As the business world changes with increasing pace, leaders need to develop a new set of core skills if they are to keep up, write Louise Axon, Elisa Friedman and Kathy Jordan for the Harvard Business School of Publishing.
The business environment is more complex and volatile than ever before thanks to:
- Globalisation. More top companies will soon be based in emerging markets as will the next wave of affluent consumers. 50 per cent of Fortune 500 companies will be based in the emerging world’s cities by 2025, according to a McKinsey Global Institute study.
- Technology. Social media has transformed the way business talks with its customers; crowdsourcing and crowdfunding mean products can now be created by, or co-created with, consumers.
- Shifting demographics. Workers can connect from anywhere in the world. Different generations in different countries work alongside each other with varying values and expectations.
To thrive in today’s complex and rapidly changing business environment, you must be able to:
1) Manage complexity
2) Manage global business
3) Strategise faster
6) Engage your staff
8) Want to learn
We’ll now look at these eight skills in more detail.
1) Manage complexity. Today’s business leaders must be able to sense the subtle changes and trends that predict imminent disruption and make good decisions in response – even without definitive information.
You must develop practices that allow your organisation to respond swiftly to changes in your environment.
Agricultural conglomerate Cargill employs over 150,000 people across 67 countries and several business categories. Cargill needed a business structure able to effectively run very different services – from food to finance – while staying on the right side of the laws, politics, cultures and consumers of those countries.
So the company developed its “Leading in a Complex World” programme to help leaders better assess complexity and quickly choose the right actions in response.
2) Manage global business. Significant growth in emerging economies cannot be ignored. Leaders must identify the opportunities in new markets and have a detailed knowledge of the consumers, competitors, economic conditions and political environments in which they will work.
Firms must also accelerate the development of local leaders. To this end Fluor Corporation, a multinational engineering and construction firm, has developed Global Business Leader Track – a programme which develops local leaders within new and emerging markets. Participants are given international and home-country assignments, cross-functional learning opportunities and “stretch” assignments that help them build cross-cultural skills.
3) Strategise faster. Long-term strategy development will give way to a more continuous, adaptive and rapid process.
Forward-thinking companies are also training mid-level leaders to shape strategy. People nearer the front line are more likely to sense trends that create the need for a shift in strategy, and are better placed to be able to both offer and execute the right solution.
Given the increasing pace of change, new strategy must be rolled out quickly. Asking the same mid-level leaders who helped craft the strategy to take charge of its deployment can only speed up the process.
4) Innovate. No company will survive without generating new products and services, new business processes and even new business models. Underpinning that is innovation.
The most successful companies approach innovation in a structured way, establishing systems to make it easy for employees to collaborate with peers and external partners.
Hoerbiger Holding AG, a company with a 6,400-strong workforce and operations in 54 countries, needed to get its geographically dispersed management and project teams to work together as one to speed innovation.
The firm started a leadership development program aimed at fostering collaboration and communication between leaders to help innovative thinking spread throughout the company. As leaders came to understand different cultures and markets better, Hoerbiger was able to develop solutions to match new customer opportunities.
5) Network. No longer just about personal opportunity, networking is now recognised as a driver of innovation. Effective leaders network to tap into new opportunities, ideas and perspectives.
Companies like MAPFRE Insurance have developed programs that encourage leaders to network with colleagues they wouldn’t otherwise contact, working across different locations to collaborate and put new plans into action.
Relationships also need to go beyond company boundaries to include suppliers, strategic partners, competitors and the general public, to access the full range of new thinking available.
Global brands including Coca-Cola, IBM and Google have used crowdsourcing technology to harvest new ideas and solutions from all over the globe.
6) Engage your staff. Research shows that high employee engagement leads to a more creative and productive workforce and higher retention of valuable staff.
And companies shouldn’t underestimate the value of open and honest conversations with staff to develop career paths, build common understanding and increase trust.
LinkedIn co-founder Reid Hoffman, Ben Casnocha and Chris Yeh argue in their book, The Alliance: Managing Talent in the Networked Age, that today’s leaders should learn about their staff’s interests and career goals, shape work and training accordingly and essentially make staff more employable to competitors. This approach builds loyalty and actually protects against losing your best and brightest.
7) Adapt. Leaders who remain open to change are more resilient, focused and effective in the face of changing circumstances.
At the heart of this is avoiding a “that’s how we’ve always done it” mentality. Effective leaders embrace new situations with a willingness to identify and quickly take advantage of new opportunities.
8) Want to learn. A learning mindset is key for leaders operating in today’s uncertain and rapidly changing world.
What makes you successful today might not stand you in good stead tomorrow. Continuous experimentation with new approaches and reflection on your experience is the best way to learn.
Focusing on these eight skills will prepare you for today’s challenges. But be warned: these eight core skills will soon need to be reassessed and revised. Rapid change is the only constant.