Reframing Organizations: Artistry, Choice, and Leadership, Sixth Edition. Lee G. Bolman and Terrence E. Deal. ! 2017 by John Wiley & Sons, Inc. Published 2017 by Jossey-Bass.
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the interpretation of the American law . . . We didn’t lie. We didn’t understand the question !rst” (Smith and Parloff, 2016). Apparently VW was smart enough to design clever software to fudge emissions tests but not smart enough to know that cheating might be illegal.
The smokescreen worked for years—VW sold a lot of diesels to consumers who wanted just what Volkswagen claimed to offer, a car at the sweet spot of low emissions, high performance, and great fuel economy. The cheating apparently began around 2008, seven years before it became public, when Volkswagen engineers realized they could not make good on the company’s public, clean-diesel promises (Ewing, 2015). Bob Lutz, an industry insider, described VW’s management system as “a reign of terror and a culture where performance was driven by fear and intimidation” (Lutz, 2015). VW engineers faced a tough choice. Should they tell the truth and lose their jobs now or cheat and maybe lose their jobs later? The engineers chose option B. The story did not end happily. In January, 2017, VW pleaded guilty to cheating on emissions tests and agreed to pay a !ne of $4.3 billion. In the same week, six VW executives were indicted for conspiring to defraud the United States.1 In Spring of 2017, VW’s legal troubles appeared to be winding down in the United States, at a total cost of more than $20 billion, but were still ramping up in Germany, where authorities had launched criminal investigations (Ewing, 2017).
The story at Wells Fargo was similar. For years, it had successfully billed itself as the friendly, community bank. It ran warm and fuzzy ads around themes of working together and caring about people. The ads did not mention that in 2010 a federal judge ruled that the bank had cheated customers by deliberately manipulating customer transactions to increase overdraft fees (Randall, 2010), nor that in August, 2016, the bank agreed to pay a $4.1 million penalty for cheating student borrowers. But no amount of advertising would have helped in September, 2016, when the news broke that employees in Wells Fargo branches, under pressure from their bosses to sell more “solutions,” had opened some two million accounts that customers didn’t want and usually didn’t know about, at least not until they received an unexpected credit card in the mail or got hit with fees on an account they didn’t know they had.
None of it should have been news to Wells Fargo’s leadership. Back in 2005, employees began to call the !rm’s human resources department and ethics hotline to report that some of their coworkers were cheating (Cowley, 2016). The bank sometimes solved that problem by !ring the whistleblowers. Take the case of a branch manager in Arizona. While covering for a colleague at another branch, he found that employees were
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opening accounts for fake businesses. He called HR, which told him to call the ethics hotline. Ethics asked him for speci!c data to support the allegations. He pulled data from the system and reported it. A month later, he was !red for improperly looking up account information.
In 2013, the Los Angeles Times ran a story about phony accounts in some local branches. Wells Fargo’s solution was not to lower the “ame under the pot but to try and screw down the lid even tighter. They kept up the intense push for cross-selling but sent employees to ethics seminars where they were instructed not to open accounts customers didn’t want. CEO John Stumpf achieved plausible deniability by proclaiming that he didn’t want “want anyone ever offering a product to someone when they don’t know what the bene!t is, or the customer doesn’t understand it, or doesn’t want it, or doesn’t need it” (Sorkin, 2016, p. B1). But despite his public assurances, the incentives up and down the line still rewarded sales rather than ethical squeamishness. Many employees felt they were in a bind: they’d been told not to cheat, but that was the best way to keep their jobs (Corkery and Cowley, 2016). Like the VW engineers, many decided to cheat now and hope that later never came.
Maybe leaders at Volkswagen and Wells Fargo knew about the cheating and hoped it would never come to light. Maybe they were just out of touch. Either way, they were clueless—failing to see that their companies were headed for costly public-relations nightmares. But they are far from alone. Cluelessness is a pervasive af”iction for leaders, even the best and brightest. Often it leads to personal and institutional disaster. But, sometimes there are second chances.
Consider Steve Jobs. He had to fail before he could succeed. Fail he did. He was !red from Apple Computer, the company he founded, and then spent 11 years “in the wilderness” (Schlender, 2004). During this time of re”ection he discovered capacities as a leader—and human being—that set the stage for his triumphant second act at Apple.
He failed initially for the same reason that countless managers stumble: like the executives at VW and Wells Fargo, Jobs was operating on a limited understanding of leadership and organizations. He was always a brilliant and charismatic product visionary. That enabled him to take Apple from startup to major computer vendor, but didn’t equip him to lead Apple to its next phase. Being !red was painful, but Jobs later concluded that it was the best thing that ever happened to him. “It freed me to enter one of the most creative periods of my life. I’m pretty sure none of this would have happened if I hadn’t been !red from Apple. It was awful-tasting medicine, but I guess the patient needed it.”
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During his period of self-re”ection, Jobs kept busy. He focused on Pixar, a computer graphics company he bought for $10 million, and on NeXT, a new computer company that he founded. One succeeded and the other didn’t, but he learned from both. Pixar became so successful it made Jobs a billionaire. NeXT never made money, but it developed technology that proved vital when Jobs was recalled from the wilderness to save Apple from a death spiral.
His experiences at NeXT and Pixar provided two vital lessons. One was the importance of aligning an organization with its strategy and mission. He understood more clearly that he needed a great company to build great products. Lesson two was about people. Jobs had always understood the importance of talent, but now he had a better appreciation for the importance of relationships and teamwork.
Jobs’s basic character did not change during his wilderness years. The Steve Jobs who returned to Apple in 1997 was much like the human paradox !red 12 years earlier— demanding and charismatic, charming and infuriating, erratic and focused, opinionated and curious. The difference was in how he interpreted what was going on around him and how he led. To his long-time gifts as a magician and warrior, he had added newfound capacities as an organizational architect and team builder.
Shortly after his return, he radically simpli!ed Apple’s product line, built a loyal and talented leadership team, and turned his old company into a hit-making machine as reliable as Pixar. The iMac, iPod, iPhone, and iPad made Jobs the world’s most admired chief executive, and Apple passed ExxonMobil to become the world’s most valuable company. His success in building an organization and a leadership team was validated as Apple’s business results continued to impress after his death in October 2011. Like many other executives, Steve Jobs seemed to have it all until he lost it—but most never get it back.
Martin Winterkorn had seemed to be on track to make Volkswagen the world’s biggest car company, and Wells Fargo CEO John Stumpf was one of America’s most admired bankers. But both became so cocooned in imperfect worldviews that they misread their circumstances and couldn’t see other options. That’s what it means to be clueless. You don’t know what’s going on, but you think you do, and you don’t see better choices. So you do more of what you know, even though it’s not working. You hope in vain that steady on course will get you where you want to go.
How do leaders become clueless? That is what we explore next. Then we introduce reframing—the conceptual core of the book and our basic prescription for sizing things up. Reframing requires an ability to think about situations frommore than one angle, which lets you develop alternative diagnoses and strategies. We introduce four distinct frames—
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structural, human resource, political, and symbolic—each logical and powerful in capturing a detailed snapshot. Together, they help to paint a more comprehensive picture of what’s going on and what to do.
VIRTUES AND DRAWBACKS OF ORGANIZED ACTIVITY There was little need for professional managers when individuals mostly managed their own affairs, drawing goods and services from family farms and small local businesses. Since the dawn of the industrial revolution some 200 years ago, explosive technological and social changes have produced a world that is far more interconnected, frantic, and complicated. Humans struggle to avoid drowning in complexity that continually threatens to pull them in over their heads (Kegan, 1998). Forms of management and organization effective a few years ago are now obsolete. Sérieyx (1993) calls it the organizational big bang: “The information revolution, the globalization of economies, the proliferation of events that undermine all our certainties, the collapse of the grand ideologies, the arrival of the CNN society which transforms us into an immense, planetary village—all these shocks have overturned the rules of the game and suddenly turned yesterday’s organizations into antiques” (pp. 14–15).
Benner and Tushman (2015) argue that the twenty-!rst century is making managers’ challenges ever more vexing:
The paradoxical challenges facing organizations have become more numerous and strategic (Besharov & Smith, 2014; Smith & Lewis, 2011). Beyond the innovation challenges of exploration and exploitation, organizations are now challenged to be local and global (e.g., Marquis & Battilana, 2009), doing well and doing good (e.g., Battilana & Lee, 2014; Margolis & Walsh, 2003), social and commercial (e.g., Battilana & Dorado, 2010), artistic or scienti!c and pro!table (e.g., Glynn, 2000), high commitment and high performance (e.g., Beer & Eisenstadt, 2009), and pro!table and sustainable (e.g., Eccles, Ioannou, & Serafeim, 2014; Henderson, Gulati, & Tushman, 2015; Jay, 2013). These contradictions are more prevalent, persistent, and consequential. Further, these contradictions can be sustained and managed, but not resolved (Smith, 2014).
The demands on managers’ wisdom, imagination and agility have never been greater, and the impact of organizations on people’s well-being and happiness has never been more consequential. The proliferation of complex organizations has made most human activities
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more formalized than they once were. We grow up in families and then start our own. We work for business, government, or nonpro!ts. We learn in schools and universities. We worship in churches, mosques, and synagogues. We play sports in teams, franchises, and leagues. We join clubs and associations. Many of us will grow old and die in hospitals or nursing homes. We build these enterprises because of what they can do for us. They offer goods, entertainment, social services, health care, and almost everything else that we use or consume.
All too often, however, we experience a darker side of these enterprises. Organizations can frustrate and exploit people. Too often, products are “awed, families are dysfunctional, students fail to learn, patients get worse, and policies back!re. Work often has so little meaning that jobs offer nothing beyond a paycheck. If we believe mission statements and public pronouncements, almost every organization these days aims to nurture its employees and delight its customers. But manymiss the mark. Schools are blamed for “mis-educating,” universities are said to close more minds than they open, and government is criticized for corruption, red tape, and rigidity.
