Case 7.3 Harvard management professor Linda Hill led a team of researchers on a decade- long...

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Case 7.3 Harvard management professor Linda Hill led a team of researchers on a decade- long study of exceptional leaders of innovation. The team studied a select group of 16 men and women from a variety of industries around the world, observing the leaders in action, on-site in their own environments, and interacting directly with them. What the team discovered may seem counterintuitive to the way many people perceive that successful innovative organizations operate; in her words, "Leading innovation is not about creating a vision, and inspiring others to execute it" (L. Hill, 2014). PIXAR: CREATING SPACE FOR SUCCESS So how do highly successful companies that innovate again and again do it? Ed Catmull, CEO of Pixar Animation Studios, exemplifies Professor Hill's findings. Pixar, known for its highly innovative computer-generated imagery (CGI) feature films like Toy Story, Ratatouille, The Incredibles, Finding Nemo, Cars, and Coco, to name just a few, took 20 years to create its first full-length film, Toy Story, which was released in 1995. By the end of 2020, the company had generated 23 feature films with an additional 4 more planned. Noting that it takes approximately 250 people four to five years to make one of these animated films with story lines that evolve as the making of the movie VARKINGA progresses, Professor Hill (2014) emphasizes that "innovation is not about solo genius, it's about collective genius." Innovation is the result of trial and error, subject to mistakes and even failures. The "heart of innovation is a paradox. You have to unleash the talents and passions of many people and you have to harness them into a work that is actually useful. Innovation is a journey. It's a type of collaborative problem solv- ing, usually among people who have different expertise and different points of view" (L. Hill, 2014). That Pixar employs this philosophy was evident in an article CEO Catmull wrote for Harvard Business Review. "You get great creative people, you bet big on them, you give them enormous leeway and support, and you provide them with an environment in which they can get honest feedback from everyone" (Catmull, 2008). Providing support without undermining authority is encouraged at all levels of the organization, and there are essentially two leaders for each production-a director and a producer. The executive management communicates that opera- tional decisions are left to the film's leaders without second-guessing or micro- managing from the top. 176 Successful leaders at Pixar "must have a unifying vision-one that will give coher- ence to the thousands of ideas that go into a movie-and they must be able to turn that vision into clear directives that the staff can implement. They must set LEADERSHIP people up for success by giving them all the information they need to do the job right without telling them how to do it. Each person on a film should be given creative ownership of even the smallest task" (Catmull, 2008). For example, an animator drew an arched eyebrow on a character to show the character's mischievous side, only to have his animation cut because it was viewed as not representative of the character. Two weeks later, it was added back by the director. "Because that animator was allowed to share what we referred to as his slice of genius, he was able to help that director reconceive the character in a subtle but important way that really improved the story," said Professor Hill (2014). Hill's research team found that innovative organizations have three common capabilities: creative abrasion, creative agility, and creative resolution. Creative abrasion centers on the concept that a portfolio of ideas is perco- lated through a process of "debate and discourse," which amplifies differences rather than minimizes them. Unlike brainstorming, where people suspend their judgment, creative abrasion results in heated but constructive arguments to develop a set of alternatives. Through this process, people and organizations learn how to inquire, how to actively listen, and how to advocate for their points of view. Pixar's "Creative Brain Trust" is an example of its approach to creative abrasion. The Creative Brain Trust consists of several accomplished filmmakers, and if a film runs into problems during production, the director is encouraged to solicit advice from this group. Because the Creative Brain Trust members can give "unvarnished expert opinions" and the director has the freedom to ask for and consider the advice, the "problem-solving powers of this group are immense and inspirational to watch" (Catmull, 2008). Creative agility is the ability to test and refine the portfolio of ideas where par- ticipants learn through experimenting irrespective of the outcome. "Experiments are usually about learning. When you get a negative outcome, you're still really learning something that you need to know" (L. Hill, 2014). Pixar's use of "dailies"-daily reviews giving feedback in a positive way- exemplifies creative agility. The team members working on the film review each other's work in progress, in its incomplete state, with the opportunity to com- ment and provide feedback. The intention of these reviews is to circumvent the natural desire to develop a project to a certain level of perfection before sharing it with the team. Creative resolution involves injecting integrated decision making into the process to bring together opposing ideas and "reconfigure them in new combinations to produce a solution that is new and useful" (L. Hill, 2014). CHAPTER 7 (Continued) LEADER-MEMBER EXCHANGE THEORY 177 (Continued) "Innovative organizations never go along to get along. They don't compromise. They don't let one group or one individual dominate, even if it's the boss, even if it's the expert," Professor Hill explained. "Instead, they have developed a rather patient and more inclusive decision-making process that allows for both/and solutions to arise and not simply either/or solutions" (L. Hill, 2014). At Pixar, everyone must have the freedom to communicate with anyone, and it must be safe for everyone to offer ideas. This means that managers learn "that they don't always have to be the first to know about something going on in their realm" and that "the most efficient way to deal with numerous problems is to trust people to work out the difficulties directly with each other without having to check for permission" (Catmull, 2008). To maximize opportunity for interactions among its employees, Pixar's build- ing has a large, central atrium housing the cafeteria, all meeting rooms, bath- rooms, and mailboxes. Everyone in the company has a plethora of reasons to pass through this space several times a day, and "it's hard to describe just how valuable the resulting chance encounters are" (L. Hill, 2014). "They understand that innovation takes a village. The leaders focus on building a sense of community and building those three capabilities. How do they define leadership? They say leadership is about creating a world to which people want to belong. What kind of world do people want to belong in at Pixar? A world where you're living at the frontier. What do they focus their time on? Not on cre- ating a vision. Instead they spend their time thinking about, 'How do we design a studio that has the sensibility of a public square so that people will interact? Let's put in a policy that anyone, no matter what their level or role, is allowed to give notes to the director about how they feel about a particular film. What can we do to make sure that all the disruptors, all the minority voices in this organiza- tion, speak up and are heard? And, finally, let's bestow credit in a very generous way" (L. Hill, 2014). To emphasize her point, she notes that the credits of a Pixar movie even include the names of babies born to team members during production. Questions 1. As noted in the chapter, the early research of LMX focused on the concepts of in-groups and out-groups. 178 a. How do you think this applies to Pixar's approach to leading the large teams required for the making of its feature films? b. From what you have gleaned about Pixar, do you feel that team members have a strong sense of a division between in-groups and out-groups? Why or why not? LEADERSHIP 2. Do you think that most members of Pixar's teams feel they are part of the in-group? d. Do you think the "creative abrasion discussed in the case is something that is a product of an in-group mentality? Why or why not? What about those who might perceive themselves in the out-group- would creative abrasion be possible or productive? Why or why not? Later LMX studies focused on the leader-member exchanges. Given what you know about the work environment, how would you rank the quality of the leader-member exchange at Pixar? Why? 3. Do you think the individual Pixar team members feel a sense of empowerment? How might the idea of creative agility discussed in the case fit into a feeling of empowerment by employees? What about the idea of creative resolution? b. 4. In looking at the phases of leadership development discussed in the text, in what phase do you think a highly innovative company, like Pixar, would fall? Why? 5. Does Pixar's culture allow for the stages of affective processes in LMX development-role taking, role making, and role routinization-to occur? Explain your answer. -Barbara Russell, MBA, BSCS, BBA, Chemeketa Community College CHAPTER 7 LEADER-MEMBER EXCHANGE THEORY 179 Case 7.3 Harvard management professor Linda Hill led a team of researchers on a decade- long study of exceptional leaders of innovation. The team studied a select group of 16 men and women from a variety of industries around the world, observing the leaders in action, on-site in their own environments, and interacting directly with them. What the team discovered may seem counterintuitive to the way many people perceive that successful innovative organizations operate; in her words, "Leading innovation is not about creating a vision, and inspiring others to execute it" (L. Hill, 2014). PIXAR: CREATING SPACE FOR SUCCESS So how do highly successful companies that innovate again and again do it? Ed Catmull, CEO of Pixar Animation Studios, exemplifies Professor Hill's findings. Pixar, known for its highly innovative computer-generated imagery (CGI) feature films like Toy Story, Ratatouille, The Incredibles, Finding Nemo, Cars, and Coco, to name just a few, took 20 years to create its first full-length film, Toy Story, which was released in 1995. By the end of 2020, the company had generated 23 feature films with an additional 4 more planned. Noting that it takes approximately 250 people four to five years to make one of these animated films with story lines that evolve as the making of the movie VARKINGA progresses, Professor Hill (2014) emphasizes that "innovation is not about solo genius, it's about collective genius." Innovation is the result of trial and error, subject to mistakes and even failures. The "heart of innovation is a paradox. You have to unleash the talents and passions of many people and you have to harness them into a work that is actually useful. Innovation is a journey. It's a type of collaborative problem solv- ing, usually among people who have different expertise and different points of view" (L. Hill, 2014). That Pixar employs this philosophy was evident in an article CEO Catmull wrote for Harvard Business Review. "You get great creative people, you bet big on them, you give them enormous leeway and support, and you provide them with an environment in which they can get honest feedback from everyone" (Catmull, 2008). Providing support without undermining authority is encouraged at all levels of the organization, and there are essentially two leaders for each production-a director and a producer. The executive management communicates that opera- tional decisions are left to the film's leaders without second-guessing or micro- managing from the top. 176 Successful leaders at Pixar "must have a unifying vision-one that will give coher- ence to the thousands of ideas that go into a movie-and they must be able to turn that vision into clear directives that the staff can implement. They must set LEADERSHIP people up for success by giving them all the information they need to do the job right without telling them how to do it. Each person on a film should be given creative ownership of even the smallest task" (Catmull, 2008). For example, an animator drew an arched eyebrow on a character to show the character's mischievous side, only to have his animation cut because it was viewed as not representative of the character. Two weeks later, it was added back by the director. "Because that animator was allowed to share what we referred to as his slice of genius, he was able to help that director reconceive the character in a subtle but important way that really improved the story," said Professor Hill (2014). Hill's research team found that innovative organizations have three common capabilities: creative abrasion, creative agility, and creative resolution. Creative abrasion centers on the concept that a portfolio of ideas is perco- lated through a process of "debate and discourse," which amplifies differences rather than minimizes them. Unlike brainstorming, where people suspend their judgment, creative abrasion results in heated but constructive arguments to develop a set of alternatives. Through this process, people and organizations learn how to inquire, how to actively listen, and how to advocate for their points of view. Pixar's "Creative Brain Trust" is an example of its approach to creative abrasion. The Creative Brain Trust consists of several accomplished filmmakers, and if a film runs into problems during production, the director is encouraged to solicit advice from this group. Because the Creative Brain Trust members can give "unvarnished expert opinions" and the director has the freedom to ask for and consider the advice, the "problem-solving powers of this group are immense and inspirational to watch" (Catmull, 2008). Creative agility is the ability to test and refine the portfolio of ideas where par- ticipants learn through experimenting irrespective of the outcome. "Experiments are usually about learning. When you get a negative outcome, you're still really learning something that you need to know" (L. Hill, 2014). Pixar's use of "dailies"-daily reviews giving feedback in a positive way- exemplifies creative agility. The team members working on the film review each other's work in progress, in its incomplete state, with the opportunity to com- ment and provide feedback. The intention of these reviews is to circumvent the natural desire to develop a project to a certain level of perfection before sharing it with the team. Creative resolution involves injecting integrated decision making into the process to bring together opposing ideas and "reconfigure them in new combinations to produce a solution that is new and useful" (L. Hill, 2014). CHAPTER 7 (Continued) LEADER-MEMBER EXCHANGE THEORY 177 (Continued) "Innovative organizations never go along to get along. They don't compromise. They don't let one group or one individual dominate, even if it's the boss, even if it's the expert," Professor Hill explained. "Instead, they have developed a rather patient and more inclusive decision-making process that allows for both/and solutions to arise and not simply either/or solutions" (L. Hill, 2014). At Pixar, everyone must have the freedom to communicate with anyone, and it must be safe for everyone to offer ideas. This means that managers learn "that they don't always have to be the first to know about something going on in their realm" and that "the most efficient way to deal with numerous problems is to trust people to work out the difficulties directly with each other without having to check for permission" (Catmull, 2008). To maximize opportunity for interactions among its employees, Pixar's build- ing has a large, central atrium housing the cafeteria, all meeting rooms, bath- rooms, and mailboxes. Everyone in the company has a plethora of reasons to pass through this space several times a day, and "it's hard to describe just how valuable the resulting chance encounters are" (L. Hill, 2014). "They understand that innovation takes a village. The leaders focus on building a sense of community and building those three capabilities. How do they define leadership? They say leadership is about creating a world to which people want to belong. What kind of world do people want to belong in at Pixar? A world where you're living at the frontier. What do they focus their time on? Not on cre- ating a vision. Instead they spend their time thinking about, 'How do we design a studio that has the sensibility of a public square so that people will interact? Let's put in a policy that anyone, no matter what their level or role, is allowed to give notes to the director about how they feel about a particular film. What can we do to make sure that all the disruptors, all the minority voices in this organiza- tion, speak up and are heard? And, finally, let's bestow credit in a very generous way" (L. Hill, 2014). To emphasize her point, she notes that the credits of a Pixar movie even include the names of babies born to team members during production. Questions 1. As noted in the chapter, the early research of LMX focused on the concepts of in-groups and out-groups. 178 a. How do you think this applies to Pixar's approach to leading the large teams required for the making of its feature films? b. From what you have gleaned about Pixar, do you feel that team members have a strong sense of a division between in-groups and out-groups? Why or why not? LEADERSHIP 2. Do you think that most members of Pixar's teams feel they are part of the in-group? d. Do you think the "creative abrasion discussed in the case is something that is a product of an in-group mentality? Why or why not? What about those who might perceive themselves in the out-group- would creative abrasion be possible or productive? Why or why not? Later LMX studies focused on the leader-member exchanges. Given what you know about the work environment, how would you rank the quality of the leader-member exchange at Pixar? Why? 3. Do you think the individual Pixar team members feel a sense of empowerment? How might the idea of creative agility discussed in the case fit into a feeling of empowerment by employees? What about the idea of creative resolution? b. 4. In looking at the phases of leadership development discussed in the text, in what phase do you think a highly innovative company, like Pixar, would fall? Why? 5. Does Pixar's culture allow for the stages of affective processes in LMX development-role taking, role making, and role routinization-to occur? Explain your answer. -Barbara Russell, MBA, BSCS, BBA, Chemeketa Community College CHAPTER 7 LEADER-MEMBER EXCHANGE THEORY 179