Advanced Leadership Note: An Institutional Perspective and Framework for Managing and Leading

Large-scale societal issues increasingly appear on the agenda of business leaders, including poverty, health, education, business-government relations, and the degradation of the environment. These problems are not entirely new, but the forces of globalization and the economic crisis have made them more visible and increase their urgency. They share several characteristics that signal the need for new kinds of societal leadership and academic scholarship. From the perspective of leadership, one common characteristic of these global problems is that they include both technical and political components. The political context surrounding any problem must be understood and managed, and a variety of institutions across sectors must be mobilized before technical solutions can be applied. Along similar lines, technical knowledge of solutions alone is not enough to scale successful demonstration projects that address these complex problems. That step involves resources and skills centered on forging appropriate systemic connections to effectively distribute solutions. Thus, these challenges cannot be dealt with by one profession or institution acting alone; indeed, effective action most often occurs at the intersections of professional and institutional fields. Holistic solutions, however, can be difficult to implement because of the complex interactions (or failures to interact) among many participants who deal with just one piece of an issue. Finally, solutions to these problems require concurrent actions at several system levels and/or among many stakeholders. This means that social capital as well as financial capital is required to forge relationships, influence opinion leaders and gatekeepers, and ensure cultural appropriateness. This note incorporates these concepts under the rubric of institutional leadership. This introductory note covers the following: (1) key dimensions of the institutional environment surrounding organizations, including the role of stakeholders and the need for new collaborations in creating new markets and solving critical societal problems; (2) the core assumptions of the institutional perspective on organizations and markets, especially in contrast to assumptions of neoclassical economics; and (3) managerial implications—analytics, skills, and success factors.