How can today’s business leaders keep up with the seismic geopolitical and economic shifts in the world?
What do these mean for their own leadership narratives?
In their newly-released book, The Leadership Lab: Understanding leadership in the 21st century, author Chris Lewis and megatrends analyst Dr. Pippa Malmgren set out to help leaders navigate these changes successfully. Covering everything from how to build a new type of leadership trust when other spheres of public power have been overturned to robots overtaking companies, this book explains not only why the old rules no longer apply, but also how to blaze a trail in this new world order and be the best leader you can be.
I recently had the opportunity to ask the authors about their new book and get their thoughts on some of the most important challenges facing leaders today.
“’What do you think?’ are the four most powerful words in a leaders armory.” -Lewis and Malmgren
There is but one skill required today that is different from previous generations. That is the willingness and ability to embrace uncertainty. Once a leader has abandoned certainty, they are on the path to excellence. The fact-based, research-led, ‘drill-down’ analytical approach that has historically been followed in the pursuit of efficiency is no longer enough. There’s nothing wrong with this, provided it is not at the expense of a ‘look-across’ big picture view. The reductionist model with one right answer at the back of the book promulgated by the infallible (often male) leader, is disappearing. This means the leader can no longer afford to predict one outcome but must now prepare for all outcomes.
“There is but one skill required today that is different from previous generations. That is the willingness and ability to embrace uncertainty.” -Lewis and Malmgren
What do Netflix, Spotify, and Google have in common? They all learn, innovate, and continuously adapt better, faster, and cheaper than traditional companies. Moreover, they use digital technology to innovate, disrupt, and grow in radical and dynamic ways. That’s how they surge ahead of traditional companies.
SURGE is a framework that provides the tools for navigating complex adaptive challenges in large corporate businesses. The digital marketplace continues to be highly disruptive to the ways that companies engage with customers, innovate, and remain relevant. The traditional approach to navigating disruptive change has been to seek out a prescriptive formula and apply it to the whole company. The journey of transforming to a digital enterprise, however, is not a process upgrade or best practice adoption problem.
In our work with large companies, what we saw as a consistent point of failure is them seeking a paint-by-numbers formula—agile process frameworks being a classic example. Despite making significant financial and organizational investments, they’re still not producing the customer experiences we expect from digital native companies like Amazon, Netflix and Google. We saw a clear need to help leaders recognize that this is a journey, not a reboot. Digital has changed the dynamics of the marketplace forever.
“Digital has changed the dynamics of the marketplace forever.” -Brad Murphy and Carol Mase
How do traditional companies versus digital native companies differ when they view impending change?
The most profound difference is that digital native companies are designed for change. Traditional companies are not. If you are Amazon or Google, one of the fundamental principles is that the space you are seeking to deliver products and services into is subject to continuous change. Therefore, the organization itself needs to be competent in enabling this change to occur. Companies can no longer accurately predict the future. They must learn to co-create products and services with their customers by evolving rapidly with them.
Contrast that with most traditional companies that have built a legacy based on a physical experience. Banks have branches, car companies have manufacturing plants, retail stores have buildings. Physical things take a long time to plan, build, and establish. As consumer preferences have increasingly shifted to adopting digital platforms, these companies have bolted on the veneer of a digital experience. Their preference is to avoid change. So you have a conflict between consumers who have gone digital and the fundamental structure of the business, which was built for a physical world.
“The ability to role shift is essential to a successful business in a digital world.” -Brad Murphy and Carol Mase
I recently spoke with Amanda about her work and her new book.
What is driving the need for fearless growth?
We all know growth is essential to a business’s health, but no matter what industry you’re in, you probably feel stress brought on by new technologies, changing customer behaviors and preferences, and new competitors that threaten your business’s ability to grow. Here are a few examples:
The food industry is investing to keep up with sometimes capricious trends in public perception regarding low-fat, low-carbohydrate, non-GMO, gluten-free, organic, alternative sweeteners and grains, and other choices.
The consumer products industry must continuously seek to find new and better ways to interact with their customers digitally. They must respond to changing consumer buying behaviors and even to consumers’ concerns about political, social, and environmental issues.
The entertainment industry is being upended, with companies that formerly were just conduits for content—like Netflix, Amazon, Google (via its YouTube subsidiary), and AT&T (via the Time Warner merger)—now creating their own original series.
The auto industry is changing gears to adapt to the way ride-sharing services, such as Lyft and Uber, are reducing people’s desire to own a car.
The banking industry is scrambling to adjust to new modes of consumer-to-consumer payment (such as Venmo) and new forms of lending and credit assessment.
The transportation and logistics industry is responding to trends in globalization, automation, and the rise of e-commerce giants like Amazon and Alibaba.
Industrial products companies are struggling with decisions about how best to deploy sensors and artificial intelligence to improve their products’ performance and reduce cost.
The energy industry is coping with low oil prices, new government regulations, and emotional consumer sentiment on both sides of the fracking, renewable energy, and coal debates.
If your business hasn’t felt the effect of massive market changes yet, it’s likely that you will soon. And if you wait until disruption occurs, it will be too late to respond effectively.
You must grow your business, but most growth initiatives entail risk of one kind or another. I often hear company leaders saying things like, “Our core business is at risk of disruption. We need to branch out into new businesses to grow, but we don’t have all the capabilities we need—they’re not in our DNA,” or, “We’re in unfamiliar terrain and aren’t sure that customer demand will materialize. There are lots of unknowns.”
To pursue growth, leaders and employees must learn to do things they have never done before, and they must grapple with new threats. All of this adds up to the fact that trying to grow a business in today’s turbulent markets is pretty scary—it’s perfectly reasonable and rational for company leaders to be worried. I developed the new rules of fearless growth to help leaders create organizations that have the courage, speed, and agility to succeed, no matter what the future brings.
“To pursue growth, leaders must grapple with new threats.” -Amanda Setili
What can companies do to grow fearlessly, even when their business environment is changing fast?
When leaders encounter risks in their business environment, the natural human response is to hunker down, tighten the controls, and defend the existing business. What is needed, however, is not tightening controls, but the opposite. You need a fearless approach to learning and adapting to market change, and that means giving up a degree of control—to employees, business partners, and customers—in order to gain control. It’s like learning to ride a bike. At first, the bike seems tipsy and unstable, but once you start going, the movement itself creates stability.
For those who don’t know your work, what is a wicked problem?
In the early seventies, Horst Rittel and Melvin Webber, two professors of design and urban planning, recognized that there are certain problems that are not amenable to resolution by traditional, accepted problem-solving techniques. They evocatively labeled these problems as “wicked” and identified ten distinguishing characteristics. Ten characteristics are difficult to remember, and over the years, I have whittled them down to just five. If a problem displays these five criteria, you can be pretty sure you are facing a wicked problem.
The first characteristic is deceptively simple and requires some thought: Is the problem one that is substantially without precedent, something that you have not encountered before?
Second, are there multiple significant stakeholders with conflicting values and priorities? You need to go beyond the traditional big three stakeholders—employees, customers and shareholders. Non-government organizations, multiple layers of government, creditors, communities in which you are located, political parties in power and out of power are all becoming more significant and demanding.
Third, are there several causes and are they interactive and tangled? For instance, the future of social media is driven by a complex brew of technology advancements in hardware and apps, changing demographics, evolving social and cultural mores, government regulations, privacy expectations, geopolitical developments, educational practices, disposable income, and economic and social mobility.
“If we don’t change direction soon, we’ll end up where we’re going.” -Irwin Corey
Fourth, there is no sure way of knowing you have the right answer. Another way of phrasing this is that there is no stopping rule—you can continue searching indefinitely for a “better” answer.
Fifth, the understanding of what the “problem” is changes depending on the “solution” being considered. In other words, the problem and the solution are interactive. For instance, entry into a country that does not permit foreign multi-brand retailers might be accomplished by creating a cash-and-carry model for small retailers or by being a minority partner with a local retailer or by entering an entirely new business employing a distinctive competency such as logistics. Each of these responses to the wicked problem of accessing the huge purchasing power of emerging economies’ populations creates a wholly different set of issues.
A note of warning may be in order. In the public policy arena, the wickedness of problems is hard to overlook. Problems such as immigration policy, violence against women, religious fundamentalism, and public education are overtly wicked. In the business world, however, the thing about wicked problems is that though they can show up anywhere, they are likely to be perceived as “tame” problems.
Wicked problems are certainly more common than most managers realize. Not recognizing that they were facing wicked problems, I believe, led to the dissolution of Westinghouse, the demise of Polaroid, and the decline of Kodak, RadioShack and Atari. Though wicked problems can occur anywhere, it is more likely than not that you will encounter wicked problems if you are a public company, operate globally, and are in a technology-driven business.
“Every threat to the status quo is an opportunity in disguise.” -Jay Samit
You talk about 3 megaforces that are challenging business. How do these trends help create wicked problems?
While there are a variety of forces and environmental factors that can create wicked problems, over the years I’ve identified three forces that are widely experienced which, in concert, are a major source of wicked problems. They are: the inevitability of globalization, the imperative of innovation, and the importance of shared value. The first two forces are well understood. Shared value, which has been brought to the attention of the managerial world by Michael Porter, is the notion that social benefit and economic value are synergistic. It also raises the issue of the appropriate sharing of value across diverse stakeholders.
The interactions of these three forces create strategic challenges that combine to create wicked problems. For instance, innovating to meet the needs of unserved, low-income customers across the world results—as the guru of disruptive innovation Clayton Christensen has affirmed—in disruptive technologies that can upend industries. Innovation also creates changes that differentially impact stakeholders, creating the likelihood of conflict between stakeholders as the organization transforms. The extreme complexity and uncertainty embodied in the global economy coupled with the conflicting priorities of multiple stakeholders creates unknowable futures. This roiling cauldron of disruptive technologies, conflicted stakeholders and unknowable futures is what spawns wicked problems.
I like to illustrate the interaction of these forces in a Venn diagram.
Three Mega-Forces and their Strategic Challenge
These three forces can interact to create wicked problems in any context. Of course, other environmental forces can also breed wicked problems, but I have chosen to focus on these three because they are so ubiquitous and powerful.
I believe there are business contexts or “industries” that will be breeding grounds for wicked problems. Health, software, information technology, fossil fuels, water, automobiles, and public transportation are prime examples. Technological innovation, drastically changing regulations, geopolitical developments, and changing notions of social responsibility make these industries particularly prone to encountering wicked problems that demand that firms develop and deploy wicked strategies.
“The human spirit is to grow strong by conflict.” -William Ellery Channing
How old I was, I don’t know. Probably around four or five years old, give or take, though my father will likely correct the number with his own memory of the same event. It was a typical hot summer day, and my family was enjoying a day at the beach. We were in Ocean City, New Jersey, to be specific. At that time, the beach seemed to stretch on forever, which I now realize was a function of my age more than the actual distance of the sand. We brought food to the beach, which was typical because there was no way my father would pay Boardwalk prices for anything.
As usual, I was in the water. Somehow I lost track of my brother, Jack, who was with me. When I pulled myself out, exhausted, I scanned the crowd, looking for someone I recognized. I started walking, dodging people, umbrellas, walking around towels, sunbathers, and family tents. After what seemed like a few hours, which likely meant twenty minutes, I realized I was completely, utterly lost.
No matter where I looked, I didn’t see a single person I recognized. I was just short of panic. It’s a feeling I can recall to this day. I had never been lost before, uncertain about what to do or where to go.
Then, I spotted my dad. Where I was stressed, he was as calm as could be. My heart rate may have been spiking, but not his. He was scanning the area, his eyes making a mechanical sweep of everything. As soon as I saw him, I felt a flood of relief as if one of the waves washed all of the worry away in an instant.
This is one of the first memories I have of my father, and one that’s fitting to remember on Father’s Day. A few years ago, I wrote about 9 Leadership Lessons from Mom. It was so popular that I was interviewed numerous times about my childhood. Today I want to turn that spotlight onto my dad and share some of that fatherly wisdom. Because that day on the beach, I had a realization: when I was lost, I wasn’t really on my own. Dad was looking for me. And he wouldn’t give up until he found me. Still to this day, when I hear a sermon about God leaving the flock of sheep to look for a single lost lamb (Matthew 18:12), I think of my own dad doing that very thing.
1. Leaders never stop learning.
My dad loves to learn. His degrees range from electrical engineering to operations research (and many others). He went to seminary and then got an MBA. Even now, he is finishing a doctorate in business. My siblings know that our family was able to “Google” something long before the search engine was even formed. We simply found Dad, inputted the question, and out would come the answer. When the internet first started, I would often find he was faster. And, when we took a family trip, we would have to stop and read every plaque and see more historical sites than anyone else I knew.
Leaders have an insatiable curiosity. The more you learn to ask questions, the more you will learn information that may change the future.
“Leaders have insatiable curiosity.” -Skip Prichard
When my wife and I were first married, we moved quite a bit. Guess who helped us move? Painted? Took down or put up wallpaper? How about fixing the leaky sinks? Inspecting the house? You’d think he was a contractor until I add that he did our taxes, analyzed the best mortgages, and told us about the history of the area.
That’s another way of saying my dad is uh…cheap. And you’d have to be with only a government salary to raise six kids and numerous others we would take into the family home. The lesson, though, is to look for the value in everything. Don’t overpay. Realize that we need to be good stewards of what we have. Don’t waste anything.
Leaders don’t wish for the impossible; they create results with what they have.
“Leaders create results with what they have, not what they wish they had.” -Skip Prichard
Yes, he had an important job. He dutifully gave his time and talent to his employer. However, my father didn’t lead at work and then fail at home. He spent time with us. He was loyal to his family, and in particular, to my mom. None of us ever questioned his devotion. And that taught me a powerful lesson about leadership: it isn’t defined by a job.
Leadership is defined by character, not position.
“Leadership is defined by character, not position.” -Skip Prichard
5. Leaders appreciate the uniqueness of each individual.
My childhood home was a bit unusual. Somehow people found their way to our home when they were in trouble. If you were abused, our home was a place of refuge. We had our share of rather strange people stopping over. I never recall my father judging any of them. They were in need, and so they were welcome. And that was it.
Leaders don’t judge. Leaders appreciate each individual for who they are.
“Leaders appreciate each individual for who they are.” -Skip Prichard
If I came home with a 93% on a paper, I don’t recall a celebration. Instead, I was asked what I got wrong, why, and did I understand what I did wrong. The focus wasn’t on the criticism, but on learning and on striving to be better. My parents required each of us to learn a musical instrument, too, simply because of the benefits we would accrue by doing that.
Leaders raise the bar. Leaders push those around them to reach for more.
“Leaders push those around them to reach for more.” -Skip Prichard