11 Sep Précis of Leadership 2030

Massive global forces will radically reshape the way we do business in the future, as well as the way we lead people and organisations. Based on research conducted by Hay Group, a global management consultancy, and Z_punkt, an international leader in strategic foresight analysis, Leadership 2030 pinpoints six converging mega-trends driving global change at the moment, and provides direction for leaders on how to lead their organisation through this profound change.

The six mega-trends are:

1. Globalisation 2.0

A new economic world order is emerging. Power is shifting from the developed western nations to fast-developing markets in Asia (China in particular). This will result in numerous opportunities and threats from highly localised market dynamics as a new middle class materialises in emerging markets. The East will progress from just being the workplace of the West, to the point where goods, people and capital are flowing in both directions. As the traditional trade patterns of the world are disrupted, and economic power shifts eastward, trade between emerging markets will flourish, and organisations will need to think differently about their marketing strategies in this new world order.

The emergence of the new middle class in developing countries will increase consumer demands. No longer will a single, centralised strategy and operating model be adequate for multinational organisations. Instead, Globalisation 2.0 will demand a complexity of thinking that few organisations or leaders have encountered. Organisations will also need to be more adaptable and encourage diversity of thought in order to enhance their contextual awareness of its new markets.

2. Environmental Crisis

Climate change is real and almost irreversible. Global warming as a result of economic activity has caused extreme weather events around the world, leading to death, displacement and considerable economic damage.

Critical natural resources are being depleted while global consumptions of unrenewable resources is rising, especially due to millions of consumers worldwide joining the middle class. Oil supply is decreasing as energy consumption increases, water shortages are becoming increasingly drastic and rare earth minerals are becoming scarcer, more expensive and more difficult to reach. These factors will drastically reduce margins for organisations and may even cause global recession, famine and turmoil. The environmental impact and carbon footprint of an organisation will no longer relate to its social responsibility, but will form part of the bottom line. In the face of accelerating cost and social and market pressures, leaders will need to fundamentally rethink their operations if they are to continue to compete.

3. Individualisation and value pluralism

The world is not only globalising, it is also individualising and people around the world are taking advantage of a wider range of life choices than ever before. As societies industrialise and their citizens become wealthier, everyday becomes increasingly governed by more individualised choices and decisions. With money in their pockets, people are freed from needing to find their next meal, to being able to improve other aspects of their lives such as indulging in emotionally fulfilling activities, seeking intellectual challenge and pursuing their aesthetic preferences.

Growing affluence in emerging markets will drive increasingly individualistic attitudes in more parts of the world. People will come to expect that their individual needs to be catered to, as both customers and employees. This will create niche opportunities for customised offering in local markets created by individualism. Individualism will also greatly diversify the demands of employees on organisations, which will require a far greater level of sensitivity, agility and a flatter structure to understand and respond to the needs of customers and employees.

4. The Digital Era

The digitisation of our lifestyles is becoming the norm. With ubiquitous Internet connectivity, the proliferation of mobile devices, and the popularity of social networking, we are always ‘on’ at home or at work, and this is eroding traditional boundaries between our personal, private and professional lives.  ‘Young, tech-savy ‘digital natives’ have increasing influence, due to the technological edge they have over older generations.

People are now able to work anywhere, anytime, fragmenting the traditional workplace and challenging the need for a central physical business location and traditional organisational hierarchies. Leaders in the digital era will need to get a grip on managing diverse, loose knit teams whose members are dispersed around the world. In order to create loyalty, leaders must foster a sense of unity, engagement and collaboration among people who rarely meet, and ensure that there is effective decision making among these groups. Openness, integrity and reputation management will be key in a transparent, virtual world, which will oblige leaders to act with sincerity and authenticity, or see their reputations plummet.

5. Demographic Change

The world’s population is expanding and aging in parallel. The global population is expanding – especially in developing and emerging markets, and rapidly aging in the industrialised world. These demographic changes are placing great pressure on social structures and western companies. National welfare systems are being stretched to breaking point due to growing populations and faltering support ratios. In addition, the ageing of western societies and China will soon start to effect these economies’ performance. The result of ageing populations is a war for talent which will intensify into the future. An ageing global population will mean a shrinking workforce, stepping up the competition for specialised skills, high performers and effective leaders. Corporations and even nations will find themselves in a global war for talent.

Successful organisations will need to develop an increasingly diverse workforce to ensure an adequate talent pipeline, which will include employing men and women of all ages and of different cultural backgrounds. Managing this diversity will be a core leadership competency.

6. Technological convergence

Technological progress is likely to transform many aspects of our lives. Advanced scientific disciplines such as nanotechnology, biotechnology, IT, cognitive science and robotics will drive major innovations in important areas such as healthcare, logistics and nutrition. The coming together of these scientific fields will make possible the greatest leaps forward, transforming industries, threatening others and creating many new product markets. R&D will become an interdisciplinary function, requiring an even higher skill base. In addition, convergence of these technologies will necessitate new levels and forms of collaboration. Diverse scientific disciplines, businesses, academia and even competitors will need to work together to pioneer research programs. All this technological advancement will lead to societies debating over the ethical boundaries of technological advancement.

Each of these individual megatrends will create tough challenges and enormous complexity for organisations and leaders, However, they do not develop in isolation. They are developing together, and as such, will greatly intensify the difficulties for business leaders. The megatrends combined will result in a set of 5 reinforcers and four significant dilemmas. The reinforcers result from and are reinforced by 2 or more megatrends in tandem. It is these reinforcers that will have the greater impact on the future of business leadership. At the same time, a series of tensions, contradictions and inconsistencies between the megatrends will present a series of dilemmas that leaders will have to face.

The 5 reinforcers are:

1. Stakeholder Proliferation

Unlike in the past when businesses only had one main stakeholder to please – shareholders – today companies need to address the demands of a complex array of stakeholders, including customers, employees, suppliers and competitors. Stakeholders are no longer limited to groups of people, abstract entities such as society, the planet, and global regulatory bodies also have become crucial considerations. Leaders must increasingly consider the impact of their decisions within this new stakeholder landscape.

2. Power Shift

Power is the ability to direct or influence the behavior of others. Conventionally business leaders have the power to influence their employees, consumers and other stakeholders which is what enables them to execute their strategies and implement their decisions. However, the megatrends will shift this power and authority away from leaders towards other stakeholders. Globalisation 2.0 will necessitate that decision-making processes include local levels. The war for talent will place the power in the hands of talented individuals and out of the hands of business leaders. ‘Digital Natives’ will have a distinct power advantage over older generations and the openness of the digital era will shift power from organisations to their consumers.

This power shift will present industry leaders will a paradox. Leaders will need greater power to be able to make and execute the big decisions needed to address the challenges and threats of the megatrend storm, yet the megatrends themselves will act to erode leaders power.

3. New Working Practices

Together the megatrends will bring about dramatic social, emotional, physical and procedural changes in work and the workplace. This will result in a new social practice of work and is a fundamental overhaul of deeply embedded working processes, routines and behaviours and of long-established expectations of the workplace and work-life balance.  This new model will consist of several elements which will combine to make work look very different for many people in 2030. The new model will include fully mobile workplaces; virtual work with new virtual tools and platforms to enable work to be done remotely; blurred boundaries between private, public and work life; and growing anticollectivism and antiauthoritarianism among the workforce. The new social practice of work will result in a paradox for leaders who will need to lead employees they never see, and who might not even think of the leaders as their leaders.

4. Cost Explosion

Rising costs are a common lament among business leaders and consumers alike. However, under the megatrend storm, costs are set to explode across the board as a result of a range of factors including the environmental crisis and the scarcity of raw materials such as oil and rare earth metals. Global warming and growing populations will threaten water supplies, increase temperatures and threaten food supplies. The talent shortage will drive up employee costs. The competitive race for innovation will drive up R&D costs. Faced with soaring costs, we may need to find different ways of living, working and doing business.

5. Ethicisation of Business

In recent years, the business world has not displayed the highest moral standards. Looking ahead, the megatrends, including climate change, the digital era, and technological convergence will demand impeccable ethics from organisations and their leaders. Consumers will expect that companies contribute to a fairer society and establish trusting relationships with customers. This calls for a high levels of integrity, authenticity and transparency.

Leadership Dilemmas caused by the Megatrends

1. Mobility

Globalisation 2.0 will mean more business done across borders, necessitating more travel. Meanwhile, the growing middle class will result in millions of people starting to travel for pleasure and leisure. However, addressing climate change will require a drastic reduction in carbon emitting travel and transport costs. Leaders will have to make tough decisions about travel and how they can function without actually meeting the people they manage and work with.

2. Resources

Growing consumer demand as a result of Globalisation 2.0 will require more intensive use of natural resources that are already in short supply. Demand for technology in particular will sour and new machines with powerful applications in healthcare, agriculture, food production and other important fields will be developed. All this adds up to a runaway demand for rare earth metals, where demand is forecast to outstrip supply globally in just a few years’ time. So how will industry continue to satisfy spiraling demand for technology in the face of dwindling supply of essential raw inputs?

3. Hierarchies

On the one hand, the megatrends will push for the need for flatter management structures where employees exert their individualism, want more responsibility, display less respect for formal authority, and insist on working remotely. On the other hand, increasingly large, diverse and global corporations will require ever increasing levels of coordination to execute operations, share ideas, deliver products to market, improve processes, drive innovation and cope with the increased complexity. How thin can hierarchies become while still exerting the necessary control? Creating lean structures that retain adequate control could prove to be a tricky balance.

4. Horizons

The environmental crisis caused by 250 years of human activity is probably the most intractable problem facing the world today. It will require complex solutions designed and implemented over long periods of time. Yet younger generations have short attention spans and are used to instant gratification. The world will need long-term thinking, painstaking analysis and thoughtful consideration to deal with its complex problems, but where, when and how will organisations find time for people to think through these issues and consider solutions?

The days of ‘Alpha-male leadership’ are over

Leader is a relational term. This means that you can’t be a leader if you do not have anyone following you. Also, contrary to generally accepted view of leadership, there is not one set of leaders and one set of followers in life. In fact, many people are both. They may be a leader in one area and a follower in another. So leadership is not only relational, it is also contextual.

An important aspect of leadership is influencing others. Broadly speaking, there are 6 ways a leader can influence people: (1) by giving commands, (2) by setting the pace, (3) by sharing the vision (4) by coaching (5) by creating harmony, and (6) by including others in decision making.

Alpha-male leaders tend to resort largely to the first two styles. This might seem natural enough to individuals who discern a clear dichotomy between leaders and followers. When alpha-males bang their fists and shout out orders, they may get results, but the approach ignores the relational, contextual and collective nature of leadership, and so typically falls short of what could be achieved. Alpha-male leadership fails to fully leverage the motivation and abilities of the team.

Life under the megatrends will demand a different understanding of leadership. Leadership 2030 will call for individuals who choose not to see themselves as heroes, as headlines, or as patrons, and who do not put their egos first. The leaders of the future will not be egocentric – they will be altrocentric

Introducing the Altrocentric leader

Altrocentric means the opposite of egocentric. The defining characteristic of altrocentric leaders is a primary focus on and concern for others rather than themselves. Altrocentric leaders do not have no ego. They are confident individuals with strong personalities. But they take their ego out of the picture, and they know how to keep it in check. They see themselves as just one integral part of the whole, realising that power stems not only from themselves, but also from others.

Competencies of the Altrocentric Leader – required for effective leadership in 2030

1. Inner Strengths

Altrocentric leaders are characterised by a number of inner strengths. This means they are emotionally stable, intellectually open, self-aware, and willing to pause and reflect on matters. They possess emotional intelligence and have the capacity to recognise their own feelings, and those of others, motivate themselves and manage their emotions.

Altrocentric leaders also possess ego maturity meaning that they accept that they cannot and should not know everything and so they are comfortable with uncertainty and ambiguity. Ego maturity is also the ability to subjugate your own emotions, motives and interests to the greater good of the group, even at personal cost. Ego-mature individuals do not panic or indulge in mood swings and sudden outbursts, and they do not crack under pressure.

Altrocentric leaders have a desire to know more and constantly challenge conventional wisdom and traditional approaches. Empathy is a precondition for altrocentric leaders and they have the ability and willingness to hear and understand the feelings of others.

2. Values

The values that leaders hold and portray to the outside world will be scrutinised in an ethicised and individualised environment. By presenting an acceptable standard of ethics and integrity, companies will be able to woo and hold on to customers and employees. Conducting yourself according to ethical standards will be a critical success factor in an ethicised, transparent climate, in which power is transferred from leaders to stakeholders.

Altrocentric leaders integrate ethical values, social responsibility, and concerns for health, safety and the environment in to their decision making. They also recognise the value of a diverse workforce in light of Globalisation 2.0 and demographic changes in the labour force. These leaders promote values that actively forge and sustain diversity in their teams and generate a collaborative climate among diverse groups of people.

3. Strategic Business Thinking

Under the megatrends, the ability to think strategically will be placed center stage. Complex thinking will be critical to steer organisations through the complexities, ambiguities and uncertainties of the megatrend era. Altrocentric leaders will need to understand the context in which their organisations sit – the global market, localised trends, external forces and the many implications of these. They must grasp the dynamics that drive their business’s relationships with its workforce, competitors, partners and regulatory authorities, and keep abreast of the broader societal, regulatory, technological and environmental issues that affect the company. Intuitively recognising the diverse and complex interests that their company must serve, altrocentric leaders take into account the interests of all stakeholders with the potential to impact the company’s ability to achieve its objectives.

4. Meaning Making

Meaning making is a highly sophisticated form of interaction that will be a key distinguishing feature of altrocentric leaders. Altruistic leaders understand the relational and contextual nature of leadership, and thus they take into account the perspectives of all involved. This enables them to construct meaning jointly with their internal stakeholders, rather than just handing it down from on high. Meaning-making is a two-way process that is co-created and promotes a shared understanding of why we are here.

Altrocentric leaders accept that they do not have all the answers and cannot make every decision alone. They are mature enough to appreciate that others might be better suited to take on some challenges or make some decisions. They are aware of the need for collaborative ventures to seize opportunities that can only be exploited collectively.

5. Execution

Execution of strategy is a primary responsibility for any business leader. But altrocentric leaders go about execution in a different way. First they create engaged, high-performing decision-making teams in which they position themselves as first among equals. Then they empower the members of their team with autonomy, within a clear framework. They create the conditions for others to act with purpose and meaning while still being held accountable. They also take the time to coach and give feedback along the way. This is

interdependent power in action and it is how altrocentric leaders make their organisations stronger, more independent and more responsive to changing conditions.

Altrocentric leadership is a concept of leadership that is more future-fit, more appropriate to cope with all of the challenges deriving from the megatrend storm. But how do we become altrocentric leaders – there is no simple recipe – it is a journey.

Developing altrocentric leaders will require considerable time, energy and investment. Leaders need to start thinking very differently now about how they will operate. They will need to think out of the ordinary if they are to stay afloat amid the megatrend storm.

by Georg Vielmetter and Yvonne Sell

Précis by Pete Laburn

Sept 2014