The forces of change are gaining momentum. In the past Industrial Age, companies had to contend with dramatic changes but these were relatively infrequent and gradual. Today’s environment presents a different sort of playing field for every institution. They are all faced with a constantly swirling cloud of change. As a result, every institution is surrounded by unpredictable innovations, shifts in the marketplace and other events that can quickly render a long-reliable strategy obsolete.  Furthermore, new competitors can emerge from seemingly nowhere.

The problem is not the shifts in themselves, but the lack of abilities among institutional players to change. Consequently, societies all around the world are experiencing an increasing gap between their aspirations for change and their abilities to change. As Peter Drucker, the father of modern management strongly expressed, a re-invention of management is needed to achieve value creation at scale. In Drucker’s words, “management is the central resource, the generic, distinctive, the constitutive organ on which the very survival of society is dependent”.

Five Capabilities for Continuous Innovation

A vast amount is written on new management practices for how an institution could become more innovative, adaptable, and fast. This body of knowledge can be distilled into five necessary key areas of management capabilities that need to be built and practiced:

1. Dynamic capabilities. Including the ability to sense and shape opportunities, to seize them, and to build, buy, reorganize, or co-create resources as needed. 
2. Human-centric capabilities. Based on a belief that people want to be creative and that a company must provide a setting in which they can exercise their creativity. 
3. Ambidextrous capabilities. Allowing the institution to combine two very different forms of business logics, to optimize daily production and optimize innovation.
4. Open innovation and co-creation capabilities. Allowing the institution permeable boundaries to exchange information and knowledge with their surroundings.
5. Systemic capabilities. Allowing a holistic and systemic approach when reinventing management components such as: culture, leadership, HR practices, organizational design, and more, that all are interdependent and jointly affect the institution’s outcome.

A New Management Model is needed

When applied, the five areas of management capabilities require not only incremental changes of the current management model, but commonly a 180- degree new management model that includes a new set of cultural beliefs, a new way of leading people and a new way of assigning and coordinating tasks and create user value in the form of product, process, marketing, and management innovations.

Currently societies and their institutions change too slowly and there is therefore an urgent need for use-cases that can first, describe and illustrate versions of this new management model, and second, tell the story how the transformation can be managed. 

GE Appliances as A Use Case

In 2022, GE Appliances (GEA) had become the fastest growing home appliances company in the USA and could proudly show-case innovation of its core business, such as Small Appliances and Recreational Vehicle appliances, as well as innovations in new channels, e.g working side-by-side with the Jewish community to develop appliances to be used during the Sabbath and with the visually impaired community to develop the talking laundry. However, what GEA is most proud of is the fact that the company now is, by its employees, labeled as ‘A Great Place to Work’ and that their goal is no longer limited to what competitors do, but instead focused on consistently building new capabilities to co-create and serve more and more users. However, behind all these successes is the most important innovation of them all-the reinvention of their own management model!

Only six years earlier, in 2016, the company was slowly dying with zero-growth. The top leadership was at this time focused on cost control and the culture was risk averse and focused on behavior that secured profit margin and cash flow, not innovation. To ensure this, leadership was top down, command and control and people selected had a long tenure in the company. Some employees described the company as a ‘machine’.

The change of GE Appliances was enabled by a new owner. In 2016, the company was acquired by Haier, which had transformed its own management model over the past years. With coaching and support from the new owner, the executive team of GE Appliances became convinced they could become the number one on the North American market if they followed some key new beliefs. As a result, in 2017, the old beliefs were exchanged with a new set of beliefs:

• The user is the boss, we need zero distance to the users
• Hierarchy is exchanged with a networked organization
• Employees are entrepreneurs
• Pay by enterprise is exchanged with Pay by users
• Management needs to transform into a non-linear leadership
• The corporation is a platform
• The firm is transformed into a win-win ecosystem

Impact on the Management Model

Previous product lines were now transformed into user focused microenterprises, with P&L responsibilities. Previously powerful functions such as supply chain, sourcing, manufacturing, legal and human relations were changed into supporting platforms, serving the user-oriented microenterprises. In this way the whole organization was now focused on the market and user needs.

Decision power and budget accountability were pushed down in the organization and the top leadership became leaner and focused primarily on new growth and inventing the future. By viewing the corporation as a platform, the company consistently added new high-growth businesses to its governance structure, going from 4 businesses in 2017 to 14 in early 2022. As has been mentioned, in July 2022, GE Appliances had become the fastest growing home appliance company in the USA.

New business opportunities also required new domain competences among employees as well as an entrepreneurial mindset and skillset. Coming up with ideas for incremental and radical innovations was now expected and rewarded, and new avenues for funding new initiatives were established.

When the changes within the company were established and rooted, GE Appliances next started to learn more about ecosystem businesses and brands and decided to become the leading ecosystem brand in North America in their industry.

As a result of the new management model, based on a new set of beliefs, GE Appliances improved their dynamic, ambidextrous, human-centric, open innovation, and systemic capabilities, which led to continuous innovation, adaptability and speed.

About the author:

Dr. Annika Steiber, author of the Springer book Leadership for the Digital Age

Any management model aims to maximize three things: Value for the company, Loyalty and productivity among Employees, and Knowledge about, and Solutions for, Users’ aspirations and true needs. However, the traditional model, based on bureaucracy, a clear distance between the company and its users, and subordinary-superiority between employees, cannot maximize all three objectives at the same time.

No less than a paradigm shift is needed.
Peter Drucker describes in ‘Management Challenges for the 21^st Century’, a paradigm as a set of basic assumptions about the reality. These assumptions are usually held subconsciously by business leaders and scholars, and despite their importance, they are rarely analyzed and challenged. However, with the development of the Internet and new technologies, it is today impossible to ignore the need for changing the underlying assumptions behind managing the firm.

According to Chairman Emeritus Zhang Ruimin from Haier, three new management assumptions are needed:

1. Turn employees into autonomous entrepreneurs
2. Allow autonomous entrepreneurs to form smaller businesses (micro enterprises)
3. Encourage micro enterprises to form micro communities (business ecosystems) that share a common goal to meet unmet users’ needs

Haier’s own transformation to implement the new management paradigm is a result of almost two decades of learning and development work through constant experimentations. However, by now being able to show case a tangible solution to the new paradigm, other company leaders can transform their own businesses much more rapidly.

Two of these companies are the USA based GE Appliances and the Portugal based Fujitsu Europe.

The Case of GE Appliances

Before the sale to Haier, GEA had experienced stagnant growth and loss of market share by adhering to the parent company’s management paradigm.  Five years after the acquisition, the company had become the fastest growing appliance company in the US and has won recognition as the go-to smarthome appliance company for four consecutive years.

The former VP of Technology, Kevin Nolan had felt frustrated with how the company was managed before the acquisition, and after becoming CEO in 2017 he had the mandate to transform the company. The transformation was guided by Haier’s new management model. An executive council with a team of three was created and one hierarchy layer was immediately taken away. The executive team members then divided the transformation work among them and met weekly to take the ‘pulse’ on the transformation work. The transformation was done in two phases, the ‘micro enterprise phase’ (2016-2020) and the ‘ecosystem phase’ (2021+).

In the first phase GEA’s executive council communicated the new goal of becoming # 1 in North America. Further, four micro enterprises (MEs) were established, and decision power was delegated. To further align the organization to users’ needs, commercial and operational functions such as marketing, sales, and manufacturing were transformed into serving platforms. The CEO encouraged the transformation by sending a weekly video to all employees. As a result of the success of phase I, the second ‘ecosystem’ phase has now been initiated.

The general approach for each phase could be described as:

Step 1: intensive internal communication in which pillars of the Haier model are discussed and interpretated.

Step 2: experimentation and constant feedback loops to refine and improve the new way of working.

Step 3: implement and scale up the new way of working

Step 4: continuously maintain change by using extensive communication from the CEO and other senior leaders

Step 5: identify and prepare the next step needed in the transformation of the business

The Fujitsu Europe Case

Fujitsu is one of the world’s largest IT service providers. For the Vice President of Western Europe, Joao Domingos, the insight about declining and shrinking traditional businesses  combined with exponential business opportunities  using new technology, acted as the wake-up call. The old way of working was not going to work in the future. In 2019, after listening to Zhang Ruimin, he decided to use the Haier model as a basis for his transformation.

He presented Haier’s concept of MEs to his direct managers and asked them to support the implementation of a pilot in the organization. As the  next step, his team spent three months planning the deployment of the pilot and decided: the business focus of the new MEs, who should/want to work in them; and their mandate. In parallel, the plan was communicated to the organization, and feedback and concerns were collected. In 2020, they implemented 14 MEs at the same time as decentralizing decision power. All in all, 160 people were allocated to the new businesses. Today, the organization has 20 MEs. To support them a small team was created. The success of each ME is measured using metrics. The data is collected automatically, which is part of the new culture to coach rather than review new businesses. To keep the MEs on track, Fujitsu Europe has regular feedback sessions to coach and support them and the focus is on the learning.

The result is positive. The Net Promoter Score and the employee engagement score improved by 10 points. Further, several of the microenterprises have double to triple digit growth rate. The next step is to continue to move more parts of the organizations into this model and build ecosystems of ME’s.

In conclusion, the new management paradigm is here to stay. The paradigm shift requires new assumptions and these are already practiced by some leading companies.  Others can effectively transform IF they a) are aware of the new set of assumptions and b) are  aware of solutions on how to implement them. Further, a successful transformation requires local adjustments of the new management model.

About the author:

Dr. Annika Steiber, author of the Springer book Leadership for the Digital Age

The 13^th Global Peter Drucker Forum again raised business critical questions such as: “Can big businesses be humanized” and “How fast should you transform your business. The answers were: “YES you can humanize a big company “, and “you need to CHANGE your perception on how fast a strategic change of your business will be”.

Drucker Forum 2021

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum

Parallel Panel #7 – Can Big Business be (Re)humanized?

Moderator
Amy Bernstein Editor, Harvard Business Review & VP Harvard Business Publishing

Speakers
Hubert Joly Senior Lecturer Harvard Business School; former CEO, Best Buy
Claudio Fernández-Aráoz Executive Fellow for Executive Education, HBS
Maurice Lévy Chairman of the Supervisory Board, Publicis Groupe
Patricia Pomies Chief Operating Officer, Globant

Parallel Panel #9 – Leading People through Change – Hoch much? How fast?

Moderator
Jenny Darroch Dean, Farmer School of Business, Miami University in Oxford

Speakers
Roger L. Martin Strategy advisor; former Dean, Rotman School of Management
Sara Mathew Non-executive Chair, Freddie Mac; former CEO Dun & Bradstreet
Elsbeth Johnson Senior Lecturer MIT’s Sloan School of Management, Managing Director, SystemShift
Michael Watkins Professor of Leadership and Organizational Change at the Institute of Management Development and Co-Founder of Genesis Advisers

Can big businesses truly be humanized

The focus of this year’s Drucker Forum was on the leader him- or herself. Many top leaders are indoctrinated by the old- stereotyped picture of a leader- the hero, who knows it all and will guide his or her people on what to do and how do it. In a VUCA world, 80% of leaders, according to Hubert Joly, understand and want to adopt the new humanized leadership model, better suited for the current dynamic economy, but find it very hard to do. According to Joly, leaders’ true purpose is to transform from only being great business leaders to also become great human leaders. Today’s leaders must lead with, not only the brain, but also with their heart and soul. Therefore, leaders need to start with themselves and ask: “what is my true purpose as a leader?”. Getting some coaching help could be one way of managing this transformation, as mentioned in last year’s Forum.

Another factor that plays an important role in humanizing businesses is who the board select as the next CEO. According to Maurice Levy, board rooms are haunted by Milton Friedman and his maximizing shareholders’ value mantra as the ultimate duty of any board. Whilst boards recognize this may not be useful anymore, they struggle to discard it.  Perhaps if boards started seeing and accepting the importance of an CEO as a great human leader, as well as a great business leader, they might recognize that better performance comes from better human qualities.

How fast should leaders push the transformation of their businesses

The panel shared the view that many leaders should “slow down” the transformation to achieve true strategic change of their business. The hunt for quick wins, could according to Dr. Elsbeth Johnson play some role to demonstrate success, but is not in any way a proof for true long-term change, which demands a true shift in mindset and of the technical system. Instead, leaders should view a transformation more long-term and understand that for a real change to happen, behavior need to change, supported by changes in structure, compensation and more. This reminds me about the excellent model developed by Schein and Schein (2017) in their book ‘The Corporate Culture Survival Guide’ in which they discuss cultural transformation from three perspectives: social culture (behavior), technical culture (the design), and the macro culture (influences from outside, for example fads such as Holacracy, Lean, and more).

In fact, the leader should during a transformation focus on ‘outcomes’ and ask the right questions to their people in the organization, rather than take on the role of the central agent for change. Johnson referred this phenomenon to ‘Magic Delusion’ in which the leader over values his or her own role and contribution to change. The risk then is that the change process will stop as soon as that leader has left the company. Other risks are the; ‘Drama delusion, the Activity delusion, and the Agency delusion. With the Drama delusion Johnson means that the change needs to be perceived as fast and action packed but is then also very risky. With Activity delusion she refers to the risk of focusing on quick wins, rather than on a long-term change. Finally, with Agency delusion she means the same as Schein and Schein (2017) stated, namely that a change in people and their behavior is not enough for a change. Instead, a change requires also changes in the technical system.

An excellent example on a leadership team that BOTH has humanized their company and successfully managed a long-term transformation, from being a cash cow to start being a winner in the digital age, is the leadership team at GE Appliances (GEA).

The team did 4 simple things:

a) Defined a leading goal

b) Promoted and role modelled a new set of beliefs (culture)

c) Reinvented the organizational structure and how different units were to be aligned with each other

d) Redefined the compensation system

The transformation of GE Appliances was not falling into any of Johnson’s ‘delusion traps.’

Let us start with the first one, ‘Magic delusion’. The transformation was and is not conducted by Kevin Nolan, the CEO himself. Instead, he got advice from Mr. Liang at Haier, and he consulted his senior leadership team and asked them to suggest solutions for working more ‘user focused’ and to become a winner in the North American market. Nolan trusted his senior leaders, so that important decisions were made based on senior leaders’ involvement and competences. Further, Nolan also avoided the ‘Agency delusion’, as GEA, after Nolan’s alignment with senior leaders, performed technical changes of management processes, structure, and compensation system, which in turn required a new behavior as well from leaders, between units, and between people on different levels. Regarding the ‘Drama delusion’, GEA did several of the big changes already during the first 12 months. However, the leadership team perceived the risk to stay ‘AS-IS’ as larger than to perform the changes during the first year- and they had key stakeholders with them. So even if many changes were done during a short time period, the team was not looking for quick wins (the ‘Activity delusion’) as they believed they had to change to stay relevant in the digital age. Their focus was, and still is, long-term and their transformation journey has not stopped. Neither will it, as the external environment continuous to change.

For more information about GE Appliances transformation, please read:

https://www.druckerforum.org/blog/must-there-be-a-human-imperative-at-the-core-of-organizations-by-annika-steiber/

Or

https://www.forbes.com/sites/benjaminlaker/2021/09/17/here-are-the-four-simple-steps-that-transformed-ge-appliances/?sh=25eb50d763ff

About the Author:

Dr. Annika Steiber is a Professor, Best-Selling Author, Speaker, Founder, Investor and the Director of the Rendanheyi Silicon Valley Center. She is the author of eight management books.

A new management model exists, applied by companies born in the digital age. This model is based on a set of principles that allow these companies to be highly innovative, agile and fast moving in the same time.

Traditional companies need to respond, and some have been highly proactive. One of these companies is Haier. Chairman Zhang at Haier understood in 2001 that the old management paradigm had to be exchanged by a new one to survive in the digital age. The result is the philosophy ‘RenDanHeyi’, which Professor Laker is regarding as a revolutionary new model, that should be aspirational for companies around the world:

“[Customer centricity] absolutely worth aiming for and I think the premise of proximity and reducing proximity to customers…is all the rage. Just look at the organizations in Silicon Valley…so I think that premise seems to be widely adopted. I think the second part, [Regarding employees as entrepreneurs], which is more about structures, systems and processes, still, particularly in Europe is regarded as somewhat revolutionary, particularly the way you can turn structures completely on their head and regard employees as entrepreneurs…I think elements of this is absolutely aspirational and should be aspirational” (Rendanheyi Open Talk, 2021)

In 2016, Haier acquired GE Appliances (GEA), a firm with a 100 years’ history. With Rendanheyi, GEA went from a 0-growth company to a double- digit growth company. According to Professor Edgar Schein, GEA’s transformation is fascinating and well worth studying:

“I am intrigued how GEA was able…to get the present set of bosses to behave according to McGregor’s Y theory. They had to make a massive change in their own daily behavior, and it will be important to understand how GEA could accomplish that”

 (Rendanheyi Open Talk, 2021)

The GEA case is of interest, but it needs to be relevant for other companies as well.

I stated earlier that the management principles used by Haier and by GEA have been found at other successful companies as well, for example at Google. This would mean that the Haier and GEA cases are not unique, stand-alone cases of a new set of management principles, but are indeed mirroring a more universal set of new management principles for the digital age.

I call these universal principles ‘meta management principles for the digital age’.

Meta Management Principles and A Comparison

To support my argument that we now have a set of new ‘universal’ management principles for the digital age, a comparison between Google and Haier would be useful to further test this hypothesis.

On a high level the principles could simplified as:

1. Ecosystem strategy for co-creation and win-win partnerships instead of the vertical and well-integrated model
2. A networked organization that gets rid of barriers between employees and users instead of a tall, hierarchical structure
3. Entrepreneurs and dynamic partners instead of ‘employees’
4. Zero distance to users instead of a clear division line between the company and the customers/users
5. Pay- by- users instead of pay-by-fixed salary that doesn’t reflect true value created 
6. Visionary, Coaching and Decentralized leadership instead of a top down and a command-and- control leadership

(Source: Steiber, 2021 inspired by the Haier Dictionary of RenDanHeyi)

We can compare the six principles with my findings from a 1- year study on Google and its management model for innovation, shown in the table below (Steiber, 2014).

Table 1. A comparison between the Google model and the Rendanheyi model
(Part of my forthcoming book ‘Leading in the Digital Age: The transformation of GEA to be published early in 2022)

The two companies’ management principles seem similar on a high level, why they might represent a new set of ‘meta- principles’ for management in the digital age.

This would mean that there is a paradigm shift in management, and that it is a global phenomenon. To survive and stay relevant in the digital age, companies need to transform their management model, and the new Meta Principles should be used as the guiding star in this work.

About the Author:

Dr. Annika Steiber is a Professor, Best-Selling Author, Speaker, Founder, Investor and the Director of the Rendanheyi Silicon Valley Center. She is the author of eight management books.

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum

Is there a need to change the current management model, which normally is not bult up around a human imperative?  

The simplest answer is YES as the world has changed. The emergence of a VUCA environment has led to a re-thinking of what it takes for companies to survive and succeed. One of the new basic management principles of ‘management of the firm’ in the 21^st century, is to put a human imperative at the very core of the organization.

Models for the digital age

Many of the companies born in the Internet age, such as Google, Facebook, Amazon, and Netflix, have already adopted a new model, more fitted to the digital age. This model is based on a human imperative at the core, which in turn enables innovating rapidly and scaling faster. 

With an increasing threat from these new entrants in every industry worldwide, traditional firms have either been proactive, or been forced, to transform their own business models and organizations, including becoming more human-centric. Some cases worth mentioning are Haier, Microsoft and GE Appliances (GEA) in the USA.

How GEA transformed

GEA is of interest as the transformation repositioned the company from a non- growing company to a company with double digit growth rate in only five years. 

GEA was established in 1905, and was owned by General Electric (GE), a company known for its technological leadership. GEA was the outlier within GE, as it was primarily a B2C company, whereas GE’s other businesses were B2B. GEA was, however GE’s public ‘face’ to the consumers, which meant that GEA had to live up to the GE brand of high quality and reliability. This changed in 2016, when GEA was acquired by Haier, the largest provider in the world of home appliances.

As a result of living up to the GE brand, and being a cash cow, GEA was viewed by GE senior leaders as a ‘machine’. The focus of the top management was therefore cost efficiency and profitability, not growth. The leadership style was top down and command and control, and people were hired because of their deep and multiple- years operational experience, not because they were entrepreneurial or brought new competences to the firm. The overall feeling among the people was that the company was slowly dying.

When the leadership in GEA decided to divest the Water Heater business, a business that had a great growth rate and potential, the former CTO, Kevin Nolan, addressed this matter to the new owner Haier, who assured him that they were not behind this decision and that if GEA would have applied the philosophy of Rendanheyi, this would never have happened. Haier explained why by clarifying the fundamental beliefs behind the Rendanheyi philosophy:

“You unleash the potential of every person, and you drive down decision making to the lowest possible layer. Further, you focus on the marketplace first and align the whole business towards the users and their needs. Then you reward the people for how well they do this.”

GEA’s now CEO, Kevin Nolan, applied this philosophy, and GEA went through a full enterprise transformation in less than five years, including transformation of culture, leadership, organizational structure, and most importantly people.

By January 2021 senior leaders in GEA were focusing their attention primarily on growth of the company as their goal was to become the leading home appliance provider in North America. To achieve this goal, GEA had to release the human potential by changing its leadership from top down to coaching. GEA also had to become flatter and decentralized, and people with an entrepreneurial competence and with new knowledge and skills had to be invited to the company. GEA was now enabling a human imperative at the very core of the organization.

When trying to pinpoint key success factors, the Chief Communication Officer at GEA, Antonio Boadas, emphasizes four key success factors: leadership, organization, culture, and alignment.

GEA key success factors

For leadership, a change was needed on both the CEO level as well as on the level of the micro enterprise (ME) leaders. The CEO had to change his role from centrally controlling and managing, setting short-term goals, to instead enabling, removing barriers, setting vision and identify gaps, and being an advisor. 

Similarly for organization, the company has moved from strong reporting lines, powerful functions, static product lines, a forced cross-functional collaboration and internal competition to common contracts, enabling platforms, agile micro enterprises, ‘natural’ cross-functional collaboration under MEs and an integration and collaboration between MEs and platforms (former functions). 

The last two success factors are culture and alignment. The aim of the cultural change has been, and still is to turn employees into entrepreneurs through empowerment and promoting ownership. For GEA this is zero-distance between the company’s goals and individual contributions. It is like defying gravity. People with power have a tendency to accumulate more power, instead of distributing it. Therefore, there is a constant need to fight this tendency of ‘centralization of power’ around certain people in the organization. 

Finally, align employees around company’s goals and user value by using broad communication of goals, metrics and results, allowing people to understand how they will contribute to achieve those. Also, connect rewards to company’s results and MEs’ results (paid-by-the-user) and complement with symbolic rewards and recognition programs. 

Meta management principles

GEA is a successful case of an industrial firm transforming itself into a ‘company for the digital age’. GEA choose the philosophy of Rendanheyi in navigating their transformation. This philosophy represents a number of ‘meta management principles’ that all are needed for companies and organizations in the 21^st century. Companies might call the application of these ‘meta principles’ different things, such as the Google model, the Netflix model, the Siemens model etc., but these companies all follow the same principles although adopted and applied in different ways. 

On a high level the principles are the following:

1. Ecosystem for co-creation and win-win partnerships instead of the vertical and well-integrated model
2. A networked organization that gets rid of barriers between employees and users instead of a tall, hierarchical structure
3. Entrepreneurs and dynamic partners instead of ‘employees’
4. Zero distance to users instead of a clear division line between the company and the customers/users
5. Pay- by- users instead of pay-by-fixed salary that doesn’t reflect true value created  
6. Coaching and facilitating leadership instead of a top down and a command-and- control leadership

(Source: Steiber, 2021 inspired by the Haier Dictionary of RenDanHeyi)

About the author:

Dr. Annika Steiber is a Professor, Best-Selling Author, Speaker, Founder, Investor and the Director of the Rendanheyi Silicon Valley Center.

She is the author of soon eight management books including The Google Model: Management for Continuous Innovation in a Rapidly Changing World, The Silicon Valley Model: Management for Entrepreneurship, Managing in a Digital Age: Will China Surpass Silicon Valley? And the Transformation of GE Appliances.

This article is one in the “shape the debate” series relating to the 13th Global Peter Drucker Forum, under the theme “The Human Imperative” on November 10 + 17 (digital) and 18 + 19 (in person), 2021.
#DruckerForum

Moderator:
Raymond Hofmann Management & Organisation Designer

Panellists:
Santiago Iniguez, President IE University
Julia Middleton, Founder & Innovation Officer, Common Purpose
Vikram Mansharamani, Lecturer, Harvard University
Maelle Gavet, Tech executive, Author
Claudia Crummenerl, Managing Director, Capgemini Invent

We are in a Paradigm shift: From a stereotyped Leadership designed by white men, to skillful Coaching of diverse high performing teams

The quality of leadership is important for a well-working society. Still, good leaders seem to be rare according to Raymond Hofmann. A poll of the participants seemed to bear out his assumption, as 93% voted that there is a leadership problem in the world.

Problems of leadership

This was underlined by both Julia Middleton and by Santiago Iniguez. The problems, according to Julia, is that leaders are not punished for lying so people learn to become like them, producing institutionalized bad leadership. Further, the language about leadership was written by men, and therefore many women either don’t think they are leaders, or it takes them a long time to try to adapt to this male form of leadership. This means inefficiency, or even waste in the society

Drucker Forum 2020

This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
#DruckerForum

For Santiago the problem is in the concept of leadership itself. Leadership has been attributed to characteristics such as aggressiveness, arrogance, and a lack of respect for common rules. To emphasize this, he referred to Greek philosophers and Fredrich Nietzsche and his concept of ‘uber mensch’, that is supreme achievement, being a goal that humanity should set for itself. Instead, the definition of leadership needs to be updated and include bolt ons such as, diversity.

Vikram Mansharamani agreed with this quite dark picture of the current definition of leadership, but also added that from his more systemic perspective, the problem was also that leaders are educated in silos and are also fostered to work in them. He illustrated this by describing a typical executive board, in which all highly competent leaders turn to the CIO when an issue of IT investments came up. Instead, leaders should be educated in integrative thinking when problem solving. The aim is to extract value from one another, without giving up autonomy. Reflecting back on my own research on innovative companies’ leadership, this executive integrative thinking makes sense and was applied in the different companies by focusing on the market and user’s needs, rather than focusing on internal matters.

More positive leadership shifts

Maelle Gavet didn’t agree with the negative picture of today’s leaders. According to her research, leaders are pushed towards, or even pushing the ideas of authentic leadership and open communication. A new poll among participants indicated that both parties were right.

Therefore, there might co-exist at least two different concepts of leadership, one where leaders should be aggressive and authoritarian, and one in which leaders are great coaches, authentic and transparent. Maelle suggested that it could be a generation or industry factor behind this conflict. My own research on Silicon Valley tech firms, as well as on Haier in China support Maelle’s findings, and this is why I believe that we need to accept the fact that there is a new leadership model that co-exists in parallel with the ‘old’ stereotyped leadership model, and that this new leadership model is currently disseminating fast around the world for the simple reason that our new reality requires a new leadership model, which unleash talents and entrepreneurship within organizations. With data indicating that less than 30% of employees are engaged at work and that job satisfaction is steadily declining, a ‘new’ leadership model might be of huge interest to many corporate leaders, as well as for policy makers. So, if we play with the thought that there is a ‘new’ leadership model in the world, how would this ‘new’, hopefully better leadership be characterized?

What are the characteristics of good leadership?

Jeffrey Pfeffer stated in 1977 that one of the problems with leadership is the ambiguity of its definition. With this in mind the panelists tried to answer this complex question.

Claudia Crummenerl suggested that good leaders connect the best people. This fits well with my own studies of Google, where leaders are evaluated on how well they find and connect great people and then on how well they coach this team to become  high performing. Further, in the case of Haier, everyone is viewed as a potential new leader, which is why they allow anyone with a good idea that has a minimum of three followers to start a micro enterprise to fulfil their vision.

Claudia also emphasized the importance of leaders being agile and adaptable. This again, was underlined by my studies of Silicon Valley companies and Haier where adaptability of not only leaders, but of the structure and even business model was viewed as key for survival in 21^st century.

Maelle agreed, but also emphasized the importance of empathy, something that she found in her own study. Santiago agreed, and thought that on way of showing care about others was through greater diversity among leaders. Another is to train leaders in empathy, which all panelists agreed was very hard. Maelle, however, thought that data supporting a correlation between empathic leadership and team performance, together with storytelling could affect the organization’s culture and thereby foster a new behavior among leaders. This is possible and one example is how Google decided to start an annual management award in order to make ‘management’ more interesting for experts (that didn’t want to become managers), and to create storytelling around successful leaders with certain key characteristics and in this way create a culture on how leadership at Google should be. To enable leaders to become specifically more empathic, Claudia had an interesting thought that, as technology will be able to handle more and more managerial tasks, this could free up managers’ time so they could spend more of their time on the ‘people dimension’ of their job.

To wrap up this discussion, the panelists thought that the concept of leadership needs to change and that this change of leadership has to start as early as in elementary school. Students that shout loudest should not be rewarded, and instead teachers should reward more up to date styles of leadership and engagement. Teachers should therefore be an interesting target group for education and training in this ‘new’ leadership.

Conclusions

There is a division in views in regard to a 21^st century leadership, which requires further research and focus on next year’s Drucker Global Forum. Leadership traits such as creator of high performing teams, adaptability, as well as a higher empathy seem to be needed in the future. This fits very well with my own research findings based on data from Silicon Valley tech companies as well as from Haier in China. Finally, if we want a change in leadership, it has to start by being part of our educational system.

About the Author:
Dr. Annika Steiber runs the Rendanheyi Silicon Valley Center at Menlo College, California

This article is one in the “shape the debate” series relating to the fully digital 12th Global Peter Drucker Forum, under the theme “Leadership Everywhere” on October 28, 29 & 30, 2020.
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