67. Top Line Growth Pie

Key Definitions

Firms often seek to grow their top line, i.e. their gross revenue derived from the sale of goods and/or services. In a now famous paper, Igor Ansoff (1957) argued that such growth can be pursued along two dimensions – in existing and new markets, and with existing and new products. The resulting 2x2 diagram is widely known as the Ansoff Matrix.

Ansoff’s four growth directions are market penetration (more existing products in existing markets), market development (more existing products to new markets), product development (new products to existing markets) and diversification (new products to new markets).

Conceptual Model

The Top Line Growth Pie builds on Ansoff’s logic of seeking growth along the dimensions of product and market, but splits each category into smaller parts, to give strategists a more fine-grained view into the various growth possibilities. Along the market dimension (plotted horizontally), a distinction is not only made between existing (at the center) and new (around the center), but also between new segments and new geographies. Each is further split according to the extent of newness – adjacent or distant. Along the vertical product dimension, the same is done, making a distinction between new products in or outside the existing business. The underlying metaphor is that firms can grow by taking a bigger slice of the existing pie (increase market share) but also have nine ways of taking a piece of a much larger pie.

Key Elements

The ten growth directions are the following:

  1. Increase Market Share. Taking more of the existing pie means finding ways to lure customers away from competitors, or even to acquire these competitors altogether. For example, a bicycle manufacturer could advertise more to gain additional market share.
  2. Increase Market Size. The existing pie can be grown by getting existing customers to buy more products and/or by finding more potential customers willing to adopt the product. So, a bicycle firm could try to get more people to cycle and/or get them to buy a second bicycle.
  3. Expand to Adjacent Segments. Growth can also be found in neighboring customer groups not traditionally served, but with a similar needs profile and buying behavior. So, a bicycle firm could start selling to pensioners and/or people trying to lose weight.
  4. Expand to Distant Segments. More difficult is to seek sales among customer groups with rather different characteristics in terms of needs and buying behavior. So, it might be a challenge for a bicycle firm to start selling to health clinics and/or courier firms.
  5. Expand to Adjacent Regions. Growth can also be sought among customers in cities, states, or countries with a low psychological distance from the current markets. So, a bicycle firm in Amsterdam could start selling in Rotterdam or even in Belgium or the UK.
  6. Expand to Distant Regions. A quick sale in a faraway place can be easy, but it is more difficult to build a structural market position where the rules of the game are very different. So, it would be tough for an Amsterdam-based bicycle firm to establish itself in Dubai.
  7. Product Range Extension. By adding new products/services to the product family already being sold, new customers can be found, or existing ones might be willing to buy more. So, introducing e-bikes and mountain bikes could be a great way for a bicycle firm to grow.
  8. Value Proposition Enhancement. Beyond extending the core range, the envelop of linked products, services, information, distribution, reputation, and payment features can be expanded. So, leasing bicycles including regular servicing could be a great growth avenue.
  9. Related Diversification. Existing competencies and/or relational resources (e.g. contacts and reputation) can be leveraged to enter new lines of business. So, a bicycle firm could branch out into exercise equipment and/or cycling clothing.
  10. Unrelated Diversification. Firms can also expand into totally new businesses, leveraging little else than their financial resources, management knowledge and business ideas. So, a bicycle firm could jump on the AI bandwagon and start selling translation software.

Key Insights

 

 

66. Sustainability Maturity Ladder

Key Definitions

A product or practice is sustainable if it can be continued over a longer period of time without depleting natural or social resources. So, sustainability is the quality of engaging in current activities in such a way that future possibilities are not diminished.

Organizations have always been concerned with their own sustainability, wanting to ensure their survival as a business or a not-for-profit actor. But more recently, organizations have paid increasing attention to the sustainability of their surroundings, given the organization’s impact on the environment and society (the indirect consequences that economists call externalities).

Conceptual Model

The Sustainability Maturity Ladder outlines the five levels of sustainability that organizations can achieve. Typically, organizations will progress through each level as a developmental stage, gradually climbing the ladder to become more mature as sustainable organization. The framework details the characteristics fitting to each stage, although in practice organizations will not neatly fall into these five categories, nor go through all stages in the same way and at the same speed. The framework is intended to help organizations map where they stand and suggest what a next development step could be.

Key Elements

The five development levels on the ladder are:

  1. Ad Hoc Level. At the lowest level, sustainability is not an issue that receives structural attention, but a rare topic that is reactively dealt with on a case-by-case basis.
  2. Compliant Level. Once sustainability gets on the radar screen, it is seen as a nuisance that needs to be managed. Organizations minimize risk by sticking to the legal rules.
  3. Tactical Level. As organizations realize their responsibility for externalities, they will make regular efforts to reduce their negative impact, as long as it doesn’t hurt their core business.
  4. Strategic Level. Once organizations embrace the ambition to be fully sustainable and have a net zero impact, it becomes a central plank of their strategy and key to their identity.
  5. Purposeful Level. At the highest level, organizations can strive to be more than sustainable, making it part of their organizational purpose to give back more than they take.

Each of these five development levels has eight distinguishing characteristics:

  1. This refers to the extent to which sustainability is seen as a topic with which top management needs to be actively involved. How high is it on the boss’s to-do list?
  2. With what type of approach does top management react to the topic of sustainability? Do they see it as threat or as opportunity?
  3. Engaging. To what extent is sustainability an issue that involves of a large portion of the organizational population? Is it a rallying cry that mobilizes internal people?
  4. Leading. How does the organization position itself vis-à-vis other organizations on the topic of sustainability? Does it want to follow or lead external parties?
  5. Capability. To what level has the organization developed the skills and culture necessary to be sustainable? Does the organization have the ability to behave sustainably?
  6. Activities. How advanced are the types of sustainability initiatives that the organization implements? Are the interventions conventional or more innovative?
  7. Measuring. How sophisticated is the internal system for assessing sustainability performance? To what extent can the organization track and trace how well it’s doing?
  8. Reporting. How sophisticated is the system for externally publicizing sustainability performance? In what way does the organization present its results to the outside world?

Key Insights

65. Self-Centered Thinking Traps

Key Definitions

Reasoning is the process of thinking and drawing conclusions from information based a particular type of logic. As this logic is specific to each individual, it is also called a person’s worldview, frame of reference, cognitive filter, perceptual lens, or perspective.

People’s perspective develops over their lifetime, depending on their surroundings and experiences. It is formed by what they encounter as individuals, as members of a group, as humans and as living in the current era. But while circumstances shape people’s perspective, that perspective in turn shapes how people see their circumstances.

Conceptual Model

The Self-Centered Thinking Traps framework outlines the four most common ways in which people’s narrow self-centered perspectives can lead to shortsighted conclusions. These four ways of thinking are all based on people’s inherent tendency to place themselves at the center of the world and then to project their reality on to their surroundings. By predominantly viewing matters from their own perspective, they draw highly colored, one-sided conclusions, that would be different if they could see things from multiple perspectives. The framework identifies four types of self-centeredness (the blue arrows) and three types of reasoning (interpreting, valuing, and judging), and gives 36 examples of shortsighted conclusions that are often drawn.

Key Elements

The three types of reasoning are the following:

  1. The first step in reasoning is to try to make sense of reality. Self-centered thinkers will assume that they are normal and understand the world from that viewpoint.
  2. A step further than determining what is valid, is weighing what should be valued. Self-centered thinkers will assume that they are more important than anything else.
  3. Judging. The last step in reasoning is to draw conclusions and pass judgement. Self-centered thinkers will assume they are right and proceed accordingly.

The four types of self-centered thinking are:

  1. Egocentric Thinking. Reasoning from your own personal perspective is the most recognized form of self-centered thinking. Individuals will believe they are normal and assume that others think in the same way (‘they probably mean…”), or at least should think in the same way. They can even value themselves above all others, favor their own interests and look down on people who “don’t get it”.
  2. Ethnocentric Thinking. Reasoning from a group’s perspective comes in many forms, as people are members of many groups. People will take the perspective of their national culture as obvious, not understanding or valuing other cultures. But they can also view matters through the lens of their ethnic group, social class, gender, club, region, company, and/or department. The more they interact within their group, the stronger their bias will be.
  3. Anthropocentric Thinking. Maybe less obvious is the tendency of people to view reality from the perspective of being a human. People will assume that other things “think” in a human-like way (e.g. animals, AI, God) and that humans are more important than anything else, justifying human’s central role in the world. The consequences can vary from treating a dog like a human baby to accepting that humans have the right to create climate change.
  4. Chronocentric Thinking. The least obvious is the tendency to view reality from the perspective of our current era. People constantly reinterpret history through the lens of modern times, not understanding how our ancestors could be so foolish and retroactively condemning their behavior, or alternatively, glorifying the past. In the same way, people project today into the future, predicting impending doom or imminent greatness.

Key Insights

 

 

64. Corporate Synergy Typology

Key Definitions

There is synergy when the whole is more than the sum of the parts – when bringing together two or more elements leads to the creation of something extra. In organizations, we speak of synergy when operating in two or more markets leads to additional value, that wouldn’t be realized if the organization had focused on only one task environment.

Organizations can strive for cross-business synergies by working in more than one product market (different lines of business) and cross-border synergies by working in more than one geographic market (different countries or regions).

Conceptual Model

The Corporate Synergy Typology outlines the three types of synergies that organizations can create (in red). In this model only two business units are used to illustrate the three types, but these synergies can also be realized across more than two units. The synergies are found between the three layers of each unit’s value creation system (usually called their business system – see model 47, the Corporate Strategy Framework for an overview). Organizations can focus on just one synergy or pursue them all simultaneously. In general, the closer the synergy is to the market, the more difficult it is to realize. How the synergies need to be organized is not addressed in this model (see model 8, 11C Synergy Model).

Key Elements

The three types of synergies are the following:

  1. Leveraged Resources. Each business unit has a variety of resources at its disposal that it employs as inputs for its activity system. These resources include tangible assets such as buildings, machines, and money (basically everything on the balance sheet), as well as intangibles such as knowledge, capabilities, data, and relationships. These resources can be leveraged across business units in two different ways:
    1. Replication. Most intangibles, like best practices, can be copied and transferred to other business units without the owner losing the resource.
    2. Most tangibles, like money, can’t be copied, but need to be partly or fully moved from one business unit to another, where their use will be more valuable.
  2. Integrated Activities. A business unit needs resources to perform a variety of activities that will result in a value proposition. These value-adding activities include primary activities like production and sales, support activities like finance and R&D, and control activities like legal and risk management (see model 50, Activity System Dial). These activities can be integrated across business units in two different ways:
    1. Horizontal sharing. Business units can bring similar activities together to create economies of scale and/or develop more expertise (horizontal integration).
    2. Vertical linking. Business units at different steps in the industry value chain can link up to improve efficiency, quality, speed and/or market power (vertical integration).
  3. Aligned Positions. A business unit’s reason for existence is to bring a product or service to market that customer will prefer to purchase. To achieve this, it needs to select a defensible market position – a specific customer need that it can satisfy with a fitting value proposition, better than competitors. This position in the market can be strengthened when business units work together in one or both of the following ways:
    1. Joint offering. Negotiation power vis-à-vis the customer can be increased by offering an aligned portfolio of value propositions or even an integrated solution.
    2. Collective bargaining. Negotiation power vis-à-vis other market and contextual actors can be increased by aligning influencing efforts (see model 31, Market System Map).

Key Insights

 

63. Guiding STAR Matrix

Key Definitions

An objective is something you wish to realize – an aim you want to achieve. If you don’t have objectives, any future direction will do, and you will drift around. Or as the Cheshire Cat in Alice in Wonderland put it: “If you don’t know where you are going, any road can take you there”.

So, to have a sense of direction and avoid ad hoc wandering, it is essential to have clear objectives. The more these objectives are SMART – Specific, Measurable, Actionable, Realistic and Time-bound – the more intentional and directed the efforts can be of the person, team or organization that sets them.

Conceptual Model

The Guiding STAR Matrix gives an overview of the four groups of objectives that are always needed in every situation to set a well-considered future direction, whether it is for an individual, group or entire organization. Often, people will only think about what needs to be strengthened moving forward, but the Guiding STAR Matrix indicates that after the S, objective-setters should follow the other letters of the STAR abbreviation to create a complete picture of what to aim for. Only with all four categories filled will a brightly shining star emerge to guide people in taking the best possible steps into the future.

Key Elements

The four categories of objectives that should always be determined are the following:

  1. When thinking about the future, it is natural that the first topic that comes to mind is what needs to be improved. People will quickly zoom in on what is going wrong or working poorly, and therefore needs to be fixed. Besides these weaknesses that require upgrading, people can also focus on further developing current strengths. But whether it is correcting faults or building on existing qualities, the common denominator is that a change for the better (future/+) is foreseen, requiring the individual, team, or organization to adapt their behaviors, learn new skills and/or embrace different values and beliefs.
  2. In the drive to set ambitious improvement objectives, it is often forgotten how important it is to identify which current qualities are still valuable and need to be preserved. This is particularly difficult as familiar characteristics are typically seen as normal and therefore taken for granted. Hence, the second step in determining objectives is to clearly define which current capabilities, relational networks, cultural norms, sense of community and leadership behaviors are highly beneficial (current/+) and need to be safeguarded. They need to be explicitly recognized and objectives set to protect them.
  3. Avoid. After thinking about what to improve and what to preserve, the third step in objective setting is to consider which potential risks are lurking in future that need to be mitigated. These risks include intentional negative reactions by other stakeholders, but also vulnerabilities to changing circumstances and the threat of making mistakes (future/-). Once these risks have been identified by considering “what if…?”, people can try to find ways to avert the risk from materializing by taking preventative action and/or look for possibilities to minimize the impact when things do go wrong.
  4. Reduce. Once the future improvements and risk mitigation have been determined, a good way to wrap things up is to explicitly determine which current qualities, behaviors and/or investments shouldn’t be preserved, but should be eliminated – decreased or even stopped altogether (current/-). Some of this scaling down will be because the current way of working is ineffectual or even dysfunctional, but it could also simply be that there are insufficient resources available and priorities need to be determined, or that a clearer focus needs to be achieved.

Key Insights

62. Hunting & Farming Typology

Key Definitions

All commercial organizations need to sell products and/or services to customers to survive. As even the best value propositions don’t sell themselves, firms need to organize a sales process to ensure that customers purchase what is on offer.

The process of acquiring new customers is often referred to as hunting, while the process of cultivating existing customers is referred to as farming. In most firms both processes are required, but the mix of acquisition and retention can differ widely.

Conceptual Model

The Hunting & Farming Typology gives an overview of the four generic types of sales processes, comparing them to four common ways of dealing with animals. Along the vertical axis a distinction is made between hunting (customer acquisition) and farming (customer retention), while along the horizontal axis a distinction is made between selling to big customers (large enough to be approached individually) and small ones (each so little they need to be approached as a group). Each of the four quadrants describes a fundamentally different way of running a sales process. By extension, each approach requires a different type of organization, performance management system, set of skills and culture.

Key Elements

The four generic types of sales processes are the following:

  1. Whale Tracking. To take a stunning picture of a whale, you need to go out and track one down – this is also called outbound sales. It requires a thorough understanding of one or just a few specimens and a willingness to pursue each lead for a long time, with the intention of eventually catching the big prize. Success largely depends on the skill of the salespeople doing the hunting – they need tenacity, perseverance, and a risk-taking attitude. Sales performance is often motivated by giving significant bonuses and is supported by a culture valuing ‘scoring the deal’.
  2. Fish Catching. While you need to go out to find a whale, the best way to catch a lot of fish is to let them swim into your net, which is also called inbound sales. This approach requires an understanding of where large schools of potential leads can be found and then luring them ever deeper into the ‘trap’. Success depends less on the individual salespeople and more on the structure of the sales funnel – together with marketing people an attractive setting needs to be created that tempts enough leads to willingly swim into the net and let themselves be caught. The supporting culture values ‘seduction and conversion’.
  3. Horse Breeding. You can go out hunting for wild horses, but it usually makes more sense to breed with the ones you already have. In this approach, the intention is to keep the existing clients happy and gradually increase their size. This requires a thorough understanding of each magnificent beast’s unique character and a willingness to cater to their specific wishes. Success largely depends on the skill of the salespeople at building and maintaining long-term trusting relationships and adapting to each customer’s whims. The supporting culture values customer intimacy and relational continuity.
  4. Bee Keeping. While you can pamper each individual horse, as beekeeper you need to focus on what will keep a whole swarm happy. This approach requires an understanding of the needs of the average bee and then shaping a hive that will satisfy their wishes and get them to constantly come back with a bit of honey. Here too, success depends less on the individual salespeople, but more on creating an attractive setting that tempts each customer to faithfully return to the ‘nest’. Ideally, each customer will feel at home, or even experience a sense of belonging. The supporting culture values building long term loyalty.

Key Insights

61. Wicked Problem Scorecard

Key Definitions

Managers are problem-solvers – they are oriented towards tackling issues that impede an organization from reaching its goals. They constantly try to understand what types of problems are holding the organization back, or might threaten the organization in future, and then look for a solution to enable the organization to move forward.

Yet, problems differ in their level of difficulty. Rittel and Webber (1973) famously made a distinction between tame and wicked problems. Tame problems are by their nature easy to solve, even though they might require a lot of work. Wicked problems, however, are challenging messes that are difficult, if not impossible, to resolve.

Conceptual Model

The Wicked Problem Scorecard is an evaluation framework for assessing a problem’s relative difficulty. An index value can be calculated for any type of problem by using 15 characteristics to judge its level of wickedness. By giving a score of 1 (fully tame) to five (fully wicked) for each of the 15 measures, then adding all the scores together and dividing by 15, an index value is calculated indicating the relative difficulty of the problem. This scorecard is not intended to convey an objective truth, but to give a rough estimation to sensitize the problem-solver(s).

Key Elements

The scorecard consists of three categories of five characteristics each:

  1. The first part focuses on the nature of the problem itself, without consideration of the stakeholders. A wicked problem is not evil, but just outright confusing and frustrating by its very structure. This is also often referred to as a problem’s level of complexity or complication. A problem is wicked if it has the following characteristics:
    1. Definition. The interpretation of the problem varies widely depending on who you ask;
    2. Separation. The problem is linked to an intricate web of other problems;
    3. Timing. The problem requires immediate attention and needs to be resolved quickly;
    4. Data. Most information needed to understand and solve the problem is unavailable;
    5. Predictability. How the problem will evolve in future can’t be objectively foreseen.
  2. The second part of the scorecard focuses on the people who play a role in the problem. Some stakeholders are involved because they believe that their interests (or those of third parties) are at stake, while others can be involved as potential problem-solvers. A problem is wicked if the stakeholders have the following characteristics:
    1. Identity. The stakeholders are unknown or there are different views on who they are;
    2. Drivers. The stakeholders’ worldview and understanding of what is important differs;
    3. Motivation. Some or all of the stakeholders don’t really want to solve the problem;
    4. Separation. Some or all of the problem solvers are themselves part of the problem;
    5. Capability. The problem solvers have limited power to influence the problem.
  3. Solution. The third part of the scorecard focuses of the nature of the potential solutions. A solution is any type of practical intervention directed at alleviating the problem. Some integrative solutions can resolve the entire problem, while some narrower measures can nudge the problem a bit closer to a solution. A problem is wicked if the solution is like this:
    1. Availability. There is no fixed set from which to choose, so solutions must be invented;
    2. Predictability. How possible interventions will influence solving the problem is uncertain;
    3. Selection. No solution is the best, as each has its own strengths and weaknesses;
    4. Execution. All potential solutions are very difficult to put into practice;
    5. Impact. Any intervention will immediately change the nature of the problem.

Key Insights

60. Time Management Funnel

Key Definitions

In most countries an official working week is 40 hours, but few managers are able to squeeze all their activities into this limited timeframe. Most managers end up laboring longer hours and even then their work isn’t finished, but they run out of time, energy and/or attention.

Time management is the process of consciously allocating time as a scarce resource, investing it into activities that will give the most attractive returns, while not overspending time on work, to the detriment of one’s family, friends, health, and other endeavors.

Conceptual Model

The Time Management Funnel gives an overview of the three steps that can be taken to limit the amount of time that managers need to invest in work. The assumption is that managers have fewer hours available than demanded, so they need to filter and squeeze activities to fit within their “time budget”. Demands for time will come from the external and organizational conditions surrounding managers but will also depend on their specific ambitions (strategic and operational goals). Managers should start by limiting their long list of potential activities, by filtering out the low value drains on time. Then they should limit their short list, by prioritizing the highest value ones. Finally, they should limit task time, by working more efficiently.

Key Elements

The five parts of the time management funnel are the following:

  1. To first way to limit the long list of activities is to delegate as many tasks as possible to others and then limit the amount of “vertical” control needed to ensure that this work is carried out correctly. This means making sure that colleagues are hired, trained, and retained who are capable of taking on significant responsibilities independently, and then going through the Empowerment Cycle (see model 21) to quickly build their autonomy.
  2. The second timesaver is to limit the complexity of the organization by reducing the number of interfaces and alignments. This can be done by creating small separate teams with the freedom to run end-to-end processes independently, instead of having large teams that need a lot of internal coordination, that in turn need to coordinate with other teams. All forms of “horizontal” alignment burn through management time at a high rate.
  3. Streamline. The third way to compress the long list is to limit the number of steps and stakeholders in decision-making processes. Each extra cook in the kitchen increases the amount of discussion time needed exponentially, while each extra quality check creates additional bureaucracy. By streamlining decision-making to a few people and a few steps, 80% quality can be achieved in only 20% of the regular time, which is usually good enough.
  4. Prioritize. Even if the long list of potential tasks is reduced to a much shorter one, it is still important to rank the remaining tasks and focus on the key ones. In the Fruits & Nuts Matrix (model 26) this prioritizing was done along two dimensions, first distinguishing which activities will have the highest impact, and then identifying how much effort each activity will require. The low hanging fruit (high impact, low effort) should usually be done first.
  5. Accelerate. Finally, it is also important to use time efficiently, by speeding up activity execution. Important ways to accelerate include not overengineering an outcome (avoiding perfectionism in favor of “good enough”) yet getting most things right the first time around (avoiding constant repair work). Also, not multi-tasking (focus on one task at a time) yet being quick at switching to a next task (redirecting focus).

Key Insights

 

 

59. Digitalization Staircase

Key Definitions

Digitalization is the process of using digital means to change activities that were previously carried out physically or using analogue technology. These digital means include IT hardware (equipment such as computers, mobile phones, and robots), software (programs such as operating systems, applications, and artificial intelligence) and connectivity (interaction methods such as the internet, 5G, and near field communication).

Digitalization can be applied to a single activity (e.g. printing a letter instead of typing one), to a workflow of activities (e.g. tracking inventory with an ERP system instead using paper records), to a value proposition (e.g. using banking apps instead of branch offices) and even the entire business (e.g. running a platform instead of a physical store).

Conceptual Model

The Digitalization Staircase gives insight into four categories of digitalization and the potential benefits that can be gained as the ‘staircase’ is ascended. The higher up one goes, the more competitive value the move is likely to create – from sustaining the current competitive position to disrupting the competitive game and building a new position. Yet, the higher one climbs, the larger the scale of change will be – from a modest transition to a full-scale transformation.

Key Elements

The four steps on the staircase are the following:

  1. Digital Automation. When single activities are performed by a machine without a direct human operator, it is called automation – traffic lights change, heating is turned on and a robot vacuum cleaner whizzes around. While some of this automation is possible using analogue technology, digital means are generally smaller, cheaper, and more powerful, hugely accelerating the process. The result is often that tasks can be carried out cheaper, faster, and more accurately/reliably than by manual means.
  2. Digital Process Transformation. When not just one, but a sequence activities, is digitalized, it is called digital process transformation – e.g. when the invoicing or quality control systems are digitalized. Generally, the activities are not automated separately, but the entire workflow is reconfigured, changing the shape and order of each activity. As with automation, the result is often lower cost, higher speed, and more accuracy, but also a process that is more convenient, more controlled, and leads to better quality.
  3. Digital Experience Transformation. When it is not only an internal process being digitalized, but also the externally oriented process of interacting with the customer somewhere during their customer journey, we speak of digital experience transformation. As with the previous steps on the stairs, the customer experience can be made cheaper, faster, more accurate, easier, more controlled, and of higher quality, but also more personalized, more integrated into a frictionless flow and overall, more enjoyable.
  4. Digital Business Transformation. When multiple internal and external processes are significantly changed by introducing a different business model based on digital means, it is called digital business transformation. Besides all of the previously mentioned strengths of digitalization, a business transformation can create an entirely distinct business model, potentially targeted at a specific market segment, while also building a unique competitive advantage that is dominant and very difficult for others to copy.

Key Insights

58. Leadership Circle Map

Key Definitions

Leadership is the art of seduction. It is the ability to get people to move in a certain direction – touching their hearts and minds in such a way that they willingly go along on the journey. To have such influence, it is essential to have some type of connection with the people you are trying to sway. In other words, leadership always takes place within the context of relationships.

As Covey (1989) remarked, leaders often have a wide circle of concern (issues/people they worry about), but a more restricted circle of influence (issues/people they can impact). Their potential influence is limited to the people with whom they have some sort of relationship.

Conceptual Model

The Leadership Circle Map is a tool for charting which people are within a leader’s circle of influence. In 360-degree fashion, a distinction is made between four different directions of connections (i.e., up, down, across and out), while a distinction is also made between three different levels of connection (i.e., inner circle, outer circle, and periphery). The map can be used to plot people’s current position and to plan for future investments in relationships.

Key Elements

The three levels of connection are the following:

  1. Reputation: Knows of You. The weakest type of connection is where people are aware of your existence and have heard certain things about you, leading them to have a picture of who you are. This reputation is also referred to as your leadership brand (see Meyer’s Management Model #18), as it is the image that you have projected, triggering expectations about your identity and probable actions. Your ability to influence people in this ring is limited to using mass media (e.g., presentations and publications) and exhibiting certain behaviors in public (e.g., leading by example and giving people recognition).
  2. Relation: Knows You. Once people actually get to know you directly, they move from your periphery to your outer circle – the connection shifts to the level of being a relation. Your potential to influence people in this ring is much higher, as you can interact directly with them, via dialogue and/or joint efforts, using a variety of leadership styles. Your sway will also be increased by building trust and credibility, as you deal with each other over a prolonged period of time (see Meyer’s Management Model #6). The relationship can be professional and transactional but can grow to become more personal and structural.
  3. Rapport: Close to You. As relationships grow tighter, stronger, more affective, and more lasting, they move from the outer to the inner circle – you develop rapport with your connection. This is a sense of mutual understanding, trust, and sympathy, leading to a warmer and easier interaction. Your potential to influence people in this ring is the largest, as there is a stronger emotional bond, level of commitment and feeling of safety, leading to a high willingness to listen to the other and accept their inputs. Such a relationship is often characterized as friendship and/or a feeling of being family.

Key Insights