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The Power of Servant Leadership to Transform Health Care Organizations for the 21st-Century Economy
Richard W. Schwartz, MD,MBA;
Thomas F. Tumblin, PhD
Arch Surg. 2002;137:1419-1427.
ABSTRACT
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Physician leadership is emerging as a vital component in transforming the nation's health care industry. Because few physicians have been introduced to the large body of literature on leadership and organizations, we herein provide a concise review, as this literature relates to competitive health care organizations and the leaders who serve them. Although the US health care industry has transitioned to a dynamic market economy governed by a wide range of internal and external forces, health care organizations continue to be dominated by leaders who practice an outmoded transactional style of leadership and by organizational hierarchies that are inherently stagnant. In contrast, outside the health care sector, service industries have repeatedly demonstrated that transformational, situational, and servant leadership styles are most successful in energizing human resources within organizations. This optimization of intellectual capital is further enhanced by transforming organizations into adaptable learning organizations where traditional institutional hierarchies are flattened and efforts to evoke change are typically team driven and mission oriented.
INTRODUCTION
During the past decade, the health care service industry transitioned from a risk-free third-party reimbursement system to a market economy for many internal and external reasons. These reasons include the ever-increasing costs of health care, increasing payer power, increasing financial risk for the patient and provider, the advent of managed care, the market influences of the Balanced Budget Act of 1997, the Institute of Medicine1-2 reports on hospital medical errors and follow-up recommendations, and the influence of organizations such as the Midwest Business Group on Health and The LeapFrog Group for Patient Safety.3 For the near future, as long as large employers like General Motors continue to pay more for health care than for steel, market forces will continue to reshape the health care sector.4
Despite these market changes, health care organizations in the United States continue to be dominated by (1) leaders who practice an outmoded transactional style of leadership and (2) organizational hierarchies that are inherently stagnant. Non–health care service industries have repeatedly demonstrated that for businesses to compete successfully in a market economy, effective leadership is essential. Furthermore, certain leadership styles and competencies have been identified as most effective; most of these skills belong to the styles termed transformational, situational, or servant. We believe that a synergy of these complementary and often synonymous leadership styles is emerging as the advocated mode of leadership for the competitive 21st-century organization. These styles engender the transformation of organizations into thriving, cohesive, mission-oriented learning entities that are prepared to respond to changing internal and external demands (Figure 1).
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Figure 1. Synergistic leadership styles that transform hierarchical organizations into learning organizations. Leadership styles are described in the Introduction.
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These leadership styles are not novel concepts, and most have been presented, using varying semantics, in the secular or spiritual leadership literature during recent decades. However, few physicians have been introduced to the large body of literature centered on leadership and organizations. Because physician leadership is emerging as a vital component in the transformation of the nation's health care industry, we offer a concise review of the leadership and organizational literature herein as it relates to competitive organizations and the leaders who serve them. In conjunction, we present the argument that the health care service industry would best be served by leaders who demonstrate a combination of transformational, situational, and servant leadership styles with the goal of creating learning organizations. The underlying premise of this argument is that organizational transformation occurs only with such leadership, and that without transformation, an organization cannot successfully compete in a market economy.
COMPETITIVE ORGANIZATIONS
To understand the types of leadership styles that engender success, it is necessary to understand the characteristics of competitive organizations. Because the rate of change in a market economy will only accelerate and rarely, if ever, slows down, Miller5 contends that the successful organization will resemble a chameleon, an "ultimately adaptable organism." Kotter6 also advocates an "adaptive corporate culture" through continual transformation. He notes that competitive organizations exhibit a persistent sense of urgency; have flatter, leaner hierarchies dominated by teams rather than individuals; promote greater risk taking, leading to broad-based empowerment of the entire workforce; delegate managerial authority to the lower levels of the organization; and eliminate unnecessary interdependence between individuals or groups. Likewise, Kanter7-8 advocates that competitive organizations will be fast and flexible. The adaptable organizations she describes manifest the following 5 critically important characteristics: great flexibility, commitment to the individual, superior use of teams, strong core competencies, and a taste for diversity. In her words:
The greatest impediments to change and the greatest obstacles to an organization's success lie within the organization itself. The challenge for senior management is to determine how to eliminate the impediments and the obstacles . . . in other words, to change an organization, start with behaviors, and especially with senior management's modeling of desired behaviors.
Beckhard and Pritchard9 note that a healthy organization has a strong sense of purpose. The dominant form of management is team driven, with evidence-based decision making in a continuous learning mode. Employees are empowered to make decisions. The corporate structure rewards innovation, and its policies respect work-family tensions.
Pfeffer10 contends that successful firms will build relationships with employees and customers by implementing high-performance, high-commitment work practices. In his view, cultural change and organizational capability are more important than technology or strategy for firm success. He states that retention of customers and employees will be the hallmarks of the successful 21st-century firm, because customer acquisition is much more costly than customer retention and because employees represent the most important asset of the firm, ie, knowledge. His research delineates the following 7 dimensions that characterize systems that produce profit by placing a premium on the importance of their employees: employment security, selective hiring of new personnel, self-managed teams and decentralization of decision making, compensation dependent on organizational performance, extensive training, reduced status distinctions and barriers across all corporate levels, and extensive communication of financial and organizational performance.11
In keeping with these philosophies, spiritual writer Robert Greenleaf12 challenged organizations to become servant organizations. He believed society would be fundamentally changed for the better if model servant organizations functioned in the fields of business, education, health care, and religion. In his view, servant organizations would perform the following functions:
- Listen receptively to what individuals have to say.
- Accept individuals and have empathy for them.
- Model foresight and intuition.
- Reward awareness and perception.
- Develop highly effective powers of persuasion.
- Demonstrate an ability to conceptualize and to communicate concepts.
- Live out an ability to exert a healing influence on individuals and institutions.
- Build community in the workplace.
- Encourage the practice of contemplation.
- Recognize that servant leadership begins with the desire to change oneself.
BARRIERS TO SUCCESSFUL ORGANIZATIONAL CHANGE
For the health care industry to adapt to its new market environment, organizational change is necessary. To a major degree, the primary mission of health care has been increasingly subordinated to the complexities and inflexibilities of its reimbursement system. Like large corporations, health care systems, especially those that have grown because of past success, have institutionalized an overemphasis on management. In the attempt to keep the ever-larger organizational structure under control, managerial competencies focused on control become paramount, and an inwardly focused bureaucracy emerges and grows. Leadership, because of corporate arrogance and narrow vision, is gradually diminished.6 Therefore, the transformational behaviors that produce the successful organizational characteristics listed above become difficult to achieve.
Other factors can cause organizations to fail to implement or sustain change. Kotter,6 a leading authority on successful leadership and corporate transformation, notes the following mistakes common to failed transformational efforts: (1) allowing complacency, (2) failing to create a powerful guiding coalition, (3) underestimating the power of vision, (4) grossly undercommunicating the vision, (5) permitting people or structures to block the new vision, (6) failing to create short-term wins, (7) declaring a premature victory, and (8) neglecting to anchor changes in the corporate culture.
He emphasizes that the creation of urgency is particularly important in the initial attempt to change culture. Most leaders overestimate their ability to force large organizational changes and underestimate how difficult it is to drive people out of their comfort zones. Given the combination of risk-averse physicians and the conservative orientation of health care systems management, establishing and maintaining a high sense of urgency is necessary to stimulate the extra effort and sacrifices needed to transform the status quo. In fact, Kotter6 emphasizes that these initiatives should be a sequence of linked stages; each stage must be solidified before tackling the next. He notes that most successful transformational efforts reveal the following 2 important patterns: (1) a multistage process must create sustained power and motivation to overwhelm the sources of inertia; and (2) only high-quality leadership, above and beyond excellent management, can effectively drive this process. In Kotter's experience, failure to create this type of multistage process leads to the following consequences, all of which are germane to today's health care delivery systems: poor implementation of new strategies, failure of acquisitions to achieve expected synergies, reengineering that takes too long and costs too much, failure of downsizing to control costs, and failure of quality/performance improvement efforts to deliver planned results.
LEADERSHIP VS MANAGEMENT
Fundamentally, management is about coping with complexity (control), whereas leadership is about transformational change.13 The balance/friction between these 2 necessary functions is crucial, as demonstrated in the following tabulation:
Good management brings the degree of order and consistency necessary for corporate survival, especially with the emergence of large organizations in the 21st century.6 However, organizational form should always follow function; therefore, management should always take its cues from its organizational leaders. Kotter6, 13 believes that most US corporations are overmanaged and underled. This imbalance routinely leads to the "cesspool syndrome," a condition characterized by organizational inertia and mediocrity.14
Academic medical centers, unfortunately, are often excellent examples of large bureaucracies that are overmanaged, underled, and rife with inertia and mediocrity. Only with strong leadership will organizations continue to adapt effectively in response to a changing external environment (eg, a competitive market economy). Kotter13 provides an excellent military analogy: "A peacetime army can usually survive with good administration and management up and down the hierarchy, coupled with good leadership concentrated at the very top. A wartime army, however, needs competent leadership at all levels. No one yet has figured out how to manage people effectively into battle; they must be led."
ATTRIBUTES OF SUCCESSFUL LEADERS
People usually recognize leadership when they see it; defining it, however, can be difficult. Attributes of successful leaders that commonly appear in the literature are presented in Table 1. DePree15 advocates a similar list of attributes but starts with this explanation: "Above all, leadership is a position of servanthood. Leadership is also a posture of debt; it is a forfeiture of rights." Gregersen and colleagues16 and Row17 emphasize that executives will be leading organizations into "new, unmapped outposts of the global marketplace," necessitating that they be akin to the Old World explorers. At FedEx, a company known for crisp execution, all employees are encouraged to become leaders and to consider management possibilities; the company has formalized programs for employee leadership development and advancement.17
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A Literature Survey of Leadership Philosophies and Leader Attributes
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Paine18 asserts that leaders must embody ethical behavior and that this demonstration of personal ethics is crucial for the development of organizational integrity; high levels of organizational integrity enhance company ethos, esprit de corps, and, ultimately, efficacy. Similarly, Badaracco19 states that managers become leaders by translating their personal values into calculated action; defining moments for leadership development force a balance between idealism and reality, and the effect on the organization is real. Carlson and Perrewe20 point out that to remain competitive, many leaders are faced with the challenge of creating an ethical environment within their organization. They contend that this type of transformation occurs via the following 4 key behaviors: communication of the vision, support and reward for followers of the vision, consideration of and concern for employees, and fulfillment of commitments. Clearly, there is a significant moral component to all of these leadership styles.
Goleman21 argues that many of these attributes constitute the sine qua non of effective leadership: emotional intelligence. He believes that the most effective leaders score high in emotional intelligence factors; in fact, at high corporate levels, the difference between star performers and those deemed average was not cognitive in nature. A high IQ and solid technical skills are entry-level requirements for such positions; however, 90% of the difference in profiles between these groups was attributable to the following 5 domains that constitute Goleman's definition of emotional intelligence: self-awareness, self-regulation, motivation, empathy, and social skills. With commitment, these domains can be learned and groomed.
Druskat and Wolff22 have extended the concept of individual emotional intelligence to teams. The members of creative, productive teams demonstrate mutual trust, a sense of group identity, and a sense of group efficacy. These emotional components enable effective participation, cooperation, and collaboration. They state:
Group emotional intelligence . . . [is] about bringing emotions deliberately to the surface and understanding how they affect a team's work. It is also about behaving in ways that build relationships both inside and outside the team and that strengthen the team's ability to face challenges.
Kets deVries,23 a practicing psychoanalyst, has written extensively regarding the emotional aspects of leadership. He emphasizes 2 major issues. First, he believes that the true art of leadership consists of creating an environment "where people have peak experiences, where in their excitement they become completely involved in what they are doing and lose their sense of time." This understanding of energizing leadership (or empowerment) engenders in the employees a sense of control and ownership in what they are doing, ie, "If you tell people where to go, but not how to get there, you will be amazed at the results." Second, he points out that the failure of many executives is a combined lack of interpersonal skills and self-understanding. He strongly believes that every leader would benefit from enhancing their awareness of the inner forces (the inner theater) that drive their behavior. In concurrence, Rosen24 offers his list of leadership competencies and advocates that "learning to lead starts with getting to know yourself." He suggests closing the gap between ideal and current performance, with conscious attention to strengths and shortcomings.
Passion is a visible feature in the effective leader; without it, no matter how compelling the vision and its associated missions, necessary organizational change will not occur. Only passion has the strength of emotion necessary to overcome the twin evils of inertia and intransigence.25
Finally, leaders must "walk the talk." Unfortunately, as James O'Toole, vice president of the Aspen Institute and director of the Corporate Leaders Forum, notes in the article by Huey, "Ninety-five percent of American managers today say the right thing. Five percent actually do it."26 Huey26 terms this mirroring of vision postheroic leadership. Servant, transformational, empowered, and distributed are similar terms. He notes that real leadership embodies the core values, which necessitate that leaders progressively relinquish control. This surrender will simultaneously empower the organization. Obviously, most executives find this final step very difficult to take. Argyris27 maintains that although top-level management often embraces the overall concept of empowerment in theory, they find it very difficult to give up the traditional command and control that they understand and trust. Furthermore, his research demonstrates that, consciously and subconsciously, many chief executive officers actually undermine the organizational transformational efforts that they espouse. Unfortunately, most physician administrators, through a combination of ignorance, inertia, and intransigence, remain rooted in the command-and-control bureaucratic structure.
Only leaders who are action oriented and demonstrate high levels of emotional intelligence will be able to lead successfully. Can these traits be learned? Two recent works describe the leadership development strategies most effective in today's corporations. Tichy28 tells of the commitment of leaders like Jack Welch, Andrew Grove, and Roger Enrico to developing leaders within their corporations. Tichy helped create leadership development cultures at General Electric and Ford. Conger and Benjamin29 advocate an action-learning approach that focuses on building competencies in emerging and existing leaders.
LEADERSHIP STYLES
Several leadership principles warrant emphasis.30 First, leaders are not independent actors; they shape and are shaped by their constituents in a mutual relationship. Second, context influences what leaders can and must do. Third, no single formula can possibly cover the wide range of situations in any organization. Fourth, ultimately, as demonstrated by Collins and Porras,31 most excellent corporate leaders of the past few decades have been "clockbuilders." They were primarily social architects who focused on designing and building an effective organization, as opposed to formulating corporate strategy or service delivery. Fifth, the entire concept of transformational leadership goes beyond the notion of individual exchange (transaction) to that of sustainable corporate change. Transformational leadership is fundamentally relational, as it involves a "commingling of [the] needs and aspirations and goals in a common enterprise."32(p213) Furthermore, a definitive, moral dimension to this type of leadership exists, which differentiates it from heroic and transactional leadership forms.
Transactional Leadership
At present, transactional leadership is the dominant style operant in most health care organizations (eg, large systems such as academic medical centers). Transactional leadership is a relationship of mutual dependence in which the contributions of each party are recognized and, often, goals are met and rewards are delivered. However, in this paradigm, leaders are followed primarily because, given the hierarchy, it is in the best interests of the follower to do so. The transactional leadership style has many disadvantages in a market economy, not the least of which is a combination of poor satisfaction among employees and customers; this decreases customer loyalty and, eventually, profits (termed the employee-loyalty/customer-loyalty profit chain).33-34 Pfeffer,11 among others, has shown that putting employees and customers first indeed yields profitability. Until recently, there has been no practical reason to provide superior health care service in a cost-effective fashion; market share and accompanying reimbursement would not have been affected by such behavior. The transactional leadership style was adequate for health care delivery systems when the payer (mostly private industry and the state or federal government) bore all the risk; this is no longer the case.
Changing Leadership Styles
Changing from transactional to transformational leadership requires understanding and mobilization of the organization using situational leadership principles. In the mid-1980s, Hersey and others35-36 suggested that leaders are most effective when they are able to read the readiness level of the people and organizations they lead. By readiness, they mean the willingness and ability of followers to accomplish a task in a given situation. Hersey et al35 state that complex change, as occurs when an organization shifts from transactional to transformational leadership, requires a staged approach. Their situational leadership model (Figure 2) proceeds through 4 stages of leadership (telling, selling, participating, and delegating) that are matched to the levels of readiness in the individual or organization. Telling becomes the mode when followers are unable and unwilling, or insecure. In this situation, the leader is highly directive in detailing the need and plan for the organization. When followers are willing but unable, the selling mode is used to motivate and train. When followers are able but unwilling or insecure, the leader participates with the followers to build confidence. When followers are able and willing, the leader can delegate responsibility with occasional follow-up to keep the followers on course. These authors advocate 2 caveats to this model. First, the relationship between the leader and followers is crucial; without a following, there is no leadership. Second, to maximize the relationship, the leader must first determine task-specific outcomes that need to be accomplished individually and organizationally. Without clarity on issues such as outcomes and objectives, no basis exists for determining follower readiness and the matching behavioral leadership style.35
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Figure 2. Situational leadership model. The model is described in the "Changing Leadership Styles" subsection of the "Leadership Styles" section.
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More recently, Bolman and Deal30 have asserted that changing from transactional to transformational leadership requires understanding the organization using the frame theory together with situational leadership principles. They suggest the following 4 frames or perspectives from which to view an organization: (1) The structural frame highlights the rules, roles, policies, and social architecture of the organization; in this frame, the leader's job is to analyze and design. (2) The human resource frame views the organization as a family with needs, skills, and relationships. The leader in this frame acts as catalyst and servant, supporting and empowering the people in the organization. (3) The political frame views the organization through the lenses of power, competition, and conflict, in which the leader is advocate and negotiator. (4) The symbolic frame points to the culture and meaning within the organization where story and metaphor create the theater in which people and processes act out the mission. The leaders in this organization serve as prophets and poets, as they frame the experience. Views through multiple frames can aid leaders in assessing situations to determine needed actions in achieving corporate change.
Transformational Leadership
A large number of authors have offered various thoughts regarding the concept of transformational leadership. Bass37 relates that transformational leaders may inspire, energize, and/or intellectually stimulate their employees; furthermore, they provide individual consideration for the employee's needs. He believes that transformational leadership can be learned and that "leaders at all levels can be trained to be charismatic." Results from these various approaches should increase employee awareness and interest in the corporate vision and mission and stimulate employees to look beyond their own self-interests.
Similarly, Waldroop and Butler38 view the successful executive as a coach. They believe that the goal of coaching is to make the most of a team's resources and to empower employees. Effective corporate coaches practice active listening, support learning through action and reflection, move from easy to hard when confronting entrenched behaviors, set microgoals, use "tape delay" (ie, pause for a significant time before becoming overtly angry), practice script writing and role-playing, arrange relationship-repair meetings, and encourage positive feedback.
Servant Leadership
In 1969, Robert Greenleaf proposed that the "great leader is seen as servant first."12 He spent 5 decades challenging organizations in the fields of business, education, health care, and religion to become servant in nature, because he believed this would fundamentally change society for the better. He conjectured that because servant leaders take care of their followers' greatest needs first, followers "become healthier, wiser, freer, more autonomous, more likely themselves to become servants." He later reasoned that cultural forces, such as the questioning of power and authority, would eventually lead to the emergence of cooperation and support as more productive, interactional modes of behavior.
Shriberg and colleagues32 also emphasize that servant leaders possess a self-awareness that their own healing is a motivation for leadership. Furthermore, servant leaders grasp that the relationship between the leader and follower is a mutual search for wholeness. The servant leader understands that the first step to leading others is the necessity to change within oneself. This line of thought sharply contrasts with the traditional command-and-control transactional leadership theories of the mid-20th century.
In summary, only through the development of the interrelated competencies inherent to situational, transformational, and servant leadership principles will health care systems survive and thrive. Prevailing transactional (commodity-driven) leadership interactions often fail to mobilize employee performance and result in customer dissatisfaction. In contrast, transformational leadership results in profit by stimulating and leveraging the most important asset of service industry corporations, ie, personal and intellectual capital.
IMPLICATIONS FOR HEALTH CARE DELIVERY SYSTEMS
Most large health care delivery systems today are in turmoil; external threats to survival continue to increase, mandating continuous, flexible internal organizational change. Nevertheless, many health care organizations (especially academic medical centers) have been resistant to transformational efforts. Unfortunately, most attempts at change have been primarily structural in nature. Restructuring requires little expenditure of political, economic, or emotional resources, and usually occurs first when change is needed; predictably, the results are usually dismal because the merging bodies never truly attempt corporate transformation. Not surprisingly, most bureaucratic restructuring, mergers, and acquisitions have failed precisely because transformational cultural change is about corporate function and relationships, not structure. Changing titles and adding or changing bureaucratic layers will add to corporate cynicism and dysfunction. In other words, adding pathology to existing pathology, in whatever form, will not result in a healthy organization. Such was the case in numerous failed mergers between large, equally stressed health care delivery systems during the past decade.
According to Hambrick and Mason,39 organizational outcomes such as strategic choices and performance levels commonly reflect the most powerful actors in the organization, the topmost echelon of management. Eisenhardt and Bourgeois,40 in a study of 8 microcomputer firms, showed that office politics arise from power centralization by autocratic chief executive officers. In their study, they demonstrated that top management often generates political behavior among subordinates, based on nonsubstantive issues like demographic characteristics (eg, age and office location). Furthermore, such politics within top management teams are often associated with poor financial performance. Bedeian and Armenakis14 term such organizational dysfunction the cesspool syndrome, whereby dreck floats to the top of declining organizations. Mediocre executives, threatened by talented employees, promote mediocre personnel. This practice leads to a brain drain and organizational decline; they note that this syndrome is commonly seen in large, bureaucratic organizations such as the military and universities. The cesspool syndrome is germane to the culture of large health care delivery systems. In contrast, the leadership literature focuses on how to manage creative people using proscriptive management, ie, setting broad boundaries and allowing people to be creative within those boundaries as long as they add value to the mission.
Likewise, large health care delivery systems model the "eroding goals" system archetype described by Senge.41 In the application of this model, the eroding goal is the constant delivery of a product, such as health care, while ignoring the satisfaction of the individuals being served (patients) and the persons providing the service (employees). With the advent of a market economy, this type of eroding customer service will eventually lead to a decrease in profits via the well-recognized employee-loyalty/customer-loyalty profit chain. In the third party payer system, health care delivery often becomes a commodity item, and corporate market share decreases commensurately; to be competitive, Pine and Gilmore42 assert that organizations must ultimately transform the service delivery experience along the following progression: commodities goodsservicesexperiences transformation.
Kelley and Caplan43 note that in the 21st-century economy, improving the productivity of professionals must be the primary corporate initiative, because the performance of knowledgeable professionals, not strategies or technology, will make or break the business. To improve productivity, the focus must be on the leader-professional relationship. Similarly, Pfeffer11 demonstrates that those firms that put people first realize higher profits; this practice is simply a wise management of intellectual capital. The most abundant resource in large health care systems is intellectual capital; its proper stewardship should result in ever-increasing productivity and profit.
Pascale and colleagues44 advocate monitoring 4 vital signs of an organizational culture as a surveillance mechanism for corporate health (employee empowerment, employee identification with the organization as a whole, successful conflict resolution, and an organizational ability to learn). They state that as organizations grow older and larger, as evidenced in many health care organizations, organizational drift occurs as the vital signs deteriorate. Employees experience loss of empowerment and no longer identify with the organization. Conflict is routinely smoothed over rather than resolved. To combat organizational drift, they espouse the following 7 disciplines that should be embedded in the fabric of the corporate culture:
- Build an intricate understanding of the corporate business among all employees.
- Encourage uncompromising straight talk.
- Manage from the future.
- Harness setbacks by viewing them as breakthroughs.
- Promote inventive accountability.
- Understand the quid pro quo (eg, employees must receive commensurate returns).
- Create relentless discomfort with the status quo.
THE SUCCESSFUL 21st-CENTURY HEALTH CARE DELIVERY SYSTEM: A LEARNING ORGANIZATION
Given the recent history of American industry, competitive health care delivery systems can be expected to display certain attributes. These attributes describe what Senge45 terms the learning organization. The key attribute of learning organizations is adaptability, unlike traditional authoritarian bureaucracies that change too slowly to remain competitive in the current market economy. Generative and adaptive learning are important; the former is focused on knowledge creation, and the latter is about coping with the environment. Senge notes that the first step in the development of a learning organization is implementing and communicating creative tension (ie, the gap between an organization's vision and reality). He contends that the primary roles of leadership include designing the social architecture, teaching reality, and being stewards of human resources. This style of leadership results in shared vision and systems alignment and is summed up in the centuries-old saying of the Chinese philosopher, Lao Tsu: "The wicked leader is he who the people despise. The good leader is he who the people revere. The great leader is he who the people say, ‘We did it ourselves.'" (Available at: http://faculty.quinnipiac.edu/libraries/tballard/quotes.htm. Accessed September 30, 2002.)
Similarly, Nahapiet and Ghoshal46 support the concept of organizational learning transformation by developing the hypothesis that the roots of intellectual capital formation and development are deeply embedded in social relations and in the structure of those relationships. Therefore, strategic advantage is based on social transformation of the organization, as opposed to a combination of individualistic, hierarchical, commodity-driven transactions. They maintain that those firms that generate the highest degree of social capital will be most successful at creation of new intellectual capital and eventually will capture market share. Each author notes the tremendous amount of emotional energy and commitment of time necessary on the part of leaders for such a culture to develop. Bordieu47 observes: "The existence of connections is not a natural given, or even a social given . . . it is the product of an endless effort . . . ." Likewise, Arthur and colleagues48 discuss the nurturing of intelligent careers and promote the competency-based, learning-centered view of the intelligent organization. They believe that the alignment and performance of systems will improve if individual career competencies are analogous to those of the intelligent organization that exemplifies knowing why, how, and whom.
Nonaka49 presents a practical proposal for implementing more effective knowledge creation and dissemination, especially in health care delivery, where most service is performed by teams. He theorizes that although new knowledge is developed by individuals, organizations play a critical role in articulating and amplifying that knowledge. He contends that a "spiral of knowledge" is created and nurtured through a dynamic and continuous "entanglement" between the individual and firm. He emphasizes that middle managers, usually the team leaders, serve as a catalyst for that spiral of knowledge to germinate up and down the organizational structure, and terms this middle-up-down management/leadership, as opposed to classic top-down or bottom-up styles. Huy50 supports this view; he asserts that when it comes to implementing radical change, middle managers, the team leaders, have the greatest organizational impact. They serve in the organizational roles of entrepreneur, communicator, and therapist, because they understand the organizational frontline and performance delivery issues, but also maintain an objectivity that enables problem solving; because they are the crossroads of communication between the executive office and the front line; and because they are directly responsible for the emotional tenor and well-being of their teams. Organizations that provide autonomy, education, and support to teams and their leaders will profit in the turbulent health care market. Far too often in recent decades, health care providers have become mechanistic and pragmatic to the exclusion of real innovation.51
CONCLUSIONS
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