Author(s): Ready DA
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Abstract Few leaders excel at both the unit and enterprise levels. More than ever, though, corporations need people capable of running business units, functions, or regions and focusing on broader company goals. It's up to organizations to develop leaders who can manage the inherent tensions between unit and enterprise priorities. Take the example of RBC Financial Group, one of the largest, most profitable companies in Canada. In the mid-1990's, RBC revamped its competitive strategy in a couple of ways. After the government announced that the Big Six banks in Canada could neither merge with nor acquire one another, RBC decided to grow through cross-border acquisitions. Additionally, because customers were starting to seek bundled products and services, RBC reached across its traditional stand-alone businesses to offer integrated solutions. These changes in strategy didn't elicit immediate companywide support. Instinctively, employees reacted against what would amount to a delicate balancing act: They would have to lift their focus out of their silos while continuing to meet unit goals. However, by communicating extensively with staff members, cross-fertilizing talent across unit boundaries, and targeting rewards to shape performance, RBC was able to cultivate rising leaders with the unit expertise and the enterprise vision to help the company fulfill its new aims. Growing such well-rounded leaders takes sustained effort because unit-enterprise tensions are quite real. Three common conditions reinforce these tensions. First, most organizational structures foster silo thinking and unimaginative career paths. Second, most companies lack venues for airing and resolving conflicts that arise when there are competing priorities. Third, many have misguided reward systems that pit unit performance against enterprise considerations. Such long-established patterns of organizational behavior are tough to break. Fortunately, as RBC discovered, people can be trained to think and work differently.
This article was published in Harv Bus Rev
and referenced in International Journal of Economics & Management Sciences