New Study Shows Need for Leadership That Goes BeyondThe CEO.

Business Editors

DAVOS, Switzerland--(BUSINESS WIRE)--Jan. 31, 2000

Preliminary Findings Look Beyond CEO Personality

and Highlight the Unparalleled Importance

of Creating a Culture of Leadership

Does a CEO lead a company to success, or is it the

The preliminary findings of a new study by the World Economic Forum/Booz-Allen &Hamilton Strategic Leadership Project challenge the prevailing &uot;personification&uot; of corporations by journalists, investors and academics, who frequently focus on the characters, biographies and charisma of CEOs or managing directors in highlighting successful leadership.

The study, &uot;Creating the Organizational Capacity for Renewal: The Strategic Leadership Program,&uot; undertaken by Booz-Allen &Hamilton and the World Economic Forum, and released today at the annual meeting in Davos, found that this obsession on a single personality typically skews analysis away from the organizational factors that are more important drivers of performance. It is those factors that often explain why some companies outperform competition in their industries over the tenures of several different chief executives, and why many CEOs who have succeeded in one organization go on to fail in the next.

&uot;Leadership is an outcome, fostered by environments that encourage it,&uot; said Bruce A. Pasternack, Managing Partner of the Organization and Strategic Leadership Practice at Booz-Allen &Hamilton. &uot;The challenge for CEOs, managing directors and other senior executives is to create an environment where desired behavior and results emerge naturally, where a company actually develops the instinct to succeed. A culture of leadership and the enabling systems that support it are the enduring legacies of successful CEOs.&uot;

&uot;We believe this program provides a unique opportunity for our members to learn from each other and to further our collective understanding of this vital issue of organizational leadership capacity,&uot; said Claude Smadja, Managing Director of the World Economic Forum.

The study asked, &uot;What qualities are needed in an organization?&uot; instead of &uot;What qualities are needed in a leader?&uot; By doing so, it found that it is possible to pinpoint enabling systems such as goal setting, measurement, recruiting, risk management, organization and management processes that executives can use to bring about changes in organizational behavior, and ultimately, to improve business performance.

According to the study, CEOs use these systems to create the two organizational attributes of successful, enduring companies: Alignment and Adaptability. Alignment, or coherence, galvanizes people around the aspirations and objectives of the company. Adaptability enables the organization to change rapidly and effectively in response to external threats or opportunities, or to a strategic imperative to &uot;change the rules.&uot;

Adaptability, the survey found, is harder to achieve than alignment -- and drivers such as deregulation, globalization, consolidation, technology and the Internet are forcing companies to adapt as never before. Creating the capacity to change has always been important, but with so many discontinuities in the marketplace today, creating the capacity to change quickly is fast becoming a prerequisite for survival.

Analysis of the preliminary data reveals significant insights that promise to help shape the way corporations craft their strategies, structures, systems and cultures. Among the most notable findings:

--   Much more senior management attention is focused on achieving
     alignment than on adaptability.

--   Incentive compensation -- &uot;pay for performance&uot; -- is an
     increasingly popular method of achieving alignment quickly and an
     effective lever for changing behavior.

--   Not all alignment is good. Strategic alignment around a few key
     levers can greatly increase an organization's efficiency and
     responsiveness, but bureaucratic alignment anchored in habit and
     past success can deaden a company and obstruct adaptation.

--   Revolutionary change is driven from the top of corporations,
     where executives must create the enabling systems necessary to
     motivate and support radical change.

--   The ability to adapt quickly requires a distinct set of
     organizational attributes, such as a powerful incentive
     compensation and measurement system that is linked closely to the
     company's strategy, recruiting and professional development
     programs.

--   Effective risk management systems are a key explainer of
     adaptability. These are systems used internally to evaluate,
     aggregate and mitigate risks associated with a company's
     investments and business initiatives.

--   Alignment and adaptability are difficult to achieve
     simultaneously. For that to happen, enabling systems must
     encourage managers to question underlying assumptions, experiment
     and actively manage risk (rather than avoid it).

To obtain a copy of the study, please contact Jennifer Blanke of the World Economic Forum at 41-22-869-1212 (e-mail: Jennifer_Blanke@weforum.org) or Bruce Corwin at 01-212-484-7951 (e-mail: bcorwin@rlmnet.com).

For further information about the World Economic Forum/Booz Allen &Hamilton Strategic Leadership Project, contact:

                Bruce Pasternack, Booz Allen &Hamilton
                         Tel: 01-415-627-4215
                   E-mail: pasternack_bruce@bah.com

                 Paul Anderson, Booz Allen &Hamilton
                         Tel: 01-312-578-4503
                     E-mail: anderson_paul@bah.com

                 Jennifer Blanke, World Economic Forum
                          Tel: 41-22-869-1212
                  E-mail: Jennifer_Blanke@weforum.org

About the Study

&uot;Creating the Organizational Capacity for Renewal: The Strategic Leadership Program&uot; is a joint study conducted by the World Economic Forum &Booz-Allen &Hamilton. The study is being conducted to better understand how senior leaders of successful companies develop a culture of leadership deep in their organizations, and to support the development of new organizational models and new concepts of leadership to help companies adapt to the unprecedented pace of change in the global economy.

Those conducting the study have worked with a select group of member companies of the World Economic Forum -- Bank of Montreal, Caterpillar, Enron, Fuji Xerox, Godrej &Boyce, Oracle and Renault -- and the Center for Effective Organizations at the University of Southern California. Announced at the 1999 World Economic Forum, the study is expected to be completed, and its definitive findings published, in the near future.

About Booz-Allen &Hamilton

Booz-Allen &Hamilton is one of the world's leading international management and technology consulting firms, providing services in strategy, organization, systems, operations and technology to clients in more than 75 countries around the globe.

Founded in 1914, Booz-Allen &Hamilton pioneered the business of management consulting. Today, Booz-Allen employs more than 9,000 people in 90 offices on six continents and has sales of US$ 1.5 billion. Its client base comprises a majority of the world's largest industrial and service corporations, as well as major institutions and government bodies around the world.

About the World Economic Forum

The World Economic Forum (www.weforum.org) is an independent organization committed to improving the state of the world. It serves its members and society by creating the foremost global partnership of business, political, intellectual and other leaders of society to define and discuss key issues on the global agenda. Incorporated since 1971 as a foundation, the World Economic Forum is independent, impartial and not-for-profit, tied to no political, partisan or national interests.