Developing the Global Leader of Tomorrow
MBA News Kai Peters and Matthew Gitsham / 01-05-2010
Climate change and other pressing environmental and social issues urgently require transformational change. 76% of senior executives say it is important that leaders in their organisations have the knowledge and skills they need to respond, but only 7% believe these knowledge and skills are currently being developed very effectively either internally or by business schools more broadly. Are business schools and HR departments up to the challenge?
For two weeks in December 2009, negotiations will take place in Copenhagen to agree a global framework for mitigating and adapting to climate change. The outcomes of this global agreement are likely to have profound implications for our organisations, heralding what McKinsey and others have called the third industrial revolution: the transition to a low carbon economy. This transition will mean immense upheaval with huge opportunities as well as challenges. We will see tremendous technological innovation and transformational change. But does this transition also have implications for our notions of leadership and leadership development? And if so, what are the implications for business schools?
The shift to a low carbon economy is inter-connected with a wide range of issues and trends that business leaders increasingly agree will impact on their companies, both in terms of risks and opportunities. There are wider concerns relating to the natural environment like biodiversity and species loss, and finite and increasingly scarce resources like water, energy, food and metals and minerals. Climate change solutions also intertwined with numerous issues thrown up by the relentless march of globalisation and the increasing confidence of emerging markets in the global economy: the realities of doing business in markets marked by poor public infrastructure, widespread poverty and inequality, corruption, violent conflict and labour standards and human rights violations.
Organisations that survive and thrive through this transition will be those that put these issues at the heart of strategic decision-making and integrate them into all the key business systems and processes. Organisations that ride the wave of this transition will work closely with policy-makers to influence the creation of new market structures and new rules of competition. They will also reach out to the hearts and minds of people working right across their organisations, leading through the transition, encouraging new mindsets, changing the nature of conversations and equipping people with the knowledge, skills and agency they need to enable them to respond.
A new type of leader?
Management education and leadership development have an important role to play in meeting this challenge. It is this role that lies behind the United Nations Principles for Responsible Management Education (PRME) initiative, developed by a global taskforce of 60 business schools and launched in 2007.
Ashridge has worked with the European Academy of Business in Society and a number of other leading business schools, across the world, to understand just how important this agenda is to companies. The research, based on extensive interviews and a global survey of CEOs and senior executives presents a stark message:
76% of senior executives polled say it is important that leaders in their organisations have the knowledge and skills to respond, but only 7% believe these knowledge and skills are being developed very effectively by either their own organisation or business schools more broadly.
The CEOs and senior executives surveyed through this research believe that three clusters of knowledge and skills are required in their organisations. The global leader of tomorrow needs to understand the changing business context – 82% of those polled say senior executives need to understand the business risks and opportunities of environmental and social trends. And they need to know how their sector and other stakeholders (regulators, customers, suppliers, investors, NGOs) are responding. Climate change, for example, has become a strategic issue for organisations not just because of direct implications for assets and business models from changes to the climate, but more significantly because of the way customers, investors and most importantly regulators and competitors are responding.
“Climate change is now a fact of political life and is playing a growing role in business competition. Greenhouse gas emissions will be increasingly scrutinized, regulated and priced. While individual managers can disagree about how immediate and significant the impacts of climate change will be, companies need to take action now.”
M.E. Porter & F.L. Reinhardt (Harvard Business Review, October 2007)
Senior executives also need the skills to respond to this information, as 70% say that global leaders need to be able to integrate social and environmental trends into strategic decision-making. This can mean knowing how to use tools for scenario building and risk management to aid decisions about emissions costs within capital expenditure projects or horizon scanning for consumer trends.
“Leaders need to be able to introduce environmental and social criteria into strategic decision making from the start – not doing this is worse than stupid, it’s reckless.” André van Heemstra, Global Board Member and Global Head of HR, Unilever 2000-2006
The second cluster of knowledge and skills are around the ability to lead in the face of complexity and ambiguity. The challenges and opportunities these issues and trends present tend, by definition, to be complex – there is often little certainty and little agreement both about their precise nature and the response that is required. Leadership in these circumstances requires a range of discrete skills: 88% of those polled say senior executives need the ability to be flexible and responsive to change, 91% - the ability to find creative, innovative and original ways of solving problems, 90% - the ability to learn from mistakes and 77% the ability to balance shorter and longer term considerations. The global leader of tomorrow also needs to be able to understand the interdependency of actions and the range of global implications that local level decisions can have and to understand the ethical basis on which business decisions are being made.
The final cluster of knowledge and skills are around connectedness – the ability understand the actors in the wider political landscape and to engage and build effective relationships with new kinds of external partners. For different businesses this can mean regulators, competitors, NGOs or local communities. The mindset with which our current leaders are groomed does not encourage productive engagement with partners outside the organisation – leaders receive plenty of training in negotiation skills, for example, but on the whole lack the skills for engaging for effective dialogue and partnership. To survive and thrive, 73% of senior executives say the global leader of tomorrow needs to be able to identify key stakeholders that have an influence on the organisation and 74% say they need to understand how the organisation impacts on these stakeholders, both positively and negatively. 75% say senior executives need to have the ability to engage in effective dialogue and 80% say they need to have the ability to build partnerships with internal and external stakeholders.
Future tasks of business schools
If these are the kinds of knowledge and skills needed, how can they best be developed? Again, the research sends a clear message – traditional approaches are not enough and we need to use a broad range of learning approaches to develop the global leaders of tomorrow. Because the issues are complex, senior executives believe the most effective learning and skills development comes through practical experience, whether the learning is on-the-job, project based or experiential. Senior executives also value opportunities to develop skills in relatively risk free environments such as simulations and by considering relevant case studies from real experience. These learning experiences can be enhanced by structured reflection through coaching or appreciative inquiry. Although learning approaches like e-learning and lecture-style sessions are rated less by executives, these are likely to still have a role as part of a broader blended learning experience where more straightforward knowledge transfer and basic awareness raising is required.
The research identifies examples where a number of leading companies have already taken steps to develop these kinds of knowledge and skills among their senior executives. Unilever, the global Anglo-Dutch manufacturer of leading brands in foods, home and personal care, runs a programme for high potentials on its emerging market strategy. Teams of executives build their engagement skills at the same time as researching current social and environmental trends and the business implications by spending time in emerging markets collaborating with NGOs, microfinance organisations and other grassroots groups. The teams develop business proposals to present to the Unilever board – the most successful are selected for implementation.
InferfaceFLOR, the modular flooring and carpet tiles manufacturer headquartered in the USA, has introduced in the Europe, Middle East, Africa and India, a four tier education programme from induction level for all employees, to the senior management team. The programme progressively raises awareness of key environmental and social issues and develops the skills individuals need for the organisation to be able to fulfil its vision of being an environmentally restorative by 2020. Individuals must have participated in certain levels of the programme, and where appropriate passed a graded assessment, to be eligible to be considered for promotion to more senior roles in the organisation.
These examples can inspire business schools about how to innovate their learning programmes to develop leaders who will survive and thrive in tomorrow’s new global economy, and the Beyond Grey Pinstripes ranking features many schools that are already innovating. At Ashridge we are taking a number of steps ourselves to address this challenge. Our MBA programme has since 2005 included a compulsory two week module which explores how these issues cut across all the functional silos. In 2009 we launched an executive MSc in Sustainability and Responsibility and we’re increasingly featuring this agenda in our executive education and organisation development consulting. Our in-house think tank for sustainability and learning – the Ashridge Centre for Business and Sustainability – was established in 1996. Working with HP, WWF and EABIS we’ve also this year challenged MBA and other management students across Europe, the Middle East and Africa with an award recognising their best ideas about how to innovate to create value from the shift to a low carbon economy.
While these examples can provide some direction, collectively, there is still a long way to go. Really achieving the transformational change needed in management education will require reaching the hearts and minds of every single member of faculty engaged in research, teaching and consulting. It also means that the management education world collectively must reassess each and every one of the key principles, models and frameworks that inform our thinking.
The task is daunting, but the need is great and as this research demonstrates, the companies we are developing people for are demanding it. We must rise to the challenge.
If you are in the senior leadership team in your organisation, ask yourself:
- What kind of people are we looking for in our organisation?
- What kind of qualities should we be valuing and being mindful of when recruiting, building teams, thinking about talent management and succession planning, or designing learning programmes?
- What are the most effective methods of developing these qualities and ways of thinking?
- Have we got things broadly right at the moment, or should we be experimenting with some new ideas?
If you are a business school dean or teaching faculty, or a human resources or learning and development professional ask yourself:
- What kinds of qualities, knowledge, skills and ways of thinking should we be seeking to develop in the people we work with?
- What are the most effective learning approaches for doing this?
- Have we got things broadly right at the moment, or should we be experimenting with some new ideas?
If you are an aspiring leader, ask yourself which qualities and skills you think are important to develop in yourself for the future, and seek a broad range of different learning opportunities to take this forward. If you are considering MBA and executive programmes offered by business schools, you should certainly be asking the question ‘Which schools are doing the most to help me build the leadership qualities and skills I need for the future?’
The Global Leaders of Tomorrow project is part of the European Academy of Business in Society (EABIS) Corporate Knowledge and Learning Programme and has received financial support from the EABIS Founding Corporate Partners IBM, Johnson and Johnson, Microsoft, Shell and Unilever. The project has been conducted in support of the UN Principles for Responsible Management Education (PRME) initiative.
The research has been led by Ashridge Business School with Case Western Reserve University, the Center for Creative Leadership, China Europe International Business School, IEDC-Bled, IESE, INSEAD, Tecnológico de Monterrey, the University of Cape Town and the University of Waikato.
The full research report is available from www.ashridge.org.uk/globalleaders
Full-time MBA, Executive MBA
China Europe International Business School (CEIBS)
Full-time MBA, Part-time MBA
IESE Business School
Full-time MBA, Executive MBA
IEDC - Bled School of Management