LEADERSHIP / MANAGEMENT SPECIAL ........The Complicated Lives of Today s Leaders

The Complicated Lives of Today s Leaders: Why Being at the Top Is Harder Than Ever
 

For insights into the ethics, values and competencies required of today's global leaders, Knowledge@Wharton recently coordinated a Wharton Executive Education roundtable discussion with four fellows from The World Economic Forum's Global Leadership Fellows Program. The program allows participants to work full-time at the World Economic Forum while developing leadership skills through training courses at top universities.

The four fellows at the Knowledge@Wharton roundtable included Ian Rogan, Ramya Krishnaswamy, Carl Björkman and Sandilya Vadapalli.

Rogan -- project manager, corporate global citizenship, at the Forum -- previously worked for the Boston College Center for Corporate Citizenship, the Winston Center for Leadership and Ethics at Boston College and the John Kerry for President campaign. Krishnaswamy, who is involved with collaborative water initiatives, has also been employed by SSG Social Impact Advisors and McKinsey.

Björkman is community manager, Europe & Central Asia, at the Forum, and has worked for the European Commission, the United Nations, the Waterberry Development Organization and Bloomberg LP. Vadapalli, project manager, environmental initiatives, previously worked for Emerging Venture Solutions, British Petroleum and Satyam Computer Services.

An edited version of the conversation follows.

Knowledge@Wharton: How has the nature of leadership changed in recent years, and what are the new complexities that characterize leadership today?

Rogan: I don't think the nature of leadership has changed, but the context in which leadership is exercised has become more complicated. We live in a time where there isn't a news cycle; there is just a perpetual flow of information. To be able to manage that, particularly in a crisis, is much more challenging. As a leader, you need to be able to perform much more quickly but still in a manner that [allows] enough time to think through your decisions.

Krishnaswamy: One of the things we have seen changing recently in the last year or two is that [the definition of] a stakeholder has actually widened ... from the traditional capitalist ideal of being responsible to shareholders ... to how much of a role the government, consumers and society actually demand of a corporation. We've seen that in the way government has stepped in to bail out failed companies; we've seen that in the way consumers have put huge pressure on [companies and governments].... Because there are a lot more people that you are accountable to, the complexity of the way that a problem diffuses or spreads has changed as well. So the pace of tackling [problems] has increased, but the scale of the problems has also increased [due to] the large network of stakeholders.

Björkman: I [wonder] if the structures that we have in place in today's world are just not set up to cope with the huge challenges that we have. It's very difficult to negotiate anything when you have so many stakeholders. Maybe we need different structures.

Vadapalli: The structures under which leaders operate have not changed with the times. You still have one person trying to deal with things that are too complex for one person. The ideal situation would be to have leaders at all levels. When we look at a government, we not only routinely look at the top person, but at all the other ministers and at the next levels. [We do this] because we know that the government is a very complex organization. But where is the equivalent of that in any other field? The world has changed but the perception of how leadership is exercised in a lot of other fields ... has not changed.

The way we view companies is still very CEO-centric.... Almost all successful leaders have successful teams under them, but we don't view that too often.

Rogan: When you look at high-performing individuals from big organizations who go elsewhere, often they fail unless they can bring their team with them. ... Instead of looking at the iconic hero-leader-CEO, we need to understand that this CEO is an effective leader because [he or she] has the ability to attract the right team, identify where there are weaknesses and fill those weaknesses with the right people.

Knowledge@Wharton: So in responses to crises, do we focus too much on the top leaders? Should we be responding differently?

Krishnaswamy: If something happens, then the entire accountability of the organization goes to that one person who runs it. However, the fact that the whole system has allowed for something like that to happen is not often questioned.... I think the idea of a leader as somebody who is on top is something that blocks us from progressing. We're generally [in a world] that is way more networked, and again the role [of a leader] is not about being able to lead in an active way, but almost more about enabling these networks to function at their best.

Rogan: I do think that in a time of crisis, society -- and I include myself -- still very much looks to one voice to galvanize the larger community, and I think that's not going to change anytime soon. In a time of crisis, from a communications standpoint, it's very important to have one leader. I still think you will need the leader on top, but going forward, what is important to realize is that this leader on top is part of this much larger network -- a global network.

Knowledge@Wharton: In terms of current events, has there been a failure of leadership -- either top leaders or any levels?

Rogan: Within the context of the BP oil spill, the entire U.S. Congress should also take blame because they created a system that allowed something like this to happen....They're so quick to demonize BP -- and I think BP rightfully is being criticized -- but there are many other actors involved.... When bad things happen, there's always this notion of, "Who's the scapegoat? Who is the one person that we are going to blame?" and I think it's much more complex than that. There are a lot of people who are responsible for what happened.

Björkman: You could also go back to COP15 [the 2009 UN Climate Change Conference in Copenhagen]. I think that was a big failure on many levels. It was a failure of leadership and a failure of the media and the public as well. It was a failure in terms of the expectations, a failure in terms of the process that was outlined [and] a failure in terms of what the leaders could achieve or not achieve.

Krishnaswamy: There was an element of top-down and bottom-up.... The group of people who led this mission had not really thought through the strategic way of achieving something. They didn't empower soon enough the people at the bottom who were going to ram it through, and they didn't think through the resources that were going to be needed. There was a whole element of leadership along many different levels that wasn't very action oriented.

Vadapalli: [The COP15 conference] was a failure not only because of what they didn't achieve, but why they didn't achieve it. They fought about process for those two weeks. They didn't even reach the big idea because they were fighting about the process.

Knowledge@Wharton: What role has ethics played in terms of leadership and recent current events?

Björkman: Leaders these days have so many different problems; they are all interconnected, they are all interlinked and they need a variety of different skills to deal with that. In terms of leadership ... you develop a toolbox of skills. A good leader will have a really big toolbox with a lot of good tools that he or she can pull out according to the circumstance. The interesting thing with ethics is that it really starts getting complex when you get into the issues. You can say you have certain values and believe in certain things, but when you're up against a very difficult situation, which you often are as a leader, it's only then that those values and belief systems really start to play out.

Vadapalli: When the crisis hits, the tool [the leaders] decide to pick out of their toolbox is guided by the values they have.... The financial crisis is an example in which the companies repeatedly tried to take advantage of the situation as the crisis was unfolding, in terms of getting their firms ahead, or trying to game the system in some way for their own advantage. That is because that was their normal way of doing business -- being smart, moving quickly and making profit every time they got an opportunity. Whereas if their value system had actually told them at this stage, "It's time to consolidate stock," then they would have done that. It's just that they were never incentivized ... for that. And expecting them to change suddenly because the crisis hit is actually unfair.

Björkman: A crisis really brings out your true values. It's easy to say in good times that we're going to do all this stuff, that we believe in these values. But you can get some interesting strains and stresses on your values in a crisis because you can have more than one value.... When you hit a crisis, it's only then that you have fewer resources. There are more stresses on you, [and] that's when your values come out.

Krishnaswamy: I would say the opposite. In a crisis, you do whatever you can to get out of it. You don't necessarily choose your most preferred way of doing things because you often hand over management of the crisis to people around you.

Vadapalli: But it's not real leadership if you just give things over to the advisor and follow what has to be done in that situation. I don't think leaders in the moment of crisis give up their control to their advisors and then follow whatever they say.

Krishnaswamy: But that is what they do. If you go to the past, kings had their prime minister or chief advisor who was the brains behind the strategy of everything they did. Oftentimes, we think that the basis of leadership is the person who gets celebrated, but behind them is his or her advisor. The President of the United States has many advisors who give him advice.

Vadapalli: Getting advice is not the point. The point is, how you react to it is based on your values. That's what comes through, and that's why we respect them as leaders. You can get advice from a hundred places but the decision to make the call is yours. The buck stops with you. You make the call, and that is based on your values. That's why you're a leader.

Knowledge@Wharton: Can ethics be taught, and what is the most effective way to instill ethics in an organization?

Rogan: I think ethics can certainly be taught, but can it be learned? That's the larger question. I do think if we want to effectively develop a more ethical society, then it needs to exist at every stage of [life], from childhood moving forward. I think the way you do that is by truly meaning that these are the values we want in a civil society, which gets back to how you incentivize and reward people. People who get to the top -- whether it's a company, a government or an organization -- didn't necessarily have to be ethical. In fact, many times perhaps, they were acting unethically to get an advantage that allowed them to achieve that level of success. And then we celebrate that success. I think if we actually start to create a system that truly does value and reward those who act ethically -- and therefore have different metrics to measure performance -- then maybe we'll have more just and ethical ways in which we conduct business and conduct ourselves in society.

Krishnaswamy: In a financial sense, we've evolved in the way we measure financial value. We started with revenues and we went to sales and we went to margins, and now ROI.... Why not do the same in terms of proper evaluation of, not just the financial, but the social value equation as well?

Vadapalli: What do you measure success by apart from shareholder value? There is no number to put there.... Bill Gates is famous because of the money he gives. The impact he has on different people's lives is not measured as well. Around the world, we don't have any way to measure anybody's contribution to society -- except by saying they're great -- in a clear way, as we can do for money. As a society, as long as we don't have that measure, the incentive system will always be skewed towards what can be measured -- and that is money.

In Medieval times, the churches were the tallest buildings because they were the most respected. And then the government buildings were the tallest because they were respected. Today, it is the banks and the corporations. They are the ones with power.

Rogan: We're in the era of the corporation. If you want to try to have a positive impact on society, [corporations] are in the best position to do that because of the power and the assets they now wield. There needs to be a great awakening among corporate leaders that, along with what they have been given, comes responsibility to do more than just think about the bottom line. With that comes the responsibility to think about more than just the activity on your balance sheet, but to think about your role in global affairs and how to create a more sustainable world.

Krishnaswamy: [But] we have also come to the realization that different parts of society are best at delivering certain kinds of value. Maybe the role of business is just about increasing the efficiency of capital. Maybe it's not about being the champion of ethics. So we're asking the businesses to stop doing what they're best at doing -- which is being the best in terms of capital efficiency and creating business value. Maybe the role of ethics needs to be embedded elsewhere in society.

I would like to add [a point about] longer- and shorter-term thinking. It's not just about stakeholders. Oftentimes, if you take a ... longer-term perspective on the resources that you have and the value that you need to create, [you] can [adopt] more ethical [behavior]. Often it's the very clear short-term mentality of: "I'm here for a two-year period and I have to maximize the most for myself and my team." It's this embedded, highly short-term thinking that does not support the much longer-term need for ethics.

Knowledge@Wharton: What is needed most in leadership today? What wasn't there and what needed to be there in terms of leadership?

Rogan: I think a long-term view, being empathetic and understanding systems and structures. A simple piece of advice I was given was: Systems drive behavior that drives events, and it's pretty obvious that is the case. The challenge in global affairs is that we're in the system, so how do we change the system when it's on such a large scale?

Knowledge@Wharton: Do we need more leaders today?

Krishnaswamy: Because there is this complex network, because of the fact that nobody operates in a vacuum, we are connected. There are industries and there are stakeholders: One person just can't do all of this.... What that means is more delegation and more building up people across the organization.

Vadapalli: My view would be that the scope of what a leader does must change. Earlier, we could have had a leader who led a company, industry, country or state. Now the scope of activity and information for everything has become so much more. The perspective that a leader should bring and what he wants to achieve need to encompass a much wider range. A businessman can't just talk about core competence and shareholder value anymore. And a politician can't just talk about development and other issues. He has to be an economist, he has to be an expert leader, he has to be a defense expert; and even if he is not an expert, he should be able to connect those dots. So the expertise required of a leader today is different.... It's not necessarily the number [of leaders which needs to increase], but the number of things a leader has to take care of.

Björkman: You need to look at leadership not just in terms of the top person in any organization or company. You can have leadership across the organization, from the top to the very bottom. Oftentimes the most effective changes -- and I think leadership is a lot about change -- can take place from the bottom up. There are great examples of employees -- not at the top, not CEO -- having great impact on an organization. Small changes can catch on -- a change in the culture or a product. I think we need to look at leadership in a broader way. So in answer to your question, maybe we do need more leadership. We need people to believe they can take on more.

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