Private and Social Sectors


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Conventional wisdom draws a hard line between for profit business organizations and their not-for-profit counterparts in the social sector. Traditional thinking puts them at opposite ends of the organizational spectrum and suggests that each requires different leadership styles, management skills and organizational behavior to succeed.

A familiar mantra in traditional business thinking has been that the private sector offered the best model for how to do things “right”, and that the way for public organizations to improve was to be “more like a business.”

However, in the context of the global economy and evolving organizational structures, does conventional wisdom still hold true? From Edizen’s perspective in working with organizations in both the private and public sectors, we see that times have changed.

Certainly there are undeniable distinctions about how a publicly traded company and a government agency need to operate. But when it comes to people issues – how leaders, managers and individuals need to work together to achieve the highest organizational performance – the skills needed for success today are the same in any environment.

Take for example how organizations make decisions. Where once the CEO was responsible for making unilateral decisions that then would be disseminated through the organization, today communication happens first. Ideas are “vetted” with collaborative input and feedback from all stakeholders before decisions are made to move forward.

Another example is reporting structures. Where once organization charts presented clear hierarchies with the CEO at the top, today’s organizations turn conventional wisdom upside down. This has a dramatic impact as the ripple effect of change travels farther and faster once the barriers of operational silos are removed. At the same time, by considering organizational structure from the bottom up, everything is much more transparent to those both inside and outside of the organization.

At Edizen, we see that there are two equally important skill sets that leaders need to master in order to be effective in today’s organizational environments – executive leadership and social leadership.

Executive leadership is often seen as the traditional skill set for leaders – strong decision-making, analytical and strategic thinking, and commanding presence. It is about demonstrating strength of character to lead by example (and sometimes force).

Social leadership is about harnessing “power of inclusion, the power of language, the power of shared interests and the power of coalitioni." to build support for change. It is about successfully using the skills of consensus building, communication and persuasion.

Whether you are a senior VP at a global financial firm, a director of a large government agency, or a front line manager at a manufacturing company, understanding and demonstrating both social and executive leadership holds the key to achieving performance objectives.

The most effective leaders today need to be both strong and decisive as well as understanding and empowering. The challenge, whether you are in a business or a government setting, is to know when to demonstrate which leadership skills.

Understanding the Situational Context

If both kinds of leadership – executive and social – are needed to succeed in today’s organization, the question for leaders becomes when is each most appropriate? Does a situation demand decisive action, or would it be more effective to first build consensus and support? When is it best to single-handedly delegate implementation of a project versus taking an inclusionary approach to gather feedback and opinions?

Knowing what skills to apply to a given challenge requires leaders to first understand the situational context. What is the nature of the challenge or change? How does it relate to achieving the organizational objectives? What are the goals of the initiative? Who are the key stakeholders? What are the costs if the initiative fails? Leaders need to first consider questions such as these to frame the situational context. Doing so will illuminate how best to approach a given challenge.

With this understanding, an effective leader will use a combination of both styles in most decisions, with one style being more dominant depending on the situational context. For example, let’s say the organization’s goal is to reduce costs. The leader must make an executive decision to identify the goal to be achieved and important timelines. In this case, an executive leadership style is best to establish the parameters necessary for the initiative to succeed. With the guidelines in place, the skills of social leadership can then be applied to engage employees to adopt the cost cutting measures and make the necessary changes to their workplace behavior.

In another scenario, let’s say a decision is made to downsize. Again, executive leadership comes into play first as the decision is one based on the numbers and operational feasibility. However, downsizing is a big change that will affect morale, and when morale is low, productivity and customer service suffer. Because morale and customer service are at stake, social leadership will play a critical role in shaping how the change takes place.

Social leadership could be demonstrated by such actions as coordinating meetings with all managers to present the financial picture along with the decision to downsize. The leader would then ask for input on how to proceed. Managers could work in teams to come up with various scenarios and the financial impact those scenarios could have. The leader would then suggest deadlines for moving forward based on the financials and use consensus to build support from the team. In the event consensus cannot be reached, executive leadership can come into play again in order to move the organization forward.

When it comes to change, relying exclusively on one leadership style alone can result in failure. Demonstrating too much executive leadership can come across as domineering, defensive, and unemotional. This can impact morale, which could have a negative effect on the bottom line. Going overboard with a social leadership style – not giving up until consensus is reached, being indecisive, or conducting too many focus groups – could also breed failure. If the process is drawn out for too long, the company could go deeper and deeper into the red resulting in even more layoffs.

In our work with organizations in both the public and private sectors, Edizen helps leaders to work through these challenges, develop the balanced leadership skills needed to achieve the highest levels of performance, and Master the Art of Business.

i. 2005 Jim Collins, Good to Great and the Social Sectors: A Monograph to Accompany Good to Great

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