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Leadership at a crossroads

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Kenneth MikkelsenLeaders may be just as much in the dark as those around them.

Witnessing how his theory of the origin of species is being played out in today’s business world would probably have fascinated Charles Darwin if he was alive today. Evolution is just one way of describing how companies struggle to create a competitive advantage and increase their market share. But, as Darwin stated, it is not the strongest of the species that survives, nor the most intelligent, but rather the one who is most adaptable to change. In view of the past years’ economic turmoil, nothing seems more accurate.

Kenneth Mikkelsen is Managing Director of the Denmark-based knowledge-brokering consultancy Controverse. He has written about Executive Development for more than a decade. He writes here about how constant change calls for adaptive organizations and leaders who are able to embrace a high level of uncertainty and make swift and wise deviations as they go along.

Jorgen Thorsell, vice president of executive development consultancy Mannaz A/S points out that many companies have been forced to reshape their strategies in response to the new economic landscape, and that this should include an adjustment of the leadership behaviour that was generally practiced leading up to the current crisis. He says the old idea that a leader should have all the answers is not only unrealistic, but also potentially dangerous.

“One of the major challenges that lie ahead of us is accepting the fact that leaders may be just as much in the dark as those around them. Instead, they should be bringing up difficult questions and then have their team experiment with solutions and move forwards on a trial-and-error basis,” he says.

25 international companies

In February and March 2010, Mannaz, in partnership with Canon, Alcatel-Lucent, and the European Foundation for Management Development (EFMD), brought together representatives of more than 25 international companies to explore and share views, experiences, and international best practice concerning adaptive leadership. The main question was how to identify and develop an adaptive practice, in organizations and amongst leaders, which would enable them to thrive in a complex and interdependent world.

During the two events that took place in Paris and London, multinationals Canon, Alcatel-Lucent, and Lafarge highlighted their approaches, and a series of workshops were conducted in order to facilitate a dialogue and sharing of experience. Mihaela Andronic, Global Director of Talent Development at Alcatel-Lucent, emphasized that the turbulent market has illustrated the increased complexity of our world and created a sense of urgency for companies to assess their operational agility and explore new ways of coping with changes that are not always predictable.

The input from the participants provided a glimpse of the future and lists a series of scenarios that organizations and leaders must relate to if they don’t want to prove Darwin’s theory right and end up like the dinosaurs – extinct and out of business. All scenarios which were highlighted will either independently or collectively influence future initiatives within the field of leadership development.

Jorgen Thorsell predicts that a series of radical changes are underway in both learning environments and methods as they are applied to develop future organizations and leaders. He says, “I foresee the collapse of the classroom as a viable way to develop leadership skills. Instead, learning will become more integrated as part of real-time working situations. Coaches, facilitators, and other leaders, who contribute to their colleagues’ training, will gradually replace traditional teachers. If companies wish to strengthen their leadership capabilities, push for change, and support innovation, they must adopt more flexible learning methods and engage in designing programmes that are adjusted to each individual’s unique needs, while ensuring that transformational learning is embedded in the organization.”

The contributions that were made during the sessions focused on outlining the future of organizational design, leadership behaviour and knowledge sharing in a global context.The future scenarios that were suggested within these three areas are:

The future of organizational design

Big is not always better

The predominant business ideology still supports a direct relationship between company size and competitiveness. However, many companies have paid dearly to find out this logic has flaws. Most mergers and acquisitions are based on this presumption, even though experts estimate that at least half of these operations fail.

There is a growing concern that some organizations may be too complex to run effectively. Critics claim that large organizations are often too slow, inflexible, unimaginative, internally focused, and too expensive to operate.

Instead of multi-level, centralized hierarchies, modern, organizational structures must become loose, spread-out systems with numerous alliances. Processes should be organised around problem solving at a different pace and with a different approach than today. The challenge is to support internal networks and create flexible, modular organizations, whilst building cooperating networks across existing pyramid organizations. More ad-hoc projects will emerge and exist as long as it is required. The challenge will be to move the organization cohesively in the right direction.

The benefits of enhanced agility include higher revenues, more satisfied customers and employees, improved operational efficiency, and a faster time to market.

“ Looking ahead, more multinationals will operate with dual headquarters, one in the West and one in Asia.“

A reverse stream of knowledge, innovation, and values

The fierce, fast and innovation-based competition forces organizational life to change in a number of fundamental ways. Increased sophistication of R&D, innovation, and design activities that are carried out in former low-wage countries, such as India and China, has already led to a reverse flow of knowledge. It is a game-changer that challenges the trendsetting American management approach in the global business environment.

Leading companies will continue to foster strong relationships with governments and adapt products, value propositions, marketing strategies, and supply chains to local markets. Key functions will move out of headquarters, as many companies will transform into globally integrated organizations.

Most intercultural research examines the impact that cultural differences have on interactions between organizations that are nurtured in different cultures. In the future, a higher level of attention will be placed on the impact of blending people of different national cultures within an organization. An interesting question is, whether the globally integrated organization will cause severe clashes or a more diversified set of values by mixing various views on work ethics, general rights of employees, and CSR-issues.

One consequence of globalisation and the current crisis has been an increased anxiety in society.

Going global

This has led to a renaissance in the value of relationships and loyalty. Companies that operate either locally, or who have a global strategy, are winners. Consumers wish to do business with a familiar face that they trust. Companies with a profound knowledge of their local market will benefit from developing regional variations of standard products and services.

Looking ahead, more multinationals will operate with dual headquarters, one in the West and one in Asia. “ Looking ahead, more multinationals will operate with dual headquarters, one in the West and one in Asia.“

Leadership behaviours in the future: From heroic leaders to ordinary heroes

The top-down leadership, in which heroic individuals or charismatic icons play the dominant role in shaping an organization, is neither adequate nor suitable. Instead of acting as the captain of a ship, leaders must serve as the designers of the ship. This involves gaining sufficient distance from the organization’s day-to-day activities in order to identify struggles over values and power, and pinpoint both functional and dysfunctional reactions to change. It also includes recognising that a leader does not always have all the answers.

Support people who question the way business is done

Too often, adaptive leaders are marginalised and their good ideas are not adopted because they represent challenges to standard operating procedures or traditional ways of doing business. The workshop participants in Paris suggested that organizations should pay more attention to dissonance as a fertile ground for creativity. More leaders should engage in this matter by challenging assumptions and encouraging risk–taking, as this is likely to reinforce innovation. One way to establish an inquisitive organization is to ask new employees about their opinion on “how things are done” after the first 90 days on the job.

Moving away from a mechanical perception of the world

There is a predominant perception in the global business environment that, if not predictable, the future is susceptible, as long as we spend enough time and energy analysing and planning. However, the attempt to create familiarity in an uncertain future may sustain an illusion of a static world. In reality, some changes are obviously quite predictable, while others could be described in terms of probability. There is a third category, however, where the result is not only unknown, but also impossible to predict. Future leaders will play a major part in embracing this paradigm.

Distributed leadership in high demand

When organizations are faced with complex problems and resources are dispersed, leadership needs to be distributed across many players, both within and across organizations and throughout the hierarchy – wherever information, expertise, vision, new ways of working together, and commitment reside. If employees have to exercise autonomy and innovation, orders and rigid hierarchies won’t do the trick. If a large proportion of those who contribute to creating value are placed outside the company, leaders cannot solely look inward and expect commands to be followed. What is needed is an internal focus combined with an external approach, and leaders should strive to mobilise and focus efforts with other forms of motivation and relationships.

Take risks and give up power

Fast and mindful reflection is in high demand. The participants emphasised a greater need for establishing smaller and more agile teams who are allowed to make mistakes and operate in a more risk-free setting. The purpose of the agile teams would be to break ground faster and bring in diverse perspectives to challenge “rational” thinking. This would, undoubtedly, challenge basic elements of an organization such as power, control, and authority.

Knowledge sharing and networking in a global context

Rehearsing the future

Scenario planning will be integrated further as part of a strategic process. By constructing scenarios, companies build a common language and a common understanding of the driving forces and uncertainties that shape the future. A basic understanding of scenario thinking within an organization is crucial to systematically testing strategies against unexpected developments, and to exploring the landscape of otherwise overlooked opportunities.

Complexity calls for cooperation

Products and services are becoming increasingly complex. A single company may not have all the skills required to deliver a competitive product. We must cooperate, find common interests, create common platforms with others, and learn to handle a growing interdependence. The value of a product or service will largely depend on how well it interacts with other products and services. It requires a different mindset and a different kind of organization to work in a more complex and open relationship.

Some of the new development methods, which organizations expect to use in the future, include external insight with customers/suppliers, increased peer networking and learning, involving the board in programmes, and using ad-hoc technology.

Creating new business

Large companies need internal entrepreneurs who can ensure that eroding business areas are replaced. Research shows that companies and individuals, who are successfully and continuously developing new business areas, use management techniques that are fundamentally different from the well-known management principles that prevail in the more established business areas. One participant suggested that companies experiment more with establishing self-sustaining communities of interests as a way to create pockets of innovation.

Individual learning vs. organizational learning

Learning is surrounded by an inherent paradox: Anxiety inhibits learning, but anxiety is also necessary if learning is to take place at all. Learning anxiety comes from being afraid to try something new out of fear that it will be too difficult, that we will look stupid in the attempt, or that we will have to part with old habits that have worked for us in the past.

There will always be learning anxiety, but if an employee acknowledges the need to learn, the process can be greatly facilitated by good training, coaching, group support, feedback, and positive incentives.

May 2011.