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May 3, 2016

CHANGE TO BE SUCCESSFUL REQUIRES A NEW TYPE OF LEADERSHIP

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It is common to read in newspapers, business magazines and books that the pace of change has significantly increased, that organisations operate in an V.U.C.A. world, that companies have to develop a change capability in order to thrive. However, if we look at the strategy making process of most organisations it still reflects the one that is much more suitable for a more stable business environment:  executives tend to form their opinions on business and organisational challenges based on a substantial amount of data and analysis. Strategic plans are then formulated for a time span of 3 to 5 years. Lots of the decision and forecasts are based on in depth analysis of past experience and performance.

 

 

There are several problems with this approach:

a) due to the fast pace of change it can happen that the plans are superseded by the events even before they have been implemented. In 5 years a whole entire industry can be turned upside down.

b) the average tenure of an executive is three years due to the swift decision of replacing them due to their lack of ability to achieve business goals. This leads to the impossibility of most leaders to actually implement their plans and to being replaced by another executive that, in order to make his/her mark, will make different strategic plans as the previous ones were apparently ineffective.

c) Senior managers tend to be risk averse as the stakes are high: a mistake and they are out. However, companies need to innovate to thrive and innovation is risky as not all the initiatives/ideas are successful. Therefore, on one side executives feel the pressure to be extra careful before making a decision, and on the other the market requires swift decision and innovation to remain competitive. But, in most organisations, if the senior management makes a mistake they risk of being out of the job.

 

Whilst the reference for the linear thinking process of the majority of senior managers is not surprising due to their education (b-school style), in most cases their approach is not conductive to successful change initiatives. Organisations need a new type of leader. In fact, there is a dichotomy between most executives’ mindset (risk averse, linear models of planning and executing strategy) and what it is required today for an organisation to be successful (consistent innovation, flexibility, long term vision).

What organisations need today in order to thrive is an adaptive leader: someone that is not afraid to innovate, experiment and potentially “fail”, someone that is well versed with what happens in other industries and competitors, that can take decisions even in the absence of past predictors. Of course, in order to be able to nurture this type of leadership also the company culture has to support innovation and this new type of leadership.

Hiring an adaptive leader in a hierarchical organisation where decisions are taken based on data analysis linked to past experience, where innovation is considered too risky and dangerous and where monolithic and silo organisational structure prevails is not conductive to a successful hire. Organisations have to look at leadership in a holistic way and determine what changes have to be implemented in its culture in order to make the capability and cultural shift that supports (and does not hinder) adaptive leadership and ultimately their own ability to change successfully.

 

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