Leadership in a Time of Rapid Change

Leadership in a time of rapid change

by Gary D. Burnison

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ifferent depictions of leaders have emerged over the decades.

One of the first was the idea of the “servant leader,” first described by Chinese philosopher Lao Tzu in about 600 BC

and popularized in the early 1970s by Robert Greenleaf.

More recently, the idea of “leader as outsider” gained currency when it was described in 1977 by Harvard Business School Professor Abraham Zeleznik. And in 2001, the idea of the humble (but iron-willed) “Level 5 leader” was introduced by Good to Great author Jim Collins. There are many different types of leaders.

People have linked these and other broad categories of leadership to individuals and attached biographies, resumes and case studies to go with each type: Nelson Mandela, servant leader; Abraham Lincoln, outsider-as-leader; Darwin Smith (legendary CEO of Kimberly Clark), Level 5 leader; and so on.

Leadership Challenges 1. Globalization 2. Disruptive technologies 3. Sustainability 4. “ Instant-gratification” consumer society 5. D emographic shifts in the West 6. D eveloping economies in South America, Asia and Middle East

In the end, however, these descriptions of leadership, though interesting, provide only limited usefulness. The worlds of Lincoln, Mandela and even Smith are very different and in some ways much less complicated than the world in which we operate today. Today’s world is flat and obsessed with instant gratification. In my seven years as an officer, including CEO of an NYSE-listed company, an analyst has yet to ask me where the company will be in five years but rather, “Where will you be in 90 days?”

Even more importantly, most depictions of leadership fail to show convincingly how one becomes a leader. In fact, in his original article on Level 5 leadership, Collins acknowledged that he did not know how Level 5 leaders developed, nor did he know whether programs could be created to train them. And while biographies of Churchill, Gandhi, Henry Ford, Louis Renault, Walter Rathenau and other leaders and entrepreneurs have sold tens of thousands of copies, the number of real leaders remains small.

Leadership experts advocate training and development programs, but often temper their advocacy with warnings designed to lower expectations regarding the results. Improvements happen on a regular basis, they say, but revolutionary change is rare. And yet, the world does produce leaders who have changed communities, companies, industries, countries and sometimes even the world.

The world has produced leaders who have inspired people to achieve nearly impossible goals.

So how do leaders develop? Who becomes one? And how can they confront the challenges and tests of today? And, if you are a leader, how do you become a better one? The following summarizes insights from nearly 50 executives interviewed on the topic of leadership challenges.

The changes leaders now face are immense. They include globalization, disruptive technologies, and the often clamorous call for a “green” revolution and a more sustainable future. They also include the growth of a global, fast-paced, “instant-gratification” consumer society alongside major demographic shifts in the West as baby boomers retire, and in Asia as tens of millions of people continue to migrate to megacity complexes each year. No one knows the longer-term impact of so many large-scale shifts happening at once.

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These changes have strategic and tactical dimensions, and they also have a great many unknowns. They will affect nearly every aspect of business and society, and they will continue to do so for a long time. Each of these changes is also accompanied by the always complicated vagaries of the human dimension. Some people want change to happen more quickly, some want it to happen not at all.

If ever there was a time for clear-eyed, courageous leadership, it is now.

“In a technologically enhanced and highly transparent environment, there is less need for charisma, and more need for authenticity, caring and humility.”

How Leaders Have Changed

Times change and so do the challenges leaders face. Alexander the Great could not imagine leading his armies from anywhere but the front, fighting on horseback and in hand-to-hand combat, alongside his troops. But in another era, the Duke of Wellington, victorious in his fight against Napoleon at the Battle of Waterloo, stayed well behind the lines, dictating orders to aides who wrote them down and carried them forward to soldiers on the firing line. Today’s leaders are different still.

It is likely, although little hard evidence exists at present to make a clear case, that today’s most successful leaders are different from those in the past. Technology has changed the equation.

Organizations are flatter and messages can be transmitted instantly.

Messages can be enhanced with graphics, live action, web links, data and other techniques. Social networking techniques can connect individuals and groups inside and outside organizations to think, consider, improve and act on those messages.

In a technologically enhanced and highly transparent environment, there is less need for charisma, and more need for authenticity, caring and humility. Today’s leaders operate in an environment that is far less private than at any time in the past.

Data matters more today than it has in the past. As one executive explained, “You can no longer make a decision and commit resources because that decision feels right, even if it’s based on years of personal experience. In large organizations, if you don’t have data, you will never get buy-in, resources or support. Strong arguments, by themselves, no longer matter.”

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Leadership is about: P roviding others with a sense of purpose.

C reating an equitable, engaging and enriching environment in which to serve or work.

F ostering growth at the individual, team and organizational levels.

M otivating with words, but inspiring through actions.

Being

smart and confident enough to ask questions on issues you are unfamiliar with.

H aving the ability to distinguish between the important versus the urgent.

Having an understanding of data is critical but not sufficient.

A leader must have the ability to translate the data in a manner which engages and energizes the people in the organization.

The need for data in highly sophisticated scientific industries, like pharmaceuticals, is apparent. But it is also true in finance, retailing, manufacturing, consumer products, software, professional services and in nearly every other sector. The importance of data has never been greater for making leadership-level decisions.

Technology, increased levels of transparency and the growing importance of data-driven decision making are impacting what leaders do, as well as who becomes a leader. The ability to learn continuously and without interruption throughout one’s career – and to develop fluency with data – has become a basic requirement to lead.

The Job of Leaders

The job of a leader has never been easy. Not only must they set an organization’s destination and course, bring individuals and teams into alignment, and make certain the organization’s values are upheld, they must do these things in the face of risk, uncertainty and in real time. Leaders are individuals who rise to prominence.

But leadership is much more.

According to the work of Warren Bennis, a professor at the University of Southern California, leaders cannot lead from the outside. Great business or organizational leaders cannot be aloof. To impel people to act, leaders must connect with them on a human level. To be successful, leaders must find ways for people to identify with them, feel a sense of common purpose with them, and be willing to share their fates. The best leaders, as one executive said, are “people who are genuine, real and who care. They are people who believe in we, and not just me. They are not in it for selfish ends.”

This means successful leaders must be part and parcel of the organizations they lead and must develop skills of listening and learning if they are to be successful at leading. Leaders coming into an organization from the outside must fit with its culture and values.

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Listening and learning in order to lead are not small tasks, nor are they as easy as they might sound. Large organizations contain wisdom, as well as dissidents, in many locations dispersed throughout the world. Too many times leaders fail to pay sufficient heed to what is offered and what is said. This inability to listen inclusively could be a significant factor in explaining why global CEO turnover has reached 13.8 percent annually, according to Booz & Company.

Global Rate of CEO Turnover (1995-2007) 18% 16% 14%

Global Average 2007 = 13.8%

12% 10% 8% 6% 4% 2% 0% 1995

1998

2000

2001

2002

2003

2004

2005

2006

2007

Note: CEO turnover defined as percentage of CEOs leaving the office in 2007 versus the total base of 2500 global companies in the sample.

Source: Booz & Co., 2008

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“The destination does not change because the seas are rough.”

Leadership in a Time of Rapid Change

Extraordinary leaders produce extraordinary results, even in periods of turmoil. They thrive in times of market growth and contraction.

And while leadership in a time of change is not a new concept, it is easy to ignore some of the most important implications regarding a leader’s role during times like these:

When the environment in which an organization operates is subject to change, the people working within the organization must also change, along with what they do and how they do it. The job of leaders is to make certain the organization and its environment are in sync.

When disruptions to the status quo occur, from new technologies or megaforces like globalization, they must be factored into the strategy, based on what is known at the moment. The job of leaders is to make sure that the organization is equipped for the present while making itself ready for the future, without deviating from established goals.

Even in difficult, changing environments, people working within organizations must remain motivated and upbeat about their chances for success. The job of leaders is to make certain everyone believes they can succeed, no matter how difficult the task.

Leadership is never just about the leader. It is a contract between a leader (or leaders) and other members of the organization, including the board, to reach a destination or achieve an ongoing set of goals.

Each leader is like a helmsman, or the captain of a ship, setting the course, steering toward it, navigating by the stars, while others in the organization furl and unfurl sails, hoist the anchor, cleat the lines and sweep the decks. In this way, the organization and its board contract with the leader for a set of services – navigating to a destination, keeping the ship afloat, returning the crew safely home – always with the understanding that the captain’s fate depends on the crew.

In times like these, which are fraught with unpredictability, the helmsman’s job (to keep the metaphor going) grows more complex,

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even though the contract between the leader and the organization remains in force. The destination does not change because the seas are rough.

Levers of Change

Leaders are by no means powerless against the forces of change, and there are numerous ways to change organizations, among them: 1) Financial: by deploying financial capital to expand an organization’s scale, scope and reach; 2) Organizational: by developing new markets or products, or refining an organization’s processes; and 3) Human Capital: by investing in the organization’s people and in their leadership capabilities. It is the combined view of the executives interviewed for this paper that by far the greatest leverage comes from investing in people. Consider the outsized contributions made by just three leaders: M uhammad Yunus, founder of Grameen Bank in Bangladesh and winner of the 2006 Nobel Peace Prize. Yunus, an economist, developed the concept of “micro lending” and the tools that go with it. As a result, he has positively affected the livelihoods of tens of millions of families in 70,000 villages in Bangladesh.

S teve Jobs, Co-Founder, Chairman and CEO of Apple Computer and of the computer animation studio, Pixar, now part of Disney.

Not only did Jobs start companies that now employ tens of thousands of people, he is also responsible for commercializing two new industries – personal computing and computer-aided animation. These industries touch (and employ) millions of people around the globe.

K onosuke Matsushita, founder of Matsushita Electric, parent of the Panasonic brand. Beginning in 1918 with the invention of a new electric light socket, Matsushita – who was known for his humility – created a company that would eventually employ 310,000 people throughout the world, and launched the global consumer electronics industry.

The outsized contributions listed above are hardly representative of leaders in general. Even so, they demonstrate the powerful difference an individual leader can make. But even more importantly, they illustrate the immense returns that can accrue from investing in leaders – their selection, education, training and development.

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Gary Becker, winner of the 1992 Nobel Prize for Economics, estimated that three-quarters of the world’s wealth can be found in its human capital, not in its physical assets. If a successful organization’s leaders and people were listed on its balance sheet, they would be its most valuable assets.

What Is a Leader?

Leadership is not about celebrity, charm nor is it about charisma.

It is about inspiring through actions. It is about the contract with the organization to do a job. It is also about the day-to-day task of making the organization more productive in its mission.

Although the problems leaders wrestle with on a day-to-day basis vary, the core components of a leader’s job remain remarkably constant over time. Based on interviews with leading executives, the following repeatedly came to the surface as some of the most important elements in the leader’s job:

1. M otivating and inspiring people and aligning the organization, its strategy, goals and values.

2. Identifying and developing talent for today and the future.

Right people, right place, right time.

3. Grasping the changing nature of the organization and the forces acting upon it.

4. Creating processes and structures, including financial, that enable the organization to do more than react.

5. Communicating clearly with the organization and its various constituencies, such as customers, investors and analysts.

6. Empowering and creating accountability with individuals and teams, and evaluating how they perform.

7. Demonstrating the ability to continuously learn (what we call

learning agility) combined with genuine courage and humility.

Of the items listed above, most relate to working closely, effectively and decisively with people. And yet, the development of a leader’s people skills is often viewed as an optional, “nice-to-have” that can be jettisoned at the first sign of belt-tightening. Increasingly, companies talk about the need for coaching and training and for

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tools to measure how leaders interact, but this concentration on leadership development has a long way to go before becoming institutionalized. Strengthening a leader’s people skills – including vital communication and listening skills – is critical. The cost of leadership failure is simply too high.

“A-level players choose A-level players, but a B-level player tends to choose B-level players or less.”

And while it comes toward the bottom of the list, several executives mentioned leadership courage and humility, especially with regard to selecting, grooming and promoting talent. Both attributes are key to developing direct reports and highly visible senior teams.

There are many reasons why courage is important. One reason is highly evident in recruiting new talent. Courageous leaders choose the best-performing, most qualified candidates to become members of their teams; they are broadening the organization’s capabilities while deepening its bench.

A less-than-courageous leader who selects individuals of lesser ability to join a highly-visible senior team places the organization in harm’s way and can unwittingly send the organization into a steep decline. This downward spiral can be summarized thus: A-level players choose A-level players, but a B-level player tends to choose B-level players or less. When this happens, the top ranks of an organization are degraded and the organization loses capabilities where it needs them most, creating a situation from which it is difficult to recover without the intervention of the board or an outside force.

While there is no written test for courage or for humility – they must be demonstrated on the job – there are powerful assessment tools and processes for rating skills and determining the strengths of all players.

If leadership is a contract through which one person assumes the helm, it is a contract that must be entered into with good faith and with the highest aims for helping others and the organization. While there is no need to seek out only the selfless, there is a need for organizations to find leaders who are authentic and who care.

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The Korn/Ferry Institute Research The Institute will tackle an array of issues: What

qualities must high-potential workers and leaders possess today?

W hat styles and types of leadership work best now?

W hat can be done to ensure a better “fit” between gifted leaders and their organizations?

H ow can more/better leaders be developed?

G iven today’s largescale demographic shifts, can the leadership development process be accelerated?

W hat generational and cultural differences must be taken into account in the development of global leaders?

W hat are the best ways to measure and evaluate leaders?

W hat can be done to lessen the odds (and costs) of leadership failure?

H ow can leaders manage change while producing consistent results?

H ow can leaders stay ahead of the changes that are occurring?

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If great leaders put “we” in front of “me,” it may follow that a leader’s most important job – after setting a course, finding the best people, and giving them the right tools – is to make certain that he or she is not in the way.

Research Agenda

To better comprehend the demands placed on leaders, the Korn/ Ferry Institute is undertaking a multiyear, firm-wide initiative to understand how individuals can become better, more successful leaders along several dimensions. During that time, the Institute will assess, define and develop new concepts and new questions and put forward our findings to the research.

This research initiative will produce practical insights and will attempt to understand how leaders can be developed who are appropriate for these times. This research effort will produce periodic white papers, articles, books, training and development materials and – if carried out correctly – more questions.

Why More Questions?

As one executive put it: “Many of us grew up when CEOs were supposed to have all the answers. That’s no longer possible. Today, leaders need to be armed with the right set of questions. They need to keep the discussion flowing. That’s a different skill.”

The world has rarely seen so many changes occurring at once and in so many areas around the globe. If things go right, and leaders emerge who are up to the task, several long-term, positive trends will continue. If that happens, millions – perhaps even billions – of people will emerge from poverty into prosperity. If these trends continue, wealthier, mature regions of the world, including the United States, Europe and Japan, will begin transferring skills, responsibilities and leadership duties to new generations – sometimes with different values – on a scale that is unprecedented.

If these trends continue forward, the world will grow more responsibly and sustainably, as it grows more affluent.

Guiding these trends will require new forms of leadership, which the Korn/Ferry Institute will explore through this research.

Methodology

To begin this research initiative, Joel Kurtzman, former Editor-inChief of the Harvard Business Review, interviewed nearly 50 thought leaders to get their views on the challenges facing leaders. More interviews and research will be undertaken regarding the abovelisted questions within Korn/Ferry International and among its clients, the academic community and selected leaders working inside innovative, value-creating organizations globally.

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Gary D. Burnison is Chief Executive Officer of Korn/Ferry International.

About The Korn/Ferry Institute

The Korn/Ferry Institute was founded to serve as a premier global voice on a range of talent management and leadership issues.

The Institute commissions and publishes groundbreaking research utilizing Korn/Ferry’s unparalleled expertise and preeminent behavioral research library. It also serves as an exclusive destination for executives to convene and hone their leadership skills. The Institute is dedicated to improving the state of global human capital for organizations of all sizes around the world.

About Korn/Ferry International

Korn/Ferry International, with more than 90 offices in 39 countries, is a premier global provider of talent management solutions. Based in Los Angeles, the firm delivers an array of solutions that help clients to identify, deploy, develop, retain and reward their talent.

For more information on the Korn/Ferry International family of companies, visit www.kornferry.com.

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Š Copyright 2008 The Korn/Ferry Institute