I was mulling over a clarion call on social media for a transformational shift in current attitudes and behaviors in the marketplace. Serious organizations like The Business Round Table with a membership of who’s who in the American business, Just Capital, a non-profit group of business, academic and social luminaries, and the Blackstone Group, an institutional investor are urging everyone to pay attention to the changing tide. According to them, the status quo will not support continued growth without rethinking the American business’s whys as the wealth gap between the rich and the rest of the people has become too wide, and cannot be sustained without serious repercussions. As such, they have formally redefined and signed off on a new definition of the purpose of business because general environmental changes are impacting the sustainability and stability of the markets.
The new definition, which 181 members signed off on, changes the mission and operation of their enterprises. The sheer magnitude of change made me wonder about the type of leadership we would need in future?
Which model of leadership would we need going forward?
I remembered a long ago interview with a hiring manager of a well-known player in the healthcare field. I was being considered to lead a small staff to evaluate the competitive position and provide insights to support the strategy development.
“How would you define leadership within your company?” I asked.
“What do you mean?” asked the SVP who was interviewing.
“I mean in terms of culture. Is it like a conductor conducting a philharmonic orchestra?” I asked, remembering a movie of Zubin Mehta conducting an orchestra from a previous employer’s leadership training.
“Well, it is more like a coach in the sports team.” She said.
The difference in my mind was clear; a conductor pulls together a team of various top-notch talents to create beautiful music together, directing each group of players, individually and together as needed. The team’s key objective is to create harmonic sound. Players pay particular attention to their instruments while following the directions from the conductor. However competitive they may be as individual players, the team’s integrity matters most at the time of performance. There is no room for imperfection, so there is no finger-pointing sub-culture. The onus is on the director.
In the Sports culture, the onus is on the individual players to assess the opponents’ moves and react with agility. Fumbles and mistakes are likely, but lead to finger-pointing despite the team spirit.
The coach’s role is to train each player on the game rules and motivate to draw out the best in them by observing the individual players’ strengths and weaknesses and guiding them to play with a single-minded purpose; to win for the team.
These two leadership styles have been practiced over the last forty-plus years, namely, Command Control and Communication marked by rigor from the top-down, and the other, a more flexible yet highly collaborative team-based approach. The scramble for innovative alternative approaches is because currently the leadership’s focuses only on the investors. The new scope has to include the customers, workers, suppliers, and the community. Dubbed as the Stakeholder’s capitalism, it is gaining acceptance in principle.
The devastating economic impact of COVID-19 has compelled deep soul searching as we face the uncertainties. We must leverage this opportunity to correct and achieve a better balance by scrutinizing our core values and purpose. And our recent political history has made it abundantly clear that we now need the leadership that unites various stakeholders in the economy and keeps Democracy and Capitalism alive. For 40 plus years, we have adopted short-term thinking as if we are permanently in existential crises. As a country and a society, we have been reacting to problems rather than setting up thoughtful policies and processes with an eye on the long-term consequences.
And our single-minded pursuit of increasing the value for only one class of stakeholder has created a class-divide so vast that historically, it has led to class warfare against the elites, sometimes even with bloody revolutions. The widening gap in wealth distribution favoring the top 1% and the income disparity among workers creates an urgency to rethink the entire approach toward long-term sustainability.
We Are on The Cusp of a Cultural Shift.
The Pandemic of 2020 was a catastrophic event, and the effect is nothing short of a tectonic shift. Life and work for most of us are in turmoil, creating huge uncertainties, leaving our leaders wondering if we must dial back the past’s indulgent behaviors
The shift is noticeable in our lexicon. Some words are now making a comeback, like community, local, inclusion, diversity, compassion, relationship, cooperation, trust, which had virtually disappeared from our social context over the last few decades. These words now replace the common words in usage like (being) number one, competition, elitism, celebrity culture, too busy, 24/7, stress, road warriors, and wars and othering- as in gender inequality, discrimination, systemic racism, and implicit bias. This cultural transformation is a result of our search for innovative approaches toward a more just society.
Why the Transformational Shift?
Threats to our fundamental forms of governance whether in federal, state, or local governments and the judicial systems have opened our eyes. More than ever it is apparent now that Wall Street and Main Street have interdependence. The consumer market must remain robust to sustain a healthy stock market. Diminishing incomes and expectation cannot fuel the economy that has consumerism at its core spurring growth.
Another major factor responsible for this shift is the millennials’ dominance as the largest demographic group by 2025. Their values are far different from the Boomers, their predecessors, and are setting the new culture’s tone. They do not aspire to high titles, huge paychecks, and ladder climbing or mansions. They embrace a lattice type of aspirational structure, allowing them to seek happiness wherever they can find it. Millennials are mobile, prone to quickly change jobs and companies to seek job satisfaction, and work in places that match their core values. Their loyalty is vital in managing organizational robustness and prevent brain drain and talent poaching in the future.
Their significant and intense activism as consumers and investors have led to mass boycotting the companies and their products if they perceive the firms as not supporting a fair and just society, and ignoring the more critical environmental, social, and governance (ESG) issues. These activists want evidence-based corporate citizenship with corporate social responsibility programs.
The leadership will have to show greater sensitivity to the ESG issues beyond lip service by ensuring that their leaders eschew investment in companies and activities that harm the geopolitical and social equilibrium. And their business processes including their supply chain are mindful of promoting the environmental balance. The proverbial, “You are known by the company you keep” applies to the supply chain vendors and contractors as well.
The leadership is now seriously focusing on diversity, equity, and inclusion (DEI) as the guiding principles to right the wrongs of a system that created the structural imbalance in society. A profound shift is taking place to minimize the glaring and widening gap between the ‘haves and the have-nots’ away from elitism to a more equitable distribution of wealth.
The new vision ensures that society’s needs are being met for all instead of concentrating wealth in the hands of a few. The newly charted course aims to empower all stakeholders, not just the investors. Thus we will see considerable shifts in companies’ policies and operational practices, filtering down to the worker level. It would require fundamental changes in the organizational culture and employee behaviors.
To execute this new vision successfully, the leadership would have to be a participatory, “Walk the talk” model. This type of leadership is doing what needs to be done with or without the formal titles. It may be democratic style, servant leadership or even coaching style or some hybrid version. Employers will need to embrace the new culture to prevent a revolving door predicament.
The Big Shift
| From | To |
|---|---|
| A hard-driving, harsh culture based on the survival of the fittest concept | A culture valuing the soft skills, emotional intelligence, aiming at fair play |
| Competitive, winner takes all mindset. | Interdependence- We don’t win if any of us fails |
| Top mission-Increase shareholder’s value to increase their assets | Top Mission-increase all stakeholders’ value for equitable distribution of wealth |
| Command Control and Communication leadership | Collaborative, we are all in this together leadership. |
| Exclusive, based on a sense of entitlement | Inclusive based on talent and indigenous abilities |
| Access to opportunities based on pre-judging the stereotypes | Access to opportunities based on evidence-based judgment on individual’s character and performance |
| Measured on productivity | Measured on the satisfaction of all stakeholders |
| Embracing stress as a stimulating factor | Embracing contentment as a factor |
| Celebrity by achievement in private enterprise, measured by the individual wealth, titles, and salaries | Celebrity by achievement in social enterprises uplifting communities and solving some major problems |
Challenges
Philosophical changes aside, changing profoundly entrenched business practices is like moving mountains. It will take a buy-in, a consensus, and commitment from all to adhere to the new business culture and practices.
There are significant challenges ahead; how will the leaders shift the investors’ mindset from entitlement? And shift employees’ mindset to operate in the new corporate culture while also making adjustments to the physical office/work locations?
The pandemic year helped usher in the significant shift, as forced lockdown made working from home necessary. Quick adoption of technologies allowed distributed control to work anywhere, surprisingly resulting in high productivity. But once the pandemic is behind us, will we go back to offices, picking up from where we left, repeating the same behavior, and reverting to the same mindset?
How will the advanced office technology and the Internet eventually facilitate the traditional versus hybrid satellite offices’ and work anywhere concept? And how will employers manage workflow and processes smoothly across far-flung co-workers and managers? How will the employers reconfigure salaries and benefits? How will they handle security aspects and the employees’ loyalty without seeming to police them via technology?
The jury is out on many issues as things are still in flux. But one thing is sure; the trust element will be truly tested, as will the ethics between employers, employees, and co-workers. However, the biggest challenge will be to wean away from the mindset programmed for uber-competitiveness to more cooperation and inclusion.
Already skeptics within the boardrooms and c-suites wonder about the institutional and individual investors’ reactions. They question if all the talk is just “greenwashing” to make the companies appear environment-conscious or “CEO Virtue signaling” rather than the influx of genuinely profound changes.
The time to implement has only a short window because if it goes for too long, human nature of sliding back into the old and familiar habits will come into play.
Leaders would have to set an example by modeling their behavior because employees, like children, act like parents; they don’t do what they are told but do what the leaders do.
Only time will tell!