So many challenges, from so many directions: What skills give a business leader, today, the best chance of success?
“It was the best of times, it was the worst of times…”
This the famous opening of A Tale of Two Cities by Charles Dickens. It’s part of a longer paragraph setting the scene for an age of radical opposites occurring simultaneously. The novel is set around the time of the French Revolution, but today many of us all over the world feel we are living through a similar period of upheaval and contradiction.
Business is no exception. Fundamental change is afoot in the operations of companies, the way they function in society, and the world of work. Corporate leaders are faced with challenges most have never experienced before, nor for which they have been trained. Despite having navigated the crisis phase of the ongoing Covid-19 pandemic, many remain unprepared for the obstacles – and the opportunities – that lie ahead. If ever there was a time to re-evaluate and revitalise the leadership skillset, that time is now.
Problems to ponder
Are strategic skills even relevant? The hospitality industry needs, above all, operational excellence. Engineering and manufacturing-based firms need leaders who specialise in systems and product design. Knowledge-based companies need marketing, customer service and networking experts. However, although strategies seem to require constant review and reorientation, they are bonded with core competencies as the mainstay to navigate challenging periods.
How to engage employees? The dynamic of many companies pre-Covid will have included a senior leadership presence – a physical manifestation of direction, motivation, supervision and control. The new workplace model is flexible or hybrid, and in some cases entirely remote. As the demands of business have escalated and now span a wider range of stakeholders’ interests, connecting with employees has become simultaneously more important and more difficult.
Do we know how to protect our culture? The organisation’s culture is an anchor during sea changes. But culture is fragile. When disruption is pervasive, when a company’s habits may have had to change and its people subjected to extraordinary social forces, its purpose may be confused and its very identity at risk.
Can we continue to raise capital? When balance sheets show the first signs of weakening, and capital is tight, what kind of leader can reinstate market confidence and rebalance the numbers?
These four questions are a small representation of challenges emanating from many fronts. They crystalise that leaders must possess – or be fast willing to develop – a diverse skillset, because they are tasked with being a visionary strategist and hands-on operator, culture catalyst and coach, inspirational communicator and investment networker. Below are some of the key areas of skill and expertise senior leaders now need. (And these are certain to keep widening in the near future.)
Know the business
When Alan Mulally was recruited from Boeing to take over as CEO of Ford Motor Corporation in 2006, there was scepticism of his understanding of the automotive industry. At his first press conference he was asked, bluntly, about his expertise. “Ford is in trouble. The industry is complex. And you’re not a car guy,” the journalist noted. “I agree with you,” Mulally replied. “The average car has around 10,000 parts. The efficiency, the quality, the safety, the systems engineering, the aerodynamics, the materials: cars are very sophisticated products. I might mention, though, that the Boeing 777 has four million parts – and it stays in the air.”
Mulally’s successful turnaround of Ford happened a while ago, but his point is still apt: as a foundational skillset, a leader must know, or quickly learn, the landscape of the company’s industry. This may seem clearcut, but when new thinking is demanded by all stakeholders, when disruptive ideas are deliberately sought, it’s worth remembering that a deep-rooted grasp of what is core to the enterprise – in Ford and Mulally’s case, that of engineering and manufacturing technology – is an essential skill.
Learning researchers Bob Eichinger and Michael Lombardo call this the Experience Quotient. It’s one of six intelligence modes required for corporate leadership success. Two of the others have come into increasing focus as the world of work has changed in the last twenty years, most dramatically since the pandemic: the People Quotient and the Learning Quotient. Crucial, now, is how well leaders can collaborate and interact with others, how they are able to modify behaviours and beliefs, and gain new skills to suit altered circumstances.
A far-reaching although not-so-new circumstance is digital transformation. This seismic technology shift has been under way for over a decade, but because it is gathering momentum – and because digital capabilities will continue to extrapolate – leaders should be comfortable with digital tools and applications. More importantly, they should be able to translate current, core business models and modes into digitally-based and enabled evolutions, including innovations. Being able to answer the question, ‘Where do you see the company in 20 years’ time?’ is the ‘vision’ aspect of twenty-first century business leadership.
Managing risk in turbulent times
To a degree, leaders need to be futurists. Failure to think about what may be coming could result in a missed opportunity, or the need to scramble to play catch-up with competitors. Worse, it could be disastrous. This leads into the ambit of how to think about risk.
Is it a skill to take an interest in the wider world? A surprisingly high number (79%) of listed companies in the U.S. showed minimal evidence of risk preparedness just before the Covid-19 outbreak, according to a study by the Notre Dame Centre for Ethical Leadership. “People see what they want to see and easily miss contradictory information when it’s in their interest to remain ignorant,” is one of the study’s conclusions.
The importance of adjusting for bias and blind spots underscores the need for leaders to adopt a disciplined approach to risk management. In its Global Risk Report of 2022, the World Economic Forum classifies no less than 37 specific areas of risks which all companies should be monitoring and mitigating. To do so, a company’s CEO and management team should be cognisant of global megatrends, understand and be able to design a risk-consequence-mitigation model, and issue regular reports on environmental, sustainability and governance (ESG) goals – among all other risk mitigation measures – to stakeholders.
This is not to dampen the importance of entrepreneurial skillsets like drive, openness to ideas, and action-orientation. The skills associated with risk management should be seen not as risk aversion, but rather as enabling reasonable and informed risk-taking.
Communication by design, persuasion through character
Communication is central to good leadership. But for next-level leadership, elevated communication skills are vital, because only intentional, meaningful and crafted communication will imbue the organisation with passion, catalyse the culture towards performance, and persuade. Indeed, the art of persuasion, too, is now a critical business skill. Whether engaging the Board on a strategy metamorphosis, convincing the C-Suite about the need for organisational redesign, or negotiating with employee bodies and unions, the ability to convince others of the appropriate direction is a priceless skill.
And, according to Aristotle, “character may almost be called the most effective means of persuasion.” This pinpoints the value and importance of self-knowledge and self-management.
“Managing self begins with developing greater emotional intelligence, which is the journey to personal mastery,” says Sunny Stout-Rostron, founding president of Coaches and Mentors of South Africa (COMENSA).
But developing emotional intelligence is neither easy nor can it be done by means of a formula. Becoming more self-aware, aware of others, attuned to how relationship dynamics work – and whether your leadership style is appropriate to the context – are just some of the aspects of emotional intelligence. The psychologist Dan Goleman, in his seminal book Emotional Intelligence: Why It Can Matter More Than IQ, pointed out that employees are almost always promoted for superior technical or operational capability, or by demonstrating intellectual advantages. However, his research then showed that many subsequently failed in their new leadership or managerial role because they had a weaker emotional intelligence quotient. Goleman’s work highlighted the relevance of people skills a quarter century ago; now, they are perhaps the most important ones. Given this, among much other evidence, emotional intelligence can no longer be classified as a ‘soft’ skill. In encompassing agility, curiosity, centredness, and openness, the ability to collaborate and network effectively, it is a necessity.
An inspirational goddess
Many leadership skills which are now upweighted in importance are closely identified with female behaviours. Writer and CEO of Harris Insights & Analytics, John Gerzema, refers to this as the Athena Doctrine. In his book of the same name he points out the organisational gains when their leaders display and practice empathy, intuition, consensus-building, nurturing people’s development, and the role modelling of behaviours. Women leaders are especially good at these, but, although they are categorised as attributes, they are skills in the sense that they can be improved upon – by leaders of any gender.
There is a highly relevant, associated issue. Financial numbers are fundamental to evaluating a leader’s delivery, and there is evidence that a company’s diversity at leadership level correlates with enhanced financial performance. A 5-year tracking by global equities and finance company MSCI confirms significantly better Return-on-Equity (ROE), and Earnings-per-Share (EPS) data for companies with women on their boards. Improved strategic decision-making comes from diversity, and although this is an outlook and mindset rather than a skill, leaders must do the inner work to embrace diversity, commit to it, and implement it throughout the organisation in a fully inclusive manner.
Focus on strengths
For most current and would-be leaders – with so much to do in little time, and with responsibilities continuing to grow and weigh heavier – a sense of pragmatism is helpful. There is light at the end of the skills tunnel: research indicates that being an outstanding leader does not necessarily require mastery of a vast range of skills and attributes. In a Bain/ Economist Intelligence Unit model, just five out of 33 identified leadership characteristics are enough to forge distinctive, inspirational leadership in the modern business world. This makes sense: coping with and excelling through complexity requires the confidence to focus on major strengths, and to delegate other key business responsibilities to colleagues whose capabilities a leader has helped to cultivate and whose mutual trust is implicit.
Being the change, not driving it
Furthermore, current leadership theory is leaning away from hero-style leaders. While stakeholders press the paramountcy of results and demand impetus around the myriad challenges that need to be tackled to deliver these results, they also understand that what creates organisational purpose and drives momentum today is markedly different to the recent past. Our definition of ‘hero’ has evolved: people see strength in expressing vulnerability, in sharing problems and asking that the load be shared, in a willingness to listen and welcoming participative decision-making. These are the vital inputs for today’s style of organisational leadership.
Ultimately, a senior businessperson’s qualifications and pedigree still count for a lot. But with the enormity of recent change, and with much uncertainty clouding the context for business, leaders must be hybrids of more than the sum of their past learning and experience and their current character. The question now is, ‘How does he or she take the next leap?’
Are you thinking of leaping ahead in the leadership stakes? Consider one of the DigitalCampus Leader of the Future short courses to broaden your knowledge, deepen your empathic qualities, update your technical nous or sharpen your digital skills.
Senior Partner and Managing Executive
In partnership with Dave Gorin
Emotional fortitude: The inner work of the CEO, Deloitte Insights magazine, Spring 2021
The Athena Doctrine: How Women (and the Men Who Think Like Them) Will Rule the Future, John Gerzema and Michael D’Antonio (Jossey-Bass, 2013)
The C-Suite Skills That Matter Most, Raffaella Sadun, Joseph Fuller, Stephen Hansen, and PJ Neal, Harvard Business Review, July-August 2022
Everything you ever wanted to know about managing people but were afraid to ask, Sunny Stout-Rostron and Michael Taylor (KR Publishing, 2022
Letting Go of Leadership: The Urgent Case for A Global Leadership Iconoclasm, Otti Vogt, 4 Oct 2020