The 21st century has been characterized by constant change and disruption. During this period the world has reached milestones never achieved before in history, which have greatly influenced the way people work and live. The dotcom boom, technological innovations (personal computing, entertainment), invention of the smartphone, emergence of digital as a platform and the advent of social media are some of the groundbreaking events that have taken place in a short span of time. They have significantly impacted how organisations work and how business are conducted globally.
An overarching consequence of these events has been the explosion and democratization of information. Combined with the accelerated pace of technology-driven globalisation, information has led to the creation of a flatter, seamless and fluid global economy.
We have also witnessed the rapid rise of emerging economies like China and India resulting in a shift in global economic power.
All of these changes have significantly impacted the role of leadership in modern organizations. Modern leaders now have the challenging task of guiding their organisations through a complex and continually shifting global economic landscape. The impact of these strategic forces are felt not only at a country level, but filtered down to industries, markets, segments and individual products and brands. Effective leadership in these modern times requires a proactive approach towards managing change and its impact on long-term organizational growth.
A good example of a company that was eliminated from the marketplace due to its leadership’s inability to effectively manage disruption and change was Kodak. Kodak was at one time the world’s biggest film company. However, its leadership team failed to fully embrace the revolutionary transition from film to digital as it was afraid that digital may cannibalize its film business, which was its core business. Kodak was eventually put out of business and had to exit the market in many of its product streams due to the dramatic drop in demand for film printing during and after the digital revolution. Blockbuster, Pets.com and Nokia are other examples whose demise were linked to their inability to understand the misalignment of their products with how the markets were evolving.
This article will provide insights into some of the challenges that leadership in the 21st century faces, and the qualities that leadership will need to possess in order to effectively tackle these challenges.
Leadership is a trait in an individual that enables him or her to influence the behaviour of others to achieve a goal or to get them to do things they would not otherwise have the skills or motivation to do. As individuals our needs, motivations and definitions of satisfaction have gone through a significant change in recent times. The continuously evolving global business environment has impacted both our personal and professional lives profoundly. In such uncertain times, leadership matters even more. The challenges faced by leaders in the 21st century include:
Geopolitical volatility: Geopolitical factors can cause sudden but destructive damage to organizations. Unstable geopolitical environments can chase away capital investments and drain financial assets. High geopolitical volatility could also lead to stricter government regulations in local markets, which makes it more costly for organizations to conduct business in certain geographies. Geopolitical risks have increasingly become a significant challenge for leadership teams as most of the components remain outside their control (e.g. governments, regulations, environment, trade, labour markets etc.).
Technological disruptions: The 21st century has been characterised by technological disruption, with futurologists and trend experts saying, “disruption is a norm today”. Technological disruption has impacted organizations in all industries and sectors, starting from healthcare to manufacturing to computing. Data mining firms are building databases of human DNA to evolve the science of personal identification, 3D printers are being used to print building equipment, everyday products, entire houses and artificial human organs, and the combination of cloud computing and artificial intelligence has magnified the scope of data-driven decision making.
These are only a few examples of how technology has disrupted the norm in the 21st century. Linked to these technological disruptions is the emergence of entrepreneurship and startups. Startups are nimble, agile and have the ability to significantly disrupt business models through new ways of creating and selling products. All these changes have significant impact on the business and operating models of organizations and the way consumers need to be served in today’s and tomorrow’s markets.
Economic and political uncertainty: When organizations filter down geopolitical risks at an individual country level, they have to deal with economic and political uncertainty. Any organization (regardless of size) prefers to operate in stable economic and political environments. Country environments characterised by frequent labour strikes, social unrest and chaos can have severe detrimental impact on revenues, profits and investments.
In the 21st century, managing economic and political uncertainty has become a critical leadership challenge. As organizations increasingly look at expanding quicker and startups look at scaling up faster, economic and political uncertainty needs to be accounted for in any form of growth strategy.
Shifting demographics: There have been major demographic changes occurring on a global scale, which include changing family structures (increase of dual-income and single-parent families), ageing population (requiring more health and welfare services) and increase in labour diversity. These shift in demographic makeups mean that the demand for a company’s products and services is subjected to continuous fluctuations. It also means that there is a constant pressure on a company’s portfolio of products to remain relevant. For leadership teams, this is a challenge in terms of creating forecasts for growth or for mapping out a sustainable growth strategy.
The above-mentioned challenges warrant next generation leadership to take a different approach in the 21st century when it comes to managing and growing their organizations. Here are some implications for boardrooms to consider while creating their leadership strategies in the 21st century:
Having a balanced short-term and long-term lens: Organizations are always under constant pressure to showcase short-term business wins over long-term strategies. The need to report quarterly earnings and profits to appease shareholders and financial analysts require organisations to adopt a short-term lens. But long-term strategies, which require commitment of organizational resources and deep thinking, are critical for success in today’s times. This constant tug-of-war between short-term and long-term objectives creates uncertainty and increases risk when it comes to capital expenditure and resource allocation decisions.
Leadership in the 21st century requires achieving a strategic balance between short-term and long-term business objectives. Achieving this balance is critical to counteract forces that have mid and long-term impact (e.g. geopolitical factors) and those with short-term ones (e.g. labour strike, civic unrest, competitor copycat behaviour etc.). Leaders in the 21st century will need to strike a balance between satisfying stakeholders’ expectations via short-term gains and long-term priorities that would grow and strengthen the company’s brand.
Resilience: Resilience is going to be a cornerstone of leadership success in boardrooms in the 21st century. The characteristic of today’s time requires resilience on all fronts. Rapidly changing consumer demand patterns, ever increasing pace of technology-induced disruption, increasing fragmentation of markets, rapid shift of economic growth potential, increasingly fluid labour markets and low cost of entry into any market are factors that require resilience to manage. On the top of it there are continuous distractions in the form of fads, trends, proliferation of digital platforms and selling channels.
To be able to deliver on both short-term and long-term organisational objectives, leadership teams need to be focused on core components of strategy and relentlessly deliver against them. This requires them to be resilient in the face of negative forces, which in all likelihood will be present in some form or the other.
Having a horizontal and vertical outlook: Horizontal leadership refers to rallying teams and generating motivation to support and achieve a common goal, whereas vertical leadership is the direct opposite – to command teams under one’s control in a top-down, military-style fashion. Effective leadership lies somewhere in between these two opposite leadership styles. In today’s world, leadership styles are defined by organisational structures, cultural diversity of work forces, global presence, command-and-control structures and the role-played by local entities. As the world becomes flatter and more connected, effective leadership styles now tend to gravitate towards giving more ownership and responsibilities to teams.
In a world of collaboration, communities and networks, leadership teams need to listen deeply, encourage sharing of information and viewpoints and foster an environment of trust. The vertical leadership style also has a role to play but in a different form – having the ability to take decisions in ambiguous environments, helping teams manage conflicts, acting as a guide in uncertain times or leading with conviction, courage and empathy.
Global perspectives and local insights: We now live in a world that is increasingly globalized but awakening to nationalistic pride. A top-level assessment of company operating models will reveal the fact that local country entities have a stronger role to play when it comes to global organizations. Startups with highly disruptive ideas also start at a country level before they scale up globally. Not only is this true for the workforce but also for consumers (who at the end of the day are two sides of the same coin).
Consequently, when it comes to leadership, it is imperative to balance global perspectives with local nuances. The impact of effective leadership can only be sustained when it influences at an individual level. It is now common practice for incoming CEOs to travel around the world and meet teams in all the local market entities. The former CEO of L’Oréal, Sir Lindsay Owen-Jones, spent a significant proportion of his business time traveling the world and meeting with the L’Oréal organizations, consumers across cultures, and multiple stakeholders.
This is just one of the many elements of balancing a global perspective with local insights. As organizations become flatter and the role of local entities become stronger, it is important for boardrooms to appoint leaders who can influence and lead across multiple geographies and cultures. Having a visible face is not enough. The ability to connect with employees across the organization, both globally and locally, is going to be a defining factor of successful leadership in the 21st century.
Strong strategic compass: The 21st century requires leaders and executive teams to have a strong strategic compass. Great leaders need to have strong self-awareness, need to be passionate visionaries, should have great clarity of purpose and should have a clear sense of direction while leading their teams. Last but not the least, their personal vision should be in complete alignment with that of the organization’s. However, a leader’s operational strategy should remain fluid in today’s uncertain times. Although it is critical to progress towards achieving long-term organisational goals, a leader should be open to considering and adopting multiple paths towards these goals. Like a compass that always points towards the North, leaders should be relentless even in the face of extreme disruption and chaos.
The traditional viewpoint of corporate leaders being viewed as figureheads, chiefs and commanders is rapidly losing its importance. The traits commonly associated with these positions, charisma and vision, are still important in leadership positions, but they are in itself not enough. To be successful in today’s dynamic business landscape, leaders need to be able to shift between their multiple roles with ease. At one point they might need to act as commander-in-chief of their organisations, while at another point they might need to act as mentors to a high performance team or an individual. It is all about leadership versatility and being able to lead effectively across generations, cultures, mindsets and differing sets of motivations.
Some critical success factors for 21st century business leaders include:
Purpose: Having a purpose is important but it is critical to have an inspirational one. Leaders need to have a personal purpose (“what I want this organization to achieve”) but it should be aligned with that of the organizations’ (“what this organization stands for”). Both companies and its leadership teams should have a clear purpose that goes beyond annual revenue and profitability targets. An unwavering focus, a clear vision and true belief in the purpose means that leaders need to walk-the-walk, not just talk-the-talk. Leaders who do not practice what they preach are abandoned very quickly. The same happens to leaders who do not lead with clarity and focus. The 21st century requires all of these to be essential traits of leadership.
Resilience: As mentioned before as a key implication, resilience is also going to be a much sought after trait amongst leaders in today’s times. Resilient leaders see failures as temporary setbacks and opportunities to learn from. They also have a strong character and positive attitude during periods of turbulence. When faced with uncertainty, a resilient leader finds ways to constantly move forward and stay ahead of the curve. To demonstrate resilience, leaders need to communicate frequently and with intent, be bold while taking long-term strategic bets, and champion a constantly improving mindset in the organization.
Networks: Many leaders underestimate the power of networks both inside and outside their organizations. Some benefits of tapping into and leveraging networks include:
Long-term lens: Leaders in the 21st century will need to focus more on long-term strategy than short-term tactics and also have the ability to think and plan ahead instead of getting bogged down by details. They will need to have a futuristic vision in order to lead the way towards strategic execution. One way that leaders can do this is to identify internal stakeholders, investors and shareholders that share similar long-term values, and then work relentlessly in partnership with them.
In 2016, S&P Dow Jones Indices launched its Long-Term Value Creation Global Index, which helps investors in bench-marking companies that have potential for long-term value creation. Another way to focus on the long-term is to clearly communicate the objectives; road map and implementation plan internally and externally.
Adaptability and Agility: Great leaders are said to possess a heightened ability to think outside the box. Instead of continually reinventing the wheel, they learn to do new and unexpected things with the tools already at hand, while encouraging others to do the same. Leaders in the 21st century need to be able to continuously innovate and manage disruptions effectively. To do this, they need to remember that everyone has something to offer and cultivate a culture where every employee feels comfortable to suggest ideas and propose solutions. This will go a long way in creating an adaptive and agile organization that is well equipped to face disruption.
Culture orientation: Last but definitely not the least, leaders should never take their people for granted. Employees across all levels of the organization need to be constantly invested in through skills training, coaching and welfare. Studies have shown that millennials are forming an increasingly larger pie of the workforce today (about one-third of the global workforce) and they want more flexibility and control over their lives and careers, while still be on track for career progression. Leaders need to understand these large-scale shifts in attitudes towards work and the workplace, but still remain driven by a set of consistent values to strengthen the brand equity and organizational culture. If leaders do not prioritize people, their organizations will suffer from constant churn, stymied progress and a dilution of the organization’s vision.
The late professor Peter Drucker once said, “Wherever you see a successful business, someone once made a courageous decision”. Leadership in the 21st century will be a combination of multiple courageous decisions. Although it is more challenging, the impact of positive leadership will also be very high during these times. Some of the headwinds that global business is facing currently are the strongest ever in the history of the world economy (followed closely by the two Wars). To effectively navigate an organization through such headwinds, it needs leaders with courage, conviction, strong mental resolve, unwavering focus and a strong sense of purpose.
But we also need to keep in mind the fact that a leader cannot achieve anything alone. This is more relevant now than it was before. To achieve critical organizational objectives, a leader needs to have an open mind, should be open to collaboration, have the ability to align differing viewpoints and should have the charisma to lead teams with differing motivations and needs.
Although it seems that leadership in the 21st century is highly challenging, it can be highly rewarding when done right. Whether it is an individual or a leadership team, the characteristics of effective leadership are applicable to both. The individual human traits of leadership are the pillars of this effective leadership model. Organizations need to constantly identify leaders with such traits or they need to train their existing leadership teams to acquire these traits.
Are you imbibing your organizational leadership teams with these critical success factors? What challenges are you facing and how do you plan to overcome them?
This article is part of the Martin Roll Leadership Series. Read the other related articles:
Part 1: Are You A Leader? 10 Questions To Understand The Essence Of Leadership
Part 2: Versatility Is The Key To Effective Leadership
Part 3: Leading Effectively Across Generations
Part 4: Ten Ways to Become A Great Mentor
Part 5: Next Generation Leadership: How To Enhance Performance
About the author: Martin Roll – Business & Brand Strategist
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