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August 15, 2009
Leading in a Dynamic and Unpredictable World
Wharton’s 13th Annual Leadership Conference
By Meghan Laska
Business leaders today are facing all kinds of challenges ranging from volatile markets and intense competition to the need for massive restructuring programs and, in some cases, the possibility of terrorist attacks. Whether they work in public service, for nonprofits, or for private corporations, they are leading teams around the world in a period of great uncertainty, increased risks, and higher stakes.
Top leaders recently gathered at Wharton’s 13th Annual Leadership Conference, sharing their experiences and strategies heading organizations in an unpredictable world. The June 16 event featured speakers such as Beth Brooke, global vice chair of Public Policy, Sustainability, and Stakeholder Engagement at Ernst & Young; Lt. Colonel Todd Henshaw, professor and director of Leadership and Management Programs at the U.S. Military Academy at West Point; and Fiona MacLeod, president of Convenience Retail in the U.S. and Latin America for BP Products.
What is it like to be a leader in today’s great recession? "It’s really hard," Brooke candidly told the packed audience. However, despite the difficulties of the current economic environment, she maintained that the keys to growth are always innovation and entrepreneurship. "It never changes. It takes leadership from the top to create a culture and mindset to allow innovation to flourish throughout an organization," she said.
To do this, Brooke explained that leaders first must focus on building constituencies with stakeholders such as employees and policyholders. "If you don’t, then you are a sitting duck, especially in bad economic times because in bad times, everyone gets innovative," she said. "You have to be innovative, nimble, and adaptive, and to do that, you need to engage your stakeholders."
Brook pointed to IBM as an example of a company with great shareholder engagement. IBM took the wisdom of crowds to the extreme, she said, holding "jams" to engage employees around the world in a form of group brainstorming to help build constituencies and introduce collaborative innovation.
"If you hit a key leadership moment and you haven’t laid the groundwork for engaging constituents, you’ll miss opportunities, you won’t have credibility, no one will follow you, and no one will listen," said Brooke. "It has to be done continuously and consistently."
The second step, she noted, is recognizing the value of diversity through "inclusive leadership." As research has shown that diverse teams outperform homogenous teams, "we need to create diverse teams to build in innovative capabilities," she said. "A byproduct of innovation and inclusiveness is that you develop leadership. The companies with reputations for getting this right are companies people want to work for."
Brooke recalled how a leadership moment presented itself last fall when conversations about the financial crisis failed to address the lack of diversity on Wall Street as a contributing factor. "We had all of these new regulations …, but if you build diversity into leadership and into boards, then you have built in a mechanism to manage risk," she said. “So we produced a report putting together existing research on why diversity matters and tried to change the conversation,” she said, noting that the report was released at the World Economic Forum in Davos. Although that wasn’t part of her day job, she succeeded in bringing visibility to an important topic.
Henshaw also spoke at the conference about a project that wasn’t part of his typical day-to-day job either, but that highlighted what it means to be a "leader" in another part of the world. He explained how on a recent trip to Afghanistan – where his goal was to help recruit leadership faculty at the National Military Academy – he met several people leading smaller teams to help stabilize their country in the midst of the uncertainty and chaos.
Those leaders, he said, all face the risk of terrorist attacks just by going to work every day, they operate in an environment of hopelessness, and they have access to extremely limited resources. Whether they work for the military, the government, or nonprofit organizations, they all face the same challenges yet are motivated by a sense of purpose to the point where their roles have become an identity rather than a job, observed Henshaw.
Leaders are not necessarily those with the greatest following, resources, or responsibility, he added. In many cases, "small teams contribute small drops" that ultimately have a great impact. "Leadership is about getting and keeping people on board, especially when joining requires selflessness and sacrifice," he said.
In her presentation, MacLeod agreed that getting people on board is a significant part of leadership all over the world. She explained that so many “change programs” adopted by businesses fail because employees don’t “own” the new system, lack the tools and training necessary to implement the changes, and morph back to the old model after the change consultants leave.
The solution, she said, is to get it right in the first place by engaging employees to sustain change and removing the "reverse gear" by providing training programs. MacLeod explained that leaders must clearly state – without jargon and flipcharts – what is not working and give employees a sense of what the future looks like if the changes are not made. Then, they need to plan a strategy to stay fit, focusing on reinforcements such as employee rewards for continuous improvements.
She told the audience about how she experienced this first-hand a decade ago while helping a sales and marketing division in New Zealand become more competitive in a changing business environment. The changes included a 60 percent reduction in the workforce as well as a renewal of the workers’ competitive spirit. The key, she said, was emphasizing that if they made these changes, they would be fit to fight.
“Everyone had to take steps every day to stay competitive in their part of the business to prevent backsliding,” said MacLeod. “We broke the change addiction cycle by making it stick and planning to stay fit with a plan that would outlive the next boss.”
This article is reprinted from the Wharton Leadership Digest.
