leadership for unprecedented times (white paper)

www.impactinternational.com

© Impact International 2011

Impact International is a global leader in sustainable business transformation and leadership development. We operate in 50 countries worldwide from offices in the USA, UK, Europe, and Asia Pacific.

LEADERSHIP IN UNPRECEDENTED TIMES WHITEPAPER

LEADERSHIP FOR UNPRECEDENTED TIMES



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EXECUTIVE SUMMARY Innovative leadership through curiosity, exploration and experimentation will unearth exciting new sources of competitive advantage. By exploring the opportunities posed by some of our biggest world issues, organizations will identify sources of competitive advantage and at the same time tap into a significant source of talent attraction & engagement - which in its own right is a source of competitive advantage. We are in challenging times. What kind of leadership is required to navigate organizations through uncharted waters? In this whitepaper, Impact International looks at the challenges and opportunities facing leaders of organizations of all sizes, including why we all need to be more aware of global issues, the importance of engagement and innovation and how there may be some not-so-obvious sources of competitive advantage that are both groundbreaking and exciting. Impact serves as leadership consultants to some of the world’s most reputable brands - in some cases we have worked in partnership with them for over twenty years. Despite our small size (200 professionals delivering in 50 countries and speaking 30 languages), as a global consultancy we tend to get more involved than most small businesses in global issues, evidenced by our being a signatory to the UN Global Compact and a charter member of the Business Call to Action. At the World Business Summit for Climate Change in Copenhagen, UN Secretary General Ban Ki-moon commented: “Climate change is the ultimate balance sheet of the 21st century. Any business who doesn’t have a strategy in place will be history.” Nobel Peace Prize winner Al Gore, who opened this conference, added: “Every business has a leadership role to play. The clock is ticking and Mother Nature doesn’t do bail outs!” In an article in The Economist entitled “The World in 2010” US business editor Matthew Bishop states that successful organizations in the new business environment will take a keen focus on looking at emerging issues and mandates. To do that they will need to be especially proactive in three areas:

Innovation Emerging economies Social and environmental issues

On the third he adds: “There will be a growing emphasis on good corporate citizenship, especially on strategies that aim to ‘do well by doing good’ as firms attempt to convince the public of their newfound long-term focus by demonstrating that their activities are not just about making money but are also building a better world.” Muhammad Yunus, founder of the Grameen Bank and winner of the Nobel Peace Prize, has a mission to “put poverty in a museum” and has a noble if not rather ambitious intent to eradicate world poverty by 2030. Already his innovative microfinance model has created wealth in some of the poorest regions of the world and was the basis for his winning the Nobel Prize. Perhaps even more impressive is his leadership vision that has resulted in the creation of groundbreaking partnerships with business organizations such as Danone, Adidas and BASF. The creation of “Social Businesses,” which exist to achieve something other than profit and a financial return for shareholders, could easily be dismissed as nothing more than do-gooder philanthropy but it would be foolish to ignore the notable business success of Grameen-Danone. In this Yunus-led initiative, 95% of shareholders were happy to invest money in the project; it had a profound motivational effect on the engagement of employees at Danone (over a thousand have invested their own money in it); and the strong ethical stance demonstrated by this project reinforcing Danone’s corporate mission has led to 25% of all graduates in France identifying Danone as the company they would most like to work for! It’s clear that successful leaders in organizations moving forward need to be able to look a lot further than just over the garden fence. We are in an increasingly interconnected Global Village and even small businesses need to pay attention to more global aspects such as their supply chain and corporate reputation. The Danish magazine Monday Morning alerts us rather alarmingly to an interconnected series of world crises. We are all aware of the current global financial crisis. Of equal concern, albeit to varying degrees, we share increasing concerns over energy, water, security, food and poverty as well as the climate issue already discussed. Yet Monday Morning remains positive because they suggest that from this adversity comes great opportunity: “The difference between a risk and an opportunity is how quickly you recognize it and what you choose to do about it.”




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And so what of leadership? We would like to focus on a particular zone where forward-looking organizations with the courage to act and the right leadership to guide them through can flourish. Jonathan Porritt has a simple model of sustainable development where business sits clearly as part of society and the environment and not as a separate entity. With this reality comes great responsibility but also great opportunity. This opportunity is what we would describe as operating as a “Sustainable Enterprise,” an organization that embraces this notion and recognizes the interplay of these three aspects.

An organization can choose different ways to react to socio-environmental issues. It can ignore them, as they are nothing to do with us - “Let governments sort them out!” They can see them as a responsibility - “Our moral compass says we should do something and it also might make us look better.” So much CSR (corporate social responsibility) operates at this level and as Business in the Community would describe it is “bolted on” rather than “built in.” Slightly more strategic is to recognize the real risk that these issues pose to your organization, so action has to be taken. But in all these cases it is still at alevelofcompliance and adaptation.

We think the really exciting zone for leaders to operate is where these challenges are seen as opportunities and ideally where they are genuinely integrated into the core of the business both in terms of organizational values and daily behaviors. This is then entering groundbreaking territory with exciting new thinking. As our new low-carbon landscape takes shape it is likely that entrepreneurial, pioneering organizations will be better placed to take advantage in these new territories. This innovative leadership through curiosity, exploration and experimentation will unearth exciting new sources of competitive advantage. By exploring the opportunities posed by some of our biggest world issues organizations will identify sources of competitive advantage and at the same time, as the likes of Danone have discovered, tap into a significant source of talent attraction and engagement, which in its own right is a source of competitive advantage.




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Organizations that embrace social and environmental issues are likely to find that this has a powerful positive impact on their employees. Many people who may be engaged in mundane work by day go home and do extraordinary things in their own lives through charities and community groups. By integrating these issues into core values, they may well find a powerful values match, which if carried out in a genuine and authentic fashion, produces increased levels of trust and loyalty. This attracts and retains talent, adds value and reduces cost. If a focus on driving innovation is added to the mix (fostered by consultation and well-designed involvement) the levels of engagement are likely to increase significantly – creating still more competitive advantage.

This will take courage and a willingness to challenge the status quo. Leaders must recognize the need to act and have the courage to take action and see it through. In our view, leadership action needs to provide three core elements:

The Copenhagen call to action then is no longer a “climate issue” - it is a global leadership issue. It will bring change that will affect organizations of all sizes - to what depth will depend on the level of combined courage of our political and business leaders working in partnership. What are the implications for leadership development? Leaders in organizations have always had to be self aware, conscious of their effect on others and of their ability to influence their own organization. We believe that successful organizational leadership in the future must include a sound understanding of global issues. Leaders will need even higher levels of emotional intelligence; be consultative and inclusive; and take a more holistic view to their organization’s position in the greater scheme of things.




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The qualities of leadership we think will be in most demand to create competitive advantage in this new landscape are:

The curiosity to look for new opportunities The ability to engage people at an emotional

level The creativity and discipline to innovate The foresight to create exciting, cross-discipline

partnerships The courage to lead groundbreaking change

The better organizations will be the ones who grasp these realities as an opportunity to innovate products and services to their advantage. This will call for innovative leadership. The best organizations will integrate all aspects of social and environmental issues into their core business. In so doing, they will open up opportunities to engage the hearts and minds of their customers, employees and shareholders. This engagement will increase brand equity through trust and commitment that in turn creates the possibility of greater business success. This will be achieved through courageous leadership. There isn’t time to wait - as Martin Luther King said: “Procrastination is the thief of time.... the time for action is now.”

Impact International Impact International is a global leadership development consultancy based in New York. Impact is widely regarded as a leader in custom-designed experiential learning solutions for development of leaders and key talent. We are especially known for the way we create custom learning architectures, leveraging real live business issues of strategic importance to the organization as the vehicle for development. Impact has been recognized as a Top 20 Leadership Training Company (TrainingIndustry, 2011). All rights reserved – this whitepaper may not be reproduced in whole or in part, without the express written consent of Impact International. For more information please contact: Ted Gemmell SVP – Global Client Solutions Impact International One Columbus Place, Suite S30C New York, NY 10019 +1 212 586 9005 [email protected] www.impactinternational.com/americas