capacity and dynamic capabilities to the commercialisation program will be limited.

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Peter Malone is a doctoral student from the University of Western Australia completing his research thesis into innovation and commercialisation within innovative small firms, with specific focus on the Entrepreneurial Innovation Value (EIV) model that he has developed. His research is at the forefront of understanding commer-cialisation value in entrepreneurial SMEs. He is also an experienced entrepreneur who has successfully founded and commercialised numerous ventures. These includes his role as a founder director and Chair of Skin Elements Limited, a fast-growing biotech firm which formed one of the case studies used in this book. Peter is also Chair of the Commercialisation Studies Centre Ltd., a not-for-profit applied learning centre which he helped to found. He has 15 years’ experience as a researcher and consultant in the fields of innovation and entrepreneurship having taught at the University of Western Australia, delivered presentations at Curtin University and the University of Notre Dame Australia. Peter holds in addition to current doctoral studies an MBA from the University of Western Australia and a Bachelor of Architecture from Curtin University. Tim Mazzarol is a Senior Honorary Research Fellow and Winthrop Professor at the University of Western Australia where his research focuses on entrepreneurship, innovation, small business management, marketing, strategy, commercialisation, and the co-operative and mutual enterprise business model. He is a Qualified Professional Researcher with the Australian Research Society, and the Coordinator of the Co-operative Enterprise Research Unit (CERU), at UWA. Tim is also the founder and Director of the Centre for Entrepreneurial Management and Innovation (CEMI), and a founder Director and Company Secretary of the Commercialisation Studies Centre (CSC) Ltd., a not-for-profit public company dedicated to encouraging best practice in commercialisation. He is also a past president of the Small Enterprise Association of Australia and New Zealand (SEAANZ). He is the author of several books on entrepreneurship, small business management

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and innovation. His research into has been published internationally. He holds a Ph.D. in Management and an MBA with distinction from Curtin University of Technology, and a Bachelor of Arts with Honours from Murdoch University, Western Australia. Sophie Reboud is professor of Entrepreneurship, Strategy and Management of Innovation at the Burgundy School of Business in Dijon, France, and an Honorary Research Fellow at the University of Western Australia. She has twenty years of experience as a re-searcher and consultant in the field of management and strategy of small firms. Originally trained as an agronomist she served as a research engineer for École Nationale Supérieure des Mines de Paris for five years and completed her Ph.D. there. Sophie’s research interests are in the strategic management of innovation and creativity. This includes firms in the food sector and low-tech industries with specific focus on intellectual property and strategy in small firms.

Chapter 23

Adaptive Planning for Inclusive Innovation: Creating Communication Spaces for Adopting Digital Government in Peru Bernardo Alayza and Domingo González

23.1 Introduction The promotion of innovation is recognized for its important contribution to the development of territories. Innovation has the potential to enhance productivity, create employment opportunities, increase the competitiveness of a territory, and attract investment, ultimately leading to an improvement in the quality of life of the citizens and communities (IDB, 2009; ECLAC, 2010d, IDRC, 2011). Local governments can play a crucial role in promoting innovation by creating an environment that is conducive to innovation by involving different stakeholders, such as businesses, universities, and community organizations; when local governments can help to create an ecosystem where innovation can thrive (Borrás & Edler, 2020; Cooke et al., 1997; Lundvall et al., 2009; Malerba, 2002; Wieczorek, Hekkert & Smits, 2012). In Peru, innovation initiatives have been promoted for over a decade as a mechanism for socio-economic development. This has led to the implementation of various plans, projects, and actions aimed at fostering innovation across different sectors and territories (CONCYTEC, 2004, 2006, 2014, 2016). The goal of these initiatives has been to leverage innovation to drive economic growth and improve the lives of people in Peru. Although some progress has been made, these actions at the national, regional, and local levels are still in their early stages (Bazán, Sagasti, & Cárdenas, 2014; Díaz, 2019; Kuramoto, 2014). One of the main factors is that initiatives have not involved different stakeholders, being initiatives top down which has some limitations in terms of participation of different stakeholders for developing inclusive and B. Alayza (B) · D. González Pontificia Universidad Católica del Perú, Lima, Peru e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_23

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long-term strategies (Alayza, 2017; Harman, 2018; Harman et al., 2022). Promoting innovation processes is not enough to ensure that the benefits of innovation are shared broadly and equitably. This requires a more participative approach to innovation, in which citizens actively participate in the development and implementation of new technologies and solutions relevant to their needs and circumstances. In this scenario, communication spaces can contribute to configure planning actions that can orient action for changing, by promoting open dialogue, transparency and cooperation. Communication spaces can be critical in adapting to changing circumstances and emerging challenges in the context of planning because they can help identify new opportunities, overcome obstacles, and generate innovative solutions by bringing together diverse perspectives and experiences (Alayza and Gonzalez, 2020). From a co-evolutionary perspective of innovation, the combination and alignment of artifacts and products, processes, mindsets, stakeholders and organizations can shape innovation at different levels (Smits, 2002; Smits & Kuhlmann, 2004). This can lead to transformations in different stable socio-technical regimes, but these transformations may not always benefit society (Geels, 2004). This is why, it is important to orient innovation towards a process of social and technical change that benefits society by including different social actors (Foster and Heek, 2015; Paunov, 2013; Chataway et al., 2014; Cozzens & Sutz, 2014; Dutrenit and Sutz, 2014). Implementing these changes can be difficult due to the high levels of turbulence, conflict, and uncertainty that exist in the innovation process as a result of stakeholders’ differing expectations, values, goals, and interests (Gonzalez, 1997; Díaz, 2019). The adaptive planning approach can be useful in generating options for innovation between stakeholders (De Melo, 2014). These interactions in the creation of innovation processes can help to better understand the nature of innovation, identify entry points for innovation, and reorient innovation processes in a more inclusive and sustainable direction (Alayza, 2017). The adaptive planning approach is characterized by a flexible and iterative approach to planning and decision-making, allowing for continuous adaptation in response to changing circumstances in complex and uncertain environments (De Melo, 1977, Gonzalez, 1997; Almeida and Melo, 2017). Since 2018, the municipality of San Bartolo in Lima Peru, has implemented a set of activities that have configured an inclusive innovation process in terms of digital government. This has been promoted in accordance with the central government’s regulations for the promotion of electronic government (Presidencia de la República, 2019). San Bartolo is one of the most popular beach towns in the south of Lima in Peru. The population increases considerably during the summer between January and March. Economic activities related to tourism—accommodation, food and local trade have a productive boom during the summer, but for the rest of the year decrease. Most of the year, the neighborhoods bordering poverty and social exclusion struggle to thrive economically. This initiative became Lima’s first digital local government initiative; however, this initiative began to be adopted as an innovation when several public and private actors, including local citizens, were able to align their views

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and interests and actively participate in the implementation through communication spaces promoted by a local commission that allowed them to make consistent decisions. This chapter provides a framework for understanding the factors involved in generating participatory innovation processes, in which various types of stakeholders intervene and planning actions at key moments to lay the groundwork for the promotion of innovation processes of digital government. By understanding the dynamics and interplay between public and private actors in a territory, the proposed framework has the potential to provide insights into how innovation processes can be more effectively configured to achieve outcomes for all stakeholders involved. The discussion attempts to lay the foundation for discussing a conceptual model of adaptive planning for generating inclusive innovation processes, in which communication plays an important role in directing, promoting participation, and generating governance in innovation processes at the local government level. The proposed framework of adaptive planning for the configuration of inclusive innovation processes was developed within the framework of a doctoral research for a period of 4 years, identifying the factors that may or may not contribute to generating innovation processes in a territory. This chapter is divided into four sections: a literature review on innovation for inclusive development, the role of adaptive planning and communication in this topic, the methodology for gathering evidence through action research, the presentation of findings and the subsequent discussion of results, and finally, the study’s conclusions.

23.2 Theoretical Framework 23.2.1 Inclusive Innovation from a Co-evolutionary Perspective It is acknowledged that innovation significantly contributes to economic development, wellbeing, and growth (IDB, 2010; ECLAC, 2010d, IDRC, 2011). From a coevolutionary perspective innovation permits to understand the complexity of the innovation which involves the interaction of technical, social and institutional elements (Smits, 2002; Smits & Kuhlmann, 2004; Wieczorek, Hekkert & Smits, 2012). The concept of coevolution emphasizes the interdependent nature of innovation and highlights the need to analyze innovation in its multiple dimensions. The operationalization of this concept involves analyzing and understanding innovation in its three dimensions: the creation of new products, the new modes of thinking and learning practices and processes, and the new institutions and socio-organizational arrangements that influence the development of an innovation (Kilelu et al., 2013; Smits, 2002). The co-evolutionary view of innovation emphasizes the interdependence and mutual influence of different actors and elements in the innovation process, such as firms, universities, governments, and users. This view recognizes that innovation is

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not solely a technical or economic process, but is also influenced by social, cultural, and political factors (Leeuwis, 2004). The operationalization of the concept of coevolution involves analyzing how these different dimensions interact and influence each other, and how they shape the development and diffusion of innovations. From this perspective, innovation is seen as a dynamic process in which different actors and elements co-evolve over time, shaping each other’s trajectories and creating new opportunities and challenges (Leeuwis & Aarts, 2016). This view emphasizes the importance of participatory processes in which actors can make collaboration and dialogue among stakeholders, as well as they can configure flexible and adaptive institutional frameworks that can respond to changing circumstances and needs.

23.2.2 Dimensions of Inclusive Innovation From a strategic perspective, promoting innovation requires designing actions that are oriented towards solving societal problems, fostering participation of diverse stakeholders, and coordinating actions to align innovation activities to create a sociotechnical governance for generating innovation outcomes that benefit society. – Directionality of innovation: from an inclusive innovation approach, the establishment of priorities involves defining the types of innovations to solve social challenges for specific demographic groups, and identifying the pathways and goals towards which innovation activities should be directed (Harman et al., 2022). This requires a deep understanding of the needs and aspirations of diverse communities, and the identification of the most pressing social and environmental challenges (Arond et al., 2011; Glennie et al., 2020). It also involves considering the social and economic contexts in which these challenges arise, and the potential impacts of innovation activities on different stakeholders (Schillo & Robinson, 2017; Schot & Steinmueller, 2018). Drawing on the insights in the literature, inclusive innovation strategies should be oriented to solve deficiencies in areas such as food, health, education and access to goods and services (Schillo & Robinson, 2017; Thomas et al., 2012); orient innovation towards creating new knowledge based on existing local needs and capacities (Planes-Satorra, Foster & Heeks, 2015; ; Mortazavi et al., 2021; Paunov, 2017) and creating new networks based on formal, informal and/or local and/or indigenous knowledge (Harman, Ross & Cavaye, 2020; Kilelu et al., 2013). – Participation for innovation: the active participation of different stakeholders is a key element in promoting inclusive innovation, as it can generate mechanisms for involvement in the various stages of the innovation process, including design, implementation, promotion, and consumption (Chataway et al., 2014; Heeks et al., 2014). This participatory and analytical perspective of innovation emphasizes the importance of involving local actors and communities in the innovation process, especially in the context of addressing societal problems. A number of authors, including the IDRC (2011), Arond et al. (2011), Paunov (2013), OECD (2013),

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Dutrénit and Sutz (2014), and Fressoli, Dias and Thomas (2014a, 2014b); Smith et al. (2014), share that innovation process involves considering a wide range of heterogeneous actors, including individuals, communities, organizations, and institutions, in order to seek the benefits of innovation and reduce inequalities between different groups and regions. It also motivates efforts, for reducing the gap between urban and rural areas, or between rich and poor communities, can lead to new forms of organizing communities and productive activities (Glennie et al., 2020; Harman, Ross & Cavaye, 2020; Pel et al., 2020). The participatory approach is particularly important in this regard, as it enables the inclusion of social, institutional, and behavioral factors alongside technological changes (Diercks et al., 2018). Participation can also help to build trust among stakeholders and ensure that innovation activities are perceived as legitimate and responsive to the needs of diverse communities (Harman, Corilloclla, and Alayza, 2022). This can help to promote the adoption and diffusion of innovative solutions, and to build networks of collaboration and mutual learning that can facilitate the development of more effective and sustainable solutions to complex societal challenges. – Governance for sustain innovation: inclusive innovation emphasizes the importance of governance mechanisms that promote coordination and collaboration between diverse stakeholders in the innovation process (Glennie et al., 2020). This can involve creating spaces for dialogue for setting innovation priorities and in managing the results and impacts of innovation activities (Harman, Corilloclla and Alayza, 2022). The development of effective governance mechanisms for inclusive innovation poses significant challenges, including the need to engage a diverse set of stakeholders with different perspectives and priorities, and to navigate complex social and environmental objectives (Glennie et al., 2020). Effective governance mechanisms need to take into account underlying values and perspectives of different stakeholders, and to ensure that the voices are heard in decision-making processes (Borrás & Edler, 2020; Diercks et al., 2018). This can involve creating opportunities for co-creation of scientific and technological solutions to social problems, and promoting the participation of diverse stakeholders, including academia, the private sector, government, and civil society organizations (Schot & Steinmueller, 2018; United Nations, 2020; Paredes-Frigolett et al., 2015). In countries with weak institutions, innovation actions aimed at inclusive development can play a crucial role in enabling capacity building, fostering collaboration between public and private actors, creating networks, and intermediating innovation processes for an effective governance. Capacity building is an important aspect of inclusive innovation, as it can help individuals and organizations to enhance their skills and capabilities. Innovation actions can contribute to capacity building by providing training, mentorship, and resources to help individuals and organizations develop their innovation capabilities (Botha, Grobbelaar & Bam, 2016). By building capacity, innovation actions can help to create a more inclusive and sustainable innovation ecosystem (Carrasco, 2017). Toma et al. (2014) and Gras, Dutrénit, and Vera-Cruz (2017) emphasize the importance of articulating public and private actors in innovation processes in order to leverage their complementary strengths and resources

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23.2.3 Adaptive Planning for Inclusive Innovation In scenarios of complexity that require structural changes, it is important to view adaptive planning process as a mechanism to configuring social change. The nature of adaptive planning can contribute to facilitating innovation. Adaptive planning is focused on creating adaptable strategies that enable recreating an appropriate and realistic social and technological transformation (Ackoff, 1974; Trist, 1976a, 1976b, 1976c). In contrast to rigid conventional planning processes, its part on the premise that changes must address factors like uncertainty, complex problems, and the involvement of different protagonists (Burns, 2004; Burns et al., 1983; De Melo, 2014; González, 1997). Constructing new futures requires the active participation of multiple actors that facilitate the constant evaluation and reorientation of actions to achieve changes at various levels (De Melo, 1985). In this sense, progressive processes for re-evaluation, decision-making, and learning facilitated by the interactions of actors are even more important than achieving specific goals because they can lay the groundwork for appropriate and consistent change (Babüroglu & Ravn, 1992). This enables the creation of social learning processes with flexibility, dynamic adaptation, and constant evaluation of actions performed, making them more compatible with interactions between different actors seeking innovation (De Melo, 2014). In this regard, when multiple actors collaborate on resolving complex problems or undertaking innovative initiatives for social change, adaptive planning processes may motivate to accommodate agreements between different types of actors in order to configure innovation according to local capabilities and opportunities in a territory (González & De Melo, 2004). The process of adaptive planning requires reticulate agents for facilitating change. According to Burns (1980), reticulate agents are individuals or groups that act as connectors between different organizations, helping to channel their expectations and capabilities towards solving meta-problems. They can serve as intermediaries between different organizations, helping to facilitate communication and collaboration in order to address complex issues that may require the involvement of multiple parties (Alayza and Gonzalez, 2020). As noted by González and De Melo (2004), the involvement of reticulate agents can help to bring together the diverse perspectives, expertise, and resources needed to address complex problems (Almeida & De Melo, 2017). In terms of promoting inclusive innovation, adaptive planning can be particularly useful, understanding the characteristics of diverse stakeholders for addressing complex social challenges and navigating in uncertain environments (Díaz, 2019; Alayza and Gonzalez, 2020). By using adaptive planning organizations can respond to feedback from stakeholders, adjust plans based on new information, and continuously improve their goals (De Melo, 2014). So adaptive planning can help to create a more inclusive and effective innovation process, by enabling organizations to learn and adapt in response to changing circumstances and feedback from stakeholders.

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23.2.4 Communication Spaces for Inclusive Innovation The advent of new trends, changes and technologies challenges conventional models and requires rethinking communication strategies that contribute to the generation, promotion and dissemination of innovations adaptable to needs and opportunities in different scenarios and contexts (Daventport et al., 2006; Hülsmann & Pfeffermann, 2011). The approaches and models related to communication in innovation promotion scenarios have generated empirical evidence on the importance of introducing communication concepts to the practice of innovation. These approaches and models provide insights into the role of communication in the innovation process and how it can be strategically used to promote innovation. Under a diffusion of innovation theory, Rogers (2003) highlights the importance of communication in the adoption and diffusion of new ideas and innovations, emphasizing the need for effective communication channels to facilitate the dissemination of information and the adoption of new innovations. Mast, Huck and Zerfass (2005) and Pfeffermann and Gould (2017) proposed communication management models that emphasize the importance of strategic communication planning and implementation in the innovation process, highlighting the need for a systematic and integrated approach to communication that takes into account the needs and preferences of different stakeholders and ensures effective communication throughout the innovation process. Leeuwis and Aarts (2011, 2016) also proposed the concept of communication for innovation applying to complex scenarios, emphasizing the importance of communication in promoting innovation that is inclusive, participatory, in which discursive communication spaces permit the alignment of new products, ways of thinking and institutional arrangements. Under this view Alayza (2017) discussed the role of communication for inclusive innovation and Alayza and Gonzalez (2020) develop that communication spaces play a crucial role in adaptive planning for inclusive innovation, as they provide a platform for diverse voices and perspectives to be heard and considered in the innovation process. in the context of adaptive planning for inclusive innovation, there are three interrelated actions that can be operationalized through communication: – Building innovation networks: these are typically formed when actors with common needs and objectives come together to pursue their interests, and deliberate actions can be undertaken to promote their generation. The formation of networks is a way to exercise power and counter-power in societies, and this can configure inclusive innovation, depending on who dominates, the context, and what objectives are pursued (Castells, 2011). Based in part on the idea that networks do not always form naturally, especially those working for social change, communication can play a crucial role for building innovation networks (Alayza, 2017). Communication can be instrumental in facilitating the building of innovation networks by enabling integrative and interconnected interactions between multiple actors. This is why communication spaces can be critical to enable the

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exchange of knowledge and resources, build trust, and promote a shared vision for innovation (Dhanaraj & Parkhe, 2006; Powel & Grodal, 2009). – Social learning in innovation: because innovation is an interactive process in which people create new relationships, knowledge, and perceptions, communication may make it easier to capitalize on lessons learned in order to shape meanings for a variety of change options (Röling, 2002). Taking into consideration that adaptive planning processes can be seen as a continuous social learning, characterized by flexibility, dynamic adaptation, and constant evaluation of the performed actions, which allows making more compatible with interactions between various actors seeking innovation (De Melo, 2014), Communication plays a key role in creating a social learning in which diverse actors can share their experiences, knowledge, and insights, which can lead to the development of new ideas and approaches. – Negotiation of changes for innovation: because innovation often leads to changes in the established order of things, which can cause social conflict. This is particularly true when innovation processes seek to bring about significant social transformation, such as changing cultural norms or disrupting traditional power structures (Leeuwis, 2004). In this vein, communication can be used to identify and address potential conflicts, build consensus, and negotiate changes that are acceptable to all stakeholders (Leeuwis & Aarts, 2011). Communication can enable navigating the complex social and political dynamics that can arise when introducing new innovations. Also, it facilitates the negotiation process by promoting dialogue and understanding among the different actors involved in a way that considers the interests and needs of all stakeholders, to ensure that the benefits of innovation are distributed equitably. According to this theoretical framework, it is possible to state that there are conceptual connections with the creation of communication spaces for adaptive planning for reaching inclusive innovation. Since it can allow the adaptation of actors’ perspectives toward more feasible and coherent innovation processes in various contexts, the role of communication conception is crucial in this scenario. Communication spaces for inclusive innovation can be defined as to the physical or virtual platforms, settings, and processes where individuals and groups with diverse backgrounds, perspectives, and experiences can engage in open dialogue, exchange information, share ideas, and collaborate on the development and implementation of new ideas, products, and processes that benefit all members of society (Harman & Alayza, 2022). These communication spaces can take various forms, including workshops, community consultations, focus groups, user feedback sessions, online platforms, and other interactive settings that enable effective communication and collaboration among stakeholders. They provide a platform for diverse voices to be heard and considered in the innovation process, and for the identification and removal of barriers that hinder the access and adoption of innovative solutions by different communities. While adaptive planning processes can help to construct multiple options for change, communication can be used to understand the nature of inclusive innovation processes in terms of orienting actions to solve social problems, encourage

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Table 23.1 Conceptual framework for adaptive planning for inclusive innovation through communication spaces Adaptive planning: Complex approach that allows to guide innovation through the creation of communication spaces

Communication spaces Network building

Social learning

Negotiation processes

Inclusive Innovation innovation from orientation a co-evolutionary perspective

The type of innovation to be adopted through a collaborative and participatory approach that responds to the demands of local networks Communication spaces

Learning that results from participatory interactions with innovation

Network building

Social learning

Continuous changes in the innovation (continued) process that facilitate the adoption and scaling of the initiative Negotiation processes

Table 23.1 (continued) Adaptive planning: Complex approach that allows to guide innovation through the creation of communication spaces Promotion of participation Governance of inclusion processes

participation, and governance of innovation in order to foster inclusive development. The Table 23.1 shows the conceptual framework that permits to instrumentalize it collectively.

23.3 Methodology This section describes the methodology used to collect the evidence required to answer the research question about the role of communication spaces in facilitating adaptive planning processes for the configuration of innovation processes for the adoption of digital government initiative over a four-year period. The methodological approach of this study is qualitative, starting from a constructivist ontology that allows us to understand the complexity of a certain social phenomenon and be part of it. Likewise, the methodology used to generate empirical evidence is based on action research, in which the researcher guides actions to conceptualize, obtain information, implement and evaluate various cycles that generate knowledge that contributes to learning and social change (Denzin & Lincoln, 2011). Methodologically, action research has a conceptual relationship with the adaptive planning approach due to the active participation of researchers in order to facilitate the orientation of an initiative. This methodology provides valuable insights identifying areas where further adaptation to changing circumstances may be required, as long as they guide the learning process and social evaluation. In this vein, adaptive planning and action research

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are powerful tools for addressing complex and dynamic problems (see Trist, 1976b; Gonzalez, 1997; de Melo, 1985). Starting from the premise that complex problems necessitate complex and adaptable solutions involving heterogeneous actors with diverse visions, discourses, interests, and sociocultural backgrounds, the use of the combination of these approaches contributes to understanding and establishing guidelines to propose tools tailored to reality, based on the protagonists’ experiences, perceptions, and desires (Denzin & Lincoln, 2011; Dick, 2004). The results of this research gather evidence from three phases: exploratory, experimental and validation. The exploratory phase included the literature review and the design of a conceptual framework that supports the theoretical basis that allows discussing and building an integrated approach. This phase was done in the period of 2019 and 2020, and involved the collaborative design of planning tools and the participation of stakeholders such as the municipality, university, citizens, and representatives from national governments. The experimental phase, which focuses on organizing and facilitating the realization of various actions that can be interpreted such as experiments, which contributed to implement incremental actions with different stakeholders, that have a complex and incremental connection with configure the elements of an adaptive planning. The Table 23.2 shows the experiments implemented during different periods. In the experimental phase more than 50 planning workshops and meetings were runed with the participation of more than 200 stakeholders during the period of 2018 to 2022. To this end, various tools were designed and implemented, such as more than 100 semi-structured interviews and 10 focus groups, in order (1) to comprehend the impact of any initiative that can be analyzed from a research standpoint, such as an experiment (2) understand what were the points of connection between each of these initiatives and (3) how was the progression between each of these activities in terms of configuring innovation. These initiatives from the perspective of adaptive planning can be conceptualized as cycles that configure innovatory planning that facilitate innovation (De Melo, 2014). For the purposes of this chapter, it will explore the outcomes of experiment 4, which relates to the consolidation of the innovation process through adaptive planning mechanisms in the process of adopting an electronic and participatory government mechanism.

23.4 Results and Discussion 23.4.1 Directing Objectives and Actions for Planning Inclusive Innovation The directionality of actions for inclusive innovation requires to comprehend in deep the needs and aspirations of diverse communities, and the identification of the most pressing social and technical challenges (Arond et al., 2011; Glennie et al., 2020). The joint work between the Municipality and the different sectors represented an initiative of inclusive innovation. This allowed for citizen participation, enabling the

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Table 23.2 Experimentation stages (2018–2022) Experiment 1: Design and execution of elements for the development of a concerted development plan for a tourist, ecological, and innovative district that can be lived in all year round (2018–2022) – Creation of a working table will be established with citizens to define the objectives of the district – Formation of a commission with representatives from the municipality and local citizens – Implementation of specialized workshops and meeting for planning process with the government planning entity, defining the local goals: tourism, innovation and digitalization of the government processes – A local university was involved in the planning process with tools and techniques for monitoring and evaluating the progress of the development plan. I – Definition of the priorities and the tourism resources in the district. The priorities were developed in consultation with the working table, the district commission, and the government planning entity (CEPLAN) Experiment 2: The identification of district tourism resources, spaces of promotion and the creation of an emblem can be an effective way to promote innovative tourism (2019–2021) – Identification of tourism resources in the district in which the commission engaged the community in the registration and the identification of tourism resources in the district – Realization of Pachamama and Mamacocha Ayni events in the district (2019, 2020, 2021). Event that was organized by the commission in order to promote the natural and cultural heritage – Activities to promote tour citizen participation in activities such cleaning beaches and parks, reconstruction of the city and campaigns to protect natural resources district to ensure that the tourism resources are well-maintained – The commission established the need for a chamber of commerce and tourism to promote the development of the tourism sector with the chamber tourism-related businesses in the district, including training, marketing, and networking opportunities – Creation of an innovative brand of the district that highlights the natural and cultural resources as well as attract residents and promote year-round living Experiment 3: The creation and execution of a chamber of commerce and tourism to promote and consolidate innovative initiatives (2019–2022) – The commission designed the guidelines for the chamber of commerce and tourism, developing a set of guidelines that outlines the mission, objectives, roles and responsibilities and activities of the chamber of commerce and tourism – The commission designed the guidelines and statutes of the chamber of commerce and tourism that formalized the chamber of commerce and tourism as a legal entity. These statutes include details about the organization’s structure, membership, and decision-making processes – Implementation of activities to foster innovative tourism that create unique and unconventional travel experiences that go beyond the traditional sightseeing and accommodation offerings involving immersive and hands-on experiences that allow travelers to engage with local cultures and communities – Creation of an information center that serves as a hub for promoting local businesses and connecting visitors with local communities for ecological and innovative tourism – Creation of digital resources to the local resources from the district to sensitize and provide user-friendly information from visitors – The creation of digital resources to showcase local resources in a district that can greatly enhance the tourism experience for visitors. By providing user-friendly information the district, its attractions, and services (continued)

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Table 23.2 (continued) Experiment 4: The adoption of a digital government practices to improve internal processes within the municipality and promote citizen participation for the development of innovative tourism based on local natural resources (2021–2022) – Partnership with a local university to improve internal processes in the local government, conducting research on best practices for digital government implementation and providing training for staff members – Agreement with an international company to use a platform and digital application for digital government management as a free trial for developing digital government solutions – Training sessions for the internal use of the platform and the application and the adaptation to the internal management needs – Using a digital application for implementing pandemic prevention measures, and developing the steps required to prevent the spread of COVID-19 – Reconfiguration of and rethinking of new objectives oriented of the digital application in order to foster citizen participation according to the local needs focusing on promoting innovative tourism – Organizing a citizen contest “empower won citizens” with support of public and private actors to identify citizen needs and encourage their participation in local solutions based on tourism projects that promote sustainability and local resources protection – Improvement of internal processes for accountability and transparency in local government management – The development and promotion of local activities and campaigns based on innovative tourism via the digital application

San Bartolo community to collectively take action and increase their influence in the decision-making process regarding tourism as a development strategy. Rather than relying on rigid planning methods, the committee provided guidance and assistance to support interconnected initiatives aimed at addressing local issues. For instance, the commission collaborated with local universities to organize specialized workshops and meetings to define local goals, highlighting tourism as a top priority for the district. This communication space allowed the community to express their ideas and values about the district, promoting a collaborative entailed and inclusive approach to innovation. The committee facilitated various workshops that contributed to visualizing San Bartolo as a district that can offer more than just beaches and surf as it is commonly known. In this vein, the community created tourism opportunities based on these identity elements, and addressing responsible tourist behavior in terms of resource consumption and waste management. By facilitating dialogue and creating an environment of openness and collaboration, this approach generates a more comprehensive understanding of the challenges and opportunities facing a given community or organization (Schillo & Robinson, 2017; Schot & Steinmueller, 2018). This has enabled prioritization of specific topics, such as ecotourism, and provided guidance for actions while maintaining flexibility and adaptability to respond to changing circumstances (Harman et al., 2022).

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23.4.2 Promoting Participation of Different Stakeholders for Adapting the Innovation to Be Inclusive The concept of reticulate agents is an important one in the process of adaptive planning. According to Burns (1980), reticulate agents are individuals or groups that act as connectors between different organizations, helping to channel their expectations and capabilities towards solving meta-problems. In the context of adaptive planning, reticulate agents can serve as intermediaries between dissimilar organizations, thereby enabling effective communication and collaboration to address intricate issues that necessitate the involvement of multiple parties (Alayza and Gonzalez, 2020). As noted by González and De Melo (2004), the involvement of reticulate agents can help to bring together the diverse perspectives, expertise, and resources needed to address complex problems. In this scenario the commission served as a crucial cross-linking agent, facilitating the integration of over 20 public and private actors into the committee. More significantly, it succeeded in mobilizing a vast network of over 200 actors affiliated with both public and private sectors, as well as community members. The committee has been an active participant in the organization of this event since 2018, alongside other prominent community representatives. As an illustration, every year since 2019 the commission fosters the annual Pachamama Mamacocha Ayni event, which embodies the sacred Quechuan principles of reciprocity, motherland, and sacred water. This event provided a crucial communication space to stimulate collaboration and integration among these actors. Another noteworthy participatory action the formation of the Chamber of Commerce and Tourism, for which the commission provided significant assistance in the design of guiding principles for its establishment. To facilitate this process, the committee created effective communication spaces, such as face-to-face interactions, workshops, periodic meetings, and roundtable discussions, that fostered alignment of actors’ perspectives, expectations, and objectives, in light of any unforeseen occurrences. The committee successfully fostered participation by establishing networks that connected a diverse range of stakeholders, facilitating knowledge and resource sharing, and promoting collaboration and innovation (Carrasco, 2017; Toma et al.,; 2014 and Gras, Dutrénit, & Vera-Cruz, 2017). Acting as innovation intermediaries, the committee provided support services to local actors while also responding to their demands (Kilelu, Klerk & Leeuwis., 2013; Ruiz et al., 2016; Joffre et al., 2017). From a social learning perspective, these changes made in the scenario of inter-organizational planning configure incremental learning (De Melo, 2014) and also favor the development of institutional arrangements that can configure the innovation process (Smits, 2002; Smits & Kuhlmann, 2004; Wieczorek, Hekkert & Smits, 2012). Through these efforts, the committee was able to create various networks that accommodated the supply and demand for the implementation of a digital government framework focused on ecotourism. While the original objectives of digital government primarily centered on improving the services of the Municipality, the networks established by the committee, chamber of commerce, local universities, and organized community collectively guided and negotiate the orientation of digital

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government toward a strategy centered on participatory and responsible tourism that embraced the values of the district’s actors.

23.4.3 The Governance of Inclusive Innovation Process The development of effective governance mechanisms for inclusive innovation poses significant challenges, including the need to engage a diverse set of stakeholders with different perspectives and priorities, and to navigate complex social and environmental objectives (Glennie et al., 2020). In this regard, the implementation of a cycle of experiments aimed at designing and evaluating inter-organizational actions (See Table 1), geared towards achieving the district’s objectives, has contributed to the governance of innovation due to permitted aligned objectives in to a new product such as the digital application oriented to promote a sustainable tourism, a new knowledge in terms of adapting the platform and canalizing a local demands and finally as the indicative have been institutionalized by the municipality as new way for empower citizens to promote tourism according to the local capacities and opportunities in the district (Diercks et al., 2018). The development of effective governance mechanisms for inclusive innovation is a complex task that entails significant challenges. These challenges include engaging a diverse set of stakeholders with distinct perspectives and priorities, as well as navigating complex social and environmental objectives (Glennie et al., 2020). In this regard, the implementation of a cycle of experiments, aimed at designing and evaluating inter-organizational actions of the adaptive planning process (as illustrated in Table 1), geared towards achieving the district’s objectives has contributed to the governance of innovation. This has permitted the alignment of objectives in the creation of a new digital application oriented towards promoting sustainable tourism. The cycle of experiments has also resulted in new knowledge regarding the adaptation of the platform and the channeling of local demands (De Melo, 2014). Ultimately, the institutionalization of the cycle of experiments by the municipality has empowered citizens to promote tourism according to local capacities and opportunities in the district (Diercks et al., 2018). Taking into consideration that Municipality’s internal efforts towards digital government adoption to enhance its management were not successful until they were integrated with the demand and dynamics generated by ecological tourism promotion, the communication spaces during the adaptive planning process permitted the reconfiguration of the objectives related to digital applications to focus on promoting women citizen participation, local needs, and innovative tourism. For instance, to achieve this, the committee organized a citizen contest with support from both public and private actors to identify citizen needs and encourage women in the involvement of local solutions based on sustainable tourism projects that protect local resources. The initiative was successful in gathering over 50 women citizen proposals and securing funds for implementation, creating an internal demand for the application.

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In this instance, both the contest and the platform were configured within the communication space (Alayza and Gonzalez, 2020). As a result, internal processes were improved through the interests and mobilization of citizens. The adaptive planning processes, which allowed for the reorientation of the initiatives, were based on the committee’s ability to tap into internal demand and to engage actors (De melo, 2014), including the development of the tourism application taking into account values and perspectives of different stakeholders, and decision. Considering that changes need negotiations, which can cause social conflict (Leeuwis & Aarts, 2016), the committee effectively facilitated the negotiation of agreements and the direction of digital government, which was initially aimed at enhancing internal processes but eventually evolved into a communication space that fostered inclusive innovation. It actively encouraged citizens to generate innovations addressing various issues such as solid waste management, experiential tourism promotion, and internal municipal process improvement. This participatory action has created promising opportunities for co-creation of solutions to social problems by engaging a diverse set of stakeholders (Schot & Steinmueller, 2018; United Nations, 2020; Paredes-Frigolett et al., 2015). As previously discussed, the innovation process involves critical roles, such as that of reticulated agents (Almeida & De Melo, 2017; Burns, 1980), which can facilitate communication spaces to enhance the decision-making process. Nonetheless, it is crucial to comprehend the state’s roles in shaping the governance of socio-technical systems’ transformation since every case may exhibit unique characteristics, actors, roles, and responsibilities (Borrás & Edler, 2020).

23.5 Conclusions In conclusion, this chapter discusses the implications of an adaptive planning framework that facilitates inclusive innovation processes through communication spaces. The study draws on four experiments conducted between 2018 and 2022, in which a local governmental commission integrated various actors, such as local universities, enterprises, and citizens, to respond to the local needs of the community and the local municipality. This study emphasized that, by prioritizing a non-synoptic approach such an adaptive planning approach, stakeholders can make informed decisions that align with broader objectives while remaining adaptable and responsive to changing circumstances. This approach is not only geared towards immediate problem-solving but also towards achieving long-term strategic goals. In this vein the experimental advances during 2018 to 2022 that initially appeared as disconnected actions, have established the foundation for the adoption of digital government as a means of promoting inclusive innovation, enabled by the presence of reticulated agents. The study finds that the commission, conceptualized as a reticulated agent, has played a critical role in aligning visions and objectives, orienting innovation towards solving local problems, promoting the participation of diverse agents, and enabling

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governance in the adoption process of a digital government initiative. Therefore, the study highlights the pivotal role of communication spaces in building networks, facilitating social learning processes, and negotiating changes within the context of adaptive planning. In this vein the facilitation of communication spaces has proven to be an effective means of promoting positive change, fostering collaboration, and generating innovative solutions. In this regard, communication spaces can be extended and replicated as a strategy for inclusive innovation when it is necessary to foster collaboration as well it is necessary to strengthen capabilities to effectively manage and address conflict, within and between community groups and local authorities. This can also contribute to extending networks with universities, civil society organizations, government agencies and other actors to create new capabilities and new opportunities to address local needs. Although communication spaces do not guarantee the configuration of an inclusive innovation process, the study shows that it has reinforced the community’ sense of agency and self-organization in order to deal with the uncertainty of planning scenarios for the future.

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IDRC (2011). Innovation for inclusive development, program prospectus for 2011– 2016. http://www.slideshare.net/uniid-sea/october-2011-innovation-for-inclusivedevelopmentprogram-prospectus-for-20112016 Joffre, O., Klerkx, L., Dickson, M., & Verdegem, M. (2017). How is innovation in aquaculture conceptualized and managed? A systematic literature review and reflection framework to inform analysis and action. Aquaculture, 470, 29–148. Kilelu, C. W., Klerkx, L., & Leeuwis, C. (2013). Unravelling the role of innovation platforms in supporting co-evolution of innovation: Contributions and tensions in a smallholder dairy development programme. Agricultural Systems, 118, 65–77. https://doi.org/10.1016/j.agsy.2013. 03.003 Kuramoto, J. R. (2014). Inclusive Innovation against All Odds: The Case of Peru in G. Dutrénit & G. Crespi (Eds.), Science, Technology and innovation policies for development: The Latin American experience (p.109–131.). Cham: Springer. https://doi.org/10.1007/978-3-319-041 08-7 Leeuwis, C. (2004) Communication for rural innovation: rethinking agricultural extension. (with contributions by A. van den Ban) Oxford: Blackwell Science. Leeuwis, C., & Aarts, N. (2011). Rethinking communication in innovation processes: creating space for change in complex systems. The Journal of Agricultural Education and Extension, 17(1), 21–36. Leeuwis, C., & Aarts, N. (2016). Communication as intermediation for socio-technical innovation. Journal of Science Communication, 15(6), 1–12. Lundvall, B. Å., Joseph, K., & Chaminade, C. (2009). Handbook on innovation systems and developing countries: building domestic capabilities in a global context. Edward Elgar Publishing. Malerba, F. (2002). Sectoral systems of innovation and production. Research Policy, 31, 247–264. Mast, C., Huck, S., & Zerfass, A. (2005). Innovation communication. Innovation. Journalism, 2(4), 165. Mohr, J. J., Sengupta, S., & Slater, S. F. (2010). Marketing of high-technology products and innovations. Upper Saddle River, N.J.: Prentice Hall, 2010. Mortazavi, S., Eslami, M., Hajikhani, A., & Väätänen, J. (2021). Mapping inclusive innovation: A bibliometric study and literature review. Journal of Business Research, 122, 736–750. OECD (2013). Innovation and inclusive development. Discussion Report. Paris: OECD. http:// www.oecd.org/sti/inno/oecd-inclusive-innovation.pdf. Paredes-Frigolett, H., Monteiro Gomes, L. &Pereira, J. (2015). Governance of responsible research and innovation: An agent-based model approach. Procedia Computer Science, 55, 912–921 Paunov, C. (2013). Innovation and Inclusive Development: a discussion of the main policy issues. OECD Science, Technology and Industry Working Papers, 2013(1), 0_1–4,6–62. http://www. oecd.org/sti/inno/oecd-inclusive-innovation.pdf Pel, B., et al. (2020). Towards a theory of transformative social innovation: A relational framework and 12 propositions. Research Policy, 49, 104080. Pfeffermann, N., & Gould, J. (2017). Strategy and Communication for Innovation. Springer International Publishing. Planes-Satorra, S., & Paunov, C. (2017). Inclusive innovation policies: Lessons from international case studies. OECD Science, Technology and Industry Working Papers. Powel W. W., & Grodal, S. (2009). Networks of innovators. The Oxford handbook of innovation (p. 78). Presidencia de la República. (2019). Decreto supremo que aprueba el reglamento del decreto legislativo N° 1412, Decreto legislativo que aprueba la Ley de Gobierno Digital. N° 1412,Nº 029–2021-PCM. https://spijweb.minjus.gob.pe/wp-content/uploads/2021/02/DL_1412.pdf Rogers, E. M. (2003). Diffusion of innovations. Free Press. Röling, N.G. (2002) Beyond the aggregation of individual preferences. Moving from multiple to distributed cognition in resource dilemmas. In: C. Leeuwis & R. Pyburn (Eds), Wheelbarrows

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Bernardo Alayza is a doctoral candidate in Innovation Management at Pontifical Catholic Univer-sity of Peru (PUCP). Master Philosophy at The University of Queensland of Australia (UQ), Master in Technology and Innovation Management from PUCP and Bachelor’s Degree in Development Communication. Lecturer in the Postgraduate School at PUCP in topics such as communication for innovation and marketing of innovation. International lecturer at Universidad Pontifical Bolivarian of Co-lombia. His area of work and research is focused on communication for inclusive innovation, facilitating coordination and cross-sector collaboration to implement broad-based innovation for development strategies and policies for Peru and Lat-in America. Domingo Gonzalez is Administrative Vice-Chair in Pontifical Catholic University of Peru (PUCP). Professor of the Engineering Department PUCP. Industrial Engineer from PUCP, Master and Doctor in Industrial Engineering from Pontifical Catholic University of Rio de Janeiro. From 2001 to 2008, he was the Director of the Center for Development and Innovation of PUCP. He was president and founder of Peruvian Association of Incubators (PERUINCUBA). He was former Head of Engineering Department of PUCP and president of the Latin American Association for

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Technology Management (ALTEC). His current research interests are innovation management, interorganizational planning, innovation and entrepreneurial systems.

Chapter 24

Crafting Sustainable Strategy from Corporate Purpose: From the Incremental to the Transformational Andrew Mountfield

24.1 Introduction The first aim of this contribution is to explore the context of sustainable strategy formulation and execution through the lenses of both organisational leadership and strategic management scholarship. Much current literature on sustainability assumes a top-down, planned approach which adopts conventional strategy tools and neglects the role of operational levels of management within the organisation. Equally, literature often assumes that the impact of conventional leadership models and behaviours remains effective despite the challenges of sustainability regarding communication of non-financial objectives, and on gaining the necessary engagement and agency of those charged with strategy implementation within the organisation. A second aim is to analyse how the process of sustainable strategy requires the adaptation of conventional strategy and leadership tools to reflect purposedriven objectives, incorporating both financial measures of success and non-financial outcomes and impacts, to reflect a broader definition of value. This chapter will argue that successful sustainable strategy execution requires alignment with and evolution of existing leadership behaviours, strategy processes and the levers of agency within the organisation. The author would like to acknowledge the contribution of the productive learning environment of the Cambridge Institute for Sustainability Leadership between 2018 and 2020, where exploratory research concerning sustainability implementation barriers was performed jointly with Kelly Hrainoha, Leslie Koh, Lija Lascenko, Renata Puchula, and Cornelia Schalch.

A. Mountfield (B) Saïd Business School, University of Oxford, Oxford, UK e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_24

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24.2 Literature Review To understand the nature of how sustainability challenges existing thinking on strategy and leadership techniques, the following literature review examines implementing strategy, first from a general perspective, in order to leverage the extensive literature on this topic, and second from a sustainability perspective in order to identify more specific insights. Further, it will focus on both senior and middle management roles in strategy as a basis for understanding scholarship related to both formulation and implementation. Lastly, it addresses two dimensions through which implementation occurs, as seen through distinct and established academic and practitioner perspectives on strategy: (i) an organisational and leadership view, focussed on the organisational dimensions of company purpose, culture, and stakeholder involvement, and (ii) a strategic management view, which emphasises the dimensions of integration of sustainability and business strategy, management process tools, and recognition and rewards. As Denning (2023) paraphrasing Christensen, argues, examining our topic through both a behavioural and a technical lens can contribute to an evidence-based view of how the challenge of sustainability increasingly demands a systemic understanding of both organisations and the ecosystems of which they are part, in order to identify “what works”. The Roles of Management Levels in Strategy Implementation Traditionally (Ansoff, 1965; Hart, 1992; Lewin, 1947), senior management (SM) has been viewed as responsible for strategy while middle management (MM) have not been considered part of the management process, except as providers of information and facilitators of implementation. Certain scholars, however, have suggested that MMs both attempt to influence strategy and often act as the source of new initiatives (Burgelman, 1996; Tarakci et al, 2018). Barringer and Bluedorn (1999) make the case that MMs, being closer to the market, have better stakeholder insights. Tabrizi (2014) argues that as trusted individuals, MMs may receive or adopt roles as “North Stars”, taking on responsibilities otherwise reserved for SM for the creation and implementation of specific initiatives. Their organisational knowledge, she suggests, is an element in their ability to create long-lasting and effective change. Floyd and Wooldridge (1992) make the case that while SM have a vested interest in the status quo, MMs are essential in championing alternatives paths, synthesizing external information that speaks to required change and facilitating the adaptability of the organisation: aspects that correspond to an emergent view of policy formulation and implementation. Where sustainability scholars have addressed the role of MMs, Neugebauer (2014) asserts, they tend to focus on the importance of SM-led, traditional, top-down, rational and planned approaches, encompassing the objectives, performance indicators and planning processes associated with enterprise-wide strategy implementation. However, she argues that an emergent approach to implementation is more consistent with current thinking. This builds on the evidence of engaged managers believing that (environmental) issues are a priority and who possess the necessary

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knowledge and skills (Anderson & Bateman, 2000) to influence the organisation and its culture through their actions and leadership. An Organisation and Leadership Perspective The following section analyses the literature providing an organisational and leadership perspective (O&L), identifying three key organisational dimensions important for implementing sustainability, absence or paucity of which could present a potential barrier for strategy formulation and implementation.

24.2.1 Purpose & Communication Several authors highlight company purpose, and the communication thereof, as an important organisational dimension for implementing strategy, and specifically sustainability. Definitions are multiple and vary in the degree to which normative or purely technical approaches are taken. For example, Mayer defines corporate purpose as “producing profitable solutions for the problems of the people and planet, and not profiting from creating problems” (British Academy, 2018), while Sennels (2014) argues that a corporate purpose from a technical perspective is an “effective tool in trying to communicate strategic decisions and corporate goals in a manner understandable to employees” (p. 42). Stoughton and Ludema (2012), in their case study of three leading companies in sustainability, assert that to deploy sustainability, top leadership “aligned sustainability with their company’s business purpose, created sustainability priorities, and communicated sustainability commitment both internally and externally” (p. 507). Creating a purpose linked to sustainability is a way to mobilise the entire organisation, but this purpose must be effectively communicated. Brunton argues that the internal communication strategy is important for “explaining and reinforcing a company’s mission and morality,” which in turn is “one of the fundamental drivers of employee engagement” (p.32); however, a company needs to also communicate its commitment externally (ibid.). Without such an external pronouncement, Epstein and Buhovac (2010) argue that any further communication on sustainability will not be understood internally. Moreover, a company purpose that does not ring true will similarly fail to motivate. As Brunton et al. (2017) argue, acceptance depends on “whether organizations are perceived to consistently ‘walk the walk’ that is crucial to employee perceptions of authentic commitment to (sustainability) programmes” (p. 46). While several scholars (e.g. Stoughton et al., 2012; Weerts et al., 2018) argue that the definition of purpose lies in the hands of senior leadership, and is, therefore, outside the purview of MMs, Petrini and Pozzebon (2010) assert that a senior-level commitment alone is only a starting point for implementation, stating: “Upper-level commitment creates conditions for the emergence of leadership at different organizational levels, thereby helping to generate the necessary conditions for sustainability practices that truly permeate employees’ everyday practices” (p. 370).

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For organisations seeking to implement sustainability, absence of a company purpose linked to sustainability, failure to effectively communicate company purpose externally and/or internally or lack of credibility of top management’s commitment to company purpose all represent areas of concern for strategy formulation and execution.

24.2.2 Company Culture & Employee Engagement Several commenters from the O&L perspective see company culture as an important tool to guide the transition of organisations and ensure the successful implementation of sustainability strategy. Epstein and Buhovac (2010) argue that “a common overall organizational culture that builds on sustainability can further help managers and other decision-makers deal with the trade-offs that the simultaneous management of social, environmental, and financial goals often causes” (p. 313). At the same time, changes brought forth by new strategy, Vele (2013) argues, must be “compatible with the existing organizational culture” (p. 1691). While Stoughton and Ludema (2012) recognize that there may be a dominant view of sustainability within organisations, they argue that “differentiated viewpoints of sustainability arise within different functional areas” and “employees operate within the sustainability perspective of these functional groups to translate organizational sustainability goals into tools and programs for facilities, suppliers and employees” (p. 513–514). These multiple viewpoints can complicate ownership of a company’s culture both for SM and MM, and in fact, Vele asserts that “one of the biggest challenges faced by (all levels of) managers, in trying to fit the new strategy into the cultural context present inside the company, is how to analyse an intangible element like organizational culture” (p. 1691). Marcus and Van de Ven (2015: 300) contend that sustainability implementation typically consists of multiple projects with “different levels of consensus and ambiguity”. MMs, with the insights they have into their organizations (Bower, 1970) and their position as trusted leaders (Tabrizi, 2014), therefore, have a critical part to play in interpreting values within the company culture. Because, as Veland et al. (2018) assert, sustainability requires a transformational approach and “new narratives” to change the organisational culture, MM are in a unique position to act as agents for the creation and transmission of the stories that will fill “fact deficits” or, as Valentino and Frances (2004) argue, to override corporate objectives as guardians of “corporate narratives”. Beyond recognising the importance of company culture in strategy implementation, several authors note that sustainability implementation in particular requires a unique set of cultural attributes. To allow for implementation of sustainability into day-to-day decision making, Epstein and Buhovac (2010) suggest that companies “build an organizational culture that motivates sustainable decision-making and behavior” (p. 313). Vele (2013) notes that an organisation should also be “flexible and dynamic” to allow for the adaption required to enable the new ways of working to flourish, while Spillane (2005) argues for “distributed leadership practices” that

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allow for decentralised adaptation to a changing environment (p. 143–144). Crews (2010) asserts that “development of an organizational learning culture is necessary to foster a culture of sustainability” and that “the organizations that excel in the future will be those that understand how to engage every member of the organization, gain their buy-in to new initiatives, and build capacity for learning at all levels of the organization” (p. 18). Nijhof et al. (2012) further argue that facilitating opportunities for employees to work with mastery, purpose and autonomy can encourage social intrapreneurs, defined as “people within a corporation who take direct initiative for innovations which address social or environmental challenges profitably” (p. 124). In summary, the absence of a sustainability culture that facilitates organisational learning, empowers employees to take initiative on sustainability issues, and provides both direction and flexibility, represents a substantial barrier for implementing sustainability.

24.2.3 Stakeholder Involvement Organisations arguing for an integrated approach to sustainability in business (e.g. International Integrated Reporting Council, Global Reporting Initiative) encourage companies to consult a range of stakeholders. Crews (2010) argues that “stakeholder engagement” is one of five main leadership challenges for sustainability implementation. However, Posch and Speckbacher assert that: “the techniques for managing the multi- dimensionality of stakeholder value creation are underdeveloped and many firms struggle with how to implement broader stakeholder-oriented strategies” (p. 3), with the implications for external and internal communication that this implies. In approaching the balancing of stakeholder needs, Crews (2010) argues for an “integrative approach”, which “finds symbiosis among the needs and interests of all stakeholders”, rejecting the idea of trade-offs. To achieve symbiosis, the author suggests requires “the ability of an organization to engage in a continuing dialogue with each community of interest” (p. 16–17). In practice, responding to multiple stakeholders’ reactions is a significant challenge for companies and, as Epstein and Buhovac (2010) argue, “corporate and societal priorities often change, as do the costs of implementing sustainability” (p. 307). Posch and Speckbacher (2016) assert that, as a result of high pressures and varied and unpredictable demands from what they characterize as “secondary stakeholders” or those outside the principal stakeholders of employees, customers and suppliers, executives may choose a more symbolic implementation rather than a substantive one. Incidentally, the inability for a one-size-fits all approach to adequately respond to all stakeholder demands gives more space, for example, for MMs to act. Posch and Speckbacher (2016) assert: “Middle managers have been accorded an important role as “linking pins” that connect top management to the organization making sense of its strategic visons for lower level managers and translating them into daily practice as well as embedding stakeholder expectations within the strategy” (p. 23).

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For MMs, an organisation’s inability to effectively involve its various stakeholders in sustainability implementation may create barriers through the creation of tradeoffs to be managed. That said, the process of responding to varied stakeholder interests also offers opportunities for MMs to become more involved in implementation efforts.

24.3 A Strategic Management Perspective The following section analyses the literature providing a strategic management perspective, identifying three key organisational dimensions important for implementing sustainability, absence or paucity of which could present a potential barrier for strategy formulation and implementation.

24.3.1 Integration of Sustainability and Business Strategy One important organisational dimension for sustainability implementation within the perspective of strategic management is the integration of sustainability into formal business strategy. As Johnson et al. argue, strategic management is the “definition of a long-term direction”, and for companies wanting to create and implement sustainable strategies with global and societal impact, making sustainability an integral and longterm part of doing business (Neugebauer, 2014: 2)—beyond statements of intent—is crucial. This desire to operationalise purpose thus also requires technical solutions that echo and build upon the discussion of corporate purpose from a leadership perspective, as described in the first section of the literature review. In this context, Henderson et al., (2015: 10) argue that for strategic sustainable change to be possible, leaders must first “articulate and shape goals”. Strategies form the frames of reference for sustainability strategy and implementation and are the “cognitive maps and thinking frameworks” (Porac & Thomas, 2006: 169) that operationalize broader strategic intent. Formalised management processes (Kaplan & Norton, 1996) are in this sense frames of reference designed to influence decisionmaking and behaviour, thus legitimising the incorporation, for example, of environmental issues (Sharma et al., 2011). Although scholars recognise that different strategy approaches exist (Mintzberg, 1978), authors on sustainable strategy often assume a formalised, planned and top-down directed model (Neugebauer, 2014: 31) Although the value of this approach is debated (By, 2005; Herbert, 1999), a strong tradition of academic research (Ansoff, 1965; Hart, 1992; Kaplan & Norton, 1996, 2006, 2008; Lewin, 1947) permeates sustainability research (e.g. Eccles & Krzus, 2010) and sustainability practitioner literature (Blowfield, 2013; Rezaee, 2013). In summary, sustainability scholars and practitioners writing from a planned strategic perspective argue that it is the role of top management to set strategic direction, providing a frame of reference to serve as guidance principles, while defining

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clear and measurable objectives that can be operationalised at lower levels of the organisation. Failing to address these factors can lead to challenges for both SM and MM in strategy formulation and execution.

24.3.2 Consistent Management Processes and Cascade of Objectives and Feedback Mechanisms The tools that companies use to operationalise and monitor strategy are also a key dimension for sustainability implementation. Planned strategy proponents stress the requirement of ensuring the strategy is monitored, measured over time, and that mitigation actions are taken in case of deviation from targets (Cokins, 2004; Kaplan & Norton, 1996). Additionally, they argue that strategic objectives must be broken down to the level of individual units and that these objectives and performance indicators will need to be aligned between units (Niven, 2003; Wirnsperger et al, 2015). Sustainability practitioners (Izzo and Vanderweilen, 2018; Rezaee, 2015; Farver, 2013; Blowfield, 2013) also argue for the integration or adoption of formal management systems. External sustainability reporting authors such as Bertinetti and Gardenal (2016) make the case for the alignment of external information with internal objectives, including and aligning risk management parameters, thus creating a consistent set of comprehensive, cascaded and aligned objectives and performance indicators. Wirnsperger et al (2015) state that a system of financial and non-financial objectives must be embedded in formal planning and reporting processes in order to make interdependencies and trade-offs visible. Sustainability scholars (Judge & Douglas, 2002; Soriano et al, 2010) have long argued for formal strategic and operational processes for sustainability implementation. Manninen and Huiskonen (2019) make the case that a neglect of formal sustainability planning damages the operationalisation process by MMs, with Mountfield et al. (2019) arguing for their integration into the corporate planning process itself, while recognising that emergent strategy exists in all organisations. Bhattacharya (2018) goes further, contending that beyond objective-setting processes and performance indicators, senior management must build a managed process around potential actions, that provide opportunities for MMs to expand on and take ownership of their goals. It is more generally noteworthy that the linkage between corporate purpose and the objectives and performance indicators requires a purpose definition that provides a solid justification for changes to existing behaviours and processes (e.g. Mountfield et al., 2021). In summary, sustainability scholars and practitioners argue for the integration of sustainability into a unified but flexible framework, with cascaded objective-setting and control processes, where goals and actions are embedded into MM responsibilities, building on or adapting on existing management behaviours and processes, dependent on the degree of ambition articulated.

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24.3.3 Linking Rewards to Sustainability Implementation Setting measurable objectives and cascading these to the responsible levels of the organisation also implies aligning reward processes with sustainability implementation (Farver, 2013). Noe et al. (2008) argue that any organization that attempts to derive competitive advantage through its employees must develop a means by which managers ensure that employees´ activities and outputs are congruent with the organisation´s goals, though Beer and Cannon (2004) warn of the risk that employees focus purely on rewards rather than broader benefits for the organisation, and by implication the underlying normative motivation for corporate purpose. While board-level compensation for the achievement of sustainability targets has received some attention (e.g. Burchman & Sullivan, 2017), there is little visibility concerning lower management levels. This may, as Burchman and Sullivan argue in the context of executive compensation, be related to the small number of metrics used for compensation, often only between two and six, and that relevant reward metrics can be found under different categories, such as safety record or reputational factors. Practitioner authors tend to either assume that sustainable objectives are part of an existing objectivesetting and reward system (e.g. Farver, 2013) or argue that intrinsic motivation will motivate managers to implement sustainability objectives (e.g. Blowfield, 2013), an approach more related to an organisational or leadership strategy for sustainability implementation, discussed above. As Mountfield et al. (2021) stress, in organisations with strong reward-oriented objective-setting command-and-control style processes, the absence of sustainability targets linked to rewards at SM and MM levels may lead to the perception that these are either not formally strategic or that SM is signalling that sustainability is a second-order class of objective and can be safely neglected. However, where a more distributed leadership system exists, together with high levels of agency and autonomy, the evidence collected in the sample companies suggested that the role of specific sustainability rewards was less important. In summary, a lack of substantial metrics on which to base rewards and recognition incentives for sustainability implementation can represent a negative factor particularly in organisations with a pronounced command-and-control culture. However, rewards may undermine intrinsic motivation and thus the willingness of both SMs and MMs to engage in sustainability implementation.

24.4 Summary Conclusions of Literature Review This summary of both leadership/behavioural and strategic management/technical literature suggests that sustainability strategy cannot be successfully formulated and executed without reference to the context of the organisation, and more, broadly to the ecosystem in which the firm operates. Thus, SMs communicating sustainability priorities should be aware that MM will be constantly assessing the degree to which SM behaviour matches the content of the messages. Equally, MM will be aware

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to the degree to which formal management processes, from strategy to rewards are constructed and implemented in a manner which is internally consistent, and that their agency regarding sustainability will be influenced by this context. Lastly, the greater the transformational ambition of the sustainability strategy, the more the internal behaviours and formal processes will be influenced by elements of the ecosystem outside the direct control of the firm. The following discussion examines the question of how ambition influences the strategy and leadership techniques that will need to be applied to successfully operationalise purpose and implement ambition.

24.5 Operationalising Purpose, Sustainability and Agency: Consequences for the Strategy Approach 24.5.1 Introduction to Operationalising Purpose This section examines the methods required for operationalising purpose into sustainability strategy and reviews the role of leadership and agency. In doing so, it draws on the academic and practitioner literature discussed previously. It takes as its definition of organizational purpose that proposed by Mayer for the British Academy (2018) research exercise: “Producing profitable solutions from the problems of people and planet, and not profiting from creating problems.” In order to operationalize purpose, i.e. translate it into sustainable strategy, this paper suggest building on Vermeulen’s (2017) proposition, who distinguishes strategies from goals. Goals are characterized by statements such as “we want to be in number one in the market”. This paper argues that sustainability “strategies” are often goals or actions, e.g. we want to be carbon neutral by 2050”. As Vemeulen notes, that may be your goal, but “you’ll still need a strategy to achieve it (ibid.), which implies (1) clear choices of what to do, but also what not to do, (2) a theory of change which encompasses a set of communicable, logical steps to achieve the goal, and (3) a means of facilitating interactive strategy communication and monitoring, including, as this paper argues, where appropriate communication from and with stakeholders and rightshoulders (those affected positively or negatively by the actions of the company).

24.5.2 Examples of Sustainable Strategy Tools Developing a sustainable strategy approach The purpose of this section is to argue for a distinction between “incremental” and “transformative” strategy and to describe corresponding approaches for each. In doing so, this paper aims to draw attention to the need for a clear foundation of

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purpose which sets the ambition for strategy, and the degree to which sustainable strategy goes beyond the status quo. “Incremental” strategy is defined for this section as having the following major characteristics: The adoption of a risk/opportunity-based “outside-in” analysis of the competitive environment, often driven by external reporting/materiality requirements; a partial adoption of sustainability-related actions, insofar as the can be judged to directly and positively influence profit (so-called “win–win” sustainability actions); the definition of strategic actions guided by the assumption that these will positively influence brand value and customer buying behaviour and investor perceptions; selection of actions that positively affect employee loyalty and engagement and indirectly influence customer or investor perceptions. Communication of sustainable strategy is driven by the desire to influence perception of the firm’s activities on environmental or social issues, e.g. “carbon zero”, noting that an incremental approach may not be transparent about the concrete actions required. “Transformational” strategy can be summarized for the purpose of this section as follows: A values-based approach which ensures that profit is not achieved through the creation of problems beyond the boundaries of the firm for the environment or society; the evaluation and migration of the product or service portfolio to achieve the corporate purpose articulated; a redesign of the corresponding business model, and where required, the related ecosystem. Sustainability-related actions are embedded in a coherent business strategy, reflected the cause-and-effect relationships needed for building and delivering the required competencies and to plausibly support its execution. Strategy is articulated to encompass both the company and its immediate stakeholders (customers, suppliers, management and staff), and where appropriate “rightsholders” who are affected by negative effects of current strategy. It should be noted that values-based approaches can be heavily influenced by both regulation, societal norms, as well as well as shareholders and stakeholders, leading transformational strategy to reflect a dual-materiality logic of “outside-in” (risks and opportunities for the company) and “inside-out” (values-based) decision-making. It should thus be clear to the reader that the approach chosen will heavily influence the design of the corresponding strategy process and roadmap. The following table describes potential alternative strategy process approaches, drawing on the work of Hurth et al. (2021) but distinguishing between “incremental” and “transformational” types. As noted above, the greater the degree of transformation implied by the ambition, the more it is likely that the process will be confronted with the demands of MM for a role in co-creation, either within the formal process or through expected managerial behaviour. High levels of ambition may also imply a heightened level of agency of MM. and in addition, integration of ecosystem participants, where problems posed by purposes cannot be solved by the company alone. This implies that the greater the degree of sustainable transformation, the greater the need to challenge and adapt tools intended previously for conventional, incremental strategy.

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Ambition-setting and the sustainable business model This section will argue that clarity of the degree of current sustainability maturity and the desired future ambition regarding transformational change is crucial for defining strategic priorities and targets (see Table 24.1). Achieving clarity means moving beyond conventional strategic toolsets to an analytic framework which answers three questions: 1. What changes to the business model in terms of scale and scope will be required by the purpose of the organisation? 2. To what extent can existing competitive advantages be maintained, or is a radically different approach required to obtain a profit that is calculated to reflect any negative impact on the environment or society? 3. What environmental and societal benefits need to be achieved to eliminate the negative impacts of the existing business model? The scope of these questions suggests that the application of conventional strategic toolsets, with their strong focus conventional profit, will lead to strategic business model options that favour the status quo, which have a bias towards incremental rather than transformational change and which risk both overstating profit and ignoring more fundamental possible developments in markets and regulation. One method to address this bias towards incremental financial options, is to ensure that analytical tools reflect a stakeholder-driven, multi-capital approach (Mountfield et al., 2019). To illustrate this, the Fig. 24.1 adapts the Business Model Canvas (Osterwalder & Pigneur, 2010) to meet the requirements of multi-capital thinking.

24.6 Sustainable Strategy Map Scholars and practitioners alike, as demonstrated above, accept that sustainability is increasingly a part of the mainstream of financial risk analysis by external investors, then this next step is to move from an integrated but externally focused communication of value creation to investors and stakeholders, to an alignment of external and internal financial and non-financial objectives and performance measures. The aim therefore is to move from purpose and strategies, to defining and aligning value creation objectives throughout the organisation, reflecting both the specificities of business unit and functional strategies, and the need to integrate these with corporate instruments of leadership and management control. The multi-dimensional nature of sustainability strategy has been recognised by external reporting standard setters, such as the IIRC, now integrated with the ISSB. However, despite the IIRC Integrated Reporting focus on the process of value creation through “six capitals,” little is said about the interactions and dependencies that exist between relevant topics within the capitals. Further, concentrating on a reduced set of topics that are “material” risks without explicit reference to value drivers and strategic context obscures the dynamics of the business model. The emerging list of

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material topics, which result from a mixed stakeholder and business-driven selection process, risks being deprived of any underlying strategic logic and understanding of broader cause-and-effect relationships. The process may then unintentionally create fragments of sustainable strategy, characterised by loose objectives or actions, rather than a comprehensive and implementable framework with the potential to improve the strategy execution process rather than simply distract from it. Practitioners will note that the process of establishing the materiality of topics may resemble an internal negotiation to produce an acceptable result and meet the demands of external standard setters and stakeholders. This section proposes to adopt the IIRC six capitals and use this framework to address the need for a clear articulation of sustainable strategy applying the criteria adapted from Vermeulen (ibid.). The illustrations below use a “sustainable strategy map” concept based on the initial design of Kaplan and Norton (1996) while adopting the architecture of the Integrated Reporting framework to distinguish between six capitals (instead of Kaplan Table 24.1 Alternative sustainable strategy approaches Analysis

Strategy

Incremental change

Transformational change

1

Scope

Focus on own assets and organisational boundaries within thematic boundaries

2

Shareholders, stakeholders and Rightsholders

Focus on existing internal Focus completed value chain and directly ecosystems, analysis of related stakeholders sources of future disruption and requirements on new business models

3

Evidence base

Conventional as-is business and stakeholder survey, dependent on maturity of existing analytical instruments

4

Risks and opportunities

“Outside-in” conventional “lnside-out”, risk and opportunity scenario-based approach, analysis involving external challenging by stakeholders and rightsholders

5

Purpose, vision and business model

Optimised shareholder value managmeent (with additional stakeholder communication), with elimination of negative impact where “win–win” for company can be achieved

Extension of value stream “up-stream” and “down-stream” (Scope 3 impact); extension where required to encompass rightsholders’ interests

External organisations and technical frameworks to provide ambition levels

Sustainable purpose and business model drive transformation process for the creation of long-term value for company and society and the elimination of negative impacts (continued)

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Table 24.1 (continued) Incremental change

Transformational change

6

Strategic priorities

Priorities linked primarily to sustainability-drivencost reduction, improved asset management and revenue enhancement, in addition to fulfilling legal requirements

Driven by future purpose, business model and sustainable strategy map, with innovation across extended value chain, aimed at achieving competitive advantage through leadership role within industry segment and ecosystem

Target-setting

Internally-driven “less-bad” targets for isolated initiatives

Externally-driven “fair share” targets, reflecting true costs including negative impact of externalities

8

Governance and performance Management

Driven by eternal communication needs; limited thematic internal Initiatives

Board-level responsibility for target cascade coupled with distributed leadership for performance management throughout organisation

9

Leadership, Incremental initiatives communicationand embedded in existing capacity building organisation and leadership model

Implementation 7

Organisation and capacity evolves to match target purpose and business model, with the aim of making sustainabiltity everyone’s everyday job

and Norton’s four perspectives), in order to clearly communicate their logical highlevel cause-and-effect dependencies. Further, in a separate scorecard (not illustrated), it develops summaries per topic of current status and future objectives to better integrate existing data and obtain a coherent internal overview. This approach aims for comprehensiveness at an appropriate level of aggregation, rather than the exclusion of certain topics associated with typical materiality matrix representations. It further aims to provide a framework for setting quantitative targets based on key performance indicators aligned with the strategy map and integrated with existing performance management systems. Note that this implies the usage of both financial and nonfinancial indicators, rather than their complete monetization, although this would be possible in a further step (e.g. Barby et al., 2021). The example below draws on a case study (Mountfield et al., 2023) of a construction industry company, which builds on a clearly articulated purpose and sustainability ambition, and which integrates (1) a strategic theme focused on the full achievement of compliance and communication standards required by both regulatory authorities and increasingly by customers, and (2) a strategic theme aimed at an end-to-end value chain incorporation of sustainability objectives, which deliver

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Fig. 24.1 Sustainable Business Model Canvas (adapted from Osterwalder & Pigneur, 2010)

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measurable outputs, outcomes and impacts, which customers recognise as differentiating the company from competitors, and lastly (3), the generation of future revenue streams derived from sustainable products and services. The first strategy map (Fig. 24.2) shows the sustainable strategy map as a whole, demonstrating which objectives are linked to which strategic theme, while recognising that a topic or objective may feed into several. It is important to note that each headline objective in the sustainable strategy map drive measurable sub-objectives, with owners, mid-term timetables, resource allocation for actions and corresponding targets for results in the form of a separate scorecard. The second strategy map (Fig. 24.3) shows the theory of change or logical cause-and-effect relationships between objectives specifically for the third strategic theme, future revenue streams.

24.6.1 Sustainable Portfolio Development A transformational sustainable strategy will require reflection on the degree of portfolio evolution required to achieve financial, environmental and social objectives. Equally, in industries undergoing technology or regulation-driven disruption, portfolio evolution can contribute to both positive and sustainable change of the industry ecosystem and improvement to the competitive position of the firm, (e.g. Hilty, 2008; Guimarães et al., 2022, Mountfield et al., 2023). This section illustrates the application of portfolio analysis to an industry case from the construction industry (Mountfield et al., 2023), which adapts work by BCG Henderson Institute (2022), and proposes a four-quadrant portfolio (Fig. 24.4) provides a framework for creating sustainable strategy options: ● To scale-up existing solutions, objectives focus on acceleration drivers to eliminate barriers to expansion. ● To fulfill existing new in a sustainable way, focus is on evolving the target market or delivery model. ● Reducing the negative product sustainability footprint means changing the specification while maintaining or improving performance. ● Creating new solutions for new needs builds on harnessing emerging new sustainability-relevant technologies.

24.6.2 Sustainable Value Chain Analysis As noted above, one risk of the adoption of conventional strategy tools for a sustainable strategy is their understandable bias towards a purely financial perspective, ignoring the requirements of operationalizing organizational purpose and the desired environmental and societal benefits, while ignoring the negative impact of failure to account for the cost of externalities.

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Fig. 24.2 Complete sustainable strategy map

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Fig. 24.3 Sustainable strategy map—Strategic theme “New Product Revenues”

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Fig. 24.4 Portfolio evolution matrix: Construction industry example

Nevertheless, value chain analysis (Porter, 1986) represents a robust means of evaluating each of the activities in a company’s value chain to understand where opportunities for improvement lie, by considering how each steps adds or subtracts from the value of a given product or service. The key question here is which values beyond financial value, might be considered as material, and which contribute to the cost or differentiation focus that value chain analysis conventionally highlights. The approach to value chain analysis recommended needs adaption along similar multi-capital principles that were described above for the business model canvas and for the sustainable strategy map. 1. Scope of value chain: Conventionally, the analysis of the value chain restricts itself to activities within the organization, excluding a detailed examination of upstream or downstream activities (i.e. suppliers or customers). A sustainable strategy however requires an integration of societal or environmental impacts of the business model as a whole. This additional complexity however can be mitigated by focussing on material activities and eliminating Porter’s secondary activities from the analysis. 2. Costs and values of activities: Understanding the costs and value added or subtracted remains a key requirement but requires analysis of material stakeholder activities (see 1), noting that external data may be incomplete or require estimates. However, a more fundamental additional requirement is to understand the logic of how both financial and non-financial value is created by stakeholders outside the firm.

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3. Opportunities for competitive advantage: A multi-capital approach further ensures that activities are aligned towards a coherent set of sustainable objectives that form a systematic approach to strategy, with a clear understanding of how these contribute to competitive positioning and social and environmental impact. The illustrative example below (Fig. 24.5) explores how different types of capital can create value for sustainable competitive advantage at the level of activities within an internal value chain. The organization in this case is a cosmetics firm that positions its brand through a differentiation strategy stressing sustainable values, aligned heavily with the expectations of its customers. Leadership, Communication and Agency This section argues that understanding the impact of leadership models and styles on the formulation and implementation of sustainable strategy requires an understanding of three factors (Mountfield et al., 2021). Two are are related directly to the practical impact of the lenses used for the review of current scholarship, 1. leadership and commitment and 2. top-down strategic direction, cascaded objectives, KPIs and rewards, while a third may be considered to be the result of these experienced through the person of MM responsible for implementation of sustainable strategy, which can be summarized as 3. sense of agency of MM and their willingness to take initiative. Drawing on the cited research, it appears appropriate assess the status of the organization in terms of these three factors, in order to better craft organizationspecific approaches to sustainable strategy. Table 24.2 summarises the characteristics and their implications, summarizing the research conclusions. The results obtained from this research into barriers to sustainability strategy execution suggest the need for practitioners to examine potential factors before designing their own strategy formulation and implementation plans specific to their organisations. Incorporating those responsible for execution into the process and recognising the potential impact of existing formal and informal systems, such as planning and rewards or leadership style and performance culture appear, based on the evidence, to be essential to adequately manage the risks associated with ambiguous or absent leadership practices, formal objective-setting processes and agency behaviours within the organization.

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Fig. 24.5 Sustainable value chain

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Table 24.2 Leadership, objective-setting and agency categories and their influence Category 2

Category 3

1. Leadership Leadership for and commitment sustainability is absent: Ensure leadership gap is addressed as precondition for launch of sustainable strategy

Category

Leadership for sustainability is ambiguous: Address sources of ambiguity and clarify key expectations concerning responsibility and agency

Leadership for sustainability is consistent: Build on existing distributed leadership model and ensure category 2 approach is compatible

2. Formal direction, objectives and measurement

Formal sustainability goals are absent: Ensure sustainability goals are integrated into formal organizational and individual target-setting

Formal sustainability goals are inconsistent: Address sources of ambiguity and clarify responsibility and authority expectations in advance of launch

Formal sustainability goals are consistent and cascaded with clear monitoring andfeedback loops: Build on existing processes and ensure consistency with overall performance management concept

3. Agency and initiative-taking

Sustainability initiative- taking is absent: Ensure expectations are consistent with existing overall managerial model and behavioural expectations

Sustainability initiativetaking is inconsistent: Clarify expectations and reward and recognise behaviours consistency with agency requirements

Sustainability initiativetaking is integrated into managerial kgliaxmiH,: Build on and reward existing behajdours and support distributed leadership concept

24.7 Conclusions and Perspectives for Future Research 24.7.1 Conclusions This paper argues that the operationalization of purpose and the formulation and execution of sustainability strategy within the organization and its ecosystem requires a reexamination of existing leadership behaviours and strategy techniques. ● Operationalising corporate purpose requires clarity concerning the problem that the company exists to solve, without profiting from the problems created for others.

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● A purely financial perspective, without understanding environmental and social impacts of the company, is insufficient and ignores future sources of strategic risk or opportunity. This implies a multi-capital approach which is incorporated into the strategy approach and tools. ● The greater the challenge and the corresponding ambition of the purpose, the greater the need for a transformational strategy approach, that takes a systemic view of the corresponding objectives and measurement systems within the company and its ecosystem. ● The application of conventional strategy tools for in the context of transformational strategies risks masking the demands of the operationalisation of purpose and transformational strategy, leading to a bias towards the status quo. ● A transformational strategic ambition will equally demand a re-examination of current leadership models and behaviours in order to drive culture and communication and encourage agency and ownership of strategy at all levels.

24.7.2 Perspectives for Future Research As the literature review demonstrates, operationalising purpose benefits from a multidisciplinary approach and future research may profit from the collaboration of cross-disciplinary multi-lens research teams, combining the analytical perspectives of strategy, accounting, leadership and HR scholars. Future research will continue to be required for both balancing and integrating non-financial and financial measurement of planning and execution of strategies and action, particularly in transformational contexts with multiple perspectives of different ecosystem members. Lastly, scholars may further increase their collaboration with purpose and sustainability practitioners to accelerate the transfer of theory into practice, and it might be argued, vice versa.

References Anderson, M., & Bateman, T. (2000). Individual environmental initiative: Championing natural environmental issues in U.S. business organizations. Academy of Management Journal., 43, 548–570. https://doi.org/10.2307/1556355 Ansoff, H. L. (1965). Corporate Strategy. McGraw-Hill. Barby, C., Barker, R., Cohen, R., Eccles, R.G., Heller, C., Mayer, C., Roche, B., Serafeim, G., Stroehle, J.C., Younger, R. & Zochowski, T. (2021). https://www.sbs.ox.ac.uk/sites/def ault/files/2021-01/Measuring%20Purpose%20-%20An%20Integrated%20Framework%20% 28005%29.pdf. Beer, M., & Cannon, M. (2004). Promise and peril in implementing pay-for-performance. Human Resource Management., 43, 3–48. https://doi.org/10.1002/hrm.20001 Barringer, B. R., & Bluedorn, A. C. (1999). The relationship between corporate entrepreneurship and strategic management. Strategic Management Journal, 13(1999), 363–380.

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Vermeulen, F. Many strategies fail because they’re not actually strategies, Harvard Business Review, (2017), 2017/11 https://hbr.org/2017/11/many-strategies-fail-because-theyre-not-act ually-strategies?utm_medium=social&utm_campaign=hbr&utm_source=LinkedIn&tpcc=org social_edit. Weerts, K., Vermeulen, W., & Witjes, S. (2018). ‘On corporate sustainability integration research: Analysing corporate leaders’ experiences and academic learnings from an organisational culture perspective’, Journal of Cleaner Production. Elsevier Ltd, 203, 1201–1215. https://doi.org/10. 1016/j.jclepro.2018.07.173 Wirnsperger, F., Gackstatter, T. & Möller, K. (2015). Performance Management: Konzept, Erfahrungen und Ausgestaltung einer neuen Disziplin, Controlling—Zeitschrift für erfolgsorientierte Unternehmenssteuerung, 1–2015.

Andrew Mountfield has over 25 years of experience in strategy and performance management across a wide range of industries and business functions and currently focuses on inte-grating sustainability and business strategy. He has worked as a manager in the pharmaceutical industry, as a partner at PwC Consulting and was country CEO of Horváth management consultants in Switzerland. He completed his research masters at HEC Paris and Oxford University and received his doctorate from Ashridge Business School. In addition, he completed the graduate degree programme at the Cambridge Institute for Sustainability Leadership (CISL). Andrew is a senior research fellow at Saïd Business School, Oxford University, where he leads the Oxford Rethinking Performance Initiative, and is a guest lecturer at CISL. He is the editor of two volumes on strategy and performance management and is the lead author of three recent book chapters on sustainability strategy and implementation.

Chapter 25

Strengthening the Organization from the Inside Out: Identifying Workplace Problems to Build and Sustain Employee Motivation Marion Philadelphia

25.1 Introduction Sales are declining, competitors have come up with new products, manufacturing is faulty, employee morale is low, employees and clients cannot be retained—whatever organizational problems may be, their consequences are, for the most part, very similar. The organization or division’s return on investment is affected, net worth and the stock price are dropping, employees and staff must be let go, leadership gets voted out, or, in the worst case, the organization is going out of business. The catalog of problem-solving approaches to workplace issues is vast. This article relies on Clark and Estes’ (2008) research-based approach to gap analysis that will help identify workplace problems and their root causes—with a focus on goal setting and on what people must do or learn to drive the organization forward. Since all level employees, from the C-suite to staff and workers, are an integral part of the organization and its goals, it is essential to look at organizational and business goals and then explore how employee performance goals align or what needs to be done to synergize organizational, business, and people’s performance goals, and, along with it, build and sustain their motivation. Deconstructing workplace problems to this granular level not only emphasizes the human aspect as an organizational driving force but, as Zweifel and Borey (2014) point out, highlight that in our fast-paced economy, problems and their solutions are not static but dynamic and require an ongoing process.

M. Philadelphia (B) Department of Business Communication, Marshall School of Business, University of Southern California, 3660 Trousdale Parkway, Suite 400, Los Angeles, CA 90089, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_25

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25.2 Establishing Organizational, Business, and Individual Performance Goals Leaders need to periodically perform a reality check with management and employees. What type of Organizational and Business Goals (OBGs) are these stakeholders familiar with? Are goals and strategies, such as meeting or increasing sales targets, expanding the product line, and implementing a new hiring process, communicated effectively within the organization? Organizational and business goals go hand in hand. In contrast to business goals, such as meeting sales targets, organizational goals include fulfilling a mission and establishing a vision, such as striving to become more sustainable. Gaining clarity about how organizational goals support business goals starts with benchmarking and allowing to realize potential gaps in meeting the goals; ultimately, the success of meeting all goals is measured by profit and loss. The following checklist, adapted from Clark and Estes (2008, p. 28), will help determine if business goal clarity exists or if it needs improvement: ● ● ● ● ●

Does the organization have a system for developing and modifying business goals? Are business goals communicated to everyone in the organization? Are employees provided with individual or teamwork goals? Are work goals clearly linked to the organization’s business goals? Is feedback provided to employees on their progress toward work goals?

If the answer is not a clear “yes” to any of these questions, a need for improvement becomes evident.

25.2.1 Organizational and Business Goals A crucial prerequisite for any type of improvement planning is to analyze and establish organizational and business goals. Michael Porter’s “Five Forces” (2008) is probably one of the most widely used frameworks to assess competition and forces of external stakeholders, from suppliers to new market entrants, etc. However, since the focus here is primarily on internal influencers to success, Clark and Estes’ (2008) “Six Steps to Setting and Analyzing Business Goals” (pp. 30–35) provides a stepby-step framework that can be modified according to the business the organization is in, to leaders’ and managers’ knowledge of factors involved, to the stage and state of the organization, to levels of assigned responsibilities, to expertise, and so on. Step 1: Listing business goal areas and describe achievement indicators, such as: ● Accounting data, like sales actuals or estimates, expenses, or profits. ● Market share, measured by one industry standard and divided by sales

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● Quality, measured in product characteristics, such as performance, or potential defects ● Consumer surveys Step 2: Benchmark and quantify the industry competitor(s) achievements for each business area that might need attention. depending on the organization, these will vary, but common areas are: ● ● ● ●

Sales (What is the competitors’ market share?) Service (How do consumers/customers rank the competitors?) Production (What is the competitors’ output by employee?) Human resources (What is the competitors’ employee turnover?)

Step 3: Quantify the organization’s current standing in each area, looking at sales, service, production, and human resources: ● ● ● ●

(Sales) What is the organization’s market share? (Service) How do consumers/customers rank the organization? (Production) What is the output by employee? (Human resources) What is its employee turnover?

Step 4: Subtract the current or desired achievement from that of competitors This will measure the quantity of performance needed to close the gap and reach business goals for the areas selected or establish which are most crucial to the organization’s performance. For example, if a competitor has a 15% market share for sales of product X, and the organization’s market share is 10%, the sales team must work on increasing the market share to the desired percentage (in other words, it might not be possible to reach or top 15% but aiming for 13% appears reasonable at this time). Steps five and six are crucial in determining how realistic, feasible, or economical a goal is. Step 5: Assess the economic benefit of closing the gap What is the return on investment1 (ROI)? For example, if this calculation is negative, you need to revise your goal under consideration of your organizational constraints. To perform Step 5, the help of an expert in financial valuation is advisable. Basically, to calculate the ROI, the assumed or calculated financial benefit of your goal minus the expenses to achieve the goal is determined. Because ROI is measured as a percentage, it can easily be compared with returns from other investments, allowing one to measure a variety of types of investments against one another. The next step assumes that set business goals are cost-effective. Step 6: What will a team or individuals have to do to reach the goal and close the gap? What are the current conditions, and what type of support and resources would they need? ROI = Calculated Value of Investment–Cost of Investment/Cost of Investment = Value of Achieving the Goal (the percentage of the invested expense).

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Consequently, it is necessary to determine what members of respective divisions need to deliver.

25.2.2 Individual or Team Goals Basically, everyone in the organization who might have an influence on outcome must review or determine team or individual goals according to what is needed from them to achieve the goal or to close a potential gap. Likewise, divisional performance goals for individuals or teams must support the larger goal of the organization. In other words, they are derived from organizational and business goals and shaped in relation to the task at hand. To do so, the organization and business goals need to be broken down and aligned with specific areas and jobs within the organization. For example, well-designed job descriptions can be used as a guide to establishing performance goals. They need to be clear and specific so that the individual can realize the business purpose for their tasks and assess if or if not they are achieving their goals. Expanding tasks and setting new goals is a challenge, and goals will be higher valued by employees if the following conditions are met: ● ● ● ● ●

respect for and trust in leadership understanding the vision and rationale of goals having confidence in their own and in their team’s capabilities being clear about expectations taking ownership of their actions or task completion Additionally, an effective work goal exhibits three pillars; it must be:

● concrete (meaning clear, easily understandable, measurable) ● challenging (doable but very difficult) ● current (short-term daily or weekly goals are more motivating than long-term goals) (Clark & Estes, 2008, pp. 24–26). Individuals tend to be particularly motivated to work towards a goal when the challenge and skill levels are high (Nakamura & Cziksentmihalyi, 2009). Having clarity about work goals further supports motivation as they allow the individual to know if they succeeded in task accomplishment, and if trust in the leader or manager is established, goals are readily accepted. To build trust, a successful goal or task completion should be recognized or rewarded, and a leader’s feedback to employees should focus on making corrections on the task performance and not on the individual or team. Finally, an organization can assess if employees’ performance is worthy, meaning the work behavior is efficient and supports valued organizational goals, by applying Thomas Gilbert’s (1996) worthy equation:

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A = The business value of the accomplishment B = The cost of the accomplishment W = Worthy: effective or useful W = A/B ● When A is greater than B, the organization achieves a worthy performance. ● When A is smaller than B, or less than 1, the organization is not productive. Clark and Estes (2008) provide a simple example: suppose a company can achieve an additional $200,000 per year in sales by investing $50,000 per year in quality training, such as training in sales strategy; then W = 200,000/50,000, or calculates as a Worthy value of 4; for the ROI, calculate the net return on investment, or $200,000 in sales increase, subtract the $50,000 investment cost for training, and divide by the cost of investment, and the result is in an ROI of 300% (pp. 24–25). However, if the training cost was higher and the increase in sales lower, your ROI could tank, and your Worthy performance indicator would be very small or maybe even negative.

25.2.3 Checking the Convergence of Goals Are organizational, business, and people’s work performance goals converging? A professional at any stage in their career must know what their personal work performance goal is. But does this personal goal relate to and support organizational and business goals? Most organizations formulate a vision of which direction they should take and how to develop to help them sustain and grow in a competitive economy. Their strategy combines their vision of impact on society and their more direct responsibility to communities, the nation, and the world. In other words, strategy has evolved from being solely profit-driven to being “in action” and “people-centered.” To sustain momentum, businesses need buy-in from their stakeholders. This means participants take stock, communicate successes, learn from innovations elsewhere, engage others, and enrich the strategy for the next round of the process—in essence, the organization becomes a learning community. Experts like Zweifel and Borey (2014) highlight that strategy and vision must converge and be an integral part of day-to-day operations aiming for seamless continuous improvement. This requires motivated employees, managers, and leaders. To sustain motivation, individual or team performance goals are necessary, but often not enough resources are invested in establishing and sustaining those goals. Sometimes, they may be entirely overlooked, especially when other pressures, such as tight delivery dates, a surge in orders, and so on, need priority attention. Many businesses rely on extensive processes and procedures to evaluate investments, for example, into new equipment or to reduce inventory or cash levels—but the investment versus

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the value of employee impact, or investment into employee performance-enhancing initiatives, are more obscure and harder to assess. How do you measure the value of training or if, indeed, individuals demonstrate that transfer of newly acquired knowledge or skills took place? What are performance indicators for people? Do they exhibit a higher degree of motivation following the training, or do the trainees expose a reluctance to participate in future training? This expression of cognitive dissonance is an indicator of poorly executed training – and, by extension, can result in a negative ROI. Therefore, a granular examination of all goals is necessary to ensure that organizational goals, business goals, and individual or team performance goals converge. Any gaps between the three, and, in addition, performance gaps in work goals between what is delivered and what is required to meet the organizational or business goals, are sources for workplace problems.

25.3 Identifying Performance Gaps at Work 25.3.1 Steps to Realize Performance Gaps Business goals, team, and individual performance goals have been determined. But what expertise, resources, and support do individuals or teams need so that they are motivated to achieve their goals? This leads to three fundamental questions: 1. What do people have to do or learn, what are their knowledge and skill, and do they know how to achieve the goal? While people generally know their expertise, they might not be aware of potential knowledge gaps or might not share those. Or, they might have performed similar tasks in the past, or someone might have expertise that so far did not have a concrete application. It is important here to engage them in conversations and discussions to be able to diagnose if knowledge and skill gaps exist and, if so, to devise a plan on how to fill those knowledge and skill gaps. These “knowledge and skill gaps” are probably the most straightforward to assess. The second question addresses motivation: 2. Are people motivated to achieve their goals? A very fundamental motivator is compensation and reward (for example, your inner voice says, “This is more work for me, what’s my reward?”). However, motivation relies on a wide variety of factors that meet three aspects: active choice, persistence, and mental effort (Clark & Estes, 2008). Active choice means feeling compelled to participate actively in the process. Even if ordered to “do the job,” the organizational culture should support that the individual and everyone else is excited and take ownership of what they need to execute. Persistence is expressed with having once started, one is committed to keep at it and continue work undeterred to completion. Lastly, exerting the ideal mental effort

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means being challenged within the ideal balance of neither being over nor underconfident. To explain this further, if the goal is routine and an individual can rely on experience, their mental effort is low. However, when a task is novel and challenging, it might require great mental effort. In other words, if someone lacks the confidence to embark on a task, this might lead to reluctance and less readiness to engage in mental effort. By the same token, if someone is over-confident and thinks they know all the steps, they also might not engage in much mental effort. In both cases, this can lead to mistakes and a lack of willingness to take on responsibility. Our behavior, in general, is driven by a few root motives, one of them is the desire to be effective and to feel good about what you are doing, or how you perform at work and, for that matter, how you live your life (Clark & Estes, 2008, pp. 82–83). In the work environment, your motivation is strongly influenced by your perception of if the organizational and workplace conditions are favorable and conducive to supporting your ability to be effective. What each of us considers effective for ourselves depends on a variety of personal factors, such as our belief system and culture. This means that we all apply our very own personal measuring criteria to the conditions at the workplace. Even if your personal criteria and values are in sync with organizational values, organizational barriers might impact your performance, which in turn impacts the company’s performance. This brings us to the third question: 3. Are organizational barriers blocking success? Organizational barriers can be traced to a great number of issues, from a lack of resources to a shortage of employees, to limitations of the facilities or plant, to faulty procedures to many others that might often not be obvious in relation to performance achievement. Often organizational barriers may also emerge through modifications to the knowledge and skill, and motivation level because those modifications influence or necessitate an adaptation of existing work processes. Depending on the organization, the professional field, the career level, the position, and so forth, you may identify just one or a variety of gaps that have to do with the concrete position at this time, or you might realize gaps for other constituents and groups in your work environment. For example, as a career starter, you need to establish and distinguish yourself but often are not quite sure how. How can you contribute your expertise so that you will be noticed and rewarded? What are gaps— do you connect with the “right” people? If not, what will it take to identify them? In mid-career, you might just have completed a professional development course and would like to apply your newly gained insights aiming for a promotion, but your organization might not offer such opportunities. The process stalls. Or, you might have risen to a leadership position. You are great at what you do, and your expertise is well-applied, but do you have the people and communication skills to make you an effective leader, or does the people aspect present challenges for you? In either case, you can see how taking the human factor into account is essential because people are the ones who are working to achieve business and organizational goals—which means working on closing or minimizing any gaps is key.

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Fig. 25.1 Six-Step process model (Adapted from Clark & Estes, 2008, p. 22)

25.3.2 Diagnosing Root Causes Workplace problems cannot be solved without excavating the root causes and addressing them. The time spent to perform these analyses adds value as solutions to causes cure the root so that business and performance goals can be implemented successfully to flourish. In other words, if a root cause remains obscure, change implementation might prove unsuccessful. Let’s say an organization is increasing the hourly wage for workers to motivate them to work more efficiently, assuming the cause for their lack of performance is that they might feel underpaid. The increase in wage not only costs the company, but also it might not bring the desired result if other conditions are not met. For example, the worker might feel more pressure to perform, which in turn causes higher stress levels and can lead to disengagement. Or possibly, other inhibitors for output levels were overlooked, such as the workforce being too small, a supply-chain issue might exist, or unstable hard or software issues might cause slow-down, and so on (Amabile & Kramer, 2011). It is critical to address the real root of issues and not to be misguided by inaccurately perceived influences that may prohibit or prevent success. To do that, you must scratch below the surface and avoid putting on a band-aid. Band-aids, or short-term

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fixes, cover up problems but do not cure them - in fact, the virus might spread. Organizational change success requires that an organization addresses the real influences that may have a significant impact on success versus the potential inaccurate or maybe unmotivated interpretation of influences. Hence, you need to ensure that organizational objectives include reflection, awareness, and examination of perceived influences to help guide gap analysis and weed out those influences that may be prohibiting successful transformation. In an organization, these are participatory processes, and, in most cases, the organization needs one or more cross-functional teams to identify gaps. One way of starting the process of root cause discovery is to conduct interviews with individuals or with focus groups as needed (Clark & Estes, 2008, pp. 45–51). This is most often done with surveys. This is the simplest form of soliciting input from small and large groups, but much depends on how well such surveys are designed. On the other hand, especially if anonymous, surveys allow people to be more candid in open-ended responses. That said, depending on the intensity or urgency of the discovered gap or gaps, face-to-face meetings, interviews, focus groups and forums, and so on will certainly add context and offer a deeper understanding of root causes and their origin. Here are a few of the commonly used rules to identify a process approach: For interviews, it is best to select about five to seven people from one area to ensure that a diverse group of voices is heard. If the number of people involved is larger than forty, focus groups of four to ten, with each member representing about five to ten people, are the norm. An important consideration in selecting participants is to group them by goal: Do they share a common goal? Can the group be composed across teams and responsibilities and across management levels? Or is it best not to mix people from different management levels because people of the same level will most likely provide more straightforward insights from their perspectives? Once participants have been identified and the interview process, or focus group meetings, begin, the main task is to listen actively for information. This is the point of fact-gathering. This means to keep neutral, or not agree or disagree, and to only ask for clarification when a point may not be quite clear. To diagnose if the primary cause is a knowledge/skill, motivation, or organizational issue, start with a probing question, such as “What do you think hinders your (or our) achievement of the [fill in the blank] performance goal—any barriers you can point to?”. Knowledge/skill causes will usually be driven by an impression that people either don’t know how to achieve the goal or some aspect of it. Motivational causes are indicated by comments that point to reluctance, avoidance, refusal, or excuses not to work on the goal. Organizational causes emerge when people comment on process and procedure issues, or resources, facilities, and material issues. For either case, the second phase is to dig deeper and ask questions that lead to discovery. Questions need to be asked with caution and considering that people might not be aware of a knowledge/skill gap until they are put to the task, or they

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might be reluctant to admit they lack the knowledge. Therefore, questions should be kept general until follow-up questions become evident for all participants, or people might share follow-up questions voluntarily.

25.3.2.1

Typical Questions to Ask for Knowledge and Skill Causes

The first area to address is if communication might have been lacking or was unclear. For example, to probe for communication ask: How was the goal communicated, and by whom? (For example, was it a written document, a verbal description, or other forms of media? And was the terminology clear? Did you participate in developing and setting the goal? Is the performance/work goal clearly understood by everyone?). Next, questions probe for process: Do people understand the exact procedure or process they need to follow? Do you believe you have sufficient knowledge, or the know-how, that you need? And, finally, probe for experience: Have you completed similar tasks before? From the replies, usually, two primary conditions can be arrived at that indicate a need for knowledge and skill improvement: 1. People do not know how to reach their performance goals. 2. Future anticipated challenges and emerging goals might require novel problemsolving skills. The first condition points to a need for information, job aids, or training. The second indicates a need for continued education.

25.3.2.2

Typical Questions to Identify Motivational Causes

As mentioned above, motivation is tied to active choice, persistence, and mental effort. Active choice and persistence become indicators of the degree of commitment. Both indicators are influenced by the degree of mental effort individuals are investing or are willing to invest. Degrees of active choice and persistence emerge by asking questions that reveal if people are proactive about reaching their goals and persisting in reaching them. For example: ● ● ● ●

Do you like your job? Are you excited about reaching your goal(s)? Are you engaged in your job and think you’ll be able to achieve it as planned? Do you feel you’re making an impact?

From the responses, some demotivating factors that can emerge are, for example, if people point to the following: ● Vague or changing performance goals and feedback ● Negative feedback (feedback that is critical, biased, or prejudicial)

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● Dishonesty, hypocrisy, unfairness ● Unnecessary rules and work barriers ● Constant competition (Clark & Estes, 2008, pp. 86–89) Throughout the process, careful observation is essential, no matter if analyzing survey or interview responses or when listening to a focus group. What are people saying or not saying? Are there patterns that emerge? What assumptions do you form, and what are they based on? To further support your observation and analysis process, it is also important to monitor the confidence levels of the participants. For example, do people expose under-confidence or over-confidence in achieving the goal, or how much mental effort are they investing? You detect indicators of under-confidence if people might be concerned about not being able to meet the goal and are only reluctantly admitting to it. Two issues surface: they might be under-confident and insecure and do not have much trust in their unit, in leadership, or the organization itself, or they might have a knowledge and skill gap. The first issue points to organizational causes that inhibit performance and undermine people’s trust. If organizational causes can be excluded, the second one might be addressed with a review of the performance goals to establish a better balance between skill and challenge level that will increase people’s task execution confidence (Clark & Estes, 2008, pp. 82, 91–92). You detect indicators of over-confidence. If people don’t show great interest in a performance goal, they might be overqualified and over-confident. Just as with under-confidence, review the balance between the challenge and the skill levels. Is the challenge high enough? Another indicator of over-confidence is if people admit to having made mistakes but try to shove the responsibility onto someone else or blame the process. The confidence level is a personal characteristic that varies widely not only from one person to another but also on a personal level for everyone; meaning, you may be very confident in completing task X, while another task might pose a great challenge, and you may struggle with your level of confidence. However, as mentioned above, organizational causes can contribute to the confidence levels of individuals, no matter if fostering under-confidence or overconfidence.

25.3.2.3

Typical Questions to Identify Organizational Causes

Indicators are often not easy to carve out because organizational causes can stem from a great variety of issues. As with knowledge and motivational causes, the questions to probe are if people have the right tools, processes, and procedures: What is the work environment, and what are the conditions like? Do they enable and support people to reach their goals? Why, why not? Which processes or procedures might need revision? For example, people may hint at issues with processes or procedures,

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or point to a lack of resources, being understaffed, limitations of facilities or the plant, faulty procedures, and so on. In the organizational context, it is also important to look at the convergence of purpose—process—people and if aspects of organizational culture need to be examined. Questions here should query, for example: ● How do organizational vision and goals align with individual performance goals? (Do you feel you are contributing meaningfully to the success of the organization? Do you feel supported in your efforts? Are you proud to be a member of this organization?) ● What is the “value stream” (or communication flow) between departments and divisions, between leaders and employees? (Do you feel you understand the direction of your organization? Do you feel informed? Do you trust that your organization shares pertinent information that may or may not affect your position and goals?) This fact-finding process will take time. It needs to be well planned out and strategized. It should result in deep and varied insights into what root causes are responsible for the gaps you have identified. To be successful, organizations need to determine who will develop and conduct the process and if to recruit outside help, such as a consulting firm or other expert advice.

25.4 Closing the Gaps 25.4.1 Building Knowledge and Skills Knowledge and skill gaps are typically differentiated into two areas. The first addresses the issue of people not knowing how to accomplish their performance goals, which indicates a need for information, job aids, or training. The second area is a need for advanced knowledge or education (Clark & Estes, pp. 57–76).

25.4.1.1

Addressing the Need for Information, Job Aids, or Training

Information sharing equals establishing transparency. It assumes that people know how to perform the task on their own, but they need to know what the goal is. This means establishing a distinct purpose, a rationale for “why are we doing this?” Often this “why” remains obscure if the organizational goals are not transparent. The lack of transparency can affect any level of the organization, including its leadership, who might be removed from what’s going on in the trenches or in certain divisions, etc. Job aids are detailed information plans that lay out a process step-by-step that individuals can follow to achieve the goal. For the most part, these are easily attainable

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but should include input from the ones who must perform the job so they can share which steps might be difficult for them. Training is necessary to help individuals acquire the “how to” knowledge and skills. This is particularly important in onboarding processes or when new systems, for example, new accounting software, etc., are introduced.

25.4.1.2

Addressing the Need for Continued and Advanced Education

Continued and advanced education goes beyond training. Education is the transmission and acquisition of research-based knowledge. For example, if the performance goal is to develop crisis strategies (possibly in reaction to an ill-handled product recall), you may be asked by your organization to attend a special course at a Crisis Management Institute. Another example is if a production or manufacturing process is converted from an assembly line style to a rotating team-based process, and management must learn how to best organize, strategize, and use teams. In other words, continued and advanced education focuses on acquiring conceptual, theoretical, and strategic knowledge and skills.

25.4.2 Building and Sustaining Motivation To close motivational gaps (Clark & Estes, 2008, pp. 79–101), the three components of motivated performance—active choice, persistence, and mental effort—must be satisfied. Actions to instigate active choice, persistence, and mental effort are, for example: ● Building individual communication confidence ● Building team confidence ● Aligning organizational and individual beliefs/culture (the “I” versus “we” culture) ● Clarifying values ● Supporting performance goal setting Of course, any of these goals are complex to achieve with a no-fit-for-all recipe. To increase communication confidence, people need to feel empowered to speak. Communication processes need to be developed that provide clear pathways for people’s contributions, thoughts, ideas, concerns, etc., that they can trust and feel comfortable about. All affected stakeholders need to be included and be able to contribute to establishing these processes. This can happen in a variety of ways, such as pulling representatives by unit and organizational level to collaborate on communication protocols. Most importantly, the protocols need to be shared with all involved and enacted on a regular basis (maybe in weekly or monthly meetings,

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emails, and so on), always including a feedback loop for additional questions or to improve the process. Team confidence relies on several perceptions. For example, if a perception is, “We have no clue what that group is doing…” this is an indicator that a team or unit might not be accepted and valued within the larger organizational context. Some teams or departments can have a questionable reputation or might even be deemed irrelevant if most of the organizational stakeholders do not seem to have a clear grasp of what it is that they are really doing. In other words, the team’s or unit’s worth is being questioned. In turn, the team or unit feels undervalued and gets demotivated. What do they need to do to change this perception? What does the organization need to do to raise the team’s value? Luciana Paulise (2022) and many others point to the importance of creating a “we” culture means creating an inclusive culture where everyone, regardless of their job level, is respected, supported, and valued. “We” also means people feel that they themselves, as well as others around them, are treated fairly. If all those needs are met, people will be more committed and motivated to work. The “we” culture builds on individual contributions that do not end with mere task completion. Building an inclusive culture means just that—including people’s thoughts, preferences, etc. Realizing that the individual is a deep resource beyond their job. For example, seeking their input as to what would make their workplace/ task/etc. more enjoyable? Can they personalize their workspace? Beyond the necessity for professional attire, is the dress code appropriate, or can it be modified (such as introducing “Casual Fridays”)? Individual values that are focused on the job are defined as preferences that drive people’s actions with persistence, even if obstacles might have to be overcome. Their work commitment is increased if they can form a connection between their values and their work goals. According to Clark and Estes (2008), three different types of values broadly apply in the workplace (pp. 95–96): ● The interest value connects people’s desire to master a task, to expand their experience, to further their career to their work goal (“I’m good at this, but I’m also challenged.”). ● The skill value connects people’s special ability to their work or team goal. What is an individual’s special contribution that they love to do and that others love to rely on they do (“Let Gabriela do the analysis so that Pete can do the planning”)? ● The utility value connects the benefits or absolute necessity of each task step (even if disliked) to the goal, reminding people that the sum is greater than its parts. (“Not my favorite task, but there’s something in it for me, and we will succeed as a team.”). Depending on the organization or the work goal, tangible (or financial) or intangible incentives can support the utility value. The interest and skill values underpin the active choice and mental effort aspects of motivation, whereas the utility value supports persistence. In other words, when who you are and what you do are locked together, intrinsic motivation is the force that it generates, also known as “Passion.”

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25.4.3 Affirming the Organization Building knowledge, skill, and motivation cannot happen without organizational drive. How healthy is your organization? Do you trust all the stakeholders? Are your ideas acknowledged? Do you feel your organization overall is doing a good job in all aspects of a business, internally and externally? Of course, every organization has its own intricate processes and guidelines, challenges, and requirements, no matter if you are working in a team-based organization, if your organization is organized horizontally or vertically, or if you are part of a virtual working environment, and so on. Still, a few common building blocks to create a healthy culture are shared: ● Constant communication flow to and from all parties involved about plans and progress. ● Inclusion of all stakeholders in processes relevant to them through information sharing; this usually starts with discussing the mission, vision, and strategic objectives. ● Alignment of organizational goals, supportive structures, processes, and individual knowledge, skills, and goals. ● Involvement of leadership and top management (do they have their feet on the ground?). Nothing is worth than employees having the notion that the leaders are not approachable or make top-down decisions without the input of affected groups. (Let’s remember, “No taxation without representation.”) ● Ensuring accountabilities for all stakeholders and employing quality control. ● Motivational and emotional support. Ensuring that conditions and prerequisites for expected performance are met. Creating a work environment that is conducive to output. Having support systems in place no matter if for knowledge and skill or for emotional support (Clark & Estes, pp. 117–118). Organizational culture and human performance are intertwined. Purpose, people, and process have to form a functional trinity. If you detect a gap or a virus that impacts the health of the organizational culture, these six steps help you jump-start a change process: ● ● ● ● ● ●

Form a cross-functional, multi-level communication team. Assess current employee communication practices against best practices. Target gaps in communication for immediate improvement. Develop a vision and strategic objectives. Conduct cascading vision, strategy, and job redefinition workshops. Monitor the results and make adjustments if you find communication breakdowns.

Solving workplace problems means employing strategy. Strategy connects vision to goals, actions to achieve those goals, showing results, and ultimately succeeding. A strategy must be dynamic and involve people at all levels of the organization. Each organization and its approach to strategy is unique or tailored to its needs. An entity’s processes influence how gaps can be closed, or workplace problems can

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be solved. Employing any such strategy also means planning for exploration and implementation time. The moment employees realize the engagement of leadership on their and the organization’s behalf; this is the first step to progress. According to Amabile and Kramer (2011), “making progress” is about connecting aspects of what motivates people at work to the conditions within the organization and its culture.

25.5 Conclusion To solve workplace problems, one approach that is widely applied is to perform a gap analysis that relies on identifying and establishing performance/work goals for individuals and organizational and business goals. The alignment of these goals is essential for the organization’s success. The analysis of gaps between the current status quo and the desired future state needs to look in great detail at root causes. These root causes typically originate from people’s lack of knowledge and skill or motivation, or they are embedded in other organizational issues. Depending on the organization, root causes can be found in either area—meaning they can be people, culture, or strategy related—or can be a combination. To close the gaps and solve their problems, an organization needs to invest. This does not always mean a significant monetary investment. This can be coaching and mentoring within the organization to improve on-the-job performance or working with leaders and teams to improve organizational culture. These efforts are aimed at establishing a healthy work environment where people realize their interest, skill, and utility value and are motivated contributors to their tasks wanting to add value not only within their division but to the organization as a whole. Whatever the case may be, you may be able to take initiative and start the process of implementing a problem-solving strategy. Depending on your organization, you might seek outside help in setting goals and creating strategy, or provide training, etc., to reach desired results. Of course, some workplace problems might necessitate significant investments or even long-term capital expenditures. In these large-scale organizational cases, communicating the importance of the investment to all stakeholders becomes a primary organizational goal that needs to be sustained. Other gaps might trigger a restructuring of the organization, lead to new product development, improving existing supply lines—but no matter what the gap and the root causes are, addressing them and successfully solving them is challenging for any organization. In any organization, it is important to set priorities for action strategy efforts to solve workplace problems. You start by asking questions and figuring out what needs to be done in the immediate, the interim, and the more distant future that will help you and your organization be more successful.

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Which of our processes seem to work well, which need improvement, which might have to be retired? Where do we have recurring issues and might need to employ new strategies or revisions to current processes? What is the cost of solving the problems we identify? What are our measures for success, and how effective are they? How do we evaluate the effectiveness and impact of change or if our solution to the workplace problem achieves the desired results? Do we have a feedback loop so that, if necessary, implementation can be corrected during the process? Solving workplace problems is a team effort—you, the people you are working with, and your organization’s stakeholders share a common goal: the success of the business and securing the triple bottom line, people, process, and profit.

References Amabile, T., and Kramer, S. (2011). The progress principle: Using small wins to ignite joy, engagement, and creativity at work. Harvard Business Review Press. Clark, R. E., & Estes, F. (2008). Turning research into results. Information Age Publishing Inc. Gilbert, T. F. (1996). Human competence: Engineering worthy performance (tribute). International Society for Performance Improvement. Nakamura, J., & Csikszentmihalyi, M. (2009). Flow theory and research. In C. R. Snyder & S. J. Lopez (Eds.), Handbook of positive psychology, 195–206. Paulise, L. (2022). We culture. American Society for Quality Quality Press. Porter, M. E. (2008). On competition. Updated and Expanded Edition. Boston, MA: Harvard Business School Publishing. Zweifel, T. D., Borey, E. J. (2014). Strategy-in-action: Marrying planning, people and performance. CreateSpace Independent Publishing Platform.

Marion Philadelphia earned her M.A. at the University of Hamburg, Germany, which combined American studies and English literature with journalism and mass communication. She began her professional career in Los Angeles, U.S.A., where she worked in entertainment public relations, journalism, marketing, and the themed entertainment industry. As an independent writer and translator, she is credited on numerous non-fiction book projects, including the Einstein Papers Project at the California Institute of Technology, and she is a published novelist. For the last two decades she has been a professor at the University of Southern California (USC), Marshall School of Business, where she chaired the department of business communication for seven years. In 2013, she earned her Doctor in educational leadership at USC. As a communication and educational leadership expert, she specializes in pedagogy, curriculum, instructional design, and faculty professional development. In her courses, she focuses on human aspects, spanning topics from developing emotional intelligence and leadership skills to investigating the forces of internal and external organizational communication. She is the recipient of the USC Mellon Award for Excellence in Faculty Mentoring and the Evan C. Thompson Faculty Mentoring and Leadership Award.

Chapter 26

Relationship Management in Technology and Knowhow Transfer Gabriele Schwarz

26.1 Technology Transfer Relationships 26.1.1 What Are the Specifics of Technology Transfer Relationships? Just as in any other social context, relationships TT emerge and exist through exchange, through ’getting in touch’, through communication. Here, too, the actors exert influence on each other, since any kind of interaction is also a kind of mutual influence. Just in the sense of Watzlawick et al. (2000) ‘You can’t not communicate’, you also cannot not influence each other. Can you design an influence, which provoke a specific, unequivocal reaction at the counterpart? As probably everyone already experienced, this is very unlikely. So, can relationships be managed? Moreover, what can I do as an actor in the transfer process to rise the probability that research or transfer So, can relationships be managed? Moreover, what can I do as an actor in the transfer process to rise the probability that research or transfer collaborations can succeed? The core in TT is the transfer of valuable assets. In the process, the partner share secrets and insights of considerable value. Therefore, the process is usually carefully enclosed with legal framework conditions. This ranges from the initial non-disclosure agreement up to license or research contracts. Thus, legal frameworks can provide a certain trust between business partners, cooperation will be difficulty, if there is no confidence in each other.

G. Schwarz (B) 86161 Augsburg, Germany e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_26

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Clarity is an essential component in building or maintaining relationships. The basis and foundations on which contact is made should always be defined as clearly as possible. Therefore, a few definitions will first help to set out the context and content of technology and knowledge transfer. A very general definition of technology transfer describes Kesting (2013, p. 84) as the transfer of knowledge—in the overarching sense—from a research institution or university to an external partner. TT works like normal activity in an existing market. In other words, a supplier of knowledge meets a customer who needs this knowledge. However, the object to be transferred is usually not a clearly defined standard product. In addition, the partners involved have the challenge of reconciling science and business, i.e. the transfer of research results into an economically usable product. If the partners met at the transfer and research market, the process in TT consists usually of the following steps. Figure 26.2 describes a process with a clear beginning and a clear end and six steps, where supplier and customer interact. This is where the direct, personal relationship happens. Besides the matchmaking on a market and the direct contact at the TT-project, there are many more possibilities, how a relationship could exist even before the first personal meeting. Those pre-existing conscious or even unconscious experiences with each other can emerge through marketing activities, articles, or presumptions about the company or research institutions or something like that. In the following figure, those aspects of a pre-existing relation are represented as a cloud. The cloud is suitable as a symbol of a not intended or shaped relationship by joint actions. To dissolve this cloud and to transfer it into a more accessible medium is what the following suggestions supposed to accomplish (Fig. 26.3).

26.1.2 Who Are the Protagonists in Technology Transfer? What Relationships Are Involved at All? The number of participants in a TT process varies greatly. For example, the number of company or university representatives involved depends on the complexity of the task or the scope of the results for the company or scientific institution. When it comes to transferring a groundbreaking new technology into reality, a large number of people are involved without being able to influence the process itself. This also increases the size and density of the network of relationships that can arise or may already exist in the respective projects. The explanations here are aimed at responsible persons who, in particular, shape the TT process start-up. Thus, on the research side, the transfer officers who feel responsible for the success of TT projects and strive for sustainable and lasting business relationships.

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Fig. 26.1 Procedural transfer on markets for research services (cf. Kesting, 2013, S. 84) Fig. 26.2 Transfer process overview (own illustration)

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Fig. 26.3 Pre-experience cloud of the transfer participants (own illustration)

Fig. 26.4 Kano model using the example of outlicensing (Adapted from Shahin 2009, p. 1010)

26.1.3 Why Do I Need to Be Considerate of Relationships? Relationships, not technical tasks, are often the aspect that poses the greatest challenges in projects. Even with well-formulated contracts and work packages, the possibility of misunderstandings between the parties involved is unmanageably high. Those who rely only on textual preparation and contracts are likely to fail repeatedly. The point is not that those involved always agree and act in total unison. The heart of scientific work is the permanent questioning of facts (falsification!). Even the professional friction between the participants can release a strong creative potential. But only if the underlying relationship is based on trust and reliability. In a coherent relationship, both parties have a reliable, congruent idea of how they want to work together. Both parties trust the other person to behave in a certain, expectable way. To develop this trust, there must be an idea of what my counterpart’s

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Fig. 26.5 Allowance of relationships through building a mutual map in technology transfer (own illustration)

goals, motives, needs, and values are. In this case, it is even more important that I know my own goals, motives, needs and values very well. This also means being prepared to reflect on and question them again and again. Relationship maintenance—not management—can succeed if the will is developed to take the other person seriously and to ’understand’ him or her in his or her context. Understanding does not have to mean agreeing with everything. It is rather the joint work on a common understanding, on the basis of which exchange can take place. Or rather, so that the likelihood of exchanging successfully increases. Successful here means that there is a high level of agreement in the evaluation of the information exchanged. This optimized flow of information among the participants is not only beneficial to the well-being of those exchanging information, but also has the potential to move the transfer process and transfer projects forward more quickly and in a more targeted manner. This is reflected in processes that conserve resources and thus simply reduce time and costs. The cost–benefit aspect plays a role in any business relationship. To completely disregard this would be unrealistic and far removed from successful technology transfer. The cost aspect is an important factor that is particularly effective when lasting, sustainable business relationships lead to regular joint transfer projects. Reliable business relationships are very important for a company or a research institution. The management must also be interested in this and may also have concepts for this.

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26.1.4 Is There a Management Approach to Relationships? In order to determine whether the term ’management’ is at all suitable for relationships, it is worth taking a closer look at the functions and activities of managers in order to examine how this approach can or cannot be applied to relationships. In the Gabler Wirtschaftslexikon, management is described thus: “In the sense of a goal-oriented activity (function of management), the tasks of management are. 1. the setting of goals for the organization, 2. the development of a strategy to achieve the goals, 3. the organization and coordination of the factors of production and the management of employees and/or volunteers for the purpose of producing private or public goods. As such, management is a basic activity and core function of modern societies (P. Drucker).” (Haric, 2018). This definition–one of many very similar ones–shows a person setting goals, developing strategies, and planning the resources to implement the strategy. This happens independently of a counterpart. If one tries to apply this definition to relationships, this model quickly reaches its limits. A relationship goal cannot be set and achieved without the person involved. Relationships only work in cooperation and not through the management of an individual. Also a categorization of relationships as Ross & Robertson (Ross (2007), p. 109ff.) suggest falls short. Here, for example, a relationship is assigned a fixed category. In this relationship category, the participants each have a fixed role and thus a fixed repertoire of behaviors. This is an oversimplification of the complexity of social situations. Roles are rarely unambiguous and people often act out of different roles (e.g., one acts simultaneously out of the role as a transfer officer, as a manager, as a university representative, etc.) and if one considers that by merely categorizing a relationship a fixed assignment of roles to the actors is made, it quickly becomes clear that this approach cannot do justice to a comprehensive view. So there are approaches that assume to be able to manage relationships. Perhaps one can derive some benefit from picking up inspiration for one situation or another. In all proposals and concepts, it is worth remembering that relationships always exist in the context of a counterpart. A manager, leader, person who takes his counterpart seriously and is really interested in a lasting relationship must not succumb to the temptations of complexity reduction. The idea of managing relationships with selected means is too simple.

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26.1.5 If I Cannot Manage Relationships, What Can I Do at All? If one says goodbye to the idea of being able to manage relationships, the question arises as to how to proceed with relationships in the first place. In the following, we will look from three positions at the possibilities that exist to make successful, because lasting, relationships possible. ● Institutional perspective—what can be done from the perspective of the university or research institution ● Individual view—what can transfer officers contribute individually ● View in context with the counterpart—what is possible in context with the transfer partner One approach to dealing with relationships is provided by Ernst von Glasersfeld through the constructivism he founded. Theoretical background–the constructivist perspective

Constructivism assumes that people cannot objectively “discover” or even “map” reality, but that all knowledge and cognition exists exclusively in the mind. This means that reality cannot be grasped objectively, but is constructed with the available senses. Whereby this constructing is not intentional, but takes place involuntarily on the basis of experiences and perceptions. (Pörksen, 2015, p. 11) In short, “reality construction happens to us more than we have it at our disposal” (Schmidt (1995), p. 569). A constructivist approach to relationships–in whatever context–on the one hand takes away the pressure to be able to control and take responsibility for everything. However, this realization is an important starting point for taking the partner in the relationship seriously and maybe starts the work on the own requirements.

26.1.6 What is the Contribution of the Organization? How Can the University Settings Be Designed? The university or research management can make an important contribution through values and goals in order to provide employees with orientation and guidelines for working together with each other and with external parties. Most universities and research institutions have long been intensively engaged with university philosophy,

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university mission and mission statements, in which the values and goals of the institution are laid down. The greatest likelihood of lived mission statements is achieved when as many members of the institution as possible are involved in the process. In this way, the employees of the university have reliably agreed on a set of values and can orient and align their conduct toward others with these guidelines over the long term. If these guidelines are lived university-wide and are also applied in all communication, an image emerges that shows an authentic, transparent and trustworthy university. The overall image can become a label, a brand, associated with these values. Again, this brand promise can help deepen trust and loyalty among business and transfer partners. University employees who see themselves as brand ambassadors embody this promise in their interactions with others. In addition to university representatives, university communications is an important element in building and maintaining relationships. It provides the transfer seeker with a picture of the potential collaboration even before the initial contact. Typically, the following media are used in university and research communication: 1. press releases about new research results and activities to draw public attention to their work. 2. social media platforms such as Twitter, LinkedIn, or Facebook provide a quick and effective way to share recent research findings and activities with the public and reach a broader audience. 3. events such as conferences, workshops, or public lectures are a medium to promote interaction with other researchers and the public. 4. the web presence is often the first business card that a research institution leaves with the customer in a targeted search and is a valuable source of information for the public. 5. collaborations help share research results and activities and increase outreach. 6. publications demonstrate an institution’s research capabilities and help validate findings and increase visibility in the academic community. 7. outreach activities are particularly helpful in bringing research results and activities to the broader public and in generating public interest in research. So for example if a university representative sees the task in making a contribution to society, the knowledge must be available to a broad public and do so in such a way that it is translated into a suitable medium that the target group, for one, can reach and also understand.

26.1.7 What Can I Do on the Project Level? Auer (2000) recommends to design the TT in the form of an organizational process to ensure ‘sufficient effectiveness’ and ‘sufficient efficiency’, which would consequently have a low effort in maintaining business relationships (cf. Auer 2000, p. 10). However, the effectiveness of this recommendation on relationships should not be

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overestimated. One-sided or even formulated conditions of togetherness can never reflect the complexity of a relationship. Rather, as Groth (2023) for example sees it, such conditions outline the end of a relationship rather than promoting it. However, it is helpful to define processes and to carefully consider and perhaps even put in writing the (seemingly) obvious in the TT process. This also goes beyond the contractual basis, since contracts always record only a fraction of what is expected of the partners in terms of framework conditions and performance. Namely, only that which can be demanded in court in the event of a dispute. In particular, reflecting on the goals pursued with the project can make an important contribution. A helpful tool for maintaining relationships at the concrete project level can be the so-called Kano model. Noriaki Kano developed a model for customer satisfaction in 1970, defining three target categories by which customer satisfaction can be measured. So if the achieved results or experiences meet or even exceed personal expectations or standards, this usually leads to a feeling of satisfaction. Accordingly, this state is also an important, if not the most important, indicator of successful transfer in general. If we assume that transfer providers strive for the satisfaction of the transfer recipient, then this model is suitable for providing indications for the maintenance of relationships. It also helps in understanding customer needs and represents a new approach to prioritizing customer requirements (cf. Shahin (2009), p. 1003ff.) It distinguishes between three target categories: Basic objectives, performance objectives and enthusiasm objectives. The basic objectives form the foundation of a business relationship and contain all the basic requirements that a company can place on a research institution. Using licensing as an example, this means that the company will be transferred an invention and will be able to use it fully for its own company. If a transfer agent is seriously interested in a sustainable and good relationship with the company, he or she will go beyond this basis. With so-called performance objectives, one goes beyond the fundamentally expectable requirements. In the case of outlicensing, for example, this could mean that the transfer office takes over the patent transfer process for the company and thus offers a further service that was not fundamentally defined in the transfer agreement. Enthusiasm objectives ultimately form the ‘icing on the cake’. This is another service, another aspect that goes beyond the usual, expected level. It is these goals that trigger strong satisfaction in the customer and can make a particularly important contribution to stabilizing relationships. Since for the opposite more is done, than possibly necessary and/or paid. Through these goals it is possible to express the greatest possible appreciation. In order to be able to fulfill these goals, it is particularly important to know my counterpart and to know what could trigger satisfaction and how I can inspire my business partners (Fig. 26.4). For public institutions such as college or universities, there is a particularly high requirement for empathy, creativity, and ingenuity in achieving enthusiasm goals. The public sector has high restrictions on the use of taxpayers’ money for gifts or attentions. However, examples can be personal attentions, which can be implemented

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with little financial resources, but are still very effective. In the above example, this could be a personal, handwritten anniversary, birthday or celebration card to express personal appreciation and thanks for the cooperation. However, such types of attention only work if I know my business partners well and know about their preferences, perhaps hobbies, perhaps birthdays. Creativity is especially needed here because repeating the same appreciation will no longer have the same effect on the enthusiasm goals. The enthusiasm goal quickly becomes a performance goal and, if missing, is more likely to lead to disappointment on the part of the counterpart.

26.1.8 What Can I Do Transfer Officer? Being at home with oneself is the necessary prerequisite for being able to relate to others, Erich Fromm already stated.

Serious relationship maintenance or relationship building with others must always begin with oneself. Without having clarified one’s relationship with oneself, one is hardly able to cultivate an authentic, stable relationship with others. Being at home with oneself can be understood as being self-aware and having the greatest possible transparency about the basis on which one acts. What seems trivial requires a high degree of honesty with oneself and the willingness to question oneself and one’s values if necessary. A suitable method for taking personal stock-check is self-reflection. For this purpose, the examination of oneself by answering reflection questions is suitable. Exactly which questions these are is not crucial. What is important is to come into the readiness and start the process of questioning one’s own values, drives and goals. Following Ruderman and Ragolsky (2014, p.4), who have worked on the characteristics of an authentic leader’s life, the following reflection questions are suitable, for example: 1. do I have clarity about my own values, priorities, and preferences? 2. what are my needs? What must be given so that I feel good? Do I treat myself appreciatively? 3. can I accept that there is a need for decisions and trade-offs in life? Do I have the willingness to work on adjusting my own values and behaviors? 4. Do I trust myself? Even in uncertain situations? Can I let go and trust in myself without being able to control everything? Am I self-determined? Am I satisfied with decisions made earlier in life? 5. am I aware of myself? Who am I without the external circumstances such as position, possessions, power? Do I like myself? For leaders who have built their identity on being experts and highly focused individual achievers, the shift to authentic relationships and open collaboration can be challenging. However, knowing one’s own values, motives and goals as accurately

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as possible is a good starting point if stable relationships are to be enabled and maintained, and can also contribute greatly to one’s own satisfaction.

26.1.9 What Can I Do for the Other Person and Thus for the Relationship? If the probability of establishing and maintaining successful relationships is to be increased, the following approaches could be helpful: ● Relate, get in touch and communicate continuously. ● Empathy, change of perspective and building trust ● Construction of a common map

26.1.10 Communication Based on Fink and Knoblach (2008, p. 465 f.), continuous communication can create an interpersonal consensus on practiced forms of cooperation. Whereby it is less about processes and specifications, but more about the subjective constructions of reality in cooperation and their individual and interpersonal interpretations. In addition to the subjective constructions, other aspects are also included. J. L. Moreno, who describes human relationships with the concept of encounter, also allows for an emotional and motivational quality. Thereby, respect for the other comes more to the foregroud and allows for the otherness of the other person and proclaims an authentic putting oneself into relationship (Ameln, 2016, p. 266). Utterances can also be understood as an offer. In constructivist communication, individuals and groups construct meaning and significance together by sharing and jointly interpreting their experiences and perspectives. Thus, communication becomes a tool for creating and changing subjectively constructed reality (Gardt 2018, p.2).

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How the other person perceives the utterances can only be determined through exchange. These utterances are not only in technology transfer all possibilities of communication as they are common in business life: i.e. press relations, research marketing, social media and any external appearance. An important aspect of constructivist communication is the idea that the meaning of terms and concepts does not lie in themselves, but in the way they are used by people. Therefore, there is no objective truth or meaning, but only a subjective construction of reality created through the interaction and communication of people. For the recognizing system, the informational value lies in the warning signal. Irritation as a borderline experience makes one’s own not-seeing visible. As important as the conception of irritation is for the explanation of a productive relationship between system and environment, it would be rash to think that irritation necessarily entails learning, i.e. cognitively structuring environmental appropriation (Schäffter 1997, p. 694). It is important to recognize irritations as stimulants that prevent the solidification of forms of perception because they stimulate rethinking and thinking differently (Pörksen 2018, p. 77). So, irritation is a good method, if a change in the relationship is needed. Which works best on a solid base layer of trust. Trust, empathy, change of perspective. An important factor in successful relationships is trust. Lohmann consider the influence of trust especially for business relationships in technology transfer (Lohmann 2013, p. 162) and confirms the fundamental relevance in her research. Groth points out that the repeated experience that positions of power are not exploited makes a significant contribution to the formation of trust. Which can be reinforced by appreciation and recognition, especially in public (Groth 2023). Construction of the common map through a continuous process of give and take (circularity). Working on oneself and clarifying one’s own goals, motives, intentions, roles, etc. contributes to appearing more authentic to the outside world as well. Authenticity is an important basis for building trust. Relationships are subject to a continuous process of negotiation and assessment and are thus constantly in motion and change. Stable relationships are based on a balance between give and take. Relationships never work unilaterally, however, but only in the context of the other person. Relationship maintenance is the joint design of a mutually constructed basis, which can become more and more differentiated with increasing exchange (cf. Groth, 2023). In other words, the design of a common map that becomes denser and denser in the joint design process and contains more and more information. The design and maintenance of relationships in technology transfer illustrates with the following graphic (Fig. 26.5).

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26.2 Conclusion In my years of work as a transfer officer, I have learned that relationships in technology transfer cannot be influenced unilaterally. However, I can contribute a lot to a good relationship through reliability, openness, transparency. Trust has to be earned. By working on oneself, one’s oral and written communication, and through continuous, honest self-reflection.

References Ameln., F. (2016). Macht in Organisationen. Stuttgart. Schäffer-Poeschel Verlag. Auer, M. (2000). Transferunternehmertum. Erfolgreiche Organisation des Technologietransfers. Bieger, T. (2021). Einführung in die Managementlehre: Basierend auf dem St. Haupt Verlag. Bildung zwischen Helfen, Heilen und Lehren Fink, D., Knoblach, B. (2008). Managementmoden im Spiegel des Kon-struktivismus. In zfbf (vol.60). pp. 459–478 Gardt, A. (2018). Wort und Welt. Konstruktivismus und Realismus in der Sprachtheorie. In Felder & Gardt (Hg.) Wirklichkeit oder Konstruktion? (pp. 2- 4). De Gruyter Groth, T. (2023). Dieses Spiel geht nur zu zweit—Überlegungen zum Be-ziehungsmanagement. https://www.simon-weber.de/blog/dieses-spiel-geht-nur-zu-zweit-uberlegungen-zum-bezieh ungsmanagement/ Haric, P. (2018). Management. https://wirtschaftslexikon.gabler.de/definition/management-37609/ version-261043. Revision von Management vom 14.02.2018 – 17:31 Kesting, T. (2013). Wissens- und Technologietransfer durch Hochschulen aus einer marktorientierten Perspektive. Ansatzpunkte zur Gestaltung erfolg-reicher Transferprozesse an Universitäten und Fachhochschulen. https://doi.org/10.1007/978-3-658-00719-5 Lohmann, S. (2013). Interaktionsqualität im Technologietransfer. Theore-tischer Ansatz, empirische Untersuchung und Implikationen. Springer Gabler. https://doi.org/10.1007/978-3658-05024-5 Neumann, O. (2016). Competitor relationship management. Beschreibung, Erklärung und Gestaltung von Beziehungen zwischen Wettbewerbern. Springer Pörksen, B. (2015). Schlüsselwerke des Konstruktivismus. Springer VS. https://doi.org/10.1007/ 978-3-531-19975-7 Pörksen, B. (2018): Der Blick des Kritikers. Die Debatte über den Kon-struktivismus in der deutschsprachigen Kommunikationswissenschaft – ein Beispiel für die Auseinandersetzung zwischen realistischen und relativisti-schen Wissenschaftlern. In Felder & Gardt (Hg.) Wirklichkeit oder Kon-struktion? (pp. 77- 101). De Gruyter Reicheld, F. (2000). E-Loyalty: Your secret weapon on the web. Harvard Business Review. Online Version (update 19.01.2023 https://hbr.org/2000/07/e-loyalty-your-secret-weapon-on-the-web) Ross, T., & Robertson, D. (2007). (2007): Compound relationships between firms. Journal of Marketing., 71, 108–123. Ruderman, M. N., & Rogolsky, S. (2014). Getting real: How high-achieving women can lead authentically (White Paper). Center for Creative Leadership. Schäffter, O. (1997). Irritation als Lernanlass. Bildung zwischen Helfen, Heilen und Lehren. In Krüger, & Olbertz (Eds.) Bildung zwischen Staat und Markt (pp. 691- 708) Schmidt, S. J. (1994). Konstruktivismus in der Medienforschung: Konzepte, Kritiken,Konsequenzen. In Merten & Schmidt & Weischenberg (Hg.) Die Wirklichkeit der Medien (pp 592–623). Westdeutscher

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Shahin, A., & Zairi, M. (2009). Kano model: A dynamic approach for classi-fying and prioritising requirements of airline travellers with three case stud-ies on international airlines. Total Quality Management, 20(9), 1003–1028 Siebert, H. (1998). Konstruktivismus. Online Version (update 17.01.2023: http://www.die-bonn.de/ esprid/dokumente/doc-1998/siebert98_01.pdf) Watzlawick, P., Beavin, J., & Jackson, D. (2000). Menschliche Kommunikation: Formen, Störungen, Paradoxien. Bern: Huber.

Chapter 27

Possible Selves, Identity, Horizons and Communication: An Exploratory Study of Dance Students Phillip A. Cartwright and Juncal Roman-Pastor

27.1 Introduction The motivation for this study is wanting to better understand in the context of the performing arts the relationship between one’s self-identity, horizons, and consequently, communication over time. Pan et al. (2017, p. 76) point out, “In psychology, self-identity is defined as a cognitive construct of the self that answers the question “who am I?”. Self-identity focuses on characteristics of an individual that separate her from others. Social categories such as groups, relationships, and personal characteristics could become part of self-identity to the extent that people use them to define themselves.” It is an underlying position of this chapter that however complex, through behavior, self-identity is implicitly or explicitly communicated. While outside the scope of this chapter, referencing self-identity, behavior communicates to other people and groups. Such communication can have critical implications for recognition. For example, a leading ballet dancer can demonstrate excellence by exhibiting specialized movements to an attentive audience. This is implicit communication. Alternatively, that same ballet dancer can stand before a group of students and explain her self-identity and a leader by verbally expressing many years of hard P. A. Cartwright (B) · J. Roman-Pastor Center for Applied Business and Management Research Ascencia, Business School Paris, Paris, France e-mail: [email protected] J. Roman-Pastor e-mail: [email protected] P. A. Cartwright Visiting Researcher, Center for Performance Science, Royal College of Music London, London, UK J. Roman-Pastor Healthcare Manager and Lead Physiotherapist English National Ballet School London, London, UK © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_27

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work and sacrifice. This research asks, “What is the causal relationship between an individual’s self-identity at a point in time and that individual’s horizons?” Naturally, the question requires understanding of the intended meaning of horizons and self-identity. The context for this research is dance, or more specifically, discussions with dance students at a premier international dance school. Initial interest in the topic of this chapter can be found in earlier research related to artist self-profiling. Briefly, the framework represents dimensions of skills and knowledge that relate to the development, maintenance and enhancement of performance. For example, Williamon et al. (2017) and Cartwright et al. (2021), implement a profiling framework that allows partial insight into artist identity. The primary focus is on dynamic interplay between (a) performers’ current levels of skills and knowledge in each dimension; (b) the overlap and interplay between dimensions; and (c) the relative importance (or weight) of each in the context of the performer’s experience, level of expertise, typical performance situations/environments and career goals. Issues related to self-identity and horizons are prevalent in the business literature focusing on social psychology and organizational behavior (Day & Shin, 2009; Kwok et al., 2021; Markus & Nurius, 1986). Wanting to focus more specifically on artist identity, the authors revisited Goffman’s classic work (1959). Goffman’s framework divides the individual into two parts: the individual is seen as a performer and as a character. The performed-self corresponds to an image. As a character, the self-on-stage and in-character attempts to convince others (the audience) to accept that image. Owing to the dependence on others, this self is not organic and it is subject to interpretation. In other words, “-this self-is” “a product of a scene that comes off, and is not a cause of it” (Goffman, p. 245). Alternatively, the self as performer derives from the possessor (Goffman’s word). The individual has capacities to learn, and dream as well as to experience psychobiological elements such as elation and fear. Understanding the self-as-performer, allows for the introduction of mental experiences such as fantasizing as well as the objects of those experiences. More will be said on this matter in what follows. Following this introduction, the paper presents a clarification of concepts and a brief consideration of relevant literature. At the outset, efforts are made to clarify the intended meanings of self-identity and horizons beyond that which has been stated thus far. Methodology and reporting of respondent information follows. The final sections of the paper include analysis of interviews as well as conclusions.

27.2 Concepts and Literature Review As previously indicated, the work of Goffman (1959) bears relevance to this research. Given that an image corresponds to the performed-self, the person on stage and acting in character tries to persuade the audience to agree with their portrayal. This self is not organic. As to the self as performer, this self is the organic self. The person is capable of learning, dreaming, and experiencing psychobiological aspects like joy and terror.

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Understanding self as a performer appears to take into account life experiences, but also allows for the objects of those experiences. As an example, suppose one experiences fear. The fear is of something such a the dark or a ferocious animal. Following along similar lines, a person looking into their future might experience excitement and that powerful emotion might be associated with the thought of achieving a certain level of competence and recognition in their field. Two considerations are worth mentioning. First, it is necessary to account for the likelihood that both versions of self are active at any point in time and surely the two must interact. Second, concerns the dynamics, which are particularly relevant for this research. Before discussing horizons per se, take the example of a young boy experiencing excitement over his future exclaiming, “When I grow up I want to be a firefighter!” Five years later, this same boy joyfully declares, “After college, I want to be a surgeon!” Here, there are dynamics in the sense of an elapsed time (five years) as well as an ambiguous view toward the future. Another approach to identity is to consider the self-expansion model (Aron & Aron, 1986). An individual has experiences over the course of their lifetime. Some experiences are inconsequential, while other experiences alter the collective set of beliefs that the individual has about themselves. According to the self-expansion model, individuals are motivated to broaden their sense of self or identity through self-development including learning new capabilities, nurturing new relationships or pursuing new goals and objectives. Initial research on the self-expansion model focused on relational expansion, that is how individuals come into interpersonal relationships by way of inclusion of other in the self (IOS). Conceptually, one can envision a Venn diagram in which two circles representing the two selves overlap or intersect indicating the extent to which senses of selves become cognitively linked to one another. IOS is one mechanism through which self-expansion can occur. In this case, self-expansion is relational. More recent research has focused on non-relational self-expansion (Mattingly & Lewandowski, 2013, 2020). In the context of a non-relational self-expansion model any activity that is found to be challenging should result in self-expansion accompanied by intrapersonal benefits. Experiments by Mattingly and Lewandowski (2013, 2020) confirm this to be the case. Individuals taking more difficult and challenging tasks have been found to demonstrate higher level of intrapersonal achievement. Along the lines of this research, there is a considerable literature in the area of social psychology related to temporal self-evaluations referred to as possible selves defined as representations of the self in the past and future (Carver et al., 1994; Markus & Nurius, 1986; Markus & Ruvolo, 1989; Oyserman et al., 2006). Following Markus and Nurius (1986), there are three types of possible selves: the expected self, the hoped for self, and the feared self. Of course, there is a range of factors that can influence the content of any category. For this research, expected selves are of primary importance as they are selves that an individual believes he or she can or will become. Moreover, as pointed out by Carver et al. (1994), “they serve as the focus point for one’s energies in striving for the future” (Carver et al., 1994, pp. 134–135). Additionally, the authors note that when an expected self is positive

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it is perceived as a realistic goal. However, when an expected self is negative, it is taken as an unlikely wish. For this research, the authors find that the relational and non-relational expansion models as well as the ideas behind possible selves are particularly relevant. Turning now to horizon(s). Fundamentally, one can understand horizon as found in a dictionary. For example, Merriam-Webster’s Collegiate Dictionary (MWCD) offers several alternatives, two of which are relevant to the present discussion: “c: range of perception or experience d: something that might be attained” (MWCD, p. 558). Horizons take on significant meaning in multiple disciplines. In particular, horizons are of importance to philosophers and phenomenologists. Much of what has been written is quite dense and beyond the immediate scope of this research. However, in applying hermeneutics to the process of interpretation, Hans-Georg Gadamer (2004) talks of a ‘horizon’ as a way to conceptualize understanding. Your horizon is as far as you can see or understand. Gadamer states that: “the concept of horizon suggests itself because it expresses the superior breadth of vision that the person who is trying to understand must have. To acquire a horizon means that one learns to look beyond what is close at hand—not in order to look away from it but to see it better” (Clark, p. 58). Oyserman et al. (2006, p. 130) address horizons in the context of possible selves, expectations and “concerns about the future.” In laboratory experiments, Coats et al. (1996) show that shifts in goals, personal strivings, or self-motivation clearly influence mood, behavior, and outcomes. In natural settings, it has been pointed out by Oyserman et al. (2006) that possible selves, goals and objectives may not be welldefined. Hence, regulated behavior is necessary in the sense that the self-concept must be associated with strategies about the behavior that will lead to the desired outcome. Further, goals, strivings, and possible selves may serve functions other than self-regulation. They can facilitate optimism and belief that change is possible because they provide the sense that the current self is mutable (Markus & Nurius, 1986). Considering research related to the performing arts, in his qualitative study related to participants in the Rochester New Horizons Band program, Dabback (2008) reports evidence that identities emerge from and are shaped by ensemble social interactions. Furthermore, encouragement and support from ensemble members serves to reinforce musical identities. Social interaction within the group context is a means for negotiating personal identity. Willard and Lavallee (2016), examined the retirement experiences of elite professional ballet dancers. Emphasis was placed on the influence of self-identity and social support on the quality of adjustment to retirement in elite ballet dancers. The authors found that dancers adopted a combination of coping strategies; predominantly retirement planning and redefinition of self. With respect to the developing ballerina, Yurow (2016) states, “… dancing becomes part of their (student’s) identity as well. Here, dance teachers and exceptional dancers in the class or in a company become role models of sorts, from senses of style, behavior, and physical prowess. Being a “ballerina” goes from an occupation or a hobby to an identity.”

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Norton (2013, p. 23) who states, “….poststructuralist theory has led me to define identity as the way a person understands his or her relationship to the world, how that relationship is constructed across time and space, and how the person under-stands possibilities for the future.” Further, Norton points to the relevance of imagined communities and imagined identities. Imagined communities refer to those groups with whom one associates and which exists outside of the person’s direct access. One’s imagined identity is often associated with hopes for the future. For example, in the context of performing arts education, it is not unusual to hear a student hope to become one day a widely recognized, musician, dancer or theatrical performer, although in fact, that student might not achieve such recognition or be associated with a leading company. Finally, Roston’s (2001) research “A Study of the Development of Young Artists: The Emergence of an Artistic and Creative Identity” studied thirty-nine children, ranging in age from 8 to 11 and enrolled in a private after-school art enrichment class. This study clearly shows the qualitative changes in skill associated with aging and the participants understanding of what it means to be an artist and what it means to be creative. An interesting course for research is to investigate dynamics of changing identities amongst performing artists in the course of their careers. The authors have interest in further investigating what happens when present horizons change and move to a new horizon.

27.3 Methodology, Data and Results The authors well-understand that qualitative research involves many ethical, methodological, and practical decisions. For this paper, informal, anonymous interviews were conducted with dance student at a well-known premier dance school. For discussion of using informal discussions in qualitative research, the authors refer to Swain and King (2022). As pointed out by Ekegren et al. (2014) preprofessional dancers begin training from a young age. And are often committed to full-time pre-professional training by the age of 15. Pre-professional training is designed to replicate both the technical demands and intensity of the professional setting. While it might be that some young dancers do not have professional intentions, others audition and are admitted to a professional ballet boarding school from the age of eleven. Of course, it is conceivable that young dancers may not have professional ambitious at the outset of their training, but develop professional aspirations over time. Consistent with Dabback (2008) the support of friends and family might be of critical importance in identity creation and horizon formation. One participant in this study indicated that “I have had so many people who have supported me and believed in me along the way. Without those people, I don’t think I would have been as committed to pursuing ballet as I am now.” While some interviewees acknowledged the relevance of self-identity dynamics or increased awareness of their goals over the

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course of their training, other students seemed to have a relatively stable horizon from the outset. Specifically, one participant stated, “When I arrived at the school, I had a strong idea and plan in my head of what my time here would look like—working hard and improving throughout my three years, and an ideal version of the dancer I would be at the end.” Another interesting observation was made by dance students who become aware of the “business” of being a professional dancer at least in the sense that they develop a sense of a “role” hierarchy. The training process goes well-beyond training a generic ballet dancer. According to one student, “An understanding of company hierarchy also gives rise to aspirations to be able to climb and be promoted, so that dancing professionally is no longer enough, a desire to dance specific roles or to be promoted has now conditioned that unconditional love for dance.” Along the same line of thought, while the dancer did not specifically relate to identity and horizons, implicitly, the evolution of maturity was recognized by another participant who stated, “As I got older was the discovery that dance can be a lot more than just happily moving, jumping and twirling to music through space. I discovered the dramatic and psychological aspect that it can carry, the deeply complex characters one can portray and how dance has the ability to tackle deep issues. Discussing these on stage in front of a live audience and truly make an impact.” Last, more mature students recognize that the chances of becoming a leading dance in a large company are relatively small. There are dancers focused on dancing with smaller national or local companies as well as those wanting to pursue teaching opportunities.

27.4 Concluding Comments The purpose of this chapter is to increase understanding of the relationship between self-identity formation and life horizons. In the case of this preliminary research, the focus has been on young, preprofessional dancers. Based on a limited number of anonymous interviews with student dancers at a prestigious international school, it can be said that participants had a varied level of understanding as concerns the concepts of self-identity and their horizons, and further, there was seemingly less understanding or thought put toward understanding how changing horizons might influence. On the contrary, however, some students indicated an awareness of changing horizons. An example is the student who is in the process of pursuing a dance career, but intends to earn a university degree. For future research, understanding horizons and the extent to which horizons change impacting self-identity of performing artists-in-training or professionals requires a more extensive interview process following the guidelines of qualitative research.

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References Aron, A., & Aron, E. N. (1986). Love and the expansion of the self: Understanding attraction and satisfaction. Hemisphere. Cartwright, P. A., Küssner, M. B., & Williamon, A. (2021). Key performance dimensions of the “Well-Tempered Musician”: A framework for artist management. International Journal of Arts Management, 23(2), 18–29. Carver, C. S., Reynolds, S. L., & Scheier, M. F. (1994). The possible selves of optimists and pessimists. Journal of Research in Personality, 28, 133–141. Coats, E., Janoff-Bulman, R., & Alpert, N. (1996). Approach versus avoidance goals: Differences in self evaluation and well-being. Personality and Social Psychology Bulletin, 22, 1057–1067. Dabback, W. (2008). Identity formation through participation in the Rochester New Horizons Band Programme. International Journal of Community Music, 1(2), 267–286. Day, D. V., & Sin, H.-P. (2009). Leader development, identity, and goal orientation: A study of personal change trajectories. Academy of Management Annual Meeting Proceedings, 1, 1–6. Ekegren, C., Quested, R., & Brodrick. (2014). Injuries in pre-professional ballet dancers: Incidence, characteristics and consequences. Journal of Science and Medicine in Sport, 17, 271–275. Gadamer, H-G. (2004). Truth and method (Second revised edn.) Continuum International Publishing Group; Clark, J. (2008). Philosophy, understanding and the consultation: a fusion of horizons. British Journal of General Practice, 58–60. Goffman, E. (1959). The presentation of self in everyday life. The Penguin Press, 1969. Kwok, N., Shen, W. & Brown, D. (2021). I can, I am: Differential predictors of leader efficacy and identity trajectories in leader development. The Leadership Quarterly, 32(5), 101422. Markus, H., & Ruvolo, A. (1989). Possible selves: Personalized representations of goals. In L. A. Pervin (Ed.), Goal concepts in personality and social psychology (pp. 211–241). Lawrence Erlbaum Associates Inc. Markus, H., & Nurius, P. (1986). Possible selves. American Psychologist, 41(9), 954–969. Mattingly, B. A., McIntyre, K. P., & Lewandowski, G. W., Jr. (2020). Relationship dissolution and self-concept change. In B. A. Mattingly, K. P. McIntyre, & G. W. Lewandowski, Jr. (Eds.), Interpersonal relationships and the self-concept (pp. 145–161). Mattingly, B. A., & Lewandowski, G. W., Jr. (2013). The power of one: Benefits of individual self-expansion. The Journal of Positive Psychology, 8(1), 12–22. Merriam-Webster’s Collegiate Dictionary. (1999). (10th edn.). Merriam-Webster, Incorporated. Norton, B. (2013). Identity and language learning, extending the conversion (2nd ed.). Multilingual Matters/Channel View Publications. Oyserman, D., Bybee, D., & Terry, K. (2006). Possible selves and academic outcomes: How and when possible selves impel action. Journal of Personality and Social Psychology, 91(1), 188– 204. Pan, Z., Lu, Y., Bin, W., & Chau, Y. (2017). Who do you think you are? Common and differential effects of social self-identity on social media usage. Journal of Management Information Systems, 34(1), 71–101. Roston, S. (2001). A study of the development of Young artists: The emergence of an artistic and creative identity. Journal of Creative Behavior, 32(4), 278–301. Swain, J., & King, B. (2022). Using informal conversations in qualitative research. International Journal of Qualitative Methods, 21, 1–10. Willard, V. C., & Lavallee, D. (2016). Retirement experiences of elite ballet dancers: Impact of self-identity and social support. Sport, Exercise, and Performance Psychology, 5(3), 266–279. Williamon, A., Clark, T., & Küssner, M. B. (2017). Learning in the spotlight: Approaches to selfregulating and profiling performance. In J. Rink, H. Gaunt & A. Williamon (Eds.), Musicians in the making: Pathways to creative performance (pp. 206–221). Oxford University Press. Yurow, S. (2016). Anatomy of Ballet how the physicality of a ballerina shapes a sense of self. M¯anoa Horizons, 1, 135–141.

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Phillip A. Cartwright is an American citizen raised in the Chicago area living in France. A Ph.D. in economics from the University of Illinois, Urbana-Champaign. He has over thirty years of academic and business experience. He has held posts at the University of Illinois, UrbanaChampaign, the University of Georgia, INSEAD, Paris School of Business, and Ascencia Business School. His research has been widely published. Today, Phil’s teaching and research interests focus on the performing arts. He is Full Professor and Academic Dean, Performing Arts Management and Research Methodology DBA, and Director, Ascencia Center for Applied Business and Management Research, Ascencia Business School, Paris, France and Visiting Researcher, Royal College of Music, London. Phil studies music theory and composition at the Berklee College of Music. He is a member of the American Economic Association, the American Psychological Association, the American Musicological Society, the Dance Studies Association and the Society for Dance Research. Juncal Roman-Pastor is an experienced leader in the field of performing arts health. She currently leads the Healthcare and Performance team at the English National Ballet School where she also sets the health strategy for the School in order to ensure ballet dancers achieve their full potential while educating them for a long and healthy career. She is also a Research Fellow at the Ascencia Center for Applied Business and Management Research, Ascencia Business School, Paris, France. She has previously worked as Head Physiotherapist for the National Centre for Circus Arts in London. She has also worked at the West End with performing artists from musicals and has also worked with several touring Circus and dance companies. Moreover, Juncal was the Module Lead in Rehabilitation in the MSc in Performing Arts Medicine from UCL as well as a current guest lecturer in several universities. Besides this, Juncal is a part of the Program Committee at the International Association for Dance Medicine and Science where she presents at the yearly conference. Juncal holds a BSc(Hons) in physiotherapist from the European School of Physiotherapy in Amsterdam and an MSc from King’s College London.

Chapter 28

Mentors, Markets, and Money: How Entrepreneurs Can Leverage Feedback Loops with Stakeholders to Articulate Value Propositions Gregory P. Pogue, Clay Spinuzzi, and Claas Digmayer

28.1 Introduction An Austin, TX-based cleaning company (“Company A”) began services in 2003 with a mission to provide “The quality cleaning you want. The lifestyle you deserve.” However, after 13 years of operation, their business had stagnated due to competition. To learn how to differentiate themselves from this competition, in 2016 Company A enrolled in the IC2 Institute at The University of Texas at Austin’s FAST Forward program offered in collaboration with the City of Austin. As a key part of this program, business owners communicate with their customers to learn why the customer might choose them, purchase from them, and return to them again and again. At the program onset, Company A hypothesized that personal trust was the key driver for customer selection of a cleaning company. Personal trust in their definition was that customers wanted to know that their valuables were safe during a cleaning. After engaging current and prospective customers, Company A learned that personal trust was indeed important to their customers—but they were surprised by how the customers defined “trust.” Yes, customers wanted reputable cleaners to G. P. Pogue (B) IC2 Institute, Department of Management, McCombs School of Business, The University of Texas at Austin, 2815 San Gabriel Ave, Austin, TX 78705, USA e-mail: [email protected] C. Spinuzzi Department of Rhetoric and Writing, College of Liberal Arts, The University of Texas at Austin, Austin, USA C. Digmayer Department of Textlinguistics and Technical Communication, RWTH Aachen University, Aachen, Germany © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_28

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work in their homes, but they were not highly concerned about theft or breakage. The lack of true incentives and existing legal system significantly reduced this particular risk. Rather, customers, especially the purchasing decision-maker—the female homeowner—were most concerned that they could trust the cleaners to clean their home as the homeowner would. Upon learning this new definition of trust—one provided by their actual customers—Company A explored their cleaning methodology, training protocols, and track record for evidence that they could be trusted by new, prospective clients. Company A routinely hired many Spanish-speaking individuals as house-cleaners. To assist with training, the founder and CEO provided colored towels that were matched with a particular room and/or surface for cleaning. For example, green towels were for kitchen counters, orange towels for living surfaces, yellow for bathroom counters and sinks, and red for toilets. This allowed for easy checking that the full job was completed by collecting the colored towels at the end of a service and monitoring for usage. Reflecting on the customer’s meaning of trust, the CEO presented the “towel strategy” to some of her existing customers. Upon hearing of the training method, customers were delighted to realize that the colored towel system provided a safeguard against mixed use of cleaning towels on inappropriate surfaces. They saw that this strategy provided the kind of trust they needed: knowing that the cleaners were trained and monitored to use particular-colored towels on particular surfaces, and not to mix uses. Company A had unknowingly systematized a strategy to clean a home as the female homeowner would. After listening to their customers’ responses, the CEO reached out to prospective customers and detailed the “towel strategy” as part of their cleaning offering. Business increased. According to the CEO, they were able to increase “our revenue by 20% in the subsequent 3 years and were able to live through 2020 with a small profit.” The growth in the business made Company A resilient to the social distancing and business recession of the COVID-19 pandemic. The story of Company A reflects an important part of business communication that is often overlooked: the interplay of hearing directly from customers, co-creating fitted value propositions, and then communicating with customers to receive further feedback. It is this co-creative feedback loop with external stake-holders that we focus on in this chapter.

28.2 Background To understand how startups such as Company A co-create value propositions with stakeholders, we first review the basics of these two aspects: stakeholders and cocreation.

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28.2.1 Six Kinds of Stakeholders As Company A’s experience shows, research into startup communication suggests that healthy startups conduct ongoing dialogue among different stakeholders, both internal and external. From our work with small businesses and technology startups, we have identified key stakeholders required for company success. These stakeholders include three internal stakeholders and three external ones we collectively refer to as the 6Ms: Internal stakeholders include: 1. Makers: the innovators; 2. Management: the venture’s leadership; and 3. Members: the venture’s research and operational team. External stakeholders include: 4. Mentors: those who provide external expertise, advice, and networking; 5. Market: product sales and partnerships; and 6. Money: financial funders. Much has been written regarding effective communication between internal stakeholders in new and established firms and its importance for success (reviewed in Men (2015)). Our attention has been drawn to how the 6Ms function beyond internal communication as they move external to secure and grow market opportunities. In the case of Company A, the CEO played both the Maker and Management roles within Company A and training relationships were ongoing with the Members, or cleaners. The CEO’s communication with external Market members—the female homeowner, for example—revealed new meaning to the value of “trust.” Established communication channels, dialogues built on mutual respect, and transparency allowed this external exchange to flow quickly to an internal exploration with her Members. The “towel strategy” emerged as a potential point of value from the internal communication. The strategy was shared by the Management with Market representatives and was found to resonate strongly with the now shared, specific definition of “trust.” From the Company A example, one can see that each stakeholder brings different expectations, motivations, and values to a dialogue, yet all must perceive the same or a shared value for business success. This value is most often summarized in a value proposition. After careful separation of many common yet different “value” phrases, Payne et al. (2017) define a customer value proposition as: “a strategic tool facilitating communication of an organization’s ability to share resources and offer a superior value package to targeted customers.” The journey of Company A demonstrated that a clean house was an insufficient offering for a complete value proposition. The actual process of house cleaning must proceed “as the female homeowner would perform herself” to have a full and superior value proposition. Moore (1999) argues, without an easily communicated value proposition (often in a positioning statement—or the points of product/service differentiation in a consumer’s mind; (Payne et al., 2017), internal and external stakeholders can become misaligned, yielding problems from

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sales to engineering to R&D to management. The dialogue externally and internally becomes incoherent and the venture itself disintegrates. Alignment requires communication between several different stakeholders—Management with Mentors or other advisors, Management, and the Market in the form of customers, or Management and Money if they seek external funding. So how do startups define value at this most vulnerable phase of the business: when they are still trying to figure out the problem, solution, and customers they are addressing and the business model they are attempting to develop? In this chapter, we focus on communicating with the external stakeholders: Mentors, Market, and Money (funders), and especially how startup leaders (Makers who have become Management) must engage in value co-creation with these three stakeholders.

28.2.2 Co-creation Successful entrepreneurs co-create with their stakeholders by conducting a dialogue with them—a dialogue in which entrepreneurs and stakeholders learn from each other so they can collaboratively develop a value proposition (Karami & Read, 2021; Kowalkowski et al., 2012; Kristensson et al., 2008; London et al., 2015; Lusch & Vargo, 2014; Re & Magnani, 2022; Spinuzzi et al., 2014). Co-creation must happen early in a startup’s lifecycle—preferably in the incubation phase, long before the decision to execute. As Company A’s experience shows, founders (Makers or Management) must begin with a hypothesis about the value they bring to their customers. But before they execute, a startup can benefit from testing that hypothesis: shaping and refining a venture concept during an incubation period in which it explores different configurations of customer segments, customer needs, and resources and capabilities (Vogel, 2017). In best practice, a startup will work out and evaluate that venture concept before deciding whether to move forward with the venture opportunity. This decision point is sometimes termed a Go/No-Go decision (Spinuzzi et al., 2020), and it is sometimes signaled in accelerator programs through a concluding pitch in which founders declare their decision to “Go,” “No Go,” or “Pivot” (Spinuzzi et al., 2018, 2020, 2023). In our research into entrepreneurship training programs, we have found that firsttime founders need much scaffolding in order to understand the needs of their customers. This is especially true for technology startups: First-time technology founders have strengths in technology development (primarily acting as Makers), but often do not have entrepreneurship training, so they lack a mental map for identifying customer segments, conducting market dialogue, and constructing appropriate pitch arguments. Among other things, they must transform the value proposition from a technical description to a business or value exchange proposal (London et al., 2015), one that speaks to the values of the audience (Belinsky & Gogan, 2016; Varas et al., 2023). Such founders are often very comfortable making arguments in their own domain, where they are confident and know the conditions that underpin a successful

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argument. But they can be very uncomfortable when making arguments about value (Spinuzzi et al., 2018). Entrepreneurial arguments require a great deal of guesswork and are inherently risky—a far cry from the accepted arguments in the domains of engineering, physics, or biology, for instance. So we’ve found that founders need heavy guidance and coaching to help them feel comfortable with making their best guesses, to test these guesses with market feedback, and to proceed more confidently with decisions to execute. In providing this guidance—both before and after the decision to execute—one pivotal role in this coaching is that of Mentors.

28.3 Mentors: How They Mature Pitches for Market and Money Stakeholders Mentorship is frequently discussed in the entrepreneurship communication literature: new entrepreneurs need more experienced guides to help them with the complexities of entrepreneurship (Cohen, 2013; Miles et al., 2017; Rigg & O’Dwyer, 2012). Without this experienced guidance, entrepreneurs find it difficult to even approach market and money stakeholders. But what is involved in mentorship? What makes it successful? In our research, we’ve investigated mentorship in three forms: In pitch audiences, in assigned mentors, and in technology commercialization reports. These forms are not exclusive.

28.3.1 Mentors in the Audience Startups who engage in pitch competitions frequently find mentors in the audience of their pitches. These mentors might provide feedback in Q&A sessions and via written feedback such as surveys. Such mentors are typically experienced entrepreneurs themselves who are interested in supporting the next generation of entrepreneurs. For instance, in one program we investigated the Gyeonggi Innovation Program(GIP) in Korea, an audience mentor asked probing questions during Q&A that suggested a company embark on a radical pivot (Spinuzzi, 2017), while others tested startups’ assumptions about market fit, business model, and value (Spinuzzi et al., 2016). In another program (Student Entrepreneur Acceleration and Launch SEAL), audience mentors provided written feedback on initial pitches, using a survey to evaluate and rank startups in terms of market space competence, problem–solution description, revenue model, and investment potential (Spinuzzi et al., 2018, 2020). In these programs, audience mentors provided useful formative feedback that startups (sometimes) drove into their subsequent arguments and offerings. The form of dialogue encouraged by pitching that is amenable to more than information transfer, but questioning of assumptions, provision of more detailed findings, extending even to co-creating the definition of value through interactive conversations.

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28.3.2 Mentors Assigned in Accelerator Programs Startups in incubators and accelerators often are assigned mentors as well. For instance, in the SEAL accelerator program (Spinuzzi et al., 2018, 2020, 2023), each startup was assigned 2–5 mentors in a relevant sector (e.g., healthcare, internet, water technology, transportation). Mentors then met at least once with the startup to discuss areas of concern. These meetings were unstructured and varied considerably by mentor. Adding to the complexity, startups in SEAL were often involved in other accelerators and incubators at the same time, where they had been assigned different mentors—mentors who did not share the same expectations or even timeline as SEAL’s mentors (Spinuzzi et al., 2018, 2023). We also examined the roles of mentors after the execution phase. For instance, London et al. (London et al., 2015) examined four cases in which mentors helped startups to iterate their value propositions after they began the execution phase, as they realized that their initial hypotheses were incorrect: their offerings did not adequately solve problems for their target market. With the insight and advice of their mentors, the startup Management were able to pivot product offerings and messaging to effectively reach new markets. The benefits of “assignment” in a formalized program like an accelerator ensures multiple meetings between startup Management and Mentors allowing more information to be exchanged than in a pitch competition, new business hypotheses to be tested, and iterative molding of value propositions through Mentor insight.

28.3.3 Assigned Mentors in Incubator Programs Incubators programs offer longer lasting engagement with startups compared with accelerators (Lange & Johnston, 2020). The manner mentors are engaged in incubators, the duration they assist companies, and the value they offer is illustrated through the Austin Technology Incubator (ATI) model studied between 2012 and 2016. During this period, the admissions process of ATI began with a highly informal process led by ATI Directors, who manage startup technology verticals, information technology (IT)/wireless technology, clean energy technology, and life sciences. ATI Directors first met with CEOs of startups to hear pitches and business strategies informally. These meetings often happened in coffee shops, at the ATI offices, or at local pitch events. Companies communicating promising value propositions were encouraged to apply to ATI membership through an online application. Key to the ATI process is that the Directors per se did not choose companies to be admitted to ATI, but the Directors involved community mentors who participated actively in the acceptance decision. Acceptance consideration happened through a “Success Committee” model where the company leadership pitched company value proposition and business growth goals to ATI Directors, UT student interns (who provided research support to ATI companies), and community mentors. After the

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“pitch” the company answered questions posed by Success Committee attendees. Then the company was asked to leave the meeting and the ATI Directors engaged mentors about their opinion of the company fit and readiness, as well as their willingness to support a company realize its growth goals. A vote was taken and companies that received support by both the Directors and the mentors were admitted. Those not receiving mentor support were not invited to join ATI. During 2012 and 2013, ATI received 471 company applications, ATI Directors rejected 424 applications as being incomplete, at too early of a company stage of formation, or not having market ready products or services. The companies passing the Director screening process, 47 in number, were invited to present at individual Success Committee meetings. Of these 47 companies participating in the Success Committees, 40 were accepted into ATI through joint agreement of ATI Directors and community mentors, and 7 were not offered membership. The total acceptance rate was 8%. What are the characteristics of mentors engaged with Success Committees? In unpublished research, we studied the composition of 31 of the 47 Success Committee meetings hosted between 2012 and 2013 (Pogue, unpublished data). Of these Success Committees, 24 companies were accepted to join ATI and seven were rejected ATI membership. During the 31 Success Committees, we found that ATI engaged 190 community mentors to attend, in addition to 63 members of ATI, including Directors and student interns from The University of Texas at Austin. Overall, 253 individuals participated in 31 Success Committees; on average, eight ATI and community mentors attended each Success Committee. Average re-use, or attendance of each member was 1.6 - most repeat attendees were ATI Directors. The background expertise principally offered by the 190 community mentors was varied: 49% business management, 29% technical or engineering, 16% funders—angel or venture capital, 6% service providers including attorneys and accountants. Interestingly, a significant proportion of community mentors engaged for the studied Success Committees were selected specifically to match expertise with the company’s technical focus. Life science companies saw the largest proportion of specially invited mentors— 40%, followed by clean energy with 23%, and IT/wireless inviting the remaining 17%. The mentors were asked after agreeing to accept a company into ATI to support the company’s business goals. Technology-based startups often share common goals with mentors and receive support in customer discovery to improve and polish products and value propositions (Alexy et al., 2012). This role for mentors is discussed elsewhere in this chapter. Most incubator mentors help to establish relationships with Market and Money representatives which requires longer periods of time compared with a typical accelerator period of 30–90 days (Alexy et al., 2012; Lange & Johnston, 2020). Introductions to Money or funders are quite important as most technology companies require equity investment to “buy time” to develop and launch their products.

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We explored the impact of the ATI-associated community mentors helping companies achieve their funding goals. We reviewed company status in 2016, allowing 3– 4 years for companies to identify and acquire seed capital after entering ATI in 2012– 13. Of the 24 companies accepted into ATI and receiving mentor support, 22 remained in business. Twenty of the companies had secured external equity funding totaling $114 million dollars with the median funding amount of $1.15 million dollars. In addition, two of the accepted companies were acquired by larger companies. Of the seven companies rejected ATI admittance and not receiving mentor support, six remained in business in 2016; only one had raised external funds, totaling $30,000; and none were acquired by external companies. From this study, we concluded that mentor relationships providing wisdom and business connections greatly support companies achieving funding and liquidity business goals. Companies lacking this mentor support show comparatively poorer performance achieving these goals. Mentors in Technology Commercialization Reports A final mentorship mechanism we studied was that of technology commercialization reports. In the GIP, a 9-month entrepreneurship program structured as a pitch competition, Korean startups provided information on their startup’s offering. This information was sent to a case manager, who sought the reactions of market representatives, typically in the United States. The case manager would then summarize the findings in a technology commercialization report known as a Quicklook (Cornwell, 1998). These Quicklooks were not just written by the analyst, they were also edited with the help of GIP staff in “an iterative production process characterized by an intensive professional collaboration between report author and supervisor” (Rigg & O’Dwyer, 2012, p. 31). That is, the staff played an invisible, yet crucial, role as mentors. Their feedback served the co-creation of arguments and social aims such as encouraging the author and expressing appreciation for the work done. By doing so, the supervisors acted in different roles and developed a professional partnership (Rigg & O’Dwyer, 2012; Schöpper et al., 2022). After being completed, Quicklooks were presented to the startups, two weeks before their final pitches (Spinuzzi et al., 2016). Startups sometimes ignored this feedback—to their detriment (Spinuzzi et al., 2015a)—but most reused feedback from the Quicklooks in their final pitches. In this dynamic, we found that entrepreneurs in this program went beyond copying feedback from the Quicklooks; as they learned to make their pitch arguments, these entrepreneurs had to weigh this feedback and engage with it critically. This reuse can be characterized in terms of three strategies: Accepting (repeating verbatim or in close paraphrase), Continuing (extending lines of argument), and Resisting (rebutting lines of argument) (Spinuzzi et al., 2015b). The key finding was that entrepreneurs needed to engage mentor feedback provided in the Quicklook to fashion a value proposition fitted to the new international market they sought to engage. Another study (Schöpper et al., 2022) examined how entrepreneurs in the energy industry arrive at innovative value propositions. The results of the study show that mentors play an essential role in iteratively identifying and refining novel approaches to products and services and adapting these to different market requirements. By engaging early with mentors and receiving feedback on value propositions at the

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drafting stage (for example, via commercialization reports), such interactions enable disruptive innovations. One interviewee pointed out that in comparison, traditional methods such as market research and customer surveys would often only allow to optimize individual aspects of known products and services (such as the cost). We started developing the use case without customers. Because I’ve learned, you should not always listen to customers, because they don’t know things exactly. Because you are the specialist and customers are only looking at what people in the same network are doing, so it’s always repeating the same, but at a lower cost. So sometimes it’s helpful to go your own way.

28.4 Markets: How Market Feedback Impacts Value Propositions Whereas Mentors function as more experienced guides to help entrepreneurs with the complexities of entrepreneurship, Markets are the potential customers, partners, and distributors who might be interested in the value proposition. For instance, in the story of Company A, direct engagement with existing and potential customers revealed the unexpected correspondence of the use of colored towels as a tool to train staff with the need for trust to be ensured with decision makers in the Market. Once understood, the colored towels moved from the background of business operations to the foreground of the value proposition presented to prospective customers with successful effect. In the Quicklook example above, Mentors reviewed, summarized, and interpreted feedback from Market representatives. This distinction is key, since ultimately the value of an innovation emerges from market conversations. The Quicklook mentors acted as surrogates for international entrepreneurs seeking to enter U.S. markets by questioning, recording, and communicating market representative feedback concerning market problems, shape of desired solution, and possible interest in an entrepreneur’s offering. How do entrepreneurs shape their value propositions with market feedback? The literature details many such techniques, such as customer interviews (Blank, 2013; Blank & Dorf, 2012), Design Thinking (Osterwalder & Pigneur, 2010), and guided workshops (Kristensson et al., 2008). In our research, we observed two mechanisms for market feedback: formal investigations and informal customer discovery.

28.4.1 Formal Investigations: Technology Commercialization Reports Above, we discussed how the GIP produced Quicklooks, or reports in which a technology commercialization expert interviewed representatives of a given market

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about an offering. In such reports, the expert selected appropriate market representatives, and those representatives in turn identified weaknesses in claims that related to accepted facts or local conditions. The expert then synthesized the feedback to provide an overall recommendation Jakobs et al (2015). For instance, one Korean startup claimed to have discovered a new principle of magnetism, a claim that was disputed by a physicist; another Korean startup offered a food disposal appliance, but potential customers in the US noted that U.S. food disposal regulations are more lax, obviating the need for the appliance (Spinuzzi et al., 2015b). In both cases, the expert then summarized the objection along with other feedback, producing a formalized synthesis of market feedback.

28.4.2 Informal Customer Discovery The Lean Startup approach involves opportunistically interviewing potential customers to rapidly iterate one’s value proposition by better understanding the customer’s needs and pain points (Blank, 2013; Blank & Dorf, 2012). This approach informs the SEAL program, and in our investigations (Spinuzzi et al., 2018, 2020, 2023), we found that SEAL startups often engaged in informal customer discovery by interviewing multiple people in their customer segment. At times, they found through these interviews that they were interviewing the wrong customer segment for their envisioned value proposition, inducing them to pivot to a new segment. At other times, they learned more about the customer’s needs, allowing them to better address those needs and bring value. Pogue et al. (2016) similarly examined how six Portuguese startups in the University Technology Enterprise Network (UTEN) program iterated their value propositions by presenting their initial value propositions to prospective customers, gathering feedback from them, then pivoting—sometimes significantly. As described, Company B who offered a smart “pill box” to address medical adherence had to engage many different market segments before finding fit and interest. They first engaged medicine manufacturers and insurance providers with two arguments “for” the pill box: increased medicine usage and associated increase in sales, and lower long-term patient costs when patients faithfully take prescribed medication, respectively. Unfortunately, the lag between pill box use and realization of return decreased collaborative motivation among these market segments. Company B then reached nursing homes and other domicile health facilities who must receive, organize, dispense, and tract medicine for many residents. Although interested in the benefits of the smart pill box, these organizations lacked funding through principal payers to afford to add this product to their workflow. Finally, Company B reviewed requirements in the U.S. for hospital performance provided in the then-new Affordable Care Act. Company B learned that medical adherence could significantly reduce hospital readmissions and improve care metrics of hospitals. Indeed, hospitals engaged with Company B with funding for clinical testing of the smart pill box.

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Market studies of existing products and services can also provide startups with key insights into what customers are looking for in value propositions. For example, a study by Digmayer (2022) used social media comments to identify barriers to the use of automated financial investment systems (robo advisors) that can be harnessed by fintech startups to develop their value proposition and next-generation robo advisors—for example, by integrating principles of explainable artificial intelligence or risk communication.

28.5 Money: How Funder Feedback Reframes Value Arguments Beyond Mentors and Markets, Money—that is, funders—constitutes a third stakeholder. And this stakeholder is exceedingly important since funding is critical to venture growth. The success of any entrepreneurial endeavor depends heavily on the entrepreneur’s ability to effectively communicate their value propositions to potential funders such as angel investors, venture capitalists, and private equity firms. Each type of funders has a different approach to investing: ● Angel investors are typically individuals who gathered considerable financial resources in their careers and are looking to invest in early-stage startups. They are often more willing to take risks than other types of funders, and are therefore interested in the motivation of the startup’s team and the innovativeness of the product. ● Venture capitalists are typically firms that invest the capital of other parties in early-stage and growth-stage startups which they perceive to have potential to generate high growth rates and above-average returns. Often, they are more interested in the financials than in the team or the product and require a proven track record and a customer base before investing. ● Private equity firms usually buy 100% ownership of mature companies, are less hands-on than either angel investors or venture capitalists, and are unwilling to take risks in their investments. Stevenson and Jarillo defined entrepreneurship as “the process by which individuals—either on their own or in organizations—pursue opportunities without regard to the resources they currently control” (Stevenson & Jarillo, 1990, p. 23]. Chief among resources required by entrepreneurs and one that is often outside of their direct control is the funding required to develop their new product offerings and build an organization to deliver the products to market. Entrepreneurs must seek out funders—Money—and convince them to invest resources into the entrepreneurial venture. An entrepreneur’s ability to shape arguments that align with the interests of potential funding parties can mean the difference between a successful venture and one that fails to generate sufficient capital to move forward. Funders are more likely to invest in a venture if they are provided with a clear and compelling value proposition

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and a thorough understanding of the potential return on investment. Consequently, the feedback that funders provide to entrepreneurs is a critical tool in helping to reframe and strengthen the value arguments that entrepreneurs make. The experience of Company C—a Portuguese technology company seeking to reach the U.S. market—illustrates this process. Company C developed as a vehicle to commercialize European Space Agency technology related to big data analysis. It thought that the new Market of wind turbine power could be an ideal setting to benefit from its “just-in-time” data analysis approach (Pogue et al., 2016). However, the conservative nature of the energy business slowed the realization of energyrelated partnerships. The lack of Market traction reduced U.S. funder interest in Company C. Interestingly, through a Mentor relationship, Company C was exposed to several problems financial companies experienced with regards to ATM monitoring and identity confirmation during credit card transactions. The needs of the financial industry were examined using informal customer discovery of Market opinion and the value proposition pivoted to reveal the advantage of Company C’s technology to process credit card big data “just-in-time.” This pivot proved critical as funders, or Money, were discovering the lucrative potential of financial technologies or Fintech. Company C became an early mover in this Market and secured a small but validating partnership with a U.S. company. This relationship demonstrated the concrete nature of Market interest to U.S. funder’s regarding Company C’s products. In 2013, Company C raised additional Money, a $2.3 M (million dollar) Series A round that was closed followed rapidly by a $4.2 M Series A extension round. Only 25 months after the Series A round closing, a $17.5 M Series B round was raised, allowing Company C to launch new Market partnerships, products, and grow to support its new Market leading position. Market feedback and pivoting of the value proposition to meet revealed opportunity was critical for Company C’s success with Money relationships. Considering Company C’s story, let us consider ways that funders may provide feedback to entrepreneurs. Firstly, funders are often able to provide entrepreneurs with the opportunity to discuss their ideas and concepts in greater detail and in a more structured way than they normally would. This provides entrepreneurs with the opportunity to identify their unique selling points and gain insights into how potential funders view their business model and how it fits into the “business model” of the funders. When creating a value proposition, then, entrepreneurs must be aware of the needs of potential funders. Funder feedback can be used to refine existing arguments or introduce new ones. For example, feedback from a funder may indicate that an argument should be tailored to their specific needs, such as emphasizing the team’s experience, the product’s features, the potential market size, the company’s revenue growth potential, and/or the potential for a return on investment. This can help entrepreneurs to better frame their arguments in a way that resonates with funders. Additionally, feedback from a funder can help entrepreneurs to identify potential weaknesses in their arguments and address them accordingly. In addition, feedback from funders can also help to reframe the value arguments that entrepreneurs make. For example, funders may suggest that entrepreneurs should

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focus their value proposition on a specific market or customer segment to maximize the potential of their value propositions or to make the value proposition more appealing to customers, such as by offering discounts or other incentives. Company C’s experience showed that positioning a value proposition in the center of future opportunity—in this case Fintech—creates more interest among funders than traditional industries—such as energy management—and encourages more conversation and collaboration to find the correct market fit. Feedback from funders can also help to strengthen the value arguments that entrepreneurs make. By providing feedback on the merits of an entrepreneur’s value proposition, the funder can help to build a more convincing case for why the value proposition is worth pursuing. This can include providing data or evidence to support the entrepreneur’s argument, as well as helping to refine the value proposition to make it more compelling. Arguments that convince investors often cannot necessarily be used for other stakeholder groups. In fact, in some cases, the effects of arguments on stakeholder groups can be diametrically opposed. In such cases, arguments that represent a reason for investment for one stakeholder group represent a significant obstacle for other stakeholder groups. For instance, one study (Schöpper et al., 2022) examines companies that aim to introduce direct-current (DC) technologies in (commercial) buildings and neighborhoods. This includes power generation (e.g., PV, small wind turbines), storage (battery storage), consumption (e.g., charging stations for electric vehicles), and distribution (via DC lines). Changing the entire energy infrastructure towards DC in buildings and neighborhoods competes with the prevailing asynchronous current (AC) infrastructure. The study reveals several advantages and disadvantages that the novelty of this technology offers for the communication with stakeholders (Table 28.1)—showing a clear divergence between the interests of funders and those of other stakeholders. In this regard, pitches had to be tailored to the needs, requirements, and concerns of individual stakeholders. The results show that the value proposition must be adapted to the different requirements of the individual stakeholder groups. The data from the project described above and a study on innovation communication by startups (Digmayer & Jakobs, 2022) indicate that this process takes place in reciprocal internal phases (idea generation and revision in the team) and external phases (alignment of perspectives on the technology with stakeholders), whereby the value proposition is developed both divergently (sharpening the focus, removing inappropriate aspects, aligning expectations of the technology) and convergently (expanding the focus, adding new aspects, adding new expectations of the technology). Thus, the initial ideation is usually done within the team. In several cases, however, external experts and institutions have also been contacted to build innovation networks that can further expand the initial idea. The following quote describes how a German energy startup was able to expand and refine its value proposition with the help of external actors after a phase in which an initial concept was developed:

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Table 28.1 Stakeholders, advantages, and disadvantages Stakeholder

Advantages

Disadvantages

Investors and funding The novelty and technical challenge institutions set such projects apart from others competing for funding Customers

For end users, DC represents exclusivity; building owners can see themselves as early adopters who facilitate sustainability

Grid operators

DC allows operators to avoid energy losses and higher flexibility for grid designs

Local governments

Local governments lack regulations for implementing DC projects, placing them in a regulatory gray area

Federal government

DC is an innovative ‘tool’ to achieve the federal goals related to sustainability and energy transition

Construction companies

Construction companies with DC experience could gain a strong competitive advantage over companies without DC experience in the future, if the technology diffuses successfully

Insurance companies

Grid operators often resist unconventional new solutions

The company must develop new expertise (a risk) and may have to deal with unforeseen or unfamiliar problems in project planning and execution Companies’ low experience with regard to DC represents a disadvantage for calculating risks and cost rates

We were inspired by a demonstration center on sustainable energy in Switzerland. There are partly conventional products and products that are becoming conventional. In any case, you get a wide range of information and you also get basic knowledge. […] And that’s how we got a network of people who we can ask what we can do.

The communication and thus the pitching of the technology often take place not only when the product is completed, but already during development. The reason given below for this is the time it takes to diffuse the value proposition to different channels: Because we know that the process of communicating innovation takes time, and in the time it takes and we have the reach and it’s permeated, we’re done with the product. […] You build the story up to the point where the product is launched and don’t just start from launch.

In the further process, as in the example from the DC technologies, different stakeholders influence the technology development and thus the value proposition due to which both are continuously developed. In addition to an expansion and enrichment of the focus, however, such steps also lead to value propositions having to be narrowed down—for example, regarding the demands of other market participants and new

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laws. In this way, competing companies influence entrepreneurs in deciding on the technology-development paths to be taken and thus the pitching of the technology. Please note that the first paragraph of a section or subsection is not indented. The first paragraphs that follows a table, figure, equation etc. does not have an indent, either.

28.6 Responding to Mentors, Market, and Money: Pivots and Co-creation As these examples show, the regular, recursive feedback provided by mentors, market, and money stakeholders can help co-create market-fitted value propositions for startups. However, two question remain: 1. In what ways do the communications with mentors, market, and money stakeholders produce pivots in value propositions? 2. What is the impact or importance of co-creation of value propositions pivoted to fit markets? In our investigations of Korean, Portuguese, and U.S. companies, we have identified four dimensions in which co-creation can iterate value propositions to fit new market opportunities (London et al., 2015; Pogue et al., 2016; Spinuzzi et al., 2018): 1. Rhetoric or argumentation: How value is expressed in words as arguments focusing on key aspects of market-spoken or defined value. 2. Use or application: Where the use or application of the innovation is modified to address market need. 3. Design of innovation: When aspects or characteristics of the innovation are altered to respond to market requirements. 4. Financial incentive or articulation: Where the flow of financial reward (such as revenue, profit, or cost savings) from the use or purchase of an innovation can be increased for a particular market partner. From stories presented in this chapter, Company B found that pivots related to financial incentive were most critical—moving from the idea of partnering with insurance companies to that of hospitals who were incentivized to use its smart pill box to reduce costs they must bear for hospital readmission and other penalties. Company C found through market investigation that pivots related to their big data technology’s use model was critical. The algorithm could be effectively used for monitoring energy production from wind turbines, but market forces showed low interest in this value proposition. Pivoting to Fintech and monitoring identity in credit card transactions allowed the same innovation to have a highly attractive value proposition. Finally, Company A found that the design of the service had to be augmented to include the use of colored towels in the training of cleaners as well as in their use in homes. Other examples are provided in London et al. (2015) and Pogue

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et al. (2016) to illustrate the function of each of these dimensions for co-creation and value proposition pivoting. What were the impacts of these pivots on company Market and Money relationships—in other words, is pivoting essential and profitable to engage in? We followed value proposition pivots of 40 Portuguese companies participating in the University Technology Enterprise Network (UTEN) program conducted between the government of Portugal and the IC2 Institute of The University of Texas at Austin from 2011 to 2016 (Pogue, unpublished data). Companies in the UTEN Global Startup program were engaged by mentors and business development team members provided by the IC2 Institute to meet with market and money representatives and seek to establish market or funding relationships in the U.S. The value propositions provided to UTEN business development members at the initiation of a company’s engagement with the UTEN Global Startup program were compared with the value propositions articulated by companies at the end of tenure in the program. Value proposition pivots were characterized, and the major pivot was recorded in the Table below. Further, the partnership outcome for each company was recorded. Partnership types included product testing agreements, product purchases or distribution agreements, strategic partnerships, research agreements, grant relationships, collaboration agreements, or funding relationships with U.S., Portuguese, or global entities. Table 28.2 shows the importance of value proposition pivoting to obtaining business relationships with market and money stakeholders. Of the 40 companies participating in the program, 33 actively co-created value propositions with market players resulting in pivots. Of these, ~67% successfully obtained business or funding partnerships during the tenure of the UTEN program. All four dimensions were deployed by companies as major or principal pivoting strategies—although some arguably used multiple methods (we similarly found multiple methods used in Spinuzzi et al. (2018). Of the seven companies that chose not to co-create with the market and “stuck with” their original value propositions, none achieved business partnerships. Review of the UTEN program’s impact on the Portuguese economy was conducted by interviewing company leadership from all companies and asking them to attribute financial outcomes directly flowing from the UTEN program or market/money relationship begun during the program. Companies reported the following economic impacts (UTEN University Technology Enterprise Network, 2016): ● ● ● ● ● ●

$27 M in new committed revenue; $27 M in new investment capital; $27 M in new strategic capital and/or partnering co-investment; $35 M new wages paid; 3 new company spin-outs; and Total of $116 M realized direct economic impact.

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Table 28.2 Value proposition pivot strategies and relationship with business partnering Value proposition pivot dimension

Company pivots recorded (Major)

Companies realizing business partnerships

Success percentage: pivot/business partnerships (%)

Rhetorical

4

2

50

Use model

6

4

67

9

7

78

14

9

64 0

Design Financial incentive None

7

0

Totals

40

22

Taking these quantified impacts of business market and funding outcomes with Table 28.2 data detailing company value proposition pivoting argues for the importance of active communication and co-creation of market fitted value propositions with market and money stakeholders. Further, the economic impacts of such communication to fuel business partnerships is significant.

28.7 Conclusion We began this chapter by talking about Company A, an Austin-based cleaning company that was able to listen to its customers (Market), better understand their needs, and deliver a value proposition and business offering fitted to those mutually understood needs. As we have seen, businesses like Company A need value propositions that are “talked into existence” (Pollack et al., 2012). That dialogue must involve external stakeholders (Mentors, Markets, and Money) in order to yield a coherent value proposition, one that not only communicates value but also provides value by aligning efforts and unifying them in service of a shared concept. In the early life of a startup, this is quite a trick since the value proposition constantly evolves through this dialogue—with the company’s product/service and business strategy following close behind. This chapter overviews some of our research, in which we have examined how startups make discursive moves with these external stakeholders. These relationships are not just binary—the startup speaking with either Markets and Money, but may involve intermediaries such as Mentors. Mentors assist by providing valuable data, tailoring value propositions, or making introductions to important business partnerships offering access to Markets and Money. Through such dialogues, startups weigh advantages and disadvantages, pivot their argument, use case, design, or financial incentive, and co-create a meaningful value proposition with external stakeholders. By developing a co-creative feedback loop, startups can identify new opportunities and realize them as a business.

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Pollack, J. M., Rutherford, M. W., & Nagy, B. G. (2012). Preparedness and cognitive legitimacy as antecedents of new venture funding in televised business pitches. Entrepreneurship Theory and Practice, 36(5), 915–939. Re, B., & Magnani, G. (2022). Value co-creation in circular entrepreneurship: An exploratory study on born circular SMEs. Journal of Business Research, 189–207. Rigg, C., & O’Dwyer, B. (2012). Becoming an entrepreneur: Researching the role of mentors in identity construction. Education + Training, 54(4), 319–329. Schöpper, Y., Digmayer, C., Bartusch, R., Ebrahim, O., Hermens, S., Nejabat, R., Steireif, N., Wendorff, J., Böschen, S., Jakobs, E.-M., Lohrberg, F., Madlener, R., Mütze-Niewöhner, S., & Reicher, C. (2022). Proceedings of the International Sustainability Transitions Conference. https://publications.rwth-aachen.de/record/953152. Spinuzzi, C. (2017). I think you should explore the kinky market: How entrepreneurs develop value propositions as emergent objects of activity networks. Mind, Culture, and Activity, 24(3), 258–272. Spinuzzi, C., Nelson, S., Thomson, K. S., Lorenzini, F., French, R. A., Pogue, G., Burback, S. D., & Momberger, J. (2014). Making the pitch: Examining dialogue and revisions in entrepreneurs’ pitch decks. IEEE Transactions on Professional Communication, 57(3), 158–181. Spinuzzi, C., Nelson, S., Thomson, K. S., Lorenzini, F., French, R. A., Pogue, G. P., Burback, S. D., & Momberger, J. (2015a). Remaking the pitch: Reuse strategies in entrepreneurs’ pitch decks. IEEE Transactions on Professional Communication, 58(1), 1–24. Spinuzzi, C., Thomson, K. S., Burback, S. D., Pogue, G. P., Lorenzini, F., Nelson, R. S., French, R. A., & Momberger, J. (2015b). How do entrepreneurs hone their pitches? Analyzing how pitch presentations develop in a technology commercialization competition. In SIGDOC ‘15: Proceedings of the 33rd Annual International Conference on the Design of Communication (Vol. 48, pp. 1–11). Spinuzzi, C., Nelson, S., Thomson, K. S., Lorenzini, F., French, R. A., Pogue, G., & London, N. (2016). How magnets attract and repel: Interessement in a technology commercialization competition. Written Communication, 33(1), 3–41. Spinuzzi, C., Altounian, D., Pogue, G. P., Cochran, R., & Zhu, L. (2018). Articulating problems and markets: A translation analysis of entrepreneurs’ emergent value propositions. Written Communication, 35(4), 379–410. Spinuzzi, C., Altounian, D., & Pogue, G. P. (2020). Go or no go: Learning to persuade in an earlystage student entrepreneurship program. IEEE Transactions on Professional Communication, 63(2), 100–117. Spinuzzi, C., Cochran, R., & Pogue, G. P. (2023). Linked but desynched: An OODA analysis of associated entrepreneurship accelerator programs. Journal of Business and Technical Communication, 36(1), 28–67. Stevenson, H. H., & Jarillo, C. A. (1990). Paradigm of entrepreneurship: Entrepreneurial management. Strategic Management Journal, Special Issue: Corporate Entrepreneurship, 11, 17–27. UTEN (University Technology Enterprise Network). (2016). Activities report. https://utaustinport ugal.org/wp-content/uploads/2021/05/uten-report-2016.pdf. Accessed 12 Jan. 2023. Varas, G., Sabaj, O., Spinuzzi, C., Fuentes, M., Gerard, V., & Cabezas, P. (2023). Value creation in start-up discourse: Linking pitch and venture through logics of justification. International Journal of Business Communication, 0(0), 1–29. Vogel, P. (2017). From venture idea to venture opportunity. Entrepreneurship Theory and Practice, 41(6), 943–971.

Gregory P. Pogue Ph.D. is Deputy Executive Director of the IC2 Institute at The University of Texas at Austin and Assistant Professor of Instruction in the Department of Manage-ment at The McCombs School of Business. He leads “think and do” programs surrounding early venture

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creation, entrepreneurial ecosystem development, and expanding opportunities of well-being for all members of communities. Clay Spinuzzi Ph.D. is Professor of Rhetoric and Writing in the College of Liberal Arts at The University of Texas at Austin. He studies how people organize, communicate, col-laborate, and innovate at work. Spinuzzi has conducted multiple workplace stud-ies, resulting in several articles and four books. Dr. Claas Digmayer Ph.D. is a research associate at the Human-Computer Interaction Center at RWTH Aachen University (Germany). He graduated in technical communication and computer science at RWTH Aachen University. His research fields include the design and diffusion of innovative technologies, usability/UX, artificial intelli-gence and text mining, as well as productdesign methods such as open innova-tion and design thinking. He serves the board of governors of the IEEE Profes-sional Communication Society as a member-at-large.

Chapter 29

Lead Playfully—Technical Innovations Communicated Through Gaming Marietta Menner and Julia Thurner-Irmler

29.1 New Challenges for Leaders The challenges brought about by a connected and digitalized work environment have altered the tasks and responsibilities of leaders. They must be able to quickly prepare their employees for innovations and technological advancements in order to remain competitive. In recent years, agile leadership styles that enable rapid adaptation to new situations have become particularly sought after to accomplish this goal. In this context, supervisors have the role of serving as a coach and supporting employees on an equal footing to find the best solutions to questions (Fink & Moeller, 2018). The COVID-19 pandemic posed a challenge of unprecedented dimension to leaders, requiring the work to be transferred to a digital space within a very short time frame without any preparation time. This situation poses entirely new demands on the leadership of employees, whether in hybrid formats or with employees who work 100% remotely and communicate with the leader through digital tools (Bansmann, 2021). In addition to the rapid digitalization wave, the COVID-19 pandemic was also characterized by severe crises. Many companies faced the question of whether they could maintain their operations. Measures such as short-time work caused employees to fear for their livelihood (Richter, 2019). Although the impact of the COVID-19 pandemic has diminished significantly by the beginning of 2023, it added further significant challenges to the already existing VUCA (volatility, uncertainty, complexity, and ambiguity) world. Leaders have developed from coaches to crisis managers who must lead their employees differently as a result of recent events. The central focus of this new leadership style is on communication (Hinzmann & M. Menner (B) · J. Thurner-Irmler Universitätsstr. 1a, 86159 Augsburg, Germany e-mail: [email protected] J. Thurner-Irmler e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_29

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Krystek, 2016). The question now arises as to how communication between leaders and employees can be optimized in the VUCA world to reduce uncertainties and fears and enable employees to work independently and with intrinsic motivation. This article will therefore present an innovative approach for training employees in certain skills and addressing any fears or barriers, especially when introducing new technology in the workplace. A great potential is seen in playful approaches. Therefore, parallels between gaming and leading will be explained firstly. Subsequently, the topics of gamification and game-based learning will be addressed, and the corresponding understanding foundations will be presented. A practical example shows a specific method for each area to introduce game elements and games into the corporate context. This will be accompanied by a discussion of the advantages and limitations of the respective approach. The article ceases by presenting a conclusion and a future outlook for the application of game-based learning in leadership and employee development.

29.2 Parallels Between Gaming and Leadership In the world of VUCA, it is crucial for leaders to plan the activities of employees in a way that they do not feel either overwhelmed or underwhelmed (Welpe et al., 2018). In hybrid or completely digital forms of collaboration, it is also important that employees feel empowered to handle their tasks independently and make decisions, depending on the nature of their work. A big part of this is whether employees see a sense of purpose in their work. If they do, they are considered intrinsically motivated, productive, and effective (Fink & Moeller, 2018). One important aspect is also the phenomenon of social desirability. Employees often tend to give socially desirable answers instead of presenting themselves negatively (Vopersal, 2015). Leaders should support creating a work environment in which social desirability takes a back seat. To support employees in developing towards this standard, it is worth looking beyond the horizon and trying out new didactic and methodological approaches, such as gaming. Concepting and designing games has parallels with the working world. A game can be defined as “having the following properties: Interactive. Has rules. Has one or more goals. Has a quantifiable measure of progress (or success). Has a recognizable ending” (Becker, 2021, pp. 1–2). In work context, it is desired that employees participate, adhere to rules or processes, and gradually achieve one or more goals by a certain time. This applies to both short-term projects and milestones in a longer-term project (Welpe et al., 2018). A crucial component of successful games and gamification approaches is the flow experience that users should undergo. Leaders can also benefit from this when using game-based scenarios. Flow is a dynamic state in which the person experiences an optimal balance between over- and underchallenge, resulting from a balance between their abilities and the challenge. To achieve this state, certain conditions must be met, including clear goals, immediate feedback, concentration, and a sense

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of control (Csikszentmihalyi, 1987). The focus should also be on this when designing work tasks for employees: a good balance between ability and challenge provides the basis for the development of employees (Welpe et al., 2018). To ensure this, New Leadership expects leaders to possess the competence to facilitate collaborative and participatory forms of cooperation. Employees should be empowered to take on more initiative and responsibility. There needs to be a framework in which independent decisions can be made. To develop independence, the ability to support employees in effectively pursuing self-set goals must be provided (Reinhardt, 2021). The mentioned competencies are promoted through playful approaches and can be trained in specifically selected and diverse gaming settings (Staudacher, 2019). There are different ways to integrate playful approaches into leadership. In the following, two possible concepts will be discussed in more detail before concrete ideas are presented on how to transfer these approaches to the work context and leadership styles.

29.3 The Buzzword “Gamification” In recent years, various buzzwords have emerged in different contexts: besides AI or Big Data, gamification has also been included in trends in the corporate and private sectors (Högberg et al., 2019). However, with terms in the gaming context (such as gamification or game-based learning), it is not always clear what they mean and how they are to be distinguished (Becker, 2021). Therefore, the term “gamification” will first be defined, and a concrete example will be presented. Subsequently, experiences from practice using the method of LEGO® Serious Play® will show how this type of gamification can be used in a corporate context.

29.3.1 Gamification: The Use of Gaming Elements The term “gamification” was created in 2002 by Nick Pelling when he suggested enhancing the user interfaces of bank ATMs, among others, with the user interface of games “to make them fun and effective to use” (Pelling, 2011). However, there were already approaches in the 60 s in which behaviors were identified as a type of play (Pandey, 2017). Nevertheless, a definition for the academic field was only created many years later: Deterding et al. (2011, p. 11) defined gamification as “the use of game design elements in non-game contexts”. This does not involve the use of full-fledged games, but only gaming elements (Eppmann et al., 2018). Possible gaming elements that can be incorporated include points, levels, badges, elor leaderboards (Korn et al., 2022). These are used to leverage the positive experiences that games typically elicit, such as increased motivation or linking with positive emotions (Högberg et al., 2019). Concrete examples from everyday life include

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fitness trackers, which aim to motivate more physical activity through badges and high scores, or applications that allow you to earn points when shopping to increase the likelihood of a subsequent visit (Korn et al., 2022). Today, gamification is used to make content that is generally perceived as “dry” more attractive. The addition of gaming elements is intended to increase intrinsic motivation so that the target audience can engage with the content on their own initiative. However, the affected persons and gamified content are not automatically activated. The challenge is to adapt the gaming elements used to competencies and content so that the intended goal is achieved (Beißwenger & Meyer, 2020). Gamification is mainly used in digital applications—however, the scope of application is not limited to the digital realm. The elements can also be applied analogously in different non-game scenarios (Deterding et al., 2011). For example, the method of LEGO® Serious Play® can be used to implement gamification in companies.

29.3.2 Introduction to a Concrete Gamification Method: LEGO® Serious Play® In 1998, LEGO® company internal workshops were enriched with building blocks to develop strategies and directions of the company (Kristiansen & Rasmussen, 2014). By 2010, the principle was further developed and successfully implemented in many companies as LEGO® Serious Play® (LSP) (The LEGO® Group, 2010). LSP can be considered as a method and process where problems are explored, modeled, reflected upon, discussed, and solved using small colorful bricks under structured guidance. The building with LEGO® bricks and the reflection help to realize views and attitudes visually, auditorily, and haptically. By using hands to build thought models, it is possible to access implicit knowledge and create entirely new connections. Furthermore, LSP can be seen as a framework for a participative leadership style that democratically, goal-orientedly, and constructively involves and values all employees in a playful manner (Blair, 2019). The core process of LSP consists of four steps: First, a moderator develops a question. This must be formulated specifically and unambiguously. Based on this question, participants begin to visualize and express their thoughts through the LEGO® bricks. Then, each person shares their story and impressions of their model to capture all perspectives of the participants. The core process is concluded with a reflection within the group (Kristiansen & Rasmussen, 2014). This takes place within the framework of a workshop that ideally lasts a whole day or at least three to four hours (The LEGO® Group, 2010). A specific etiquette should be followed, assuming that all answers, none of which are right or wrong, are already in the system and can only be brought out by the participants by “expressing themselves and listening to each other” (The LEGO® Group, 2010, p. 19). During the building process, the participants should reach a flow state: there is a clear and understandable goal and the challenge in the building process

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is constantly adjusted and adequately accompanied. This allows for maximum efficiency in answering the question (Kristiansen & Rasmussen, 2014; The LEGO® Group, 2010). The LSP method is often misunderstood: Although the word “play” is embedded in the name, LSP is not just a team building activity, an ice breaker, or a creativity tool— “it is hard fun, and it engages your brain in a playful manner to solve a real problem” (Kristiansen & Rasmussen, 2014, p. 182). The uses are very diverse. Different stages of construction make it possible to use in a corporate context for all areas and topics: building individual models is suitable as a coaching measure to verbalize values and actions or to develop ideas. Joint models support team building and show visions and (product) innovations. To represent strategies or scenarios, the highest level of construction, the building of system models, is suitable. There interactions and influences within the joint models are emphasized (Blair, 2019). This is especially a great opportunity in the context of leadership: whether it’s strategy and organizational development or change management, such processes can be initiated and supported with LSP. It’s not about using the method as a persuasion or messenger tool, but about involving all perspectives from all stakeholders. This makes information visible that might not have been revealed in a regular discussion. In addition, during the third and fourth steps of the LSP process, less extroverted people also have the opportunity to be heard (The LEGO® Group, 2010). The method of LSP also shows that social desirability moves into the background. Through the creative, playful engagement, an atmosphere free of fear and motivating can be created that counteracts this phenomenon (Kranawetleitner et al., 2022). In colder, sterile settings with little emotional activation, it is much stronger (Holden, 2010). So, even for topics that may trigger fear and hesitation in employees (introduction of innovations, digitalized work processes, etc.), a setting can be created that motivates and actively involves employees. However, the profitable use of LSP also requires some things—especially in the preparation and implementation of the intervention—which will be briefly outlined. LSP is not “just” playing with Lego. The workshop must be thoroughly prepared and the question to be dealt with must be clearly defined. The moderator should not be actively involved but should only give the work instructions and take on the role of the observer. In order for the phenomenon of social desirability to move into the background as much as possible, it is essential that employees can implement their ideas and wishes without guidelines. This is probably best achieved when the moderator does not come from within the organization and is not directly affected by the work context. The person who takes over moderation should ideally be trained or have familiarized themselves thoroughly with the method beforehand (Kristiansen & Rasmussen, 2014). Equipment in the form of building blocks must be purchased for the method. A large selection of different building blocks allows for greater metaphor possibilities. This is associated with costs and storage capacities. However, the building blocks are not only suitable for the LSP method, they can also be used elsewhere in the business context. In addition to creating a company vision or introducing technical innovations and innovations in general, the LSP method is also well suited for creating prototypes. In today’s times, products must be developed

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quickly and, depending on the industry, must be continually developed or optimized. Building prototypes can be a great enrichment in this challenge. Prototypes allow the people involved in a project to quickly provide/receive feedback, identify processes or components that do not work in reality, and can trigger a collective feeling of positive excitement. This can positively influence motivation to find a common solution to a challenge (Welpe et al., 2018). Building blocks are particularly suitable for the rapid, plastic construction of prototypes, as they offer a great potential for rapid development and can also be quickly dismantled if the orientation was not correct. Next, an LSP application is presented in which companies are sensitized to “knowledge transfer” and strategies for implementation with employees are developed.

29.3.3 Practical Example: LSP Workshop on the Topic of Digital Knowledge Transfer As outlined at the beginning, the pandemic of COVID-19 has changed the working methods of many companies. In particular, the transition to home office requires clear rules to be established for the continued transfer of knowledge within the company. To ensure a continuous exchange of knowledge, it is advisable to involve the employees in the process, the chosen tools, and the methods used. The LSP method described above is well suited for this purpose. This approach was carried out in practice with 150 participants from different companies. Representatives from all departments of the companies were named to ensure a good cross-section of all interest groups who participated in a LSP workshop moderated by the project team. A fictional game setting was created around the company, in which the company received an award for knowledge transfer 5 years later. The workshop group was then asked to think about the improvements that were made to the company in order to get the award. They then received the task of visualizing their own work environment using individual models with building blocks in this context (see Figs. 29.1 and 29.2). In the second step, the employees thought about the tools, interfaces, and contact opportunities with colleagues or superiors they needed to continuously pass on their knowledge through collective models. This optimized work environment was then presented to all participants of the intervention. The proposals were not commented on, but documented on a flipchart. Finally, the departments created with building blocks were combined into system models for the complete company. Based on this visualization, the group discussed which interfaces could still be optimized across departments. The ideas that emerged were then sorted and evaluated. Together with the management that was then consulted, the group decided which ideas should be implemented. The evaluation afterwards showed that 85.7% of the participants fully agreed that they could recognize a high practical relevance to their own activities through the workshop. A fundamental awareness of the topic of knowledge transfer was achieved and the needs of

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Fig. 29.1 To enhance creativity and imagination, the LSP workshop starts with a guided warm-up phase

Fig. 29.2 Employees build their individual models to address the questions of the LSP workshop

the employees were raised. 90% of the participants also agreed that the method motivated them to engage with an abstract topic (Kranawetleitner et al., 2022).

29.4 Game-Based Learning: Achieving Goals Through Gaming The implementation of certain gaming elements can elicit positive qualities and effects of games such as intrinsic motivation (Högberg et al., 2019). A much greater immersion, including an engaging storyline, can be achieved through the use of full-fledged games (Bakhsheshi, 2019). One of the main outcomes of gaming is enjoyment (Michael & Chen, 2006). However, the perception of having fun in the workplace is often associated with wasting time, not with productivity or efficiency (Dale, 2014). Although there is an unlimited number of game variants, games are often perceived as a meaningless pastime, particularly among adults. However, this variety allows for ongoing adaptation to current life situations, interests, abilities,

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and competencies. Additionally, the effect of game-based learning can be utilized to initiate active, self-directed, and constructive processes (Staudacher, 2019). The definition of game-based learning, in contrast to gamification, will be explained in the following section. Subsequently, Escape Rooms will be presented as a concrete example of game-based learning. The presentation of an Escape Room for the theme of knowledge management, developed and used by businesses, will conclude the chapter.

29.4.1 Game-Based Learning: Playing and Learning? Game-based learning is defined as “the theory of how learning happens with the use of (primarily digital) games” (Becker, 2021, p. 3). This approach involves the use of full-fledged games, not just gaming elements (Deterding et al., 2011). The purpose is to achieve a (learning) goal, acquire knowledge, or a similar objective, while ensuring that the fun aspect is not lost. A major challenge is to make sure that the enjoyment factor remains intact, as the perception of fun is highly individual. Some players prefer concrete challenges, some thrive in creative work, while others enjoy repetitive activities (Staudacher, 2019). A term frequently associated with game-based learning is Serious Game. If a game is developed and used with a “carefully thought-out educational purpose” (Abt, 1987, p. 9), and not primarily for entertainment (though fun remains an important component), it can be considered a serious game (Abt, 1987; Michael & Chen, 2006). Thus, the term Serious Gaming is often used instead of game-based learning (Bakhsheshi, 2019). Not only games with a specific intended outcome can be used for specific purposes. Commercial entertainment games can also be used to motivate players, encourage participation, and stimulate reflective engagement with a certain theme (Staudacher, 2019). It is important to note that learning and playing are always intertwined, whether it is a conventional entertainment game or a serious game. This is because mastering games requires the development and improvement of various motor, cognitive, social, or creative skills. Additionally, games provide a space for making mistakes without consequences in the real world (Donau-University Krems, 2017). The vast potential of game-based learning lies in the ability to blend learning in the game world with the real world, to promote collaborative problem-solving ability, and to provide an affective learning environment (Li & Tsai, 2013, p. 893). Furthermore, game experiences can be articulated and transfer processes from what has been experienced and learned in the game can be initiated into the real world (Donau-University Krems, 2017). An appropriate example of such a game is escape rooms. These not only involve game-based learning or Serious Gaming but can also function as a serious game themselves (Bakhsheshi, 2019).

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29.4.2 Specific Game-Based Learning Application: Escape Rooms Escape Rooms are highly popular all over the world. They are “live-action team-based games where players discover clues, solve puzzles, and accomplish tasks in one or more rooms in order to achieve a specific goal (usually escaping from the room) within a limited time frame” (Nicholson, 2016, p. 1). The main objective is for a team to escape from a room by solving various puzzles under time pressure. Escape Rooms appeal to a wide range of players without favoring any particular gender, role, or character trait. The most successful teams are those that have the greatest variety of competencies, experiences, and background knowledge (Nicholson, 2016). The idea of escape rooms originated when a Japanese company employee hid various objects, messages, and codes in bars and players were given one hour to assemble, decipher, and escape from the room. The underlying concept was not to answer specific questions, “but identifying them in the first place” (Corkill, 2009). As a result, Escape Rooms have the potential to create challenges on various topics to achieve specific goals. The learning process is supported by a playful approach to solving puzzles (Bakhsheshi, 2019). Participants who have played a purposedesigned Escape Room emphasize that the game primarily requires skills such as linking information and thinking outside the box. The room, the story, the gameplay, or the challenge itself can motivate individuals to engage with the topic, connect it to positive emotions, overcome obstacles, and be aware of consequences (both positive and negative). Other applications, which also play a significant role in the work and business context, include promoting teamwork and introducing a new topic as well as increasing motivation in general (Bakhsheshi, 2019; Glavaš & Stašˇcik, 2017; Veldkamp et al., 2021). For leaders, Escape Rooms in a business context can also provide an option to obtain emotional insights from employees about their experiences (for example, about a particular status quo) in the company through emotional activation (Ehrlich et al., 2020). The most important part is the debriefing, which takes place after the completion of the Escape Room and should take up at least one-third of the intended duration of the measure. During the debriefing, the experience of the Escape Room is discussed, reflected upon, and linked to existing knowledge, experiences, and attitudes. The reflection should take place in the group to capture all perspectives and give everyone the opportunity to present their views and experiences (Nicholson & Cable, 2021). It is important to highlight that developing an escape room with a specific goal in mind can be quite demanding. It is crucial for the designer to have a high level of knowledge and experience both in the topic being covered and in the methodology of escape rooms themselves. Depending on the chosen variant of the escape room, the setup and maintenance, supervision and adaptation can also be very time- and resource-intensive. Cost-effective alternatives to a commercial pop-up escape room include puzzle-based events with just locked boxes or envelopes (Nicholson & Cable, 2021).

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29.4.3 Practial Example: An Escape Room on the Topic of Knowledge Management in Companies As a part of a project, an Escape Room was developed with the main aim of creating awareness of meaningful and secure knowledge management and knowledge transfer within a company. During the game, participants were expected to reflect on the current knowledge management in the company and to be motivated to freely talk about the current situation and their daily work. The Escape Room was intended to be used as an introduction to a workshop day in companies with different focuses and with individuals from different positions, with a time frame of one hour being established for this purpose. To ensure that the game was introduced and that a discussion and reflection of the topic was integrated at the end, the playing time was limited to 20–25 min. As two to six players were expected in the Escape Room, the difficulty, the duration of the puzzles, and any potential influence on the playing time from outside (e.g., from a game master who provides hints) had to be taken into consideration when designing the game. The setting was a realistic multi-person office in a company. The game story revolved around a fictional company named DEMMIC (see Fig. 29.3). In this company, an employee had forgotten to forward an order to production before taking a vacation. The game starts with a call from the customer who complains about the missing parts in his order—this also represents the first confrontation with incomplete knowledge transfer. Various puzzles were presented in a linear sequence, allowing each player to interact with different issues: password management, contact/contact person lists, and server structure/document organization. At the end, the focus was not on escaping the room, but on solving a problem as a team (see Fig. 29.4). The Escape Room was used as an introduction to a workshop day in two SMEs. The goal of the workshops was to conduct a needs analysis and develop strategies for intra-organizational knowledge transfer that involved the employees. A total of 21 Fig. 29.3 In the Escape Room, the employees are faced with problems regarding knowledge transfer in the fictional company DEMMIC

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Fig. 29.4 The employees must work together to solve the puzzles in order to fix the problem confronted in the Escape Room

individuals played the Escape Room. Through a questionnaire, there was an opportunity to rate twelve statements from “agree totally” to “disagree totally”. 95.2% of the respondents said that they had a lot of fun in the Escape Room. Additionally, 80.9% agreed that the method of an escape room helped them to become more sensitive to the topic of knowledge management in the company. In the subsequent debriefing, there was also a criticism: that in a realistic working environment, not a team but an individual would work on such a problem. Nevertheless, the use of the Escape Room achieved the intended goal of raising awareness of problems regarding knowledge transfer in companies and provided a good introduction to further discussion and an individual needs analysis for the development of suitable measures for each company.

29.5 Enriching Leadership with Gaming The initial question posed was how communication between leaders and employees in the VUCA world can be optimized to reduce uncertainty and fear and empower employees to work independently and intrinsically motivated. The examples of gamification (LSP) and game-based learning (Escape Room) presented in this paper demonstrate that there are many similarities between games and the workplace and that they can also be used in a corporate context. Several arguments for and against the use of gaming have emerged. Incorporating gaming into leadership culture offers many benefits. Gamification can be used in many different forms in the workplace. For example, to visualize idea development, introduce innovations in the company, identify and concretize needs, train error management, etc. (Patrício et al., 2021). The flexibility in the use of gaming elements allows even difficult topics to be prepared for all target groups of a company and to provide a low-threshold entry that ensures that everyone can participate: “The purpose of the group dynamic procedures is to destroy the 20/80 meeting syndrome, … where 20% of the meeting participants use 80% of the time

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to talk about their knowledge and intentions. The goal… is instead to create what we refer to as a 100/100 meeting” (Kristiansen & Rasmussen, 2014, p. 49). Furthermore, it is possible to effectively determine the interests and competencies of employees through game-based assessments (Kranawetleitner et al., 2022). Through playing, the social skills that support independent work are also trained, including communication, tolerance, teamwork, problem-solving, and decisionmaking skills (Bakhsheshi, 2019; Staudacher, 2019). In line with the New Leadership concept, gamification promotes bottom-up communication and collaborative teamwork. This can also enhance the innovation process of a company, as all employees feel that they have contributed (Patrício et al., 2021). By carefully selecting game settings, social desirability can also be counteracted (Vopersal, 2015). This includes a good approach to mistakes. Mistakes trigger negative emotions and can impair the performance of employees (Frese & Keith, 2015). Games often work on the basis of try and error. Mistakes in this context are meant to motivate, to play a sequence, level, etc. again and learn from them. Through a playful approach, employees can be empowered to see mistakes as a natural part of a learning process. If there is the possibility to train error management in a protected environment (game environment), emotions can be better controlled in critical situations and thus subsequent errors avoided. Furthermore, a playful approach to mistakes can also lead to employees being inspired to develop a better understanding of a certain situation and thus also contribute to the progress of the company (Welpe et al., 2018). Due to these characteristics, the use of game elements or games can support a participative leadership style as well as during the communication and introduction of innovations. A shared sense of responsibility, which is also necessary in game-based settings, promotes cohesion. This can intensify learning successes of the individual and of the group. This can lead to real progress and growth for both individuals and the organization. A participative management style benefits from the intrinsic motivation of the employees, which in turn can also be promoted by gaming. In this context, there is no “right way”. Rather, employees are guided in gaining an understanding of problems and finding a solution together (Blair, 2019). Gaming elements or games can help develop more understanding of what an innovation process is trying to achieve (Patrício et al., 2021). However, when using gamification or game-based learning, neither the intended goal should be lost sight of nor should the fun be neglected. Adding game elements to a process for introducing innovations does not mean that it is no longer about working or productivity. Rather, gamification can help make productive activities more fun (Raczkowski, 2018). The fun, which is after all one of the main factors of games, should be transferred to the people involved because “it’s not work if you enjoy it” (Dibbell, 2007, p. 36). The end of the game or the productivity, the result, the answering of a question, etc. is then almost to be seen as a side effect of playing. Nevertheless, fun should not be the main reason for using game elements or games (Raczkowski, 2018). When selecting a game-based approach, it is therefore always important to ensure that the pure game mechanics are not designed too elaborately and thus distract from the actual content or objective. In addition, many are critical of gaming in a corporate context, seeing it merely as a

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team-building activity or fun break from work. It is important not to override these attitudes, take them seriously, and try to have everyone participate in the process (Kristiansen & Rasmussen, 2014; Patrício et al., 2021). As mentioned earlier, it is also important to use gamification or game-based learning as a communication tool from the management level to the employee. It is excellent as a support tool to involve everyone in an (innovation) process, to perceive all voices, to give employees a sense of self-determination and decision-making opportunities in order to - in terms of a participative leadership style - unleash their full potential (Blair, 2019; The LEGO® Group, 2010).

29.6 First Steps for More Gaming in a Leadership Style As previously described, recent years have brought new challenges for leaders. Communication has become more important than ever in businesses to support employees in facing the challenges of the VUCA world. Choosing the appropriate medium and communication strategy has become crucial. In complex tasks, a communication medium with higher information density, such as personal communication or video conferencing, is recommended (Welpe et al., 2018). However, leaders must not only choose appropriate forms of communication and media but also be willing to embrace new leadership methods to best support employees in their journey towards self-organization. Alongside traditional work methods, new agile methods have been introduced, based on different approaches such as flat hierarchies and increased employee autonomy. It is important to consider whether these newly selected approaches will lead to an increase in creativity and problem solving (University of Applied Sciences Würzburg-Schweinfurt, 2022). These aspects are what the game-based approaches discussed in this paper address. For leaders who are not familiar with this methodology, it can be difficult to get started. Hence, it is recommended to conduct an analysis and answer the following questions to determine if and which game-based intervention would be suitable for the organization: ● ● ● ● ● ●

What topics/tasks/strategic considerations should employees be involved in? To what extent should the method promote intrinsic motivation? To what extent should employees be involved? Does social desirability play a role in the context? Should the intervention result in learning gains? What should be the scope of the setting in which the intervention takes place?

Another important criterion might be how the target group for the intervention is composed within the organization. Games are seen as positively charged for the younger generation as they are familiar from their environment and daily life. Adults often view playing games as negative and meaningless (Bakhsheshi, 2019; Staudacher, 2019). However, there are also studies that show how seniors explore new technologies through playing games and are indeed intrinsically motivated to engage

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with a new topic (Oppl, 2020). Hence, before the intervention is carried out, it is necessary to consider how an introduction could be made that allows all employees to get started. Awareness should be created that playing games at work is not inherently inefficient, but with proper preparation in the specific context and under professional guidance, it can be promising and a new, innovative approach to participative leadership (Blair, 2019; Dale, 2014). Given that game-based interventions require time for preparation, implementation, and debriefing, it is always worth conducting research on existing media and concepts. There is a variety of game-based settings that can potentially be applied to one’s specific situation. In some cases, it may also be advisable to involve external individuals trained for these interventions. Furthermore, the willingness to allocate personnel for these more time-intensive interventions must be present. Ultimately, the leadership must also possess the motivation and courage to embrace a new method of communication and leadership, specifically, to tackle complex challenges with a playful approach (Kristiansen & Rasmussen, 2014). With these elements in place, playful leadership can proceed smoothly.

References Abt, C. C. (1987). Serious games. University Press of America. Bakhsheshi, F. F. (2019). Serious games and serious gaming in escape rooms. In Proceedings of the 1st International Serious Games Symposium (ISGS) (pp. 1–6). Bansmann, L.-M. (2021). Führen in der COVID-19-Pandemie. https://doi.org/10.25968/OPUS1949 Becker, K. (2021). What’s the difference between gamification, serious games, educational games, and game-based learning? Academia Letters, Article 209. https://doi.org/10.20935/AL209 Beißwenger, M., & Meyer, L. (2020). Gamification als Schlüssel zu “trockenen” Themen? Beobachtungen und Analysen zu einem webbasierten Planspiel zur Förderung orthographischer Kompetenz. In K. Beckers & M. Wassermann (Eds.), Wissenskommunikation im Web. Sprachwissenschaftliche Perspektiven und Analysen (pp. 203–240). Internationaler Verlag der Wissenschaften. Blair, S. (2019). Serious work: Meetings und workshops mit der Lego® Serious Play® Methode moderieren (1st ed.). Franz Vahlen. https://ebookcentral.proquest.com/lib/kxp/detail.action? docID=6991278 Corkill, E. (2009). Real escape game brings its creator’s wonderment to life. https://www.japant imes.co.jp/life/2009/12/20/general/real-escape-game-brings-its-creators-wonderment-to-life/ #.Xocyd0pCQ2x Csikszentmihalyi, M. (1987). Das flow-Erlebnis: Jenseits von Angst und Langeweile: im Tun aufgehen (11. Auflage 2010). Klett-Cotta. Dale, S. (2014). Gamification: Making work fun, or making fun of work? Business Information Review, 31(2), 82–90. https://doi.org/10.1177/0266382114538350 Deterding, S., Dixon, D., Khaled, R., & Nacke, L. (2011). From game design elements to gamefulness: Defining “Gamification”. In MindTrek’11: Proceedings of the 15th International Academic MindTrek Conference: Envisioning Future Media Environments (pp. 9–15). https://doi.org/10. 1145/2181037.2181040 Dibbell, J. (2007). Play money, or, How I quit my day job and made millions trading virtual loot. Basic Books.

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Pandey, A. (2017). A brief history of gamification. XRDS: Crossroads, the ACM Magazine for Students, 24(1), 13. https://doi.org/10.1145/3123774 Patrício, R., Moreira, A. C., & Zurlo, F. (2021). Enhancing design thinking approaches to innovation through gamification. European Journal of Innovation Management, 24(5), 1569–1594. https:/ /doi.org/10.1108/EJIM-06-2020-0239 Pelling, N. (2011). The (short) prehistory of “gamification”… https://nanodome.wordpress.com/ 2011/08/09/the-short-prehistory-of-gamification/ Raczkowski, F. (2018). Digitalisierung des Spiels: Games, Gamification und Serious Games. Kulturverlag Kadmos Berlin. Reinhardt, S. (2021). Transformation von Führung: Reflexion und Resonanz als Zukunftskompetenzen (1. Auflage 2021). Schäffer-Poeschel Verlag für Wirtschaft Steuern Recht GmbH. https:/ /www.wiso-net.de/document/SPEB,ASPE__9783791050782183 Richter, F. (2019). Führung in Unternehmenskrisen. In S. Sackmann (Ed.), Führung und ihre Herausforderungen. Springer. Staudacher, N. (2019). Digitale Spiele und ihr Potenzial als Bildungs-und Lernräume. MAGAZIN Erwachsenenbildung.At, 35–36, 1–7. http://nbn-resolving.org/urn:nbn:de:0111-pedocs-166730 Veldkamp, A., Knippels, M.-C. P. J., & van Joolingen, W. R. (2021). Beyond the early adopters: Escape rooms in science education. Frontiers in Education, 6, Article 622860, 1–11. https://doi. org/10.3389/feduc.2021.622860 Vopersal, A. (2015). Der Wert der Lüge – die Gefahr sozial erwünschter Antworten im unternehmerischen Führungsalltag. In N. Müller & C. C. Jäger (Eds.), WERTEorientierte Führung von Familienunternehmen (1st ed., pp. 333–357). Springer Gabler. Welpe, I. M., Brosi, P., & Schwarzmüller, T. (2018). Digital Work Design: Die Big Five für Arbeit, Führung und Organisation im digitalen Zeitalter. Campus.

Dr. Marietta Menner heads the STEM department and the DLR_School_Lab at the University of Augsburg. In this context, she researches game-based learning scenarios for all age groups. Julia Thurner-Irmler is a research associate in the STEM department at the University of Augsburg. She develops game-based approaches in the field of education and is researching educational Escape Games as part of her doctoral thesis.

Chapter 30

Inspiring Leadership for Innovation Araceli Castaneda and Mark A. Jamison

30.1 Introduction Innovators and scholars alike are intensely curious about why large, prominent companies with seemingly insurmountable competitive advantages sometimes take a pass on innovations that soon obsolete the large companies’ products. History is full of examples: In 1981, the giant IBM let a small, seemingly quirky Microsoft take ownership of the operating system that IBM would need for its new Personal Computer. Soon Microsoft was in control of the PC industry. A DuPont scientist created Teflon, but DuPont decided it wasn’t interested in expanding what the product could do. So one of its employees, Wilbert Gore, left DuPont and started his own company. Which used another version of the underlying chemical and made Gore-Tex. Sometimes innovations fail in a company because the success of that innovation means that someone or something else loses importance. And that fear of loss holds the company back. Consider the example of Sony and the iPod. In the late 1970s Sony introduced the Walkman—a portable cassette-based music player—and quickly solidified the company as the leader in personal music devices and the world’s most successful consumer electronics company. Sony saw the future and soon bought CBS records and Columbia Pictures so that it could control both the content and the content players. Sony also foresaw the power of digital music players and in the fall of 1999 introduced two digital music players at the Las Vegas Comdex trade show. Sony was poised to be the dominant player in the next phase of personal music devices—digital players that could download music from the internet, which had just burst onto the consumer market itself. But Sony failed to introduce products that would capture this market. Apple would do this with its iPod and iTunes store just two years later. Why A. Castaneda (B) · M. A. Jamison Public Utility Research Center, College of Business, University of Florida, 205 Materhly Hall, P.O. Box 117142, Gainesville FL 32611, USA e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_30

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didn’t Sony introduce its own iPod and iTunes? It had the technological know-how. What Sony did not do was deal with the fears of loss that people in the company had regarding the changes an iPod-like innovation would mean for the company. The Walkman people made analog devices. Sony’s 1999 flop digital devices were too expensive for consumers, and the company’s internal bureaucracy made hard to lower costs and prices. Sony’s content people were afraid of what internet-based music stores would do to their business model, and so raised obstacles. By the time Sony’s employees realized that they were holding their company back by hanging onto the past, Apple had taken control of the future (Aaker, undated; Dvorak, 2005; Kay, 2012; Pascoe, 2012; Saporito, 2022). Heifetz (1994) was one of the first to recognize that people’s fear of loss as a primary reason why organizations resist change. He explained that people face two kinds of challenges: technical and adaptive. Technical challenges have to do with applying technical experts’ knowhow to problems that are known and people are ready for solutions. People in authority task engineers, accountants, product managers, etc. to deal with these problems. Adaptive challenges are where people disagree on whether there is a problem and the nature of the problem, if they think there is one. People have a sense that something is off, perhaps because there are unexpected tensions, such as the tensions in Sony over the future of the product lines that had given it great success and industry leadership. The industry’s digital future was hard to see through the lenses of the practices that had made the company successful until then. Whether an organization is an established company or a startup, innovation always involves stepping into the future and the future is always a surprise (Gilder, 2018). Whether the possibility of surprise triggers fears or excitement depends on the degrees to which the challenges are technical or adaptive, and how well those leading the company are able to adapt what they do accordingly.

30.2 Types of Innovation There are three types of innovation. One is innovation the known world. In these situations, the product and the customer needs are known, but improvements can be made. It is like climbing a ladder: One can make the ladder sturdier, lighter, or make the side rails thinner or thicker—the next steps can be seen—but sometimes the actions can make huge differences. Innovation into the known largely involves technical challenges, at least for the innovators. Google’s search engine is an example of an innovation into the known. When Larry Page and Sergey Brin created the Google search engine, the search engine market was already well known. Yahoo, Lycos, and AltaVista were already widely used. Indeed, in 1998, the year Google was founded, Fortune Magazine ran a headline “How Yahoo! Won The Search Wars” (Stross, 1998). Page and Brin combined what was known about search engines with another known—how academia measured the

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degree to which a research paper was important—and quickly eclipsed its rivals (Jarvis, 2011). A second type of innovation is innovation into the knowable. This type of innovation adapts the current system to better serve customers’ wants and needs by developing solutions to problems that frustrate customers the most. One can expand the use of the ladder by making it taller or wider, or can change the distance between the steps for additional comfort. This goes beyond the work of engineers and economists, and into the fields of psychology and marketing to discover what frustrates customers the most in their lives and in their businesses. In his bestselling book Ask, Ryan Levesque argues that one key knowing what frustrates customers is to avoid asking customers what they want, because that locks thinking into what they already know. He suggests instead have them talk about the problems they are facing and identify the pictures and stories behind their frustrations. The innovation approach is technical, but the innovations themselves could involve adaptive challenges for the innovator. Govindarajan and Trimble (2005) suggest that businesses often have to protect innovations from established product lines, in part because of the fears of loss that Heifetz (1994) identifies. The final form of innovation is innovating into the unknown world. This is like being secure on a ladder and thinking, “I have gone about as far as I can go on this ladder. I cannot see another ladder to climb that is within my reach, but if I reach out far enough, there might be a new ladder over there and…” This type of innovation creates all-new systems that address needs that customers did not anticipate, completely destroying the old system. Recent examples include the Macintosh computer and the iPhone. In both cases, the innovator saw what was possible and dreamed of what customers might do with it. In this space, innovation is beyond customers’ imaginations. As Henry Ford is reputed to have said, “If I had asked people what they wanted, they would have said faster horses.” This work almost always involves the work of scientists or artists, who are not vested in the way things work or a particular industry, but dream about what the world could be like. All innovations in this space involve adaptive work because, by definition, people are stretching beyond what they can see. But there are also many technical challenges as many of the technical problems will have never been solved before. This makes it imperative to for the people who are providing leadership to create a culture for innovation that embraces the uncertainties. Such a culture of innovation requires the organization to embrace three juxtapositions.

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30.3 The Three Juxtapositions and Communication Practices The first juxtaposition for an innovation culture is: It’s not about best practice, but next practice (Heifetz et al., 2009). Imitation is legitimate when circumstances are familiar, but can hurt in novel situations. How can we tell when circumstances are familiar or when they are novel? This is difficult and the tendency is to misidentify novel experiences as familiar ones (Heifetz, 1994). But there are signals that alert us. One signal is stakeholders disagreeing on whether there is a problem or on the nature of the problem. Consider what happened in New Orleans when it was struck by Hurricane Katrina. The possible consequences of a large hurricane had been known for some time, but political priorities favored using taxpayer money for projects other than building up the city’s dikes. When the storm struck, many people remained in denial about the consequences: Some residents refused to seek safety and some politicians let jurisdictional boundaries and face-saving be higher priorities than quick and efficient response to the crisis. Other signals indicating adaptive challenges include stakeholders’ embracing policy options that align with long held beliefs and biases rather than with the problem at hand. Consider for example budget cuts at a university that we will not name. When the university experienced an overall decline in revenue, its president asked academic heads to identify ways that their units could maintain quality while adjusting to decreased funding. Some units made hard choices that included eliminating programs that were good, but where the unit was not a leader. Other units refused to accept that hard choices needed to be made and put forward plans that weakened all programs. This first juxtaposition presents communications challenges, including effective listening. The obligation to listen applies across the organization. To choose and implement next practices, people in authority need to listen to customers, community leaders, and employees to learn where innovations can add value, what has changed or is changing in the business environment that necessitate innovation, and where people are worried about the future. Employees listen to customers to learn unmet desires, to their bosses to detect the pressures that they are experiencing and changes in the organization, and to each other to sense which valued traditions are becoming barriers to future success. People in authority should establish trustworthy communications channels to hear from stakeholders and employees. Another communication challenge is conveying insights and surfacing questions. The learnings from listening can be processed in numerous ways, including company blogs, and meeting time for “What have you heard lately that was interesting?” and “What surprised you this week?” For employees, this might include scenario planning exercises, lunch-and-learn programs, or work-out exercises. Scenario planning exercises could include identifying a desired future state, discussing what would change about the company if it had achieved that future state, and examining who might be negatively affected along the way. A work-out exercise might be an event where employees for groups to work on next practices proposals that they would implement,

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the employees making presentations regarding a next practice to decision-makers, and decision-makers giving an immediate thumbs up or thumbs down after asking exploratory questions. To surface important questions, employees could be obligated to speak in open forums to express their concerns, convey what they are learning, and bringing attention to challenges that seem unaddressed by traditional products and practices. A working group could develop answers to any questions that seem inadequately addressed during the forum. Without deliberate effort to suspend traditional practices and controls, we can find ourselves stuck. When Adam Kahane went to the Basque Country in 2002 to help find a peaceful solution to the conflict between a Basque separatist group and the government of Spain, he found an unwillingness to break from the status quo and engage in talks or even to agree that peace was the proper objective. The Spanish Prime Minister preferred to continue to characterize the Basque separatists as fanatics and the separatists preferred to maintain a revolutionary self-image (Kahane, 2004, pp. 39–43). The second juxtaposition is: It’s not what you do, but why you do it. Innovators must be students of their work. Collins (2009) describes the importance of being a continual learner. He tells the story of a small, then unknown American company in the 1950s that decided to emphasize discount retailing in small, rural towns. The company’s visionary leader emphasized a culture of partnership, everyday low prices for customers, and personal accountability. The company decimated its mom and pop rivals and competed effectively against its primary competitor, K-Mart, a large discount retailer that was at that time an industry leader. The company’s stock value increased 6000% from 1970 through 1985 and it became one of the country’s largest discount retailers. Who was Collins describing? Wal-Mart? No. He is talking about Ames Department Stores, a company that no longer exists. Why did Ames go out of business while Wal-Mart, following almost an identical business plan, rose to number one in the Fortune 500? Collins says much of the answer lies in Wal-Mart’s founder’s selfdeprecating and inquisitive nature. Sam Walton interviewed his rivals’ employees, taking copious notes on a yellow pad, and was well known for asking more questions than he answered when visited by foreign business leaders. This passion for knowing why things work, not just what works, was instrumental in Wal-Mart’s success. The not-what-but-why juxtaposition can be put into action by treating all decisions as experiments or tests of hypotheses. The hypothesis is that X, Y, and Z are known about the world, that the challenge to performance is W, and the answer to the challenge is V. The choice of V isn’t the important choice. The important choice is what will be learned as the knowledge will be fundamental to the next innovations. A key communication challenge in the not-what-buy-why juxtaposition is identifying what is to be learned, how it will be learned, and how it is interpreted. Prior to the choosing of a next practice, their needs to be a discussion of the business knowledge gaps given the changing environment and innovations. These knowledge gaps then guide the choice of a next practice, with a coordinating group specifying what is the be learned, how data will be collected and archived, and the analyses

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that will be conducted and by whom. Rival teams can develop alternative analyses, and persons in authority then communicate these findings broadly and engage with employees to understand alternative interpretations. Consistent with the next practice juxtaposition, conclusions are treated as hypotheses to be tested with a next practice. The third juxtaposition is: It isn’t about leading, but about leadership. Ensuring that we intelligently move from best practices to next practices, in part by continually investigating the why question and not just the what question, makes the third juxtaposition necessary. People think of a leader as someone who identifies problems and points the way forward. Such a role is certainly necessary for creating a culture of innovation. But within the culture, leading takes a backseat to leadership. The role of leadership helps the organization step back and look at itself and its context from afar. It helps the people in the organization see and learn from problems rather than trying to simply solve problems. It thinks carefully about relationships within the organization and between the organization and key stakeholders. And it orchestrates the work on the adaptive challenge by keeping focus on the hard realities and the learning, and by managing the stress that people will experience during the learning process (Collins, 2001; Heifetz, 1994). Practicing leadership in this context involves three basic questions. The foundational question is: What is possible? This is the realm of economics, engineering, law, and the like. Within these disciplines, experts tell us about products, cash flow requirements, legal rights and responsibilities, and what can and cannot be done with current technologies. The work also requires that organizations conduct candid assessments of the abilities that can set it apart from the competition (Collins, 2001). The second basic question is: What is important? This is typically the realms of philosophy and psychology. Companies establish values, such as what difference they want to make in the world. Answering this question generally involves retreats and exercises where employees discuss future scenarios that would have them proud and fulfilled, and candid discussions about what gets them there. Research in this field is normative because it advocates goals, objectives, and instruments. The last basic question is: How can we do it? This question addresses many of the human processes that it takes to move from “What is possible?” and “What is important?” into accomplishment. This work takes the organization through examinations of the three types of innovation. Leadership seeks to help the organization find where answers to these three questions overlap, implying that there is a core, or a sweet spot, where what it would like to achieve is technically feasible, can be worked through the human processes, leverages abilities that make the organization stand out, inspires workers, and implements the three juxtapositions.

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30.4 Conclusion We examine three types of innovation: Innovation into the known is what Google did when it simply applied engineering skills to improve the technology for internet search. Innovation into the knowable is the work of psychology, seeing what is frustrating customers and finding solutions for them. The third type is innovation into the unknown, which is what made Steve Jobs famous: He saw possibilities beyond even the customers’ visions. Each type of innovation requires that a business deploy a different set of talents and practices to be successful. Being ready to create any or all of these types of innovations requires having a culture of innovation, which in turn requires the organization to embrace the following juxtapositions: Next practices rather than best practices, why rather than what, and leadership rather than leading. Next practices keep exploring even when others are ready to pause and rest. Asking “why?” rather than “what?” emphasizes the dynamics of innovation in that each innovate step is done in part to learn what steps should be considered next. And providing leadership rather than leading recognizes that determining the direction of the business is better found in the collective learning of the people and not the accepted wisdom of the person in charge. Any business that wants to be on the cutting edge would do well to ensure that it is pressing for all three types of innovation and embracing the three juxtapositions that empower a dynamic organization.

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Pascoe, M. (2012, June 28). What to learn from Sony’s greatest mistake. The Sydney Morning Herald. https://www.smh.com.au/business/what-to-learn-from-sonys-greatest-mis take-20120628-21405.html. Saporito, B. (2022). How IBM, Ford, DuPont, and Sony Passed on Windows, the Cadillac, GoreTex, and the iPod. Inc. https://www.inc.com/magazine/202205/bill-saporito/microsoft-appleipod-steve-jobs-teflon-gore-tex.html. Stross, R.E. (1998, March 1). How Yahoo! won. The search wars. Fortune. https://money.cnn.com/ magazines/fortune/fortune_archive/1998/03/02/238576/.

Ms. Araceli Castaneda is the director of Leadership Studies of the Public Utility Research Center at the University of Florida (PURC). Ms. Castaneda has led international leadership workshops involving over 70 countries and more than 500 participants. She works closely with program attendees and coaching clients in their leadership challenges and the challenges their organizations face. She regularly presents leadership and strategic sessions at the PURC/World Bank International Training Program on Utility Regulation and Strategy which has trained more than 3,400 utility profes-sionals from 154 countries. She also provides customized leadership training. Dr. Mark Jamison is the director and Gerald Gunter Professor of the Public Utility Research Center at the University of Florida. Dr. Jamison works with Ms. Castaneda in her leadership workshops and leads the PURC/World Bank International Training Program on Utility Regulation and Strategy. In addition to working with government and in-dustry officials from around the world on training and research, he is a Non-Resident Senior Fellow with the American Enterprise Institute, where he conducts research and outreach related to innovation and competition in the information technology industries.

Publisher’s Correction to: New Leadership—Essential Leadership Skills for Interactive Daily Business Nicolas Sonder

Correction to: Chapter 4 in: N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_4 Inadvertently, the author’s private address was published due to a mistake in the production process. It has been replaced with the official address in this updated version. Springer Nature regret the problem caused.

The updated version of this chapter can be found at https://doi.org/10.1007/978-3-031-34314-8_4

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Pfeffermann and M. Schaller (eds.), New Leadership Communication—Inspire Your Horizon, https://doi.org/10.1007/978-3-031-34314-8_31

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