LEADERSHIP IN TOMORROW'S COMPANY

by Philip Sadler

Executive summary
(To obtain the full version of this publication please contact the Centre for Tomorrow's Company 19 Buckingham Street London WC2 Tel. 02079 305150)

This paper is about the kind of leadership that will inspire and enable tomorrow's company to compete successfully in tomorrow's world. It begins with defining the inclusive approach to the achievement of sustained business success which was set out in the RSA report The Nature of Tomorrow's Company

This approach has five aspects;
· A strong sense of shared purpose or mission together with a vision of the company's future, couched in other than purely financial terms.
· A set of shared values which form the basis for the actions and decisions of the company and its agents.
· A success model which identifies the real drivers of business success, together with a related, balanced set of performance measures.
· The building of relationships of mutual trust with the key stakeholders - investors, employees, customers suppliers and the community..
· The acceptance of the need to win and maintain a 'licence to operate in the context of a society increasingly demanding in terms of corporate social responsibility..'

The Nature of Leadership

Leadership as an element in social interaction is a complex activity, involving:
· a process of influence.
· actors who are both leaders and followers.
· a range of possible outcomes - most obviously the achievement of goals, but also the commitment of individuals to such goals, the enhancement of group cohesion and the reinforcement or change of organisational culture.

The leadership processes that are involved in creating the conditions for long term business success are to do with defining the organisation's purpose or mission, about creating a vision of the organisation's future, about building the kind of social structure and corporate culture which will enable that vision to become reality, and about developing and maintaining the values which guide decision making.

Management and leadership- the difference

Management is concerned with the achievement of plans through such processes as designing the organisation structure and staffing. Leadership is about aligning people - obtaining their commitment to the realisation of the vision. Management is about controlling and problem-solving, while leadership is about motivating and inspiring.

Transformational leadership

Stimulated by the intensification of global competition and the rapidity of technological change, attention since the 1980s has focused on the role of leadership in enabling organisations to undergo radical change - to transform themselves. This has led to the development of the concept of transformational leadership, defined as the process of engaging the commitment of employees to radical change in the context of shared values and a shared vision. Transformational leadership has several components:
· Clarity of vision and sense of purpose, coupled with the ability to win the trust and respect of followers.
· Concern for the needs and potential for development of people.
· Actively soliciting new ideas and new ways of doing things.
· Inspiring and motivating people, generating enthusiasm, setting an example, As interpreted by a number of students of leadership, notably Bass, transformational leadership is a function of certain qualities possessed by the leader and which are summed up in a single word - charisma. Charismatic leaders are people with a strong conviction in the essential rightness of their own convictions. They are radical, unconventional, risk taking, visionary, entrepreneurial and exemplary. There is an intense emotional attachment to them on the part of their followers which goes beyond such things as trust, respect or admiration to embrace awe, devotion and unswerving loyalty.

The myth of charisma

Other writers are strongly critical of the charisma theory. Nicoll describes it as a myth which rests on our wish for leaders to be "higher, stronger and better than we ourselves are: our saviours". This desire, he points out, places huge burdens on the leaders. The myth also implies a passive followership role for the rest of us. It causes us to underestimate the importance of the interactive aspects of leader-follower relations.

Warren Bennis points out that "our contemporary views of leadership are entwined with notions of heroism, so much so that the distinction between "leader" and "hero" often becomes blurred. In our society leadership is too often seen as an inherently individual phenomenon."

The assumption that the leader is in control and knows the answers is frequently construed as a particularly masculine notion. Rosener, for example, found women not only encouraged participation and shared power and information to a greater extent than men, they went further still, practising what she calls interactive leadership, which involves enhancing the feelings of self worth of others, believing that high levels of performance result from people feeling excited about their work and feeling good

Pascale provides us with a detailed account of organisational transformation in the Ford motor company in the 1980s and in particular examines the role of Donald Petersen.

Petersen, undoubtedly the main agent of this change, is the supreme example of the leader as "catalyst". Self-effacing, quiet, definitely not charismatic, his example challenges the validity of the idea of the leader as hero. Petersen exercised superb skill as a group facilitator, having considerable intuition and empathy, and the ability to ask penetrating questions.

Leadership in the future

Recent studies of leadership place less emphasis on individual leaders and charismatic personal qualities. The concept of the charismatic transformational leader is giving way to new views on the nature of successful leadership, particularly leadership in the context of tomorrow's world .

These new concepts include the following :
-The learning leader
-Stewardship
-Servant leadership

The learning leader

Although its title says nothing about leadership Senge's work - The Fifth Discipline - The Art and Practice of the Learning Organisation (1992) is in fact a very pertinent guide for the leaders of today and tomorrow. It is about leadership as the process of nurturing people's commitment to and capacity for learning at all levels of the organisation.

The role of the learning leader in the learning organisation has four aspects;

· A willingness not only to keep learning but also to be open about this, encouraging others to follow this example and making it clear that there is no use sitting around and waiting for 'the leader' to come up with the answers.
· The encouragement of learning by asking challenging, awkward questions, by stimulating intellectual curiosity.
· The ability to facilitate the learning of others, by acting as coach or mentor and by putting in place appropriate incentives, commissioning training and development programmes and establishing facilities such as learning resource centres.
· The fostering of a culture which is supportive of learning. The principal characteristics of such a culture include: tolerance of mistakes and avoidance of blame; absence of 'not invented here' attitudes; a high level of cross-functional and interdisciplinary integration; encouragement of active membership of professional bodies; and strong emphasis on authority based on competence and expertise rather than rank or position power. · The development of mechanisms for the transfer of learning from individuals and teams into the organisation's store of knowledge and experience.

Stewardship

Block argues the case for replacing our traditional concepts of leadership with a new concept -stewardship. Most of our theories about making changes, he asserts, are clustered around the idea of leadership and the role of the leader in achieving the transformation of organisational performance. In his view, this pervasive and almost religious belief in leaders actually slows the process of genuine transformation.

Stewardship is about "the willingness to be accountable for some larger body than ourselves - an organisation, a community". It is to do with "our choice for service over self-interest", with being "willing to be deeply accountable without choosing to control the world around us".

Servant leadership

The term servant leader was first used by Robert Greenleaf in 1970 in an essay entitled The Servant as Leader (1977), the first of a dozen essays or books on leadership which have sold more than half a million copies world-wide. Greanleaf was greatly influenced in his thinking by the novel Journey to the East by Hermane This is an account of a journey undertaken by members of a religious order, on some kind of spiritual quest. The central figure of the story is Leo, the party's servant who accompanies the group and, through his sustaining influence, helps them overcome difficulties. One day, however, Leo disappears. The group rapidly disintegrates and the quest is abandoned. The narrator decides to try and find Leo and after many years' searching, finds him,. and discovers that he was, in fact, the head and guiding spirit of the Order, recognised as a wise and great leader. Greenleaf saw this parable as conveying the central idea of his own approach to leadership - that great leaders are those who serve others.

Leading Tomorrow's Company -an inclusive approach

A picture is beginning to emerge of the kind of leadership style and approach which, in the years ahead, will make a good fit with the inclusive approach to corporate governance. It is an approach which combines the following elements:
* The inspirational and visionary qualities of transformational leadership.
* The willingness to learn, and to facilitate the learning of others, of the learning leader
* The concept of stewardship - of acting as custodian of the organisation's reputation and resources.
* The perception of leadership as service.

The foundation of an inclusive approach to leadership is the adoption of a set of values which places human relationships centre stage and which defines the purpose of the enterprise in other than purely financial or commercial terms. Inclusive leaders understand the links between the organisation and the wider socio-economic environment and in particular see organisational change in the context of social and technological change.

This deep understanding of the nature of the interdependence which exists between an organisation and its dynamic environment provides the basis for a critically important function of leadership, which is to contribute to the development of an inspiring yet achievable vision of the organisation's future. Such a vision needs to be one that meets the needs of the key stakeholders and at the same time provides the basis for a strategy to develop and maintain a competitive advantage. If the vision is to be realised the co-operation of all the stakeholders must be won. Here the key leadership task is to build strong relationships of mutual trust and respect with all the stakeholders and to strengthen the bonds which link them.

One plus five

In the work of the Centre for Tomorrow's Company this task is encapsulated in the phrase 'One plus five' 'Five' refers to the five key relationships- with employees, customers, investors, suppliers and the community and 'one' refers to the central role of leadership in providing a vision and a style of leadership which empowers people in the various stakeholder groups and enables them to focus on how to achieve, and share in, sustainable success. This leadership will need to be found not only in the organisation's management but also among employees, customers, investors, suppliers and the community.

Developing tomorrow's leaders

Leadership training programmes have some serious flaws. Many of them are more about management skills than they are about leadership, focusing on things like planning or understanding financial information .It is too easily assumed that lessons learned while performing exercises on training courses are transferable to the work situation. Also, employers make the mistake of believing that training programmes will, by themselves, develop leaders. Leadership development must start at the point of recruitment. Job experiences, rewards and organisation cultures must be combined with training to foster leadership potential and encourage the acquisition of the requisite skills and values. The whole culture of business needs to change to become more nourishing in respect of creativity and vision. The business schools, too, need to place more emphasis on the social sciences and the humanities. On-the-job experience, particularly when it involves the early assumption of real responsibility, is seen as providing the most useful learning opportunities. Mentoring and coaching are being increasingly used as developmental processes, but the effectiveness of mentoring depends critically upon the suitability of the mentor as a role model for a future senior manager and on his or her competence in the mentoring role.

A leadership development programme based on inclusive principles

1. The directors of a company first need to reach consensus as to the style of leadership and related values that they wish to see developed and which they believe will be appropriate to the future needs of the organisation.
2. The next step is to identify those with the potential to develop the ability to provide leadership in the context of tomorrow's organisation.This search should be cast much wider than the traditional elite group of 'high flyers'. An important factor to be taken into account is the individual's motivation to lead and the values upon which it is based.
3. Those selected to participate in the programme should then be given assignments which will constitute the principal means of developing them These assignments should include, wherever possible, opportunities to meet and interact with the organisation's stakeholders
4. Through out the period of time during which successive developmental assignments are carried out,, the participants in the programme should be supported in the following ways: · By being assigned to action learning groups of 4 to 6 persons, meeting perhaps quarterly, to share learning and experience. · Each participant should be allocated a mentor. · They should receive regular feedback on their progress. Feedback should be sought from stakeholder groups as well as from peers and line management · 5. External programmes should be used for skills development.