Leadership Landscape
What does it mean to lead in an age of upheaval, to master personal challenges, to be in the limelight continually, to make decisions under extreme uncertainty?
It is often said that the principles of great leadership are timeless, or based on immutable truths. But when we meet with the men and women who run the world’s largest organizations, what we hear with increasing frequency is how different everything feels from just a decade ago. Leaders tell us they are operating in a bewildering new environment in which little is certain, the tempo is quicker, and the dynamics are more complex. They worry that it is impossible for chief executives to stay on top of all the things they need to know to do their job. Some admit they feel overwhelmed. To understand the leadership challenge of our volatile, globalized, hyperconnected age more clearly, we recently initiated a series of structured interviews with the leaders of some of the world’s organizations. Excerpts from those conversations appear below. The leaders — Josef Ackermann, formerly of Deutsche Bank; Carlos Ghosn of Nissan and Renault; Moya Greene of Royal Mail Group; President Shimon Peres of Israel; Ellen Kullman of Du Pont and Daniel Vasella of Novartis — represent a diverse array of viewpoints. All are grappling with today’s environment in different ways. But the common themes that emerged from these conversations — what it means to lead in an age of upheaval, to master personal challenges, to be in the limelight continually, to make decisions under extreme uncertainty — offer a useful starting point for understanding today’s leadership landscape.
Carlos Ghosn: I don’t think leadership shows unless it is highlighted by some kind of crisis. There are two kinds. There are internal crises that arise because a company has not been managed well. Then there are external crises, like the collapse of Lehman Brothers or the earthquake in Japan or the flood in Thailand. In that case, you are managing your company, and all of a sudden there is this thing falling on you. Business schools may prepare people to deal with internal crises. But I think we need to be more prepared for external crises, where it’s not the strategy of the company that is in question; it’s the
ability of leaders to figure out how to adapt that strategy. We are going to have a lot more of these external crises because we are living in such a volatile world — an age where everything is leveraged and technology moves so fast. You can be rocked by something that originated completely outside your area. I think one of the reasons Nissan has been able to cope with external crises better than some of our competitors is that we have a more diverse, multinational culture. We don’t just sit around waiting for the solution to come from headquarters. We are accustomed to always looking around, trying to find out who has the best ideas. Our people in the US talk to our people in Japan on an equal level. We have a lot more reference points.
Shimon Peres: The last two decades have witnessed the greatest revolution since Genesis. States have lost their importance and strength. The old theories — from Adam Smith to Karl Marx — have lost their value because they are based on things like land, labor, and wealth. All of that has been replaced by science. Ideas are now more important than materials. And ideas are unpredictable. Science knows no customs, no borders. It doesn’t depend on distances or stop at a given point. Science creates a world where individuals can play the role of the collective. Two boys create Google. One boy creates Facebook. Another individual creates Apple. These gentlemen changed the world without political parties or armies or fortunes. No one anticipated this. And they themselves did not know what would happen as a result of their thoughts. So we are all surprised. It is a new world. You may have the strongest army — but it cannot conquer ideas, it cannot conquer knowledge.
Mastering today’s personal challenges
The rigours of leadership have prompted many leaders to think of themselves as being in training, much like a professional athlete: continually striving to manage their energy and fortify their character. There is a growing recognition of the connection between physical health, emotional health, and judgment — and of how important it can be to have precise routines for diet, sleep, exercise, and staying centered.
Moya Greene: The first criterion is: do you love it? It’s a sevenday- a-week job. I think that’s true for anyone in these roles. If you don’t love the company and the people — really love them — you can’t do a job like this. I’m pretty energetic. I start at five in the morning. I don’t even think about it anymore; the alarm goes off and I’m up. I go for a 30-minute run. I do weight training three mornings a week. I try to eat well, but not too much. I’m a big walker—that’s my favorite thing. I try to get a good walk every weekend. I go on walking vacations. I’ve usually got three or four books on the go. I’ve given up on novels.
I can’t get through them no matter how good they are; there’s no way I’ll finish before there’s some kind of interruption. So I read poetry now: the collected works of Ted Hughes, Emily Dickinson. I’m working my way through Philip Larkin. You can take a Larkin poem and read it on the bus in 15 minutes. The good ones stay with you and will come back to you. That’s what I like about poetry: you get a little shot of mental protein without a lot of time.
Dan Vasella: I talk to my team about the seductions that come with taking on a leadership role. There are many different forms: sexual seduction, money, praise. You need to be aware of how you can be seduced in order to be able to resist and keep your integrity. Every CEO needs someone who can listen—a board member, an adviser—someone to whom he can speak in total confidence, to whom he can say, “I’ve had it; I’m about to resign.” Or, “I really want to beat this guy up.” You need someone who understands and can help you to find the balance. Leaders often forget the importance of stable emotional relationships—especially outside the company. It helps tremendously to manage stress. Your partner will do a lot to help keep you in sync. You have to be able to switch on and switch off. Are you entirely present when you’re present? Can you be entirely away when you’re away? The expectation is that your job is 24/7. But no one can be the boss 24/7. You need to have a moment when you say, “I’m home now,” and work is gone.
Ellen Kullman: I spend a lot more time on communication, more time out at plant sites, in sales offices, with customers, in our research laboratories. I’m bringing my board of directors to India in a couple of weeks to help them really see the issues we’re facing.
That’s where I get my energy from. It’s contagious. I come away from these engagements with ideas, energy, and a real sense of focus on where we as a company need to go. That’s part of what drives me.
Shimon Peres: The mind of a leader must be free—a mind that can dream and imagine. All new things were born in dreams. A leader must have the courage to be a nonconformist, just like a scientist. He must dream, even if he dreams alone or if people
laugh at him. He must not let his heart falter. Today, the separation between generations is stronger than between nations. Our children say, “Please don’t impose upon us your own arrogance — the world you created, wounded by war, corrupted by money, separated by hatred. And don’t try to build artificial walls between us and other youngsters.” Because they were born in a new age. They can communicate much more easily and don’t feel all this hidden discrimination that we were born with and find so difficult to get rid of.
The (now 24/7) public face of leadership
Nearly everyone we spoke with commented on the challenge of dealing with constant scrutiny and of acting as a connector in a complex ecosystem. As the face of the organization, leaders must be prepared to address the immediate, practical concerns
of the job while also maintaining and articulating a long-term vision of the organization’s purpose and role in society—all against a backdrop of 24-hour financial coverage, ubiquitous blogs, and Twitter feeds.
Dan Vasella: People have a legitimate demand for access to the CEO. But you have to modulate that so you avoid overexposure. You’re a product. And the press will paint you as either a hero or a villain—whatever sells. If they paint you as a hero today, you should be prepared to be painted as a villain tomorrow. Not everything you do will work out every time, and you have to accept that people will be unfair.
Moya Greene: A decade ago, I’d have said that it was harder to be a public official than an executive in the private sector. But the tables have turned. It’s tough these days to be the CEO of any business—even a very successful one with a balanced view of the corporation’s position in society. My public-sector experience has helped me to understand how easily sound policies can be derailed by small, symbolic things. It may not matter that the policy change you are advocating is the product of fantastic analytics or years of brilliant stakeholder management; the tiniest little spark can become a flash fire—something that takes hold and transforms perceptions in ways that don’t seem rational. If you work in the public sector, you learn the value of developing antennae for popular perceptions and keeping them finely tuned.
I spend about 15 percent of my time trying to help our own people understand how good we are at what we do, which isn’t always easy, because there is so much negativism in the press. I see good internal communications as a way to punch through and get our message out, to tell our people—who are the most powerful ambassadors for our brand—“Stand up and be proud.”
Carlos Ghosn: In business, there are no more heroes. The media has become a lot more negative about corporate leaders over the past ten years. Small mistakes get blown up into huge things. I cannot imagine myself today doing what I did in Japan in 1999, when I stood up and said: “We’re going to get rid of the seniority system. We’re going to shut down plants. We’re going to reduce headcount. We’re going to undo the keiretsu system.” I had a lot of criticism. But there were also people who said, “Let’s give him the benefit of the doubt.” Today, if I were to stand up and try to do something like that, I would get massacred. I would need much more emotional stability and certainty. Leaders of tomorrow are going to have to be incredibly secure and sure of themselves. Leaders of the future will also need to have a lot more empathy and sensitivity—not just for people from their own countries but for people from completely different countries and cultures. They are going to need global empathy, which is a lot more difficult.
Decision making under uncertainty
A final theme is that leaders must increasingly resist the temptation to cope with chaos and complexity by trusting their gut. At a time of extreme volatility, past experience is an unreliable guide to future outcomes. Leaders must create cultures of constructive skepticism and surround themselves with people who bring multiple perspectives and have no fear of challenging the boss.
Josef Ackermann: It is a paradox: on the one hand, you have to be more confident and secure, but on the other, you have to be a lot more open and empathetic. You need to listen, but then when you make a decision, that’s it—you must be a very hard driver. Usually, these are not attributes you find in the same person. Once you have done the analysis and made the decision, then you have to learn to simplify the decision in communicating it to others. Everything’s complex, but once you have decided, sometimes you need to simplify so much it’s almost a caricature. You must say, “Nothing matters beyond this.” You must reduce everything to zeros or ones, black or white, go or no-go. You can’t have too much nuance. In a crisis, you have to be able to do all of these things—listening, deciding, and then simplifying—very quickly. That is what makes leading in a crisis so interesting. And because you have to move so fast, you have to empower people to make decisions themselves. That’s the best way to restore calm.
Daniel Vasella: As a leader, to whom can you express your doubts—and should you? In which situation is it appropriate and when not? I believe that you have to be able to express doubt in your team and with a board. If you don’t—and you pretend—then you are playing a role, which eventually leads to an unhealthy situation. That’s not to say you should act like you’re in a confessional. At some point [in decision making], you have to take the sword and cut through the Gordian knot and make a decision, despite any uncertainties. But the question is: are you being led by the context or do you lead? Are you being led by your followers and are they choosing for you? Or do you choose and do you lead? I think you have to be aware of the context, and what people expect and hope for. But as a leader, you’re not there to feed people with all the things they hope for. Your job is to persuade people to do the things you believe will be the right direction for the long term. People want you to lead. And if you lead, you will hurt. You will satisfy sometimes. You will celebrate and you will blame. That’s all part of your job.
This adapted article in CDET of 120706was originally published in McKinsey Quarterly
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