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Leadership Skills For The 21st Century

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					                                                                                            Spring 2009       Leadership skills for the 21st century   The Ashridge Journal




Matt Gitsham is a Programme Director at Ashridge with            Kai Peters is Chief Executive of Ashridge. His interests lie
a particular interest in leadership and sustainability. He       in the interface between entrepreneurship, technology and
leads research into executive learning, sustainability and       education. Kai writes and lectures on strategy, leadership
organisational change and works on a wide range of executive     and management education for government, business and
programmes and the Ashridge MBA. He is the programme             academic audiences.
director of Ashridge’s Integrating Corporate Responsibility
programme, a continuing professional development                 Email: kai.peters@ashridge.org.uk
programme for sustainability specialists.


Email: matthew.gitsham@ashridge.org.uk




Leadership skills for                                                                                                             We are living in challenging times. The
                                                                                                                                  2008-09 financial crisis has created
                                                                                                                                  circumstances which are testing our

the 21st century                                                                                                                  leadership skills as we attempt to navigate
                                                                                                                                  through uncertain market conditions. This
                                                                                                                                  financial crisis has been over 20 years in the
                                                                                                                                  making and illustrates a valuable and
                                                                                                                                  extremely important lesson – the longer
What skills do you need to lead in the face of                                                                                    risk is ignored, the bigger will be the
today’s global challenges? Are you fit to survive in                                                                              consequences. Although current recession
                                                                                                                                  concerns are the most serious for nearly a
this changing new world? Climate change and other                                                                                 century, they are dwarfed by those predicted
                                                                                                                                  in the Stern Review on the Economics of
pressing environmental and sustainability issues                                                                                  Climate Change, published in the United
urgently require transformational change. In this                                                                                 Kingdom in 2006.1 This highlights that the
                                                                                                                                  expected increase in extreme weather, with
article, Matthew Gitsham and Kai Peters challenge                                                                                 the associated and expensive problems of
                                                                                                                                  agricultural failure, water scarcity, disease
readers with the findings of Ashridge-led research                                                                                and mass migration, means that global

presented to the United Nations in December 2008                                                                                  warming is likely to precipitate crises on a
                                                                                                                                  scale we have never witnessed. Stern
which reveal that although 76% of senior executives                                                                               extrapolates the cost to suggest that climate
                                                                                                                                  change could swallow up to 20% of the
say that leaders in their organisations need the                                                                                  world’s GDP.

knowledge and skills to respond, fewer than                                                                                       The shift to a low carbon economy is one of
8% believe they are currently developing them                                                                                     a wide range of issues and trends that
                                                                                                                                  business leaders increasingly agree will
very effectively.


                                                                                                                                                       www.ashridge.org.uk/360   1
                                                       Ashridge Business School               http://www.ashridge.org.uk
      The Ashridge Journal     Leadership skills for the 21st century   Spring 2009



                                                   impact on their companies, according to             Transformational change requires more
                                                   Ashridge research conducted in the autumn           than changing to a few low wattage
                                                   of 2008. Wider concerns relating to                 lightbulbs.     Making     the    necessary
                                                   sustainable development – finite and                adaptations to a sustainable economy
                                                   increasingly scarce resources (energy,              means putting these issues at the heart of
                                                   water, food, metals and minerals for                strategic decision-making and integrating
                                                   example) – also figure prominently. Business        them into all the key business systems and
                                                   leaders have thus clearly understood that           processes. It means influencing policy-
                                                   severe challenges lie ahead. But do they            makers to create new market structures
                                                   know what to do about them?                         and rules of competition. And it also means
                                                                                                       reaching the hearts and minds of individuals
                                                   With emerging economies the source of               working right across organisations,
                                                   future growth for many organisations, and           changing the nature of the conversations
                                                   with President Obama and political leaders          within organisations and equipping people
                                                   around the world putting the transition to a        with the knowledge and skills they need to
                                                   low carbon economy at the heart of their            enable them to respond.
                                                   response to the current recession, it is
                                                   increasingly clear that it is not simply a case     What does this mean for you and your role?
                                                   of business as usual with a few tweaks here         And what does it mean for leadership
                                                   and there. There is now an urgent business          development?
                                                   imperative for transformational change.
                                                                                                       To explore these questions, Ashridge
                                                                                                       worked with Unilever, IBM, Shell, Johnson &
                                                                                                       Johnson and Microsoft – the founding
                                                                                                       corporate partners of the European
                                                                                                       Academy of Business in Society – as well
                                                                                                       as a number of other leading business
                                                                                                       schools around the world. The findings,
                                                                                                       based on extensive interviews and a global
               CONTEXT                                                                                 survey of CEOs and senior executives,
                                                                                                       present a stark message:

                                                                                                       76% of CEOs and senior executives polled
                                                                                                       say it is important that leaders in their
                                                                                                       organisations have the knowledge and skills
                                                      COMPLEXITY                                       to respond to sustainability, but fewer than
                                                                                                       8% believe these knowledge and skills are
                                                                                                       currently being developed very effectively.


CONNECTEDNESS                                                                                          Three clusters of knowledge and
                                                                                                       skills: context, complexity and
                                                                                                       connectedness

                                                                                                       Context
                                                                                                       The CEOs and senior executives 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




 2   www.ashridge.org.uk/360

                                                Ashridge Business School              http://www.ashridge.org.uk
                                                                    Spring 2009   Leadership skills for the 21st century   The Ashridge Journal



– 82% of those polled say senior executives                                                           to be flexible and responsive to change;
need to understand the business risks and         FMCG giant Unilever, through its in-                91% – the ability to find creative, innovative
opportunities of environmental and social         house      Marketing       Academy,     has         and original ways of solving problems; 90%
trends. And they need to know how their           introduced the Brand Imprint process to             – the ability to learn from mistakes; and 77%
sector and other stakeholders (regulators,        help build the skills of its brand directors        – the ability to balance shorter and longer
customers, suppliers, investors, NGOs) are        to factor opinion leader and consumer               term considerations.
responding. Global warming, for example,          attitudes about social and environmental
has become a strategic issue for                  issues into the development of its top              Connectedness
organisations: not just because of direct         brands in order to build customer loyalty,          The final cluster of knowledge and skills is
implications for the organisation and its         differentiate and capture value. Brand              around connectedness – the ability to
assets and business model from changes            teams seek new opportunities by                     understand the actors in the wider political
to the climate, but more significantly            conducting a 360º scan of the social,               landscape and to engage and build effective
because of the way customers, investors           economic and environmental impact that              relationships with new kinds of external
and most importantly regulators and               their brand has on the world, taking into           partners. For different businesses this can
competitors are responding.                       account consumer attitudes as well as               mean regulators, competitors, NGOs or
                                                  the views of external stakeholders, NGOs            local communities. The mindset with which
As Michael Porter, in the Harvard Business        and opinion formers, and market forces              our current leaders are groomed does not
Review, noted recently: “Climate change is        driving the brand’s success. The learning           encourage productive engagement with
now a fact of political life and is playing a     experience revolves around developing               partners outside the organisation. Leaders
growing role in business competition.             skills to identify business-relevant                receive plenty of training in negotiation skills,
Greenhouse gas emissions will be                  social and environmental issues and                 for example, but on the whole, lack the skills
increasingly scrutinized, regulated and           factor this information into product and            for engaging in effective dialogue and
priced. While individual managers can             brand development to improve the                    partnership. To survive and thrive, 73% of
disagree about how immediate and                  bottom line. The first four brands to go            senior executives say the global leader of
significant the impacts of climate change will    through the Brand Imprint process                   tomorrow needs to be able to identify key
be, companies need to take action now.”2          were four of Unilever’s most successful             stakeholders who have an influence on the
                                                  ones: Lipton Tea, Dove, Lifebuoy and                organisation and 74% say they need to
Senior executives also need the skills to         Flora/Becel. Many other brands within               understand how the organisation impacts
respond to this information, as 70% say           Unilever are now undertaking the process            on these stakeholders, both positively and
that global leaders need to be able to            as well.                                            negatively. 75% say senior executives need
integrate social and environmental trends                                                             to have the ability to engage in effective
into strategic decision-making. This can         “Leaders need to be able to introduce                dialogue and 80% say they need to have the
mean knowing how to use tools for scenario       environmental and social criteria into               ability to build partnerships with internal and
building and risk management to aid              strategic decision making from the start –           external stakeholders.
decisions about emissions costs within           not doing this is worse than stupid, it’s
capital expenditure projects or horizon          reckless.”                                           Engaging with local communities can be
scanning for consumer trends.                    André van Heemstra, Global Board Member              increasingly important for a variety of
                                                 and Global Head of Human Resources,                  companies, especially those in the oil, gas
 Energy utility National Grid has                Unilever 2000-2006                                   and mining sectors, where the expectations
 introduced a carbon budgeting process                                                                of governments, institutions providing
 that mirrors its financial budgeting            Complexity                                           project finance, and NGOs, not to mention
 process, with all parts of the business         The second cluster of knowledge and skills           local communities themselves, are rising.
 negotiating to agree how much carbon            is around the ability to lead in the face of         This means moving from a mindset in which
 they will emit. Senior leaders in the           complexity and ambiguity. The challenges             local communities are viewed as a nuisance
 organisation now need the skills to be          and opportunities these issues and trends            that must be managed, to a strategic partner
 able to take into account the shadow            present tend to be marked by a lack of               where constructive relationships are central
 price of carbon when making capital             certainty and a lack of agreement.                   to value protection and value creation. This
 expenditure decisions to understand the         Leadership in these circumstances requires           means more than financial donations for
 future financial performance, should            a range of discrete skills: 88% of those             community projects – it means a real focus
 carbon pricing legislation be introduced.       polled say senior executives need the ability        on relationships.




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                                     Ashridge Business School        http://www.ashridge.org.uk
             The Ashridge Journal     Leadership skills for the 21st century   Spring 2009



The ability to engage and contribute to                   potentials. Through project-based learning,
                                                                                                                company to design and deliver a
public policy is another example, particularly            teams of executives build their engagement
                                                                                                                leadership and strategy programme that
important in the context of negotiations                  skills at the same time as researching
                                                                                                                engages its high potential managers in
over a successor to the Kyoto Protocol and                current social and environmental trends and
                                                                                                                exploring new markets and products,
the second phase of the European                          the business implications, by spending time
                                                                                                                and equips them to address the
Emissions Trading scheme. By 2012, the                    in emerging markets collaborating with
                                                                                                                challenges of the future through a
European Union will make decisions on the                 NGOs, microfinance organisations and
                                                                                                                combination of residential modules and
future distribution of permits that could be              other grassroots groups. The teams develop
                                                                                                                project-based learning. Projects take
worth up to €3 billion for the airline industry3:         business proposals to present to the
                                                                                                                place in emerging markets that both
there is clearly a lot at stake. Companies                Unilever board and the most successful are
                                                                                                                address the long term sustainability
need to work closely with regulators to                   selected for implementation.
                                                                                                                vision of the company and put
ensure that the new rules do not have
                                                                                                                participants outside their comfort zone.
unintended consequences, but work in the                  InterfaceFLOR, the modular flooring and
                                                                                                                Participants     are    challenged      to
best possible way. For many business                      carpet tiles manufacturer headquartered in
                                                                                                                understand and engage with local
leaders, this engagement will require                     the USA, has introduced a three-tier
                                                                                                                people in these locations, to understand
enhanced skills.                                          education programme. Highly interactive,
                                                                                                                and engage with the issues they face
                                                          the programme progressively raises
                                                                                                                and the lives they lead, and to innovate
A need for diverse learning                               awareness of key environmental and social
                                                                                                                to create new business ideas and viable
approaches                                                issues and develops the skills that individuals
                                                                                                                business models to support them. For
If these are the kinds of knowledge and                   need for the organisation to be able to fulfil
                                                                                                                example, for one project, participants
skills needed, how can they best be                       its vision of being environmentally restorative
                                                                                                                worked with a local community in India,
developed? Again, the research sends a                    by 2020. Individuals must have participated
                                                                                                                developing relationships with NGOs and
clear message. Traditional approaches are                 in certain levels of the programme, and
                                                                                                                running focus groups with village women
not enough: a broad range of learning                     where appropriate passed a graded
                                                                                                                to source and assess ideas for alternative
approaches are required to develop the                    assessment, to be eligible to be considered
                                                                                                                products and explore ways to provide
global leaders of tomorrow. Because the                   for promotion to more senior roles in the
                                                                                                                them to poorer people. After the project,
issues are complex, senior executives                     organisation.
                                                                                                                participants deliver their proposal for a
believe the most effective learning and skills
                                                                                                                business model, then work with the
development comes through practical                       Together with InterfaceRAISE, the consulting
                                                                                                                company’s senior management to
experience, whether the learning is on-the-               arm of InterfaceFLOR, Ashridge has
                                                                                                                decide on the next steps forward. This
job, project-based or experiential. These                 developed a partnership which brings
                                                                                                                experience is leveraged and developed
learning experiences can be enhanced by                   together Ashridge’s expertise in executive
                                                                                                                at a personal level during the final,
structured reflection through coaching or                 education and organisation development
                                                                                                                classroom-based module.
Appreciative Inquiry. Learning directly from              consultancy with the vast practical
the experience of others is also valued as                experience of InterfaceFLOR in sustainable
                                                                                                              On another programme, the Ashridge MBA,
important – through mentoring, or                         development. Through workshops, senior
                                                                                                              a compulsory two week module explores
communities of practice and other formal                  executives and strategic decision-makers
                                                                                                              how sustainability issues cut across all the
and informal learning networks.                           are supported to think strategically about
                                                                                                              functional silos, and builds critical skills. In
                                                          the     commercial     opportunities    and
                                                                                                              2005, Ashridge launched the world’s first
Individuals need to seek out their own                    challenges presented by sustainable
                                                                                                              continuing     professional     development
opportunities to learn and refine the skills              development and to develop a strategic
                                                                                                              programme for sustainability and corporate
they need. HR and Learning and                            plan to engage their organisation to address
                                                                                                              responsibility directors – the Integrating
Development Directors also have a                         them. These plans are then rolled out with
                                                                                                              Corporate Responsibility programme. All this
responsibility   to     ensure    that  the               further support from the Ashridge
                                                                                                              work has been supported by our specialist
organisational learning agenda supports                   InterfaceRAISE partnership.
                                                                                                              centre for research and thought leadership
the development of appropriate skills. This
                                                                                                              – the Ashridge Centre for Business and
process can be supported through                            For the past four years, Ashridge has
                                                                                                              Society – which we established over a
leadership development programmes.                          collaborated with a leading global
                                                                                                              decade ago in 1996.
Unilever, for example, runs a programme on                  healthcare, lifestyle and technology
its emerging markets strategy for high




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                                                       Ashridge Business School              http://www.ashridge.org.uk
                                                                Spring 2009   Leadership skills for the 21st century   The Ashridge Journal



So what are the implications
for you?                                                                                             References
You are a senior leader in your organisation,
or on a career track towards becoming one.                                                           1. Nicolas Stern (2006) The Economics of Climate
                                                                                                     Change: The Stern Review, Cabinet Office –
Ask yourself these questions: “How                                                                   HM Treasury.
important are the skills identified in this
                                                                                                     2. Porter M.E. and Reinhardt F.L. (2007)
research to my role now and as I progress
                                                                                                     A strategic approach to climate change,
in the future? Do I understand a low carbon                                                          Harvard Business Review, October, p. 22
economy? Are our products and services
                                                                                                     3. Enkvist P., Nauclér T. and Oppenheim, J.M., (2008)
sustainable? If not, can I change them?                                                              Business strategies for climate change,
What are my current communications                                                                   The McKinsey Quarterly, April.
strengths and weaknesses? Can I engage
effectively with scientists, regulators,
competitors and community groups?”

And if you are an HR or learning professional:
“Which of these knowledge and skill sets                                                             Further information and the full
are important for my organisation, now and                                                           research report is available from
in the future? Does the low carbon economy                                                           www.ashridge.org.uk/globalleaders
even surface in our learning strategy?
What’s stopping us?”                                                                                 The Global Leader 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 research findings
                                                                                                     were launched at a global forum on the
                                                                                                     future of management education
                                                                                                     convened and addressed by UN
                                                                                                     Secretary General Ban Ki-Moon at the
                                                                                                     United Nations in New York in December
                                                                                                     2008.

                                                                                                     The research was led by Ashridge
                                                                                                     Business School working together with
                                                                                                     Case Western Reserve University, the
                                                                                                     Center for Creative Leadership, China
                                                                                                     Europe International Business School
                                                                                                     (CEIBS), IEDC-Bled, IESE, INSEAD,
                                                                                                     Tecnológico de Monterrey, the
                                                                                                     University of Cape Town and the
                                                                                                     University of Waikato.




                                                                                                                       www.ashridge.org.uk/360     5
                                     Ashridge Business School    http://www.ashridge.org.uk
Ashridge Business School   http://www.ashridge.org.uk
Ashridge Business School   http://www.ashridge.org.uk
Reprinted from 360º – The Ashridge Journal, Spring 2009

Ashridge, Berkhamsted, Hertfordshire HP4 1NS, United Kingdom
Telephone: +44 (0)1442 843491 Facsimile: +44 (0)1442 841209
Email: contact@ashridge.org.uk Corporate website: www.ashridge.org.uk
Registered as Ashridge (Bonar Law Memorial ) Trust. Charity number 311096.

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