Managing people is difficult because people are complex. In today’s high-pressure environments, it is very easy to get caught up in the fight for results and to forget about the complex human beings who are needed to produce them.

The dilemma is that when the challenges facing an organization are not about repeatable execution, but about innovation or responding to complexity, the idea of breaking things down into well-understood parts is not only unhelpful, it can also be a dangerous trap.

Successful institutions almost always develop strong cultures that reinforce those elements that make the institution great. They reflect the environment from which they emerged. When that environment shifts,it is very hard for the culture to change. In fact, it becomes an enormous impediment to the institution’s ability to adapt.

This is doubly true when a company is the creation of a visionary leader. A company’s initial culture is usually determined by its founder’s mindset—that person’s values, beliefs, preferences, and also idiosyncrasies. It’s been said that every institution is nothing but the extended shadow of one person.

Yet this whole midlevel framework misses two huge, incredibly important natural sources of

strength:

1. Having a coherent strategy—one that coordinates policies and actions. A good strategy doesn’t just draw on existing strength; it creates strength through the coherence of its design. Most organizations of any size don’t do this. Rather, they pursue multiple objectives that are unconnected with one another or, worse, that conflict with one another.

1. The creation of new strengths through subtle shifts in viewpoint. An insightful reframing of a competitive situation can create whole new patterns of advantage and weakness.

In many large organizations, the challenge is often diagnosed as internal. That is, the organization’s competitive problems may be much lighter than the obstacles imposed by its own outdated routines, bureaucracy, pools of entrenched interests, lack of cooperation across units, and plain-old bad management. Thus, the guiding policy lies in the realm of reorganization and renewal. And the set of coherent actions are changes in people, power, and procedures. In other cases the challenge may be building or deepening competitive advantage by pushing the frontiers of organizational capability.