Audiotech Summary of "The Clarity Principle"

The Clarity Principle: How Great Leaders Make the Most Important Decision in Business (and What Happens When They Don't)

by Chatham Sullivan

A summary of the original text.

The Clarity Principle, summarized by arrangement with John Wiley & Sons, Inc., from The Clarity Principle: How Great Leaders Make the Most Important Decision in Business (and What Happens When They Don't) by Chatham Sullivan. © 2013 by John Wiley & Sons, Inc.

In this summary...

 

• Learn how you can restore clarity to an organization facing an identity crisis because it is confused about its core business, torn between competing ideas about what it is and wants to be.
• Bridge the gap between leadership and strategy, and comprehend the tremendous gains to be achieved by leaders willing to make tough choices to clarify their organization's core purpose.
• Create value for your customers by aligning your organization around a unifying focus instead of getting caught in the "murky middle" between two contradictory missions.
• Absorb the lessons from real-world examples of companies like Southwest, Continental, Intel, and CNN that succeeded or failed to apply the Clarity Principle.
• Transform your organization by embracing the leader's responsibility to take action through putting the insights in this summary to work in your business.

The Clarity Principle

Every company, including yours, exists for a reason. Every business has a purpose. Even if your organization's objective is to make money, the way it endures is by solving a particular kind of problem in the world.

Whether you are a pharmaceutical carving out a unique way to treat patients, a nonprofit serving a worthy constituency, or a global retailer satisfying a particular consumer desire, your market, your customers, and the people in your organization all need to know clearly what the business is about. Just like individuals, companies need to know "who" they are, what they're up to, and why it matters.

But purpose doesn't happen by default. It's chosen. Leaders must be willing to take a stand on the company's core purpose and make a decision. Clarity is derived from purpose, and purpose from a pivotal act of choice that leaders make about the business.

Unfortunately, the majority of organizations become confused at times about who and what they are. Their leaders feign clarity, but cannot articulate what they're truly up to. Through their leaders' decisions and actions, these companies avoid answering fundamental questions about the business.

Some duck the responsibility. Others pretend they have the answer when they do not. But by whatever means, the problem of purpose remains unaddressed. This is an increasingly common condition in business that can be referred to as an "identity crisis."

Your business, just like a person, must lay claim to an identity in the world. Your company has to take a stand on what it is. When it can't—when the business's identity and purpose become vague to its market, customers, and employees—a crisis ensues.

Crises are becoming increasingly common because we live in a disruptive era. Technological and business model innovation has uprooted the foundations of many industries. Music, publishing, and media were only the beginning. Early signs of the sea changes to come can already be seen in sectors as diverse as healthcare, retail, financial services, energy, and consumer goods.

It's very possible that the shadow of future disruption has already been cast on your industry—or that you're right in the middle of it.

As an illustration, consider the rate of churn in the Standard & Poor's 500. In the 1960s, the average tenure of a company on the S&P list was 60 years. Today, a company listed on the S&P 500 can expect to remain there a mere 15 years. At this pace, only 25 percent of the current S&P will remain on the list by 2027.

As companies quickly fall, others rise. Facebook, a company that didn't even exist eight years ago, was worth $100 billion at the point of its IPO.

Could that have happened 20 years ago? It's highly unlikely. Companies and their purposes come and go, and they do so quickly and under conditions of greater uncertainty. Although in the past, your business might have had to reinvent itself every 10 to 15 years, you may now need to reevaluate your role and position in the market on much shorter cycles.

In a disruptive and highly uncertain world, the problem isn't that companies define themselves incorrectly. No, the problem today is that companies don't choose at all. Choosing is risky. It brings personal, political, and cultural risks for the organization and its leaders.

In some cases, the failure to choose happens because leaders intentionally dodge the big questions about the business. In others, the failure is an artful compromise across competing strategic ideas about what the business should be.

But beneath it all, leaders duck their responsibility for choosing because they cannot accept the trade-offs, risks, and loss that accompany an act of commitment to one definition of the business over another. In a word, leaders are conflicted about what the company should be.

What then is an identity crisis in the business realm? Put simply, it is a parade of symptoms that occurs in the absence of purpose.

It occurs when your organization becomes confused about what it is, torn among competing alternatives of what to be:

 

• Do we serve this client or that one?
• Do we fulfill this mission or another?
• Do we occupy this position in the market or that one?
• Do we compete on this capability or that?
• Are we one firm or several?

When a company fails to make clear choices in answer to these questions, its identity becomes incoherent, and a crisis—which may last for years—settles in.

Ultimately, identity is about purpose. Purpose is your organization's reason for being in the world—what we might call your company's "problem-to-solve." Purpose isn't about a specific product or service, but about the calling your company answers in the market.

Apple, for example, is an answer to a problem. In a market full of clunky, undifferentiated mass-market products, Apple offers creative, simple, elegant, and highly integrated consumer electronics and software.

Whether you articulate it or not, your company exists in the context of a problem-to-solve.

Choosing is an ongoing activity. All companies—including Apple, including yours—are dynamic, existing always in a process of becoming rather than a stable state of being. They gain, lose, and reinvent their purpose all the time.

But this doesn't mean that your company—even if it's successful—can afford to stop defining itself. The battle against ambiguity is never-ending.

The Murky Middle

Homer's Odyssey tells the story of the Greek hero Odysseus making his 10-year journey home from the Trojan War to Ithaca, where his wife Penelope awaited his return. En route, Odysseus had to pass by two great sea monsters flanking the Strait of Messina, between what is now Sicily and southern Italy.

The first of the two monsters, Scylla, had six heads and 12 feet; it fed on careless sailors who passed too closely. On the other side, rooted in the sea floor, was the monster Charybdis, whose gaping aperture caused whirlpools that swallowed ships whole.

Because the strait was too narrow to pass without coming within range of one of the monsters, Odysseus faced the dilemma of choosing the "least worst option." His was the first case study of a basic leadership dilemma. The word "dilemma," from the Greek, means "two premises." It applies when we face a choice between two alternatives, either of which is thought to be undesirable.

For example, we often say that one is caught on the "horns of a dilemma." This usage of the term comes from Phaedrus, in the Socratic Dialogues, who likened facing a dilemma to squaring off against a charging bull. To confront the bull, you can choose to risk either the right horn or the left. But either way, the bull is inescapable. The prospect of choosing which risk to accept can induce decision-making paralysis.

The heart of an organization's identity crisis is a dilemma. Understanding this dilemma is the first part of resolving the crisis. Failing to do so merely prolongs or exacerbates it, as shown by the tragic story of the cable news network CNN.

CNN was the first all-news cable television channel. The company's identity was deeply rooted in the innovative niche it had created for itself. CNN's early journalists identified themselves as "news guerillas," pioneering a journalistic revolution.

For its first ten years, CNN was wildly successful. CNN had revolutionized news. It had found a galvanizing purpose in satisfying a powerful unmet need in the market: constant coverage of global events in an increasingly globalized world.

But by the mid-1990s, CNN's ratings fluctuated wildly as hot news stories came and went. It was a feast-or-famine business model, dictated by forces outside of CNN's control.

 

By the late '90s, the democratization of world news, which CNN helped make happen, flung the door wide open to the likes of Fox News and MSNBC, who brought new purposes and thus identities to the market. Fox had successfully grafted the personality-driven radio talk show format of shows like Rush Limbaugh's onto cable television, tailoring its programming to a growing conservative audience. MSNBC soon followed with a similar position for liberals.

Fox News and MSNBC went beyond the five W's—who, what, when, where, and why—to solve other problems for viewers. Value migrated to point-of-view-based news, diluting CNN's original position.

It wasn't long before Fox News overtook CNN in the ratings. Audiences stopped tuning in for world events in places like Rwanda and North Korea.

By CNN's 20^th anniversary, rival programs on MSNBC and Fox News had waged a spirited challenge to CNN. Chief among the antagonists was Bill O’Reilly, who owned the all-important 8 pm slot, for which CNN had no answer. With O’Reilly at the helm, Fox's lead began to lengthen.

As a result, CNN began to rethink its purpose. It tried a series of moves to compete with Fox and MSNBC in the coveted 8 pm time slot. For example, it recruited Connie Chung to host a quasi-tabloid program that featured sensationalized stories alongside traditional news.

Initially, ratings rose, but Chung's show provoked tensions within the network. Rank and file saw in Chung everything they believed was wrong with the network. Chasing ratings, they believed, had compromised CNN's journalistic principles and legacy.

For the next several years, the network made several moves that alternated between providing straight news and focusing on delivering entertainment news.

How had CNN lost its way? On one hand, the network was a serious news outlet that honored facts, did smart analysis, and covered big world events. On the other, in order to fend off competitors, CNN had begun to experiment with a different kind of business characterized by bigger personalities, sensational news stories, and opinion.

The problem was that these two identities expressed starkly incompatible purposes, each targeting different audiences with different products, derived through opposing values, core assets, processes, and cultures. Instead of laying claim to one position or the other, CNN clumsily experimented with both, drifting down a path one staffer dubbed "the murky middle."

CNN's tribulations demonstrate that the failure to choose derives from a dilemma. Like Odysseus, the network faced a choice between options that posed risks and potential losses. To embrace traditional journalism, CNN would have had to risk losing viewers interested in alternative forms of news; conversely, adopting a Fox-like strategy would mean abandoning the original vision of a no-stars network giving its audience the news they needed.

Rather than accept the tradeoffs required to go all-in on either position, CNN compromised, straddled, and oscillated between irreconcilable identities. Judging by its erratic behavior, the network's tactics weren't the product of reasoned decision-making but an expression of lacking the clarity needed to make a choice.

This lack of clarity is common. Every organization struggles over different versions of what to be. As a way to appreciate the dynamics, think about your own company. Lurking beneath the surface are likely opposing tensions around what your organization is or ought to be.

What are your own versions of "entertainment versus news organization"? If you can locate the opposing positions, take a step further.

Between the two options you identified, where would you locate your company at the present? How about 18 months from now? Would your colleagues agree with your assessment?

Going further, what would be the impact on your organization if employees worked from divergent or confusing understandings of the business?

This brings us back to Odysseus, whose voyage through the Strait of Messina required that he choose between two deadly monsters. Odysseus' dilemma was not so different from those that many executives face.

However, they do not always heed the lesson embedded in this 2,800-year-old tale. Odysseus was forced to accept the inevitable risk and loss that came bundled with the act of making a clear decision. He opted to pass close to Scylla, thereby losing only a few of his sailors, rather than risk losing his whole ship and crew to Charybdis.

Core dilemmas are deep and complicated phenomena. We must not underestimate the weight of the choices that fall on leaders' shoulders.

Odysseus, too, was pained by the prospect of putting his crew in harm's way. After all, they had fought together for years, defeated Troy, and Odysseus knew them all as brothers and friends. But he was nonetheless able to choose the "least worst option"—the one that would prevent the destruction of the ship—because he never lost sight of the journey's purpose: to get back home to Ithaca.

Leaders confront many powerful dynamics that can distract them from choosing a clear enterprise purpose. In the next section, you will learn more about the performance penalties that a murky identity imposes. No matter the short-term pain, it is always better to choose.

Neither Fish nor Fowl

John F. Kennedy is said to have described the camel as "a horse designed by a committee." Kennedy wanted to make a point about the way committees make decisions: Organized efforts to satisfy competing agendas typically end up pleasing no one.

This is as true in business as it is in politics, architecture, or any number of other fields. A business can be one thing or another, but will invariably suffer when it tries to be too many things at once. The unsatisfying in-between state of being "neither fish nor fowl" is likely to incur a variety of penalties.

These penalties are paid internally as a cost to operational performance, and also externally to the detriment of your brand in the market. As a general rule, consumers and other stakeholders shun things that defy preexisting categories or fail to stand out clearly on their own. We don't like things that confuse us.

There is only so much tension an organization can bear without tearing itself apart. Abraham Lincoln observed that, "a house divided against itself cannot stand." This applies to business as well. An organization pulled among competing purposes risks discord, fragmentation, and inefficiency.

Companies that divide their attention and resources between competing purposes are applying half-hearted energy and focus to what should be fully committed activities. Over time, splitting the difference becomes a strategy unto itself—and not a very good one.

One of the best illustrations of a house divided and its impact on performance is the squaring off between Southwest and Continental airlines. Southwest has posted 39 years of profitability in an industry where profits are excruciatingly difficult to earn. There's a simple reason why Southwest endures: The company has made a commitment.

Back in the 1990s, Southwest Airlines carved out a new space in the airline market by offering short-haul, low-cost, no-frills service to price-sensitive travelers. Southwest achieved this position by aligning all of its operational activities toward economy and volume. The airline eliminated meals, seating assignments, and first-class sections, and used automated ticketing to bypass travel agencies that charged a commission for booking flights. It used a single model of aircraft to simplify parts inventory and flight crew training.

All these activities, from the seating procedures to plane selection, ensured fast turnarounds at the gate, making it possible for Southwest to keep more planes in the air, increase the number of flights, and drive down ticket prices. The airline had a clear purpose: Provide value in the low-cost space.

Enticed by Southwest's success, Continental developed its own version of the low-cost model, which it called "Continental Lite." Like Southwest, Continental Lite eliminated meals and first-class service. These measures increased the speed of departures and lowered fares.

But the airline soon encountered turbulence, figuratively speaking. Continental's full-service airline couldn't afford to drop travel agents or revamp its seat-assignment processes, nor could it offer the same frequent-flyer benefits to customers paying the Lite segment's lower fares.

To manage these contradictions, the company lowered commissions for travel agents and watered down the frequent-flyer program across all service classes. But in attempting to compromise between two incompatible models, Continental failed to fully deliver on either purpose.

The compromises produced inefficiencies in both service segments. The results were devastating. Late flights, cancellations, and angry customers cost Continental hundreds of millions of dollars—and the CEO his job.

Continental's misstep is a reminder that businesses succeed not in their parts, but as a whole. Designed around a very clear purpose, to which it was committed, Southwest operated a holistic business that aligned a number of reinforcing, amplifying activities.

Continental cherry-picked some of those activities. But the unity and alignment of activities around a purpose is what matters. The Continental Lite model was in conflict with Continental's core operation. Straddling these two positions eroded the efficiency of the business as a whole and its ability to generate value for customers seeking low-cost air travel.

The lesson: Clarity and alignment create value; confusion and compromise destroy it.

Data from a number of places show us that companies that align around a unifying focus do better. Chris Zook has made a compelling case that companies that pursue growth through their core business do remarkably better than those that attempt to build multiple cores or diversify.

He finds, for example, that private-equity companies achieve their best financial results acquiring underperforming businesses that are marooned within diversified conglomerates and then sharpening their business's focus. Similarly, acquisitions that expand the scale of the core business are twice as successful as those that diversify or expand scope.

Paradoxically, growth is likelier to come from focus—by narrowing rather than expanding scope. Companies that seek growth by stretching beyond their core don't often fare well.

We certainly see this in the Continental case. When Continental aped Southwest's positioning, it strayed from its core—and paid a steep price.

There is only so much artful balancing a company can endure. The goal of achieving balance between contradictory models often becomes the biggest excuse for failing to make the bigger choice between them.

A company cannot successfully try to be both fish and fowl. It has to choose. When companies drift into the gulch between two market positions, they dilute value both for customers and for the business.

CNN is another good example. The network straddled the line between providing straight coverage of world events and personality-driven programing that sometimes veered into entertainment. CNN drifted between those two peaks in a kind of no-man's-land in the market structure. It is the territory where underperforming companies can be found.

 

The operational side of things is half the story. Clarity involves more than efficiently executing your strategy or aligning your business. It is also about branding and intelligibility—the way the market perceives you, as you do whatever it is you've chosen to do. To amplify this point, we will need to introduce two concepts.

The first, cognitive fluency, is drawn from psychology; the second, categorical imperative, from sociology. Together, they help explain how consumers decode and respond to clarity and confusion in the market.

One reason why markets reward clarity and punish ambiguity is quite simple: People respond better to things that are easy to think about and avoid those that are harder to make sense of. Ambiguity makes people work; it has what psychologists call "low cognitive economy."

The more effort it takes to make sense of something, the less valid it seems. Clarity, on the other hand, is comforting. It enhances consumer confidence, helping prospective buyers evaluate whether an item being offered is good or bad. The preference for easy thinking is what psychologists refer to as cognitive fluency.

We might simplify this bias to the formula Easy = True.

The CNN and Continental examples show how easily companies can drift into the murky middle. They also show how identity confusion can violate the natural human preference for cognitive fluency. Again, people grant more validity to offerings that they can more easily understand.

For example, shares in companies with easy-to-pronounce names significantly outperform those with hard-to-pronounce names. The reverse is also true: When customers encounter ambiguous offerings that require more cognitive effort, they grant them lower validity. Whether or not we are conscious of it, fluency influences judgment.

Companies that ambiguously straddle different positions also violate what economic sociologists refer to as the categorical imperative: Consumers make judgments about the value of a company by referencing things they already understand—established market categories.

Market categories drive our purchasing decisions. We instinctively know the difference between a Walmart and a Whole Foods, a Dell and an Apple, a Mercedes and a Ford, not just because of the properties of the products themselves but also by the different needs these companies satisfy.

In the car sector, for example, there are very specific fundamental categories—luxury, economy, hybrid, and so on—that help us organize our choices as consumers. They make the options intelligible.

The categorical imperative decrees that consumers assign a lower value to offerings that straddle categories or fall outside of the market's classification system, because these ambiguous offerings can't be easily evaluated against alternatives.

Data are beginning to confirm the effect of the categorical imperative across industries. Studies illustrate that economic entities—ranging from movie actors to large corporations—underperform compared with their rivals if they don't fit within the market's customary categories. For example, actors who can be easily typecast tend to find more work than their perhaps more brilliant but idiosyncratic peers.

These two concepts reinforce the importance of taking a stand to avoid getting caught in the murky middle. Leadership's primary responsibility is to define the purpose of the business. This means understanding and making choices to resolve strategic dilemmas confronting the organization.

An essential part of that duty is accepting the reality of trade-offs. An elemental role that leaders play is to wrestle with uncertainty, risk, and the losses caused by doing one thing rather than another.

Frightening as they may be, the big purpose-defining choices in business are moments for leaders to rise to greatness. There are few things executives find as satisfying as creating clarity in the business by taking a risk with their colleagues to do the right thing. In the next section, we'll see exactly how this happens.

Taking a Stand

The Gordian knot is said to have adorned an oxcart in the central square of Phrygia in what is now western Turkey. The knot was an intricately woven mystery, considered insoluble by human hands. For several hundred years, the knot remained unloosened.

Then, in 333 BC, its mystery tempted Alexander the Great. Alexander had heard tales of the knot and couldn't help but visit the puzzle that had eluded so many for so long. Naturally, a great crowd came to watch as Alexander knelt beside the knot and searched for the ends. But, like others before him, he failed to find the solution.

Befuddled, Alexander closed his eyes and sat for some time, searching his mind for an answer. Then suddenly insight struck him. He quickly stood, raised his sword, and with a swift strike cleaved the knot in two. Thereupon, the riddle of the Gordian knot was revealed: Hidden inside its core were the two ends.

The Gordian knot is an apt metaphor for an identity crisis that occurs when organizations lose purpose. The condition is bound up in an intractable, knotty network of problems; the sources of which we can't readily identify and may not easily comprehend. There are hidden interests at play, and layers of politics. Most crises last for years; CNN, for example, has suffered from its identity crisis for nearly a decade.

Solving a multitude of puzzles one strand at a time cannot solve a crisis like the Gordian knot. The knot is often beyond the powers of even the greatest leader. The painstaking, bit-by-bit approach to executing strategic change simply takes too long. And before you know it—like the allegorical "boiling frog"—you've been cooked to death by degrees. Sadly, many organizations do not notice what's happened until it's too late.

But there is a solution. Like Alexander, we can cut directly through to the heart of the matter. But to do this, we have to begin with purpose.

Purpose is the opposite of the murky middle. Let's be honest: It is relatively easy to muddle along in the murky middle. You can follow the path of least resistance. You can avoid discussing the undiscussable trade-offs. You can satisfy everyone's interests, not completely, but enough to keep up a fairly balanced equilibrium.

As CNN has shown, balance can be sustained for quite some time. But what if CNN were to finally break the ice and have an open conversation about its future? Imagine if the network's executives set the options for what it might become side by side, and actually felt the scary-but-exhilarating implications of each identity. They'd get beyond tactics and abstract ideas, and finally plunge into the experience of what the transition to a changed identity would look and feel like.

The greatest weapon against the murky middle is to envision what it would mean to enact a new identity—that is, what it would mean to make the choice.

However, this process should be slightly traumatizing. If there aren't elements in an unfolding scenario that distress you or make the hairs stand up on the back of your neck, then you haven't done your job. The litmus test for a meaningful purpose ought to be that the vision of the future is both exhilarating and scary. The process has two parts:

 

• First, you and your team must build a holistic understanding of what the business would be like if you went all in. Don't pull any punches. If you think a line of business might be a misfit in the new world, imagine you will have to cut it off.
• Second, help the community of your organization get in touch with the implications of a potential future so that they, too, can understand what feels right and what doesn't. The anxieties that feed the crisis don't come from an uncertainty about whether you get the math right. They derive from the implications of the choice: the economic, social, political, and emotional trade-offs of doing one thing versus another.

To take a stand, the leader must face the anxiety of making a choice whose ramifications directly affect people. Choice can be agonizing, not just because one risks choosing wrongly, but also because the act of making a commitment is emotional, political, and often deeply personal work.

To give you a sense of this, let's briefly consider the early history of Intel Corp. Intel's initial success had come from manufacturing computer memory chips, known as DRAM (dynamic random access memory). By 1983, Intel faced growing competition from Japanese manufacturers, which had flooded the market with cheap, high-quality DRAM alternatives. At the time, Intel was entirely identified with the memory business.

Way back in 1971, Intel had designed the first commercial microprocessor—essentially, the brain of a microcomputer (later known as the personal computer)—and by 1983 founders Andy Grove and Gordon Moore saw an opportunity for Intel to move the business toward microprocessor manufacturing.

But the leaders hesitated, unwilling to jeopardize the memory business, which still provided the bulk of Intel's revenues. As Grove observed, "The company had a couple of beliefs that were as strong as religious dogmas." One of these was that memory chips "are the backbone of our manufacturing and sales activities."

It was a classic dilemma, and as the years rolled on, indecision cost the company. By the early 1980s, declining DRAM profits were materially hurting Intel. On what would later be known as Black Monday, 15 Intel engineers who had been designing new microprocessor applications resigned in protest over the company's reluctance to commit to the new technology.

Intel was riven with disagreement. The proposal to exit the DRAM business ran up against powerful emotions throughout the organization.

One day, as Moore and Grove stared glumly out of Grove's office window, Grove turned to Moore and asked, "If we got kicked out, and the board brought in a new CEO, what do you think he would do?"

Moore responded unequivocally: "He would get us out of memories." A moment of silence passed before Grove made a startling proposal: "Why shouldn't you and I walk out that door, come back in, and do it ourselves?"

And that's what they did. But committing to a course of action is one thing; implementing it is another. Purging the social and cultural architecture that surrounded the DRAM business proved to be more difficult than making the choice had been.

R&D budget allocations were especially difficult. Moore, Grove, and other senior leaders hesitated, wavered, compromised, and anguished over the transition. Despite their decision to discontinue production of the chips, DRAM continued to consume about one-third of Intel's total research budget.

But by late 1984, they had succeeded in reducing DRAM production to a lone manufacturing site in Oregon—which proved to be an outpost of recalcitrance. To ensure cooperation, Grove had to replace the site manager. But the manager's replacement also attempted a compromise.

Finally, Grove flew to Oregon himself. With difficulty, he told the team there that Intel was discontinuing DRAM production permanently. He then directed his sales force to notify the company's memory customers that Intel would no longer make DRAMs.

Looking back on the Intel episode, and on the aftermath of perhaps any difficult but necessary transition, there is no sensible argument for failing to make a move. But in the heat of battle, it can often be almost impossible to look ahead, past the turmoil of the moment, to the benefits that will flow from achieving clarity.

As we saw with Intel's stubborn devotion to DRAM chips, the anxiety in the foreground becomes gigantic and obscures the gains to be made on the horizon. But eventually you move past it, arriving at the harvest that transformation can bring.

In the shadow of an unmade decision, the focal points of fear seem so much larger than they turn out to be in reality. At Intel, the senior team was terrified of the customer response to its proposed exit from the DRAM market. That worry prolonged the company's period of denial.

But, as Andy Grove later recalled, "[The customers'] reaction was, for all practical purposes, benign." One customer, he said, even joked, "Well, it sure took you a long time!"

After liberating the capital and management energy to pursue microprocessors, Intel took off like a rocket. "We became the largest semiconductor company in the world," said Grove, "larger even than the Japanese companies that had beaten us in memories. By now, our identification with microprocessors is so strong that it's difficult for us to get noticed for our other products."

Momentous choices always provoke powerful emotions because the stakes are high. Choosing requires a good measure of courage. It requires taking a stand.

Leaders have the burden of making choices for the benefit of the institutions they lead and the people who work in them. They vanquish the disorienting and frightening feelings associated with choice only when they finally accept the responsibility of choosing, both for themselves and the organization.

The primary responsibility of leadership, then, is to take responsibility. When we embrace choice, we gain clarity of purpose. It is clarity that ultimately severs the Gordian knot of an identity crisis.

This defining commitment also gives an organization its distinctiveness in the marketplace and a feeling of coherence and integrity. It gives the organization a story to tell. The clarity attracts others, who seek similar purposes.

Even as customers, we may feel that a company is "special." Distinctive organizations—of which there are relatively few—seem to radiate purpose, and we get it. You can bet that behind that specialness is a leader who faced anxiety and risk in order to take a stand on the business.

Of course, you don't have to be a customer or a leader to understand the impact of this kind of choice. Many of us are fortunate enough to work in a special organization. The organization is up to something, and you can feel it. As we'll see in the next section, a well-made choice can endow an enterprise with meaning, identity, and a sense of community.

The Hunger for Purpose

A shared central purpose provides a sense of community and a point of orientation—the equivalent of a North Star that guides the work of everyone in an enterprise. The value employees place on purpose can outrank even the importance they place on money.

It is easy to be skeptical of such a claim. Money is typically presumed to have the strongest hold on people's motivations. And, without question, financial rewards are right up there. But interesting research suggests that people are often more deeply driven by other factors.

Take for example, the recent research on how professionals actually experience work. Harvard Business School Professor Teresa M. Amabile and research partner Steven J. Kramer spent more than a decade studying what they called the "inner work lives" of 238 knowledge workers. Each day, the participants were asked to write about a single memorable event, using the form of a diary entry.

In terms of motivation, what the professionals in the study valued most—more than money, more than perks, and more than status—was the feeling that they were "moving forward" and achieving meaningful goals.

It was clear that participants felt most adrift and least happy when they were given too little guidance to know whether they were succeeding or not, and to what end. Conversely, they were happiest when they understood the assignment, the progress they were making, and how their work fit in the larger scheme of the project's ultimate goals.

It is not a great leap to conclude from this research that people in a workplace have a strong desire to feel that they are part of something larger than themselves. They want to know not only why they are doing what they do; they also want to know how it fits with others' contributions as part of the whole endeavor. In short, they strive to understand the context of their work—its meaning and its purpose.

Too many organizations lack the charisma that comes from identifying with a larger cause. People who feel disconnected from the primary task of the business work for a paycheck or to gain new skills before the next, more promising career move comes along.

Purpose is the "why" of any business. When leaders fail to make fundamental choices, the identity crisis that ensues corrodes the organization's purpose, thereby undermining its ability to create meaning and a sense of community. Purpose provides meaning, motivation, and community to a business.

Meaning and intelligibility wrought by purpose let us know what matters—what counts as being important and what doesn't. Senior managers say that one of the biggest issues they face is the lack of clear priorities in their organization. Everything is important, and therefore nothing is important.

This flattening of value is paralyzing, because it diminishes the organization's ability to make trade-offs between one activity and another, making it next to impossible for employees to reliably judge "what has significance for us."

Not every area of the business can be treated as equal; some matter more than others. A clear understanding of these differences helps everyone know when to say yes, when to say no, what to pursue, and what to let go of.

Purpose—the core or "why" of an enterprise—provides a basis for discriminating. It is a guide for helping us decide what counts. When purpose is clear, and is both shared and supported, business operates from a secure foundation that enables people to take action.

From Insight to Action

Let's conclude with some constructive thoughts on how to put the insights you've gleaned from this summary to work. No matter where you sit on the org chart, there are ways for you to take action.

You are now in a better position to spot the existence of confusion in your own organization, even before it becomes a full-blown crisis. When it comes to addressing the underlying dilemmas that spread confusion, whether you're the CEO or a middle manager, you can expect to encounter strong forces that will push and pull against your desire to act. Some of these forces may be within your organization; some may be within you.

But taking even a small action can make a big difference. For example, a number of years ago, in a leadership development program for state corrections officers, an insignificant yet powerful leadership moment took place. During a break between sessions, a somewhat jaded group of wardens began grumbling about a clock on the room's wall that was still unchanged from the start of daylight saving time six weeks earlier.

The wardens complained that the clock was yet another example of the state's larger corrections problems: Nothing ever changes, broken things never get fixed, no one takes accountability, and so forth. Then, out of the blue, one of the wardens quietly placed a chair against the wall, climbed up on it, and reset the clock.

When something is broken and stays that way, after a while we tend to stop seeing it. Its brokenness becomes "the new normal." We accept it and factor it into our accommodation of all the other broken things.

In the case of a wall clock, we add or subtract the hour each time we look at it. Soon enough, the accommodation itself goes unnoticed, and resignation sets in. What's broken no longer looks quite so wrong. You stop noticing all of the things that are broken. You then fail to connect the dysfunctional consequences back to their true root causes, which are often related to the very purpose of the organization.

You might think that the act of fixing the clock was nothing special. But it took courage, in that moment, for the warden to go against his peer group's resignation and skepticism about change.

Because of the contrast it created with the sour complaints that had so recently filled the room, the act made a powerful point, highlighting the transformative difference between grousing about a problem and actually taking steps to fix it. As a result, there soon came a noticeable shift in the wardens' group dynamic when it came to thinking about how to handle larger problems.

What brings someone from a position of accommodation and going along to the point of taking action? It's more complicated than simply overcoming inertia.

You have to find a way to see things differently—to not just see them as needing repair, but see a role for yourself in their repair. You yourself have to change. Your thought pattern has to change from "Somebody should fix that clock," to "I really ought to fix that clock." What's needed, then, is a sense of investment and accountability—the recognition that the problem is yours to solve.

On this point, remember how the need to seize accountability bedeviled Intel founders Andy Grove and Gordon Moore. In retrospect, it seems strange that the two most influential figures in the company felt so stymied when faced with the choice of abandoning memory chips in favor of microprocessors. Rationally, they knew it was the smart thing to do, but they were torn between internal factions and couldn't muster up the courage to take the final action.

Only when they paused to imagine being fired by Intel's board of directors were they able to see that whoever succeeded them would immediately do what they had been dithering about. Recognizing that the good of the company required action gave them permission to do it themselves.

In both of these examples—the warden, and Intel's founders—people with different levels of status and power came to accept their responsibility for circumstances that lay within their ability to control. They embraced their duty to disrupt the status quo on behalf of the organization.

Within almost every business, at any given moment some person—maybe you are one of them—is incubating an idea that swims against the tide of the prevailing enterprise culture and practices. To be sure, many more of those ideas will perish than will flourish. But the ones that thrive make it easier for larger, more fundamental changes to occur.

The journey to becoming a change agent begins with the commitment to an idea, whether small or large, and ripens into a felt sense of responsibility: "The clock is wrong, so I need to reset it." One person can make a difference.

Few problems that threaten a business ever go wholly unnoticed. We all know, if only vaguely, when something is broken. But too often, individuals suffer in silence. We may feel like we're the only ones who see the problem. But even when we do realize that something's wrong and that others agree with us, we rarely accept the risks that would come from trying to do something about it.

If you are an executive, this is a big problem. More often than not, leaders don't recognize the spreading discontent until it's too late and you are bushwhacked by a focusing event—such as when, on Black Monday, those 15 Intel microprocessor scientists walked out the door in frustration.

Smart leaders treat such events as a wake-up call not to be wasted. But if you are a leader, challenge yourself to go one step further. Do not allow things that matter to fester; face up to them early on.

Over time, customers, markets, competitors, and technology innovations push a business to make compromises. And the compromises inevitably chip away at the business's clarity of purpose.

Choosing the right purpose demands intelligence, an incisive understanding of the business, and a sure reading of the marketplace. But even more critical is the courage to take responsibility for uncovering the choices that underlie the messy conflicts that plague the business. The leader's primary responsibility is to take responsibility.

When you run into evidence of a crisis, don't sit back and get out of the way, don't throw up your hands or shrug your shoulders or roll your eyes. Instead, lean forward. Diagnose. Interpret. Question. Take action.

The choices that you may be trying to avoid are the very same choices that can, once they are made, reinvent your organization. Confront them.

Remember that you have the real responsibility. Ultimately the meaning, vitality, and above all clarity in your business come from your courage to choose.

About the Author

Chatham Sullivan is an organizational psychologist and a partner at Pivot, a strategic leadership boutique.

He has taught at the Wharton School of Business and the School of Social Policy at the University of Pennsylvania and worked closely with executives at some of the world’s most influential organizations, such as PayPal, eBay, Nike, Johnson & Johnson, and other Fortune 500 companies.

For more information, please visit www.pivotleadership.com.

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