Green-, Yellow- and Red-Light Leadership

Three Leadership Styles implemented for Corporate Change

Research Paper (undergraduate) 2010 16 Pages

Business economics - Business Management, Corporate Governance


Table of Contents

1. Green Light, Yellow Light and Red Light Management and Leadership

2. A charismatic example of Green Light Leadership
2.1 John T. Chambers, Chairman and CEO of Cisco Systems Inc.
2.2 John T. Chambers´ 3 Visions for Cisco Systems Inc.

3. An outstanding example of analytical Yellow Light Leadership
3.1 Lou Gerstner´s Behavioral Analysis for the turnaround of IBM
3.2 Lou Gerstner´s Strategies for Change at IBM

4. An epic example of Red Light Leadership
4.1 Jack Welch´s Visions and Strategies for GE´s Change
4.2 GE´s standing at the end of Jack Welch´s Tenure as CEO

5. Conclusion

6. References

1. Green Light, Yellow Light and Red Light Management and Leadership

For several decades now, we have experienced an unavoidable and strongly growing market globalization. We have also been able to experience some very remarkable changes in the globe´s market scenarios: good economic times for some companies on the globe, uncertain, fluctuating or changing economic times for some other companies on the globe. Some companies doing well, while others having to struggle for survival. Why these differences in companies´ economic success, when the conditions seem to be the same for everyone participating in the game of corporate business? The answer is, that some companies´ leaders recognize where their weaknesses and strengths lay inside the company and where their opportunities and threats lay in the surrounding market theater, while some leaders do not.

A primordial and successfully performed SWOT analysis gives clues as to what a company´s leaders and managers have to do for best achievement of the intended business goals. At this early point it is absolutely necessary to distinguish between the company´s inner environment and its surrounding market environment. At this point it is also necessary to be aware of the fact, that management and leadership are two related but different disciplines for operating the company. Management means working by the system and doing things right. Leadership means working on the system and doing the right things.

In this term paper on green light, yellow light and red light management and leadership, I will try to explain what color of light correlates with which discipline and with which type of causal market situation. From what I read and reflected on after the lecture of Dr. John Sadowsky, I dare making the following systematically simplified introduction:

Green Light: a market defined condition. The booming market and growing demand require optimum strategies and processes. Visionary and charismatic leadership is the discipline required in this case. An optimistic visionary leadership is best for defining strategies of global market expansion and business growth possibilities, for embracing the global market´s abundant business opportunities and discovering possible threats and possible changes in trends. In order to gain influence, valuable information and global acceptance a green light leader must be socially caring and emotionally available. Management needs to work by the system and must insure that all processes perform by the established standards of excellence in order to satisfy growing demand and to insure sufficient speed to market.

Yellow Light: a market defined condition. The market is generally very unstable and uncertain because of many different possible reasons: may it be because of market saturation effects, new customer generations, new economies, a recession or a financial crisis, emerging substitution technologies, changing consumer priorities, unexpected global armed conflicts, financial shortages, shifting of information power, new suppliers in other countries, or even shifting behavioral trends in consumption, just to name a few known ones. The causes for an uncertain economy are innumerable and this fact demands a very intensive and careful watching of the market´s uncertain and changing trends. These market signals are understood as the flashing yellow light. After the flashing yellow light, a green or a red light business might turn up for thr company, and this is where the difficulty for strategically correct calls of judgement lays. Judgemental and analytical thinking is asked for understand- ding the signs of the uncertain economy correctly. Analytical and judgmental leadership for change is the discipline required in this case, it has to scrutiny the global markets for possibly emerging business opportunities and adapt the company to it by changing its structures. A yellow light leader inspires trust by means of his consistent and objective analytical behavior in uncertain times. Change management must implement and coordinate strategic system changes and optimizations in order to adapt to the uncertain market´s competition and demand situation.

Red Light: a company in strategic crisis condition. The market is generally good and transparent, but the company has entered a strategic crisis and not properly adapted to market demands. Business and market share losses have been incurred by existing weaknesses and by better adapted competitors. The causes for not being successful in a propitious market climate lay inside the company and its crisis of strategy. Authoritarian but charismatic leadership is the discipline required in this case, the existing system must be changed. A red light leader must be a charismatic but very authoritarian change promoter in times of strategical crisis. Leadership must provide effective change strategies. Change management must implement and coordinate strategic system changes and optimizations in order to adapt to the uncertain market´s competition and demand situation.

2. A charismatic example of Green Light Leadership

John T. Chambers´ highly successful career as Chairman and Chief Executive Officer at Cisco Systems Inc., is a typical example of charismatic, emotionally available and socially caring green light leadership during the time of booming IT markets in the ninety´s. His visions and suiting strategies made Cisco Systems one of the world´s most successful companies under booming global IT market conditions.1

2.1 John T. Chambers, Chairman and CEO of Cisco Systems Inc.

Cisco´s skyrocketing business success philosophy can be best appreciated in John T. Chambers´ own words: "Cisco has enjoyed many years of success by recognizing and capitalizing on important market transitions; and in turn helping our customers do the same. We have become both a technology and a business partner to thousands of companies across the globe. By providing an integrated intelligent network, we enable our customers to take a holistic approach to driving productivity, innovation, and growth."

Cisco´s remarkable business success under green light leadership is briefly described in the following three paragraphs.

Cisco´s Global Industry Position: Cisco's trusted market capitalization is currently over twice that of its top 11 North American competitors. With more than 65,000 employees worldwide, Cisco leads the market for Internet routers and switches, both in market share and innovation. More recently Cisco has expanded its presence into six advanced technology markets of wireless, home networking, security, optical, IP telephony and storage. In combination, these core and advanced technologies comprise Cisco's vision of the Intelligent Information Network. As a proof of its global success, Cisco is the number one or two player in almost every market in which it competes, while it continues to deliver innovations that extend its Intelligent Information Network.

Acknowledging Cisco's industry leadership under John T. Chambers´ administration, Fortune magazine designated Cisco one of America's "Most Admired Companies", Forbes magazine called Cisco one of the "Leading Companies in the World" and Business Week named Cisco one of the Top 50 market performers. Adherence to the strictest ethical principles is as important to Cisco as market leadership and it´s earning Cisco a designation by Business Ethics Magazine as one of its "Business Ethics: 100 Best Corporate Citizens."

Cisco´s People: Cisco employees are deemed some of the best in the world. They have in turn consistently voted Cisco as one of the top employers. Recent honors include:

- Fortune magazine's "100 Best Companies to Work For"
- Working Mother magazine's "100 Best Companies for Working Mothers"
- Diversity Business' "America's Top Organizations for Multicultural Business Opportunities"
- The Advocate Magazine's "10 Best Companies to Work For"

Cisco´s team of top managers is of the opinion that their CEO, John T. Chambers, is recognized worldwide for his optimistic style and honest business approach. Under his leadership they have successfully steered Cisco through five generations of competitors, even during crisis ridden economic times. Cisco's "bench strength" is strong and thorough, keeping Cisco well-positioned for continued leadership on the market.

Cisco´s Technology: as the worldwide leader in networking for the Internet, Cisco sells networking equipment and software technology for routing, switching and fiber- and Internet Protocol (IP)-based solutions. Cisco stands for Internet technology in relation with the advantageous productivity implications that Internet business solutions provide.

Cisco´s technology leadership is based on three differentiating commitments:

- Creating networks that are smarter, with intelligent network services built in;
- Faster, in terms of their performance
- Longer lasting, with a generational approach to an evolutionary infrastructure.

These differentiating commitments help Cisco preserve the integrity of its best Internet products and ensure that this product integrity is the foundation of the global systems it develops. Cisco is driving product innovation to develop and deliver the best solutions for its core technology markets, routing and switching, and in its advanced technology markets.



Title: Green-, Yellow- and Red-Light Leadership