Who Really Matters: The Core Group Theory of Power, Privilege, and Success - Hardcover

Kleiner, Art

Hardcover

ISBN 10: 0385484488 ISBN 13: 9780385484480

Publisher: Currency/Doubleday, 2003

Synopsis

In a breakthrough Organization Man for the twenty-first century, bestselling author Art Kleiner reveals that every organization is driven by a desire to satisfy a Core Group of influential individuals and explains why understanding this group’s expectations is the key to success.

When corporate leaders announce, with seeming sincerity, “We make our decisions on behalf of our shareholders,” their words are taken at face value. But as recent news stories prove, this imperative is routinely violated. In Who Really Matters, Art Kleiner argues that the dissonance between a declared mission and actual operation can be seen at organizations large and small. All organizations have one motive in common. Every decision—which projects to back, who to promote, or how to spend money—is affected by the perceived wants and needs of a core group of people “who really matter.”

The composition of the group can differ from organization to organization. Often, the most senior people in the hierarchy are members—but not always. Sometimes, the people who “matter” can extend far down the corporate ladder, or even reach outside the company to include key customers, labor union leaders, and stockholders. Kleiner gives readers clues about how to identify a core group’s real mission by observing its day-to-day actions, listening to the fundamental message it sends employees, examining its management of new members; understanding the ideas that shape its policies about management, money, and the way the world works; and avoiding the taboos governing the way it operates.

Whether you’re a member of the Core Group—or want to be—this deft, engaging blend of argument and observation, anecdotes and advice, is the one guide you’ll need to achieve your career goals and aspirations by navigating the hidden pathways in any organization, large or small.

About this title

About the Author

ART KLEINER is the director of research and reflection at Dialogos, a consulting firm based in Cambridge, Massachusetts; a faculty member at New York University’s Interactive Telecommunications Program; and the “Culture & Change” columnist for Strategy + Business magazine. He is also the editorial director of the Fifth Discipline Fieldbook series and a longstanding writer on the human impact of management and technology. He lives outside New York City.

From the Back Cover

“Art Kleiner has uncovered a central truth about the way organizations work. His concept of the Core Group clarifies one key reason why rational people often act in seemingly irrational ways within the confines of an institution. Like any deep insight, it
makes explicable what had previously been mysterious.”
—Jim Collins, author of Good to Great and coauthor of Built to Last

“Fresh, pragmatic, wise and eminently accessible . . . Who Really Matters cuts through our needlessly complex views of organizations and brilliantly reveals what’s at the core of both their promise and dysfunction. Kleiner’s astute and grounded analysis makes it possible for all of us who work within or around organizations to be more skillful and successful while maintaining our personal values and purposes.
—James Flaherty, founder of New Ventures West and author of Coaching: Evoking Excellence in Others

“Seminal idea, brilliantly presented, and wonderfully useful.”
—Warren G. Bennis, author of Geeks and Geezers

“Provides a much needed new perspective on leadership, power, and authority in showing clearly how Core Groups unconsciously guide and control organizations. This is a must read for all managers and would-be leaders.”
—Edgar H. Schein, Sloan Fellows Professor of Management Emeritus, MIT Sloan School of Management

“This original and carefully-argued text suggests how to penetrate the apparent and
understand the real driver of corporate conduct. Most important are the practical suggestions for how to effect change. This addition to the conventional wisdom should be part of everyone’s library—buy it!”
—Robert A. G. Monks, shareholder activist and author of Corporate Governance and The New Global Investors

From the Inside Flap

<b>In a breakthrough <i>Organization Man</i> for the twenty-first century, bestselling author Art Kleiner reveals that every organization is driven by a desire to satisfy a Core Group of influential individuals and explains why understanding this group’s expectations is the key to success.</b><br><br>When corporate leaders announce, with seeming sincerity, “We make our decisions on behalf of our shareholders,” their words are taken at face value. But as recent news stories prove, this imperative is routinely violated. In <i>Who Really Matters</i>, Art Kleiner argues that the dissonance between a declared mission and actual operation can be seen at organizations large and small. All organizations have one motive in common. Every decision―which projects to back, who to promote, or how to spend money―is affected by the perceived wants and needs of a core group of people “who really matter.” <br><br>The composition of the group can differ from organization to organization. Often, the most senior people in the hierarchy are members―but not always. Sometimes, the people who “matter” can extend far down the corporate ladder, or even reach outside the company to include key customers, labor union leaders, and stockholders. Kleiner gives readers clues about how to identify a core group’s real mission by observing its day-to-day actions, listening to the fundamental message it sends employees, examining its management of new members; understanding the ideas that shape its policies about management, money, and the way the world works; and avoiding the taboos governing the way it operates.<br><br>Whether you’re a member of the Core Group―or want to be―this deft, engaging blend of argument and observation, anecdotes and advice, is the one guide you’ll need to achieve your career goals and aspirations by navigating the hidden pathways in any organization, large or small.

Reviews

The old saw "the customer comes first" is a flat-out lie, argues Kleiner, a contributing editor at strategy+business magazine and the author of several business books, in this fresh look at the structure and politics of business. He contends that "a depressing number of business corporations have evolved into organizations with one primary purpose: To extract wealth from all constitutions (not just the shareholders, but the employees, customers, and neighbors as well) and give it essentially to the children and grandchildren of some of its senior executives." Such corporate selfishness works because the key decisions in are being made by the "Core Group"-executives or employees whose needs and desires determine company behavior. Others within an organization immediately sense who is in the Core Group and adjust their behavior accordingly; "Day after day, in all the small decisions we made, all the employees contributed to keeping these individuals more or less at the center of the Core Group." Using examples of individuals and companies, Kleiner shows how employees can better understand the mechanisms of the Core Group to advance their careers; sometimes, he says, if they lack the respect of Core Group members, they might even conclude that leaving their current position is more advantageous. The book also provides executives with strategies for managing unions, shareholders and others in a time when recent scandals have tarnished the image of big corporations. Not just another bit of conventional business wisdom, this volume should prove most beneficial to experienced managers who are accustomed to holding workshops and seminars on change.
Copyright 2003 Reed Business Information, Inc.

Excerpt. © Reprinted by permission. All rights reserved.

CHAPTER 1

The Customer Comes Eighth

Back in the early 1980s, when writing mission statements was just an infant management fad, a division of the Exxon Oil Company held an employee conference to announce their new "core values." Enshrined as number one on the list was this simple sentence: "The customer comes first."

That night, the division executives met for dinner, and after a few drinks, a brash young rising star named Monty proposed a toast. "I just want you to know," he said, "that the customer does not come first." Then Monty named the president of the division. "He comes first." He named the European president. "He comes second." And the North American president. "He comes third." The Far Eastern president "comes fourth." And so on for the fifth, sixth, and seventh senior executives of that division, all of whom were in the room. "The customer," concluded Monty, "comes eighth."

Said the Exxon retiree who told me this story: "There was an agonized silence for about ten seconds. I thought Monty would get fired on the spot. Then one of the top people smiled, and the place fell apart in hysterical laughter. It was the first truth spoken all day."

"The customer comes first" is one of the three great lies of the modern corporation. The other two are: "We make our decisions on behalf of our shareholders" and "Employees are our most important asset." Government agencies have their own equivalent lies: "We are here to serve the public interest." Nonprofits, associations, and labor unions have theirs: "Above all else, we represent the needs of our members."

Of course, if organizations were really set up on behalf of these interests, then they would do a better job, by and large, in serving them. When organizations fail, people tend to assume that their leaders are inept, overwhelmed, or corrupt. But suppose instead that all organizations are doing precisely what they're supposed to be doing. What, then, is their objective? Judging not from their rhetoric, but from their actual behavior and accomplishments, what purpose are most organizations seeking to fulfill?

This book is an effort to answer that question. It starts with the premise that, in every company, agency, institution, and enterprise, there is some Core Group of key people--the "people who really matter." Every organization is continually acting to fulfill the perceived needs and priorities of its Core Group. It's sometimes hard to see this, because the nature and makeup of that Core Group varies from workplace to workplace, and so do the mission statements and other espoused purposes that get voiced to the rest of the world. But everything that the organization might do--meeting customer needs, creating wealth, delivering products or services, fulfilling promises, developing the talents of employees, fostering innovation, establishing a secure workplace, making a better world, and, oh yes, returning investment to shareholders--comes second. Or maybe "eighth." What comes first, in every organization, is keeping the Core Group satisfied.

Core Group dynamics explain why some corporations spend years scrambling frugally for profit, and then squander it on ill-advised mergers, disproportionate pay for their senior executives, or hidden and improper deals. Core Group dynamics also explain why some government agencies block efforts to reform themselves, even when their reputation and potential survival depends on reform. And why some nonprofit organizations persevere against enormous odds to fulfill their idealistic missions, while complacently dismissing potential partnerships that might genuinely help them. Indeed, every organization seems to have its own forms of Core Group-related folly or corruption.

It's because of Core Group dynamics that a depressing number of business corporations have evolved into organizations with one primary purpose: To extract wealth from all constituents (not just the shareholders, but the employees, customers, and neighbors as well) and give it essentially to the children and grandchildren of some of its senior executives. And yet Core Groups are not inherently bad or dysfunctional. Indeed, they represent probably the best hope we have for ennobling humanity--at least in a world like ours, in which organizations have the lion's share of power, capital, and influence. An organization's Core Group is the source of its energy, drive, and direction. Without an energetic and effective Core Group, all efforts to spark creativity and enthusiasm sputter out.

If you work in an organization, then all this may be second nature to you, so obvious and taken for granted that it barely even registers as important. But when you take a step back, the significance for all of us, even those who don't work in organizations, is unavoidable. We live in a civilization composed of organizations. Indeed, in industrialized countries, the organizational birthrate exceeds the human birthrate. Even though organizations are continually merging, swallowing each other up, or dwindling into inactivity, there are more organizations each year than there were the year before.

People have always used organizations to amplify human power. Individuals didn't build pyramids or cathedrals; tribal and feudal organizations did. But since the industrial revolution, and in the past 150 years in particular, organizations have become powerful in unprecedented ways. They are faster than they have ever been, operating with the perpetual acceleration of computers and wireless communication. They are interconnected through vast global webs of trade and distribution, webs that (among other things) make most human beings virtually dependent on organizations for food, shelter, and transportation. They are pervasive; there are almost no sustainable ways of making a living without organizations, and organizations dominate the political system, instead of paying fealty to it.

It's as if some giant invisible species suddenly invaded the Earth around 1850, reshaping civilization in its image, obviously here to stay--and yet almost nobody seems to see it clearly. Nobody really knows how it works, or even what it does. Some people go to business school to master these new creatures, and end up being mastered by them.

The left protests against globalization, capitalism, big corporations, and Wall Street; the right excoriates big government, corrupt labor, or liberal media. But when you strip away the rhetoric, both sides seem to be driven by the same basic dynamic. They feel excluded from, rejected by, opposed to, and trampled on by the Core Groups of organizations associated with the other side.

If we are going to act effectively in a society of organizations, we need a theory that helps us see organizations clearly, as they are. We need to observe this new species in its natural habitat, to track its behavior, and to study its relationships with predators and prey. Only then can we ask: Why does it operate this way? And what, if anything, could be different? Only then can we learn to use organizations, instead of feeling like we are being used by them. Only then can we move organizations away from being simply the property and tools of the few, and develop their potential for the rest of us. Only then can we form real relationships with the members of this new species, as employees, neighbors, cocreators, participants, leaders, and even lovers of organizations.

In short, if we want to not just live within society, but establish ourselves as leaders and creators, then we have to understand the dynamics of the Core Group.

The root of the word "core" is the Latin cor, or heart, and the Core Group is the genuine heart of an organization. Management writer Arie de Geus, in his book The Living Company, calls the Core Group the "we" of the organization--the central proprietors of its interests. They usually include most, but not all, of the people at the top of the organization chart. Plus others. The Core Group members are the center of the organization's informal networks, and symbolic representatives of the organization's direction. Maybe they got into the Core Group because of their position, their rank, or their ability to hire and fire others; maybe because they control a key bottleneck, or belong to a particular influential subculture. Maybe their personal charisma or integrity got them in. In the end, it probably doesn't matter that much how they got in. What matters is that they matter.

The Core Group won't be named in any formal organization chart, contract, or constitution. It exists in people's hearts and minds. Its power is derived not from authority, but from legitimacy. Its influence is not always conscious, or even visibly apparent, but it is always present in the implementation of actual decisions. It is the fundamental aspect of organizational culture that makes visitors to a workplace scratch their heads sometimes: "What are those people thinking?"

It is impossible to imagine an organization without a Core Group. And if you could imagine one, why would you want to create it? Start-ups need entrepreneurial Core Groups who put themselves at risk for the company's future. (People start organizations in the first place precisely because they want to be in a Core Group, if only to see what it would be like. I should know; I cofounded a consulting firm largely for that reason.) Large, well-run companies need a Core Group of senior leaders who can permanently merge their identities with that of the organization. Government agencies and nonprofits need Core Groups that can take a visible stand on behalf of the organization's principles. Even the most hierarchically strict organizations, like military units, depend on their Core Groups to maintain, among other things, the level of mutual respect that soldiers need to operate above and beyond the limits of their orders.

As we'll s...

Edition details

• Publisher: Currency/Doubleday
• Publication date: 2003
• Language: English
• ISBN 10: 0385484488
• ISBN 13: 9780385484480
• Binding: Hardcover
• Edition number: 1
• Number of pages: 288