Creative destruction and the emergence of executive leadership
of women
I came across an article by Stacie A. Furst, and Martha Reeves
From Leadership Quarterly ( 2008 Volume 19) about a year
ago and it really caught my eye. As I watched the world's financial
markets unravel, this academic article rang truer and truer. I
decided it was time for me to summarise it to share with our
Professionelle community. This proved to be no mean feat, and I do
hope I've managed to keep the key points and to convey its powerful
message.
A message of hope
It's a well known fact, and one we have written about a lot,
that women are under-represented in top positions. What is unique
about this article, and what rang so true to me, is its message
that in a crisis there is hope: in times of uncertainty, women are
more likely to make it to top positions. The authors put forward
what I found to be a very powerful proposition to support this
argument, using a mix of case studies and research to illustrate
their points.
But first, what is creative destruction?
I'd never heard this term before, but since reading this
article, I have seen it mentioned in many places.
This term was coined by Joseph Schumpeter (1942) who noted that
capitalist economies are continuously undergoing persistent change.
The most important characteristic of this change, in his view, is
the succession of market leaders. Schumpeter observed that market
leaders have only temporary leadership which is eventually
destroyed by the creative actions of new challengers. He further
observed that sometimes the incumbent leader can counter
challengers' threats by providing something new, something that
might even mean destroying its previous identity and reinventing
itself as a new enterprise.
Think of how Bic outmanoeuvered Gillette in the razor wars by
applying Bic's understanding of consumer preferences for cheap
disposable items (e.g., the Bic biro) to a new product category -
the disposable razor. Interestingly, I recently heard that one of
Gillette's best selling products over the last few years was
designed for the first time by women for women! Something to
ponder…
In their article, Furst and Reeves borrowed the term 'creative
destruction' to argue how, in times of market turbulence and
change, women are more likely to make it to the top of
organisations. They outlined why they believe this is the case and
I am sure their reasons will resonate with many of you!
Three case examples
Furst and Reeves identified women to study through a review of
the popular business press from the years 2004 to 2006. They aimed
to compare the experiences of a diverse set of women who had
successfully broken through the glass ceiling and to explore the
underlying themes of those experiences as they relate to the tenets
of creative destruction. They reviewed the experiences of about
twenty women but the three that caught my eye the most were:
- Izumi Kobayashi, President of Merrill Lynch Japan
Securities
- Anne Mulcahy, the first female CEO at Xerox and
- Andrea Jung, CEO of Avon Corporation.
Izumi Kobayashi: President of Merrill Lynch Japan
Securities.
When Kobayashi took charge of the subsidiary in December 2001,
the brokerage firm was in disarray. Izumi became both the first
woman and the first Japanese native to run the Japan unit. She
exhibited a willingness to make tough decisions and an ability to
identify and cultivate areas of growth to outpace the competition.
Among her toughest decisions, Kobayashi opted to close most of
Merrill's retail offices and slash staff by almost two-thirds.
In the four years under her leadership, Merrill became the most
profitable foreign brokerage firm in Japan.
Anne Mulcahy: first female CEO at Xerox.
Mulcahy became CEO due in large part to her performance as its
first female president and chief operating officer, a job she
obtained in 2000 according to the authors, after a succession of
men had failed. When Anne was appointed, Xerox faced a massive
accounting scandal that led to restatements of $1.4 billion in
earnings and a restructuring that reduced employment by nearly
half. Anne was home-grown and a 27-year veteran of the firm. She
rejected the idea that Xerox lacked ingenuity and could not compete
on innovation. In a bold move, she decided not to cut the R&D
budget when cuts were being made across the board. By June 2005,
Xerox completed a 2-year new-product cycle in which the company
redesigned 95% of its product lines.
After years of decline, Xerox's "post-sale" revenue from inks
and toners, the biggest source of profits in the printer industry,
rose as customers made use of the company's new multifunction
devices.
Andrea Jung: CEO of Avon Corporation.
Andrea first worked with Avon in 1993 when then-CEO Jim Preston
planned to start selling Avon products in department stores and
hired Jung to consult on the project. In her advisory role, Jung
immediately saw what many Avon executives had not-an outdated
product line. Jung's insights and uncompromising stance earned
Preston's instant respect. He later conceded that the company was
being run by "men in suits who don't really understand (the
product) in the first place".
According to the authors, when Jung became CEO in 1999, she gave
the company an extreme makeover, pouring millions into R&D,
pushing new lines of skin cream, expanding into overseas markets
and developing flashy ads. The company updated many of its products
and packaging and developed a new line of cosmetics designed for
teens. Jung changed the image of Avon saleswomen from dowdy,
door-to-door housewives to professional women who sold Avon
cosmetics to their work colleagues while searching for new
markets.
Tough times: call a woman!
As these three examples show, the women profiled made it to the
top of their organisations in times of uncertainty, both external
and internal. None of them, it seems, were appointed at a time
where their company was doing really well… This crucial observation
that lead the authors to conclude that women may be viewed as
especially attractive candidates to lead organizations under
turbulent, uncertain conditions because they bring a fresh approach
to leadership, different skill sets, and diverse life
experiences.
The authors further argue that women rise to the top in
industries with higher involuntary, as well as voluntary, turnover.
Specifically, involuntary turnover often occurs when boards of
directors or other stakeholders determine that leadership changes
are needed to regain competitiveness and to shift strategic focus.
These are likely to be times when a male CEO is forced out.
And, finally, the authors argue that firms or industries
experiencing scrutiny or facing scandal will signal to stakeholders
that change is in the air both by using very transparent skills and
leadership methods as well as searching for non-traditional
candidates - thus providing more opportunities for women to be
considered.
What makes women so attractive in tough times?
This is what made the article so powerful for me. It seemed to
me they distilled all the great things we at Professionelle
advocate about why professional women have so much to offer. The
authors also shone a whole new light on some of the behaviours we
all thought were holding us back!
The authors argue that the following six possible perceptions
held by decision makers may be the reasons why women are considered
superior candidates in uncertain or turbulent business
environments. Specifically, they refer to perceptions that
women:
- Are more charismatic or transformational than male
candidates.
- Have more of the desired communication skills required for the
difficult tasks of dealing with crisis than male candidates.
- Are more customer-focused or customer-savvy than male
candidates.
- Will be more self-sacrificing than male candidates.
- Will be more likely to take on strategic risks than male
candidates.
- Offer a more diverse set of work and life experiences than male
candidates.
1. A perception that women are more charismatic or
transformational than male candidates:
The authors argue that women are both perceived to, and have
actually been shown to, demonstrate more of the transformational
leadership skills which are so important in times of crisis. But
they further suggest that it is the perceptions regarding the
tendency for women to exhibit charismatic or transformational
leader behaviors that contribute to their advancement to executive
positions.
2. A perception that women have more of the desired
communication skills required for the difficult tasks of dealing
with crisis than male candidates:
Communication skills and the ability to manage a diverse group
of people are critical skills for leading in rapidly changing
environments. Under these conditions, employees may feel vulnerable
to lay-offs, morale may be low because individuals are asked to do
more with fewer resources, and the ambiguity of job roles may leave
employees feeling insecure. Leaders who communicate openly,
demonstrate integrity and trust, and encourage participation should
outperform those with a more traditional, command and control style
of leadership.
The experiences of the women they studied suggested to Furst and
Reeves that some of the traits that have handicapped the
advancement of women in the past might ironically be the reason why
they are preferred as candidates amidst scandal. These traits are:
greater transparency in communication, an open decision-making
style and personal integrity.
3. A perception that women are more customer-focused or
customer-savvy than male candidates:
Women may be perceived as more attuned to consumer preferences
and more able to bring focus to female purchasing power in
marketing and product development. This is consistent with the
claim that creative destruction occurs in the operational parts of
the business, where companies interact with customers and where new
products are designed and manufactured.
Anne Mulcahy at Xerox enjoys a reputation for being extremely
focused on both internal and external customers. She attributes her
success as a leader to her commitment to understanding and meeting
customers' requirements. And of course for Andrea Jung of Avon it
was both her understanding of customers and being a woman herself
that helped her understand what her male predecessors missed - the
Avon was out of touch and out of style as an option for self
respecting buyers of cosmetics!
4. A perception that women will be more self-sacrificing
than male candidates:
Self-sacrifice occurs when a leader abandons or postpones his or
her own personal preferences, perks, or bonuses. The
self-sacrificing behavior of an executive is especially important
in turbulent business environments when rank-and-file employees may
be asked to work longer hours and give up privileges. The leader's
willingness to self-sacrifice communicates a vision of co-operative
enterprise, which can motivate employees in times of chaos.
There has been much written about women's tendency to
demonstrate self-sacrificing behaviors more often than men and
women are also are perceived to be more self-sacrificing and
"other-directed" than men. For example, in an experiment looking at
differences in how men and women allocate resources and the degree
to which they cooperate strategically it was found that women
donated twice as much money to their anonymous partners when
factors that might control co-operation were eliminated.
Indeed, this self-sacrifice is something that we often talk
about in our workshop and with our coaching clients. It is an
example of behaviors that in the past have contributed to women not
being taken seriously - yet in times of crisis and uncertainty they
might be the very reason why women can gain the upper hand!
5. A perception that women will be more likely to take
on strategic risks than male candidates:
There is emerging evidence that women leaders may be more likely
to ignore rules and take risks than men. Their actions do not
reflect risk taking per se but rather the fact that women are not
bound by conventional wisdom and/or are willing to take risks to
get ahead. It is exactly this approach that enabled our three case
example women to break through the 'glass ceiling'. The fact they
made it may be very attractive to decision makers as it clearly
illustrates that women can take calculated risks and travel less
travelled paths to achieve their goals.
Indeed, a University of Michigan study of 302 successful
businesswomen found that more than 90% of the women surveyed
indicated that risk-taking was an important factor in their
advancement. In another study it was found that many women leaders
attributed their own upward mobility to their willingness to take
on risky assignments. These women seem to acknowledge that breaking
through the glass ceiling requires taking significant risks in
order to increase their visibility and status as leaders.
6. A perception that women offer a more diverse set of
work and life experiences than male candidates:
The authors argue that successful women executives employ a
variety of complex behaviors and new approaches to leadership that
can make them particularly effective during turbulent and uncertain
times. They suggest that the reason for this is that many women's
career paths are complex: think labyrinth rather than ladder (you
can read about that elsewhere in Professionelle). Also, women's
careers reflect the constant need to negotiate work and life
demands. My favorite example is Merrill Lynch's Kobayashi President
who began her career photocopying, fetching tea and doing other
menial jobs as an "office lady" at a Japanese chemical company in
1981.
So what now?
There is a lot more to this article than I've summarised here -
if you are an academic geek like me, you might want to get the
original. But to me, the reason this is such an important piece is
because it provides hope. It emphasises how many of the attitudes
and behaviors that we, as women, cherish, and ones that may have
held us back in the past, may prove to be the very reason we can
really make our mark on the future!
© Professionelle Ltd 2009