ADAPTING TO SURVIVE
Interviews with 150 chief executives reveal challenges facing leaders amid rapid change
SOUTH Africa can be a challenging place to do business and these challenges offer unique opportunities. Business leaders increasingly have the chance to shape South Africa’s future. But the role that business plays in society, and the expectations about the role it should play, have shifted dramatically. Along with this shift, society’s expectations and the public narrative about leadership have changed too.
Declining levels of public trust suggest that public and business leaders have not kept pace with increased expectations.
Global leadership advisory firm Heidrick & Struggles in association with the Saïd Business School at Oxford recently released “The CEO Report: Embracing the paradoxes of leadership and the power of doubt”, which presents findings from its interviews with more than 150 sitting chief executives around the world. The report explores these issues along with the central question: how do leaders and senior executives develop the competence to lead in a changing world? The findings are instructive and contribute to the leadership debate in the South African context.
For chief executives, assessing the changes facing their companies or institutions in volatile times is difficult. Doing so under the real-time gaze of stakeholders ready to tweet and retweet assessments at a moment’s notice compounds the challenge. It’s no surprise that many leaders feel preoccupied with the pace of change.
Given the pressure to respond faster and faster to events, how can leaders ensure they assess the nature of the changes appropriately while also determining how and when significant change will affect their organisations? In other words, how can they lead continuous change while also responding constantly to it? The key, the research suggests, is to focus not only on the speed of change, but on its scope and significance as well.
The chief executives interviewed routinely spoke of the pressure today’s pace of change imposed on them, citing factors such as disruptive new competitors and new market channels, often digital. Predictably, many cited technological innovations, particularly the rise of social media, as driving a ubiquitous sense of urgency and pressure for increased transparency. In fact, many chief executives view social media as a two-edged sword, both a powerful tool for engaging in public discussion, as well as a potential source of exposure to challenges on their leadership.
Some chief executives highlighted the importance of discerning the true speed of change. They cautioned that a more granular understanding of change helped them prioritise, delegate, and allocate energy and resources. The impact of scope can be difficult to predict: even systemic changes can have root causes that were initially contained and local – for example, the seemingly localised US sub-prime credit crunch that became a global crisis.
Pace of change
A pervasive sense of urgency can mask the fact that not all aspects are changing at the same pace, or even changing at all. Indeed, one chief executive pointed out that while his sector (banking) had faced substantial changes, in many respects its core principles remained the same.
Others emphasised the need for a longterm perspective: “The world has changed and stability is different than before,” observed one chief executive, “although we have selective memory in the sense that we think we are living in the most turbulent times you can imagine.”
And another offered a healthy dose of scepticism, saying: “There is this mantra at the moment that change is faster than it’s ever been and therefore these kinds of issues are going to be greater… I don’t really buy that.”
When it comes to coping with the pace of change, chief executives referred to several rules of thumb. One described a “more principles-based leadership style” to “spend the time, rather than giving the answer, setting the stage and context and then have other people work out what the pieces are within it”.
Highlighting the need for resilience, another said: “You have to look at almost everything as something that could kill you, and you have to have a battle plan for not only how you are going to… optimise it, but how are you going to survive it.”
While the focus on the speed of change is not surprising, chief executives indicated that there were two additional, more subtle dimensions of change that a preoccupation with urgency could mask. On of these dimensions is the scope of change – the size and extent to which a particular event or trend is far-reaching.
The greater the scope, the more likely it will become significant and affect the organisation. Trends take different forms: for example, geopolitical upsets such as the conflict in Ukraine; economic changes (for example, in energy prices); or health threats such as the recent Ebola crisis.
The impact of scope can be difficult to predict. Some changes may be more evidently systemic, such as the recent global financial crisis; others may generate substantial attention but actually turn out to be more contained, with less impact.
Significance
The final dimension is significance, which refers to how deeply any change affects the organisation. Predicting and assessing significance as data accumulates is crucial. It means asking “how, how fast, and how much” an event will impact the business.
As one chief executive noted, “You have to begin to sort out the results you’re getting. Are they a result of a broader macroeconomic or industry shift taking place, or are they more enterprise specific?”
The recent drop in the price of oil highlights the complexities involved in navigating the three dimensions of change. The sheer speed and scope of the price fall in the last 12 months has taken most by surprise, even though the fundamentals driving the price shift are well known: rising supply from shale gas in the US and weakening demand in other large economies.
While the full significance of the changes play out, the implications are likely to be far-reaching in scope and highly significant for many countries and businesses. Some industries face the possibility of significant knock-on effects in terms of growth, jobs, investment, and perhaps even industry restructuring.
Accordingly, how any given change will affect a company varies. Some changes will influence the business model, strategy, or operations of the business – technical changes. But other changes are more profound and foundational, challenging the organisation’s mission and core values. What looks like a purely technical decision can also have value-based implications that make it foundational.
Cyber threats, for example, are likely to represent technical changes for most businesses but will be foundational for a smaller group, such as computer firms (though what may initially appear technical can quickly become foundational, as Sony’s battles with cyber security suggest.)
More complex
Untangling scope and significance is vital. Seemingly large events may end up being relatively insignificant; others may be small in scope but prove highly significant because they trigger concerns inside the business or among external interest groups. For leaders of large and diversified entities, questions of scope and significance will be much greater as their environments grow more complex, and as stakeholders declare new agendas or more actively pursue existing ones.
Navigating change along its three dimensions requires different competencies. Global operations mean thinking about local conditions. They need the capacity to scan the environment for emerging trends that might appear isolated and contained, but are actually linked in hard-to-predict ways, creating ripples of significance that can bring destruction or opportunity.
The change landscape is constantly evolving, and any given event or trend will mean different things for particular industries, regions, and individual businesses. What’s important is developing a multidimensional approach to change that helps leaders understand and prioritise actions, direct resources, and, crucially, reserve their own energy for significant, largescale challenges.
Remembering that fast doesn’t necessarily mean urgent or important is a critical first step in determining where to focus attention. Diagnosing the likely impact of events and trends means assessing scope and significance along with speed.
Increasingly leadership needs flexible, systemic thinking from those that are comfortable with uncertainty, complexity and constant change. These qualities need to become part of the national narrative on our leaders and how to best effect change.
There is this mantra that change is faster than it’s ever been and these kind of issues are going to be greater… I don’t buy that.
Allen Shardelow is the partner in charge at the Johannesburg office of global executive search and professional services company Heidrick & Struggles.