Who Really Matters: The Core Group Theory of Power, Priviledge, and Success [NOOK Book]

Overview

In a breakthrough Organization Man for the twenty-first century, bestselling author Art Kleiner reveals that every organization is driven by a desire to satisfy a Core Group of influential individuals and explains why understanding this group’s expectations is the key to success.

When corporate leaders announce, with seeming sincerity, “We make our decisions on behalf of our shareholders,” their words are taken at face value. But as recent ...
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Who Really Matters: The Core Group Theory of Power, Priviledge, and Success

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Overview

In a breakthrough Organization Man for the twenty-first century, bestselling author Art Kleiner reveals that every organization is driven by a desire to satisfy a Core Group of influential individuals and explains why understanding this group’s expectations is the key to success.

When corporate leaders announce, with seeming sincerity, “We make our decisions on behalf of our shareholders,” their words are taken at face value. But as recent news stories prove, this imperative is routinely violated. In Who Really Matters, Art Kleiner argues that the dissonance between a declared mission and actual operation can be seen at organizations large and small. All organizations have one motive in common. Every decision—which projects to back, who to promote, or how to spend money—is affected by the perceived wants and needs of a core group of people “who really matter.”
The composition of the group can differ from organization to organization. Often, the most senior people in the hierarchy are members—but not always. Sometimes, the people who “matter” can extend far down the corporate ladder, or even reach outside the company to include key customers, labor union leaders, and stockholders. Kleiner gives readers clues about how to identify a core group’s real mission by observing its day-to-day actions, listening to the fundamental message it sends employees, examining its management of new members; understanding the ideas that shape its policies about management, money, and the way the world works; and avoiding the taboos governing the way it operates.
Whether you’re a member of the Core Group—or want to be—this deft, engaging blend of argument and observation, anecdotes and advice, is the one guide you’ll need to achieve your career goals and aspirations by navigating the hidden pathways in any organization, large or small.
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Editorial Reviews

Soundview Executive Book Summaries
Recent events in Corporate America have taught us that when an organization claims to make decisions for its customers or shareholders, it is not necessarily speaking the truth. In reality, there is another group within each company whose needs and desires are the real drivers of most decisions - a Core Group of people "who really matter."

While Enron, Tyco and others have given the concept of the Core Group a bad name, bestselling author Art Kleiner explains in Who Really Matters that companies need Core Groups to supply the energy and direction they require to be successful. By observing the Core Group's members' day-to-day activities, communications and management decisions, Kleiner argues that the astute employee can recognize decisions before they are made, and can be ready to react to change. Eventually, if that person is able to navigate to a position of influence, he or she can join the Core Group.

One of the great lies of corporate culture is, "The customer comes first." In every company, agency, institution and enterprise, there are people who really come first, a Core Group of people who really matter. The makeup of the group differs from one company to the next, but each activity the organization undertakes - from creating wealth to meeting customer needs to training its people - is done with the goal of fulfilling the perceived needs and priorities of this group.

Core Group Dynamics
Core Group dynamics explain why some companies act frugally for years to turn a profit, then squander it all on ill-advised mergers, disproportionate pay for senior executives, or impropriety in their business dealings. It is because of Core Group dynamics that businesses evolve into corporations with one primary purpose - to extract wealth from all constituents (including employees, customers and neighbors as well) and give it to senior executives.

Yet, a Core Group is not inherently bad or dysfunctional; indeed, it serves as an organization's source of energy, drive and direction. Without an energetic and effective Core Group, all efforts to spark creativity and enthusiasm sputter out. Startups need entrepreneurial Core Groups that put themselves at risk for the company's future. Large, well-run companies need a Core Group of senior leaders who can permanently merge their identities with that of the organization. Even the most hierarchically strict organizations - military units, for example - depend on their Core Groups to maintain, among other things, the level of mutual respect that soldiers need to operate above and beyond the limits of their orders.

There is always an implicit, almost unconscious bargain of mutual commitment in organizations - the people of the organization agree to make decisions on behalf of their Core Group, and the Core Group members agree to dedicate themselves as leaders to the organization's ultimate best interests. The organization goes wherever its people perceive that the Core Group needs and wants it to go; if you want to know what a company stands for, explore the characteristics and principles of its Core Group.

Making Decisions
When faced with a complex decision, you might ask yourself, "How comfortable would so-and-so be with this decision?" There is probably a range of "so-and-sos" - your boss, executive team, unions, customers and so forth. Even if you don't go through such a litany when you make a decision, your colleagues and fellow employees do, and that's what sets the direction of the organization. The influence of these key people trumps all other concerns, simply due to the cumulative effect of the decisions made throughout the organization.

Imagine that you could make a list of all the so-and-sos in everyone's mind, in aggregate - all the people who influence all the decisions made through the course of a year. Some names would stand out as significant, but only to certain members of the organization. Other names would stand out as important to the whole organization. There would also be some classes of people ("stockholders" or "key customers," for example) that take on significance for the entire organization. Each of these individuals or groups represents not only itself, but an image of the direction of the organization - a view of where it may go. These are the members of the Core Group. Copyright © 2004 Soundview Executive Book Summaries

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Product Details

  • ISBN-13: 9780385510981
  • Publisher: The Crown Publishing Group
  • Publication date: 10/14/2003
  • Sold by: Random House
  • Format: eBook
  • Pages: 288
  • File size: 841 KB

Meet the Author

ART KLEINER is the director of research and reflection at Dialogos, a consulting firm based in Cambridge, Massachusetts; a faculty member at New York University’s Interactive Telecommunications Program; and the “Culture & Change” columnist for Strategy + Business magazine. He is also the editorial director of the Fifth Discipline Fieldbook series and a longstanding writer on the human impact of management and technology. He lives outside New York City.

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Read an Excerpt

CHAPTER 1

The Customer Comes Eighth

Back in the early 1980s, when writing mission statements was just an infant management fad, a division of the Exxon Oil Company held an employee conference to announce their new "core values." Enshrined as number one on the list was this simple sentence: "The customer comes first."

That night, the division executives met for dinner, and after a few drinks, a brash young rising star named Monty proposed a toast. "I just want you to know," he said, "that the customer does not come first." Then Monty named the president of the division. "He comes first." He named the European president. "He comes second." And the North American president. "He comes third." The Far Eastern president "comes fourth." And so on for the fifth, sixth, and seventh senior executives of that division, all of whom were in the room. "The customer," concluded Monty, "comes eighth."

Said the Exxon retiree who told me this story: "There was an agonized silence for about ten seconds. I thought Monty would get fired on the spot. Then one of the top people smiled, and the place fell apart in hysterical laughter. It was the first truth spoken all day."

"The customer comes first" is one of the three great lies of the modern corporation. The other two are: "We make our decisions on behalf of our shareholders" and "Employees are our most important asset." Government agencies have their own equivalent lies: "We are here to serve the public interest." Nonprofits, associations, and labor unions have theirs: "Above all else, we represent the needs of our members."

Of course, if organizations were really set up on behalf of these interests, then they would do a better job, by and large, in serving them. When organizations fail, people tend to assume that their leaders are inept, overwhelmed, or corrupt. But suppose instead that all organizations are doing precisely what they're supposed to be doing. What, then, is their objective? Judging not from their rhetoric, but from their actual behavior and accomplishments, what purpose are most organizations seeking to fulfill?

This book is an effort to answer that question. It starts with the premise that, in every company, agency, institution, and enterprise, there is some Core Group of key people--the "people who really matter." Every organization is continually acting to fulfill the perceived needs and priorities of its Core Group. It's sometimes hard to see this, because the nature and makeup of that Core Group varies from workplace to workplace, and so do the mission statements and other espoused purposes that get voiced to the rest of the world. But everything that the organization might do--meeting customer needs, creating wealth, delivering products or services, fulfilling promises, developing the talents of employees, fostering innovation, establishing a secure workplace, making a better world, and, oh yes, returning investment to shareholders--comes second. Or maybe "eighth." What comes first, in every organization, is keeping the Core Group satisfied.

Core Group dynamics explain why some corporations spend years scrambling frugally for profit, and then squander it on ill-advised mergers, disproportionate pay for their senior executives, or hidden and improper deals. Core Group dynamics also explain why some government agencies block efforts to reform themselves, even when their reputation and potential survival depends on reform. And why some nonprofit organizations persevere against enormous odds to fulfill their idealistic missions, while complacently dismissing potential partnerships that might genuinely help them. Indeed, every organization seems to have its own forms of Core Group-related folly or corruption.

It's because of Core Group dynamics that a depressing number of business corporations have evolved into organizations with one primary purpose: To extract wealth from all constituents (not just the shareholders, but the employees, customers, and neighbors as well) and give it essentially to the children and grandchildren of some of its senior executives. And yet Core Groups are not inherently bad or dysfunctional. Indeed, they represent probably the best hope we have for ennobling humanity--at least in a world like ours, in which organizations have the lion's share of power, capital, and influence. An organization's Core Group is the source of its energy, drive, and direction. Without an energetic and effective Core Group, all efforts to spark creativity and enthusiasm sputter out.

If you work in an organization, then all this may be second nature to you, so obvious and taken for granted that it barely even registers as important. But when you take a step back, the significance for all of us, even those who don't work in organizations, is unavoidable. We live in a civilization composed of organizations. Indeed, in industrialized countries, the organizational birthrate exceeds the human birthrate. Even though organizations are continually merging, swallowing each other up, or dwindling into inactivity, there are more organizations each year than there were the year before.

People have always used organizations to amplify human power. Individuals didn't build pyramids or cathedrals; tribal and feudal organizations did. But since the industrial revolution, and in the past 150 years in particular, organizations have become powerful in unprecedented ways. They are faster than they have ever been, operating with the perpetual acceleration of computers and wireless communication. They are interconnected through vast global webs of trade and distribution, webs that (among other things) make most human beings virtually dependent on organizations for food, shelter, and transportation. They are pervasive; there are almost no sustainable ways of making a living without organizations, and organizations dominate the political system, instead of paying fealty to it.

It's as if some giant invisible species suddenly invaded the Earth around 1850, reshaping civilization in its image, obviously here to stay--and yet almost nobody seems to see it clearly. Nobody really knows how it works, or even what it does. Some people go to business school to master these new creatures, and end up being mastered by them.

The left protests against globalization, capitalism, big corporations, and Wall Street; the right excoriates big government, corrupt labor, or liberal media. But when you strip away the rhetoric, both sides seem to be driven by the same basic dynamic. They feel excluded from, rejected by, opposed to, and trampled on by the Core Groups of organizations associated with the other side.

If we are going to act effectively in a society of organizations, we need a theory that helps us see organizations clearly, as they are. We need to observe this new species in its natural habitat, to track its behavior, and to study its relationships with predators and prey. Only then can we ask: Why does it operate this way? And what, if anything, could be different? Only then can we learn to use organizations, instead of feeling like we are being used by them. Only then can we move organizations away from being simply the property and tools of the few, and develop their potential for the rest of us. Only then can we form real relationships with the members of this new species, as employees, neighbors, cocreators, participants, leaders, and even lovers of organizations.

In short, if we want to not just live within society, but establish ourselves as leaders and creators, then we have to understand the dynamics of the Core Group.

The root of the word "core" is the Latin cor, or heart, and the Core Group is the genuine heart of an organization. Management writer Arie de Geus, in his book The Living Company, calls the Core Group the "we" of the organization--the central proprietors of its interests. They usually include most, but not all, of the people at the top of the organization chart. Plus others. The Core Group members are the center of the organization's informal networks, and symbolic representatives of the organization's direction. Maybe they got into the Core Group because of their position, their rank, or their ability to hire and fire others; maybe because they control a key bottleneck, or belong to a particular influential subculture. Maybe their personal charisma or integrity got them in. In the end, it probably doesn't matter that much how they got in. What matters is that they matter.

The Core Group won't be named in any formal organization chart, contract, or constitution. It exists in people's hearts and minds. Its power is derived not from authority, but from legitimacy. Its influence is not always conscious, or even visibly apparent, but it is always present in the implementation of actual decisions. It is the fundamental aspect of organizational culture that makes visitors to a workplace scratch their heads sometimes: "What are those people thinking?"

It is impossible to imagine an organization without a Core Group. And if you could imagine one, why would you want to create it? Start-ups need entrepreneurial Core Groups who put themselves at risk for the company's future. (People start organizations in the first place precisely because they want to be in a Core Group, if only to see what it would be like. I should know; I cofounded a consulting firm largely for that reason.) Large, well-run companies need a Core Group of senior leaders who can permanently merge their identities with that of the organization. Government agencies and nonprofits need Core Groups that can take a visible stand on behalf of the organization's principles. Even the most hierarchically strict organizations, like military units, depend on their Core Groups to maintain, among other things, the level of mutual respect that soldiers need to operate above and beyond the limits of their orders.

As we'll see throughout this book, there is always an implicit, somewhat unconscious bargain of mutual commitment in organizations: The people of the organization agree to make decisions on behalf of the Core Group, while the Core Group members agree to dedicate themselves as leaders to the organization's ultimate best interests. When it works, the result of this arrangement is greatness. Indeed, behind every great achievement, there is almost certainly a great organization (even when it seems like the achievement is that of a single individual). And behind every great organization there is certainly a great Core Group.

Great or miserable or in-between, the Core Group sets the organization's direction. The organization goes wherever its people perceive that the Core Group needs and wants to go. The organization becomes whatever its people perceive that the Core Group needs and wants it to become. If a goal is perceived as irrelevant to the Core Group, then it will not be reached, no matter how worthy it is, how ardently it is advocated, or even how stringently it is mandated by law or regulation. (At most, the organization will pretend to pursue it, grudgingly complying with the rules.) If a goal is perceived as close to the heart of the Core Group, then the organization will get there, come hell or high water. Moreover, just as every coherent human group comes to embody a set of values, ideas, and attitudes, the Core Group nearly always becomes an unconscious microcosm of the whole. If Core Group members think or act in a particular manner, or with particular attitudes, those percolate throughout the hierarchy. If Core Group members are cold to each other and to employees, then the whole enterprise becomes like a frozen wasteland. If the Core Group somehow warms up, then a little Santa's Workshop begins to develop amidst the tundra.

Thus, if you want to know what an organization stands for, start by exploring the characteristics and principles of its Core Group. If you want to invest in a company, look not just at its business prospects and trading history, but at the quality and reliability of its Core Group. If you want to lead an organization to great new things, start by fostering the kind of environment in which a great new Core Group can emerge. If you need to change or influence an organization, you can't do it unless you understand which aspects of the Core Group are open to change, in what ways, and by whom. Finally, if you remain unaware of the nature of an organization's particular Core Group, then that organization will be opaque, ungovernable, and dangerous to you--even if you are ostensibly the person in charge. You may go through your career, for instance, thinking that "the customer comes first," acting as if that premise were true, and wondering why you never seem to get the rewards and recognition you think you deserve.

The Core Group theory emerged from watching organizations at play. Trained as a journalist, in 1979, I began covering Silicon Valley and the emerging precursors to the Internet for the counterculture publication that Stewart Brand had founded, the Whole Earth Catalog. Every once in a while, a corporation invited some of us Whole Earthers to advise them on the prospects for these strange new technologies. At one such meeting in 1982, some senior executives of the Atari Corporation asked for advice on the potential value of their new product, a home computer. I remember walking out still puzzled by two questions: Why would this buttoned-down organization (which Atari had become after its purchase by Time-Warner) want advice from Whole-Earth-Catalog-style hippies? And why wouldn't these leading-edge technology executives already know their own business? (Now, of course, I know the answer to both questions; this company, which had ejected its technology-savvy founder and been acquired by Time-Warner, had a new Core Group in place that was in over its head.)

By 1985, when Atari had already entered its inevitable decline, I had grown bored with writing about technology. Behind every technology story, after all, was a much more interesting business story, and behind every business story was a much more interesting story about management culture. I drifted to writing about advertising and then management, covering the quality movement and other business fashions of the late 1980s. This in turn led to a consulting job helping an MIT lecturer named Peter Senge develop a book about systems thinking in organizations--a book which ultimately became the 1990 best-seller The Fifth Discipline. Around the same time, I spent six years researching and writing my own book, The Age of Heretics, about the social movement to change large corporations from within.

As part of these and other endeavors--cocreating several Fifth Discipline follow-up "Fieldbooks," writing regularly on "Culture and Change" for the business magazine Strategy + Business, working part-time as a management consultant, helping develop a series of organizational oral histories called "learning histories" at Massachusetts Institute of Technology, and conducting a course on the future at New York University's Interactive Telecommunications Program--I have interviewed more than a thousand people in depth, from a wide variety of organizations, about their aspirations, experiences, and frustrations in the workplace. The Core Group theory sums up the common threads I've perceived in all of those conversations. It also reflects a series of in-depth conversations conducted during the past five years with leading organizational thinkers and thoughtful organizational participants about the Core Group concept and its implications.

In the rest of the chapters of this book, I hope to articulate "who really matters" in a way that transcends both cynicism and naivete, charting the boundaries and influence of the Core Group and discovering the most effective ways to manage it, live with it, and influence organizations for the better.


From the Hardcover edition.
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Table of Contents

Ch. 1 The Customer Comes Eighth 3
Ch. 2 How Organizations Think 12
Ch. 3 A Field Guide to Some Common Core Groups 21
Ch. 4 A Very Special Kind of Love 36
Ch. 5 Power and Legitimacy 45
Ch. 6 Employees of Mutual Consent 55
Ch. 7 A Core Group Way of Knowledge 65
Ch. 8 Guesswork 74
Ch. 9 "Doggie Treats" (Incentives, Targets, and Measurements) 83
Ch. 10 Welchism 89
Ch. 11 The CEO's Choices 97
Ch. 12 The Expanded-Core-Group Organization 106
Ch. 13 The Glass Ceilings 116
Ch. 14 Your Inner Core Group 125
Ch. 15 Core Group Enablers 132
Ch. 16 A Portfolio of Equity 137
Ch. 17 Parasitic Core Groups 151
Ch. 18 Core Group Feuds and Maladaptive Companies 158
Ch. 19 Government Agencies 164
Ch. 20 Labor Unions 169
Ch. 21 Management Consultants 175
Ch. 22 Schools and the "Hidden Curriculum" 180
Ch. 23 The Shadow Core Group 189
Ch. 24 Corporate Governance 200
Ch. 25 The Cycle of Noble Purpose 209
Ch. 26 The Body Politic 225
A Note to the Reader 235
Glossary 237
Notes 243
Bibliography 257
Acknowledgments 265
Index 269
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First Chapter

CHAPTER 1

The Customer Comes Eighth

Back in the early 1980s, when writing mission statements was just an infant management fad, a division of the Exxon Oil Company held an employee conference to announce their new "core values." Enshrined as number one on the list was this simple sentence: "The customer comes first."

That night, the division executives met for dinner, and after a few drinks, a brash young rising star named Monty proposed a toast. "I just want you to know," he said, "that the customer does not come first." Then Monty named the president of the division. "He comes first." He named the European president. "He comes second." And the North American president. "He comes third." The Far Eastern president "comes fourth." And so on for the fifth, sixth, and seventh senior executives of that division, all of whom were in the room. "The customer," concluded Monty, "comes eighth."

Said the Exxon retiree who told me this story: "There was an agonized silence for about ten seconds. I thought Monty would get fired on the spot. Then one of the top people smiled, and the place fell apart in hysterical laughter. It was the first truth spoken all day."

"The customer comes first" is one of the three great lies of the modern corporation. The other two are: "We make our decisions on behalf of our shareholders" and "Employees are our most important asset." Government agencies have their own equivalent lies: "We are here to serve the public interest." Nonprofits, associations, and labor unions have theirs: "Above all else, we represent the needs of our members."

Of course, if organizations were really set up on behalf of these interests, then theywould do a better job, by and large, in serving them. When organizations fail, people tend to assume that their leaders are inept, overwhelmed, or corrupt. But suppose instead that all organizations are doing precisely what they're supposed to be doing. What, then, is their objective? Judging not from their rhetoric, but from their actual behavior and accomplishments, what purpose are most organizations seeking to fulfill?

This book is an effort to answer that question. It starts with the premise that, in every company, agency, institution, and enterprise, there is some Core Group of key people--the "people who really matter." Every organization is continually acting to fulfill the perceived needs and priorities of its Core Group. It's sometimes hard to see this, because the nature and makeup of that Core Group varies from workplace to workplace, and so do the mission statements and other espoused purposes that get voiced to the rest of the world. But everything that the organization might do--meeting customer needs, creating wealth, delivering products or services, fulfilling promises, developing the talents of employees, fostering innovation, establishing a secure workplace, making a better world, and, oh yes, returning investment to shareholders--comes second. Or maybe "eighth." What comes first, in every organization, is keeping the Core Group satisfied.

Core Group dynamics explain why some corporations spend years scrambling frugally for profit, and then squander it on ill-advised mergers, disproportionate pay for their senior executives, or hidden and improper deals. Core Group dynamics also explain why some government agencies block efforts to reform themselves, even when their reputation and potential survival depends on reform. And why some nonprofit organizations persevere against enormous odds to fulfill their idealistic missions, while complacently dismissing potential partnerships that might genuinely help them. Indeed, every organization seems to have its own forms of Core Group-related folly or corruption.

It's because of Core Group dynamics that a depressing number of business corporations have evolved into organizations with one primary purpose: To extract wealth from all constituents (not just the shareholders, but the employees, customers, and neighbors as well) and give it essentially to the children and grandchildren of some of its senior executives. And yet Core Groups are not inherently bad or dysfunctional. Indeed, they represent probably the best hope we have for ennobling humanity--at least in a world like ours, in which organizations have the lion's share of power, capital, and influence. An organization's Core Group is the source of its energy, drive, and direction. Without an energetic and effective Core Group, all efforts to spark creativity and enthusiasm sputter out.

If you work in an organization, then all this may be second nature to you, so obvious and taken for granted that it barely even registers as important. But when you take a step back, the significance for all of us, even those who don't work in organizations, is unavoidable. We live in a civilization composed of organizations. Indeed, in industrialized countries, the organizational birthrate exceeds the human birthrate. Even though organizations are continually merging, swallowing each other up, or dwindling into inactivity, there are more organizations each year than there were the year before.

People have always used organizations to amplify human power. Individuals didn't build pyramids or cathedrals; tribal and feudal organizations did. But since the industrial revolution, and in the past 150 years in particular, organizations have become powerful in unprecedented ways. They are faster than they have ever been, operating with the perpetual acceleration of computers and wireless communication. They are interconnected through vast global webs of trade and distribution, webs that (among other things) make most human beings virtually dependent on organizations for food, shelter, and transportation. They are pervasive; there are almost no sustainable ways of making a living without organizations, and organizations dominate the political system, instead of paying fealty to it.

It's as if some giant invisible species suddenly invaded the Earth around 1850, reshaping civilization in its image, obviously here to stay--and yet almost nobody seems to see it clearly. Nobody really knows how it works, or even what it does. Some people go to business school to master these new creatures, and end up being mastered by them.

The left protests against globalization, capitalism, big corporations, and Wall Street; the right excoriates big government, corrupt labor, or liberal media. But when you strip away the rhetoric, both sides seem to be driven by the same basic dynamic. They feel excluded from, rejected by, opposed to, and trampled on by the Core Groups of organizations associated with the other side.

If we are going to act effectively in a society of organizations, we need a theory that helps us see organizations clearly, as they are. We need to observe this new species in its natural habitat, to track its behavior, and to study its relationships with predators and prey. Only then can we ask: Why does it operate this way? And what, if anything, could be different? Only then can we learn to use organizations, instead of feeling like we are being used by them. Only then can we move organizations away from being simply the property and tools of the few, and develop their potential for the rest of us. Only then can we form real relationships with the members of this new species, as employees, neighbors, cocreators, participants, leaders, and even lovers of organizations.

In short, if we want to not just live within society, but establish ourselves as leaders and creators, then we have to understand the dynamics of the Core Group.

The root of the word "core" is the Latin cor, or heart, and the Core Group is the genuine heart of an organization. Management writer Arie de Geus, in his book The Living Company, calls the Core Group the "we" of the organization--the central proprietors of its interests. They usually include most, but not all, of the people at the top of the organization chart. Plus others. The Core Group members are the center of the organization's informal networks, and symbolic representatives of the organization's direction. Maybe they got into the Core Group because of their position, their rank, or their ability to hire and fire others; maybe because they control a key bottleneck, or belong to a particular influential subculture. Maybe their personal charisma or integrity got them in. In the end, it probably doesn't matter that much how they got in. What matters is that they matter.

The Core Group won't be named in any formal organization chart, contract, or constitution. It exists in people's hearts and minds. Its power is derived not from authority, but from legitimacy. Its influence is not always conscious, or even visibly apparent, but it is always present in the implementation of actual decisions. It is the fundamental aspect of organizational culture that makes visitors to a workplace scratch their heads sometimes: "What are those people thinking?"

It is impossible to imagine an organization without a Core Group. And if you could imagine one, why would you want to create it? Start-ups need entrepreneurial Core Groups who put themselves at risk for the company's future. (People start organizations in the first place precisely because they want to be in a Core Group, if only to see what it would be like. I should know; I cofounded a consulting firm largely for that reason.) Large, well-run companies need a Core Group of senior leaders who can permanently merge their identities with that of the organization. Government agencies and nonprofits need Core Groups that can take a visible stand on behalf of the organization's principles. Even the most hierarchically strict organizations, like military units, depend on their Core Groups to maintain, among other things, the level of mutual respect that soldiers need to operate above and beyond the limits of their orders.

As we'll see throughout this book, there is always an implicit, somewhat unconscious bargain of mutual commitment in organizations: The people of the organization agree to make decisions on behalf of the Core Group, while the Core Group members agree to dedicate themselves as leaders to the organization's ultimate best interests. When it works, the result of this arrangement is greatness. Indeed, behind every great achievement, there is almost certainly a great organization (even when it seems like the achievement is that of a single individual). And behind every great organization there is certainly a great Core Group.

Great or miserable or in-between, the Core Group sets the organization's direction. The organization goes wherever its people perceive that the Core Group needs and wants to go. The organization becomes whatever its people perceive that the Core Group needs and wants it to become. If a goal is perceived as irrelevant to the Core Group, then it will not be reached, no matter how worthy it is, how ardently it is advocated, or even how stringently it is mandated by law or regulation. (At most, the organization will pretend to pursue it, grudgingly complying with the rules.) If a goal is perceived as close to the heart of the Core Group, then the organization will get there, come hell or high water. Moreover, just as every coherent human group comes to embody a set of values, ideas, and attitudes, the Core Group nearly always becomes an unconscious microcosm of the whole. If Core Group members think or act in a particular manner, or with particular attitudes, those percolate throughout the hierarchy. If Core Group members are cold to each other and to employees, then the whole enterprise becomes like a frozen wasteland. If the Core Group somehow warms up, then a little Santa's Workshop begins to develop amidst the tundra.

Thus, if you want to know what an organization stands for, start by exploring the characteristics and principles of its Core Group. If you want to invest in a company, look not just at its business prospects and trading history, but at the quality and reliability of its Core Group. If you want to lead an organization to great new things, start by fostering the kind of environment in which a great new Core Group can emerge. If you need to change or influence an organization, you can't do it unless you understand which aspects of the Core Group are open to change, in what ways, and by whom. Finally, if you remain unaware of the nature of an organization's particular Core Group, then that organization will be opaque, ungovernable, and dangerous to you--even if you are ostensibly the person in charge. You may go through your career, for instance, thinking that "the customer comes first," acting as if that premise were true, and wondering why you never seem to get the rewards and recognition you think you deserve.

The Core Group theory emerged from watching organizations at play. Trained as a journalist, in 1979, I began covering Silicon Valley and the emerging precursors to the Internet for the counterculture publication that Stewart Brand had founded, the Whole Earth Catalog. Every once in a while, a corporation invited some of us Whole Earthers to advise them on the prospects for these strange new technologies. At one such meeting in 1982, some senior executives of the Atari Corporation asked for advice on the potential value of their new product, a home computer. I remember walking out still puzzled by two questions: Why would this buttoned-down organization (which Atari had become after its purchase by Time-Warner) want advice from Whole-Earth-Catalog-style hippies? And why wouldn't these leading-edge technology executives already know their own business? (Now, of course, I know the answer to both questions; this company, which had ejected its technology-savvy founder and been acquired by Time-Warner, had a new Core Group in place that was in over its head.)

By 1985, when Atari had already entered its inevitable decline, I had grown bored with writing about technology. Behind every technology story, after all, was a much more interesting business story, and behind every business story was a much more interesting story about management culture. I drifted to writing about advertising and then management, covering the quality movement and other business fashions of the late 1980s. This in turn led to a consulting job helping an MIT lecturer named Peter Senge develop a book about systems thinking in organizations--a book which ultimately became the 1990 best-seller The Fifth Discipline. Around the same time, I spent six years researching and writing my own book, The Age of Heretics, about the social movement to change large corporations from within.

As part of these and other endeavors--cocreating several Fifth Discipline follow-up "Fieldbooks," writing regularly on "Culture and Change" for the business magazine Strategy + Business, working part-time as a management consultant, helping develop a series of organizational oral histories called "learning histories" at Massachusetts Institute of Technology, and conducting a course on the future at New York University's Interactive Telecommunications Program--I have interviewed more than a thousand people in depth, from a wide variety of organizations, about their aspirations, experiences, and frustrations in the workplace. The Core Group theory sums up the common threads I've perceived in all of those conversations. It also reflects a series of in-depth conversations conducted during the past five years with leading organizational thinkers and thoughtful organizational participants about the Core Group concept and its implications.

In the rest of the chapters of this book, I hope to articulate "who really matters" in a way that transcends both cynicism and naivete, charting the boundaries and influence of the Core Group and discovering the most effective ways to manage it, live with it, and influence organizations for the better.

Copyright© 2003 by Art Kleiner
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