This month two of us - Andrew Winston and Chris Laszlo - begin 2012 with an inquiry into how personal and brand leadership is evolving to serve both thriving businesses and a flourishing world. The question of what leadership really looks like is vital;
it’s getting clearer that tomorrow’s winners will require the skills for both creating profits and nourishing human and natural systems. A December 14, 2011 opinion piece in the Wall Street Journalby Al Gore and David Blood notes that “businesses cannot be asked to do the job of governments, but companies and investors will ultimately mobilize most of the capital needed to overcome the unprecedented challenges we now face.”
A long line of thought leaders from Peter Drucker to Michael Porter tell us business is moving in this direction; and a growing number of corporations are leading the way, from IBM and GE in the U.S. to Unilever, Puma, Munich RE and Santander abroad.
So what is changing in the task of leadership? We believe that businesses in every sector are on the cusp of a new paradigm of sustainable value creation (which we have explored elsewhere), one that calls for a different type of leadership. In this opening piece, we attempt to quickly outline some of our ideas on the topic, as a framing exercise for the month ahead.
The broad thrust of the leadership change is toward more integration and broader thinking, serving not only shareholders but all stakeholders in ways that are value creating. We’re moving beyond the basic business case for sustainability – creating value in a range of ways from cutting costs and mitigating risk to driving revenues and brand value – to include a personal and organizational commitment to leaving the world a better place. While the move toward systems thinking in management has been around at least since Peter Senge’s The Fifth Discipline, we see a qualitative change in the making, one that is best described as a shift to holistic thinking.
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One pivotal change is the gradual merging of the outer dimension of leadership – focused on the external market forces that condition a company’s opportunities for profit and growth – with the inner dimension of leadership based on meaning, purpose, values and spirit. Another pivotal change is the gradual merging of personal leadership with organizational leadership, in other words, the individual leader’s beliefs and behaviors are becoming more integrated with the organization’s identity, strategy, and culture. As a result the proverbial need to “check in your values at the door” on the way to work is lessening as people work for companies that are committed to doing well and doing good (the point being, these two are not at odds).
We visually map this evolution to greater integration in Figure 1 (hey, as consultants we need a good 2 x 2 matrix to tell our story). We’ll each post a piece on what external (Andrew) and internal (Chris) leadership looks like, but we want to lay out the core components here. The point is not that leadership tomorrow is about choosing one level or dimension over another. Instead, it is about playing in all four quadrants. Good leaders and strong brands embed sustainability for business advantage in terms that respond to external pressures and consider the full value chain of their impacts, risks, and opportunities and convey to external partners and customers a clear vision. These leaders also develop internal capabilities, such as culture, mission, and values at both the personal and organizational levels. The holy grail of consistency across all these levels we call holistic leadership.
To understand how fragmented have been past leadership approaches, consider where the work of the following authors maps onto Figure 1. Jim Collins’ Level 5 Leadership, described in his best seller Good to Great, is primarily at the external-facing personal level (lower left). Michael Porter’s Shared Value idea is primarily at the organizational level and external dimension (upper left) with its focus on market forces and strategic response. Our own works – Sustainable Value/Embedded Sustainability (Laszlo) and Green to Gold/Green Recovery (Winston) have largely focused on the microeconomic and organizational levels in the top half of Figure 1. Meanwhile, a growing strand of spiritual leadership authors such as L.W. Fry (“Toward a Theory of Spiritual Leadership”, The Leadership Quarterly, 2003) and Otto Scharmer (“Uncovering the Blind Spot of Leadership”, Leader to Leader, Winter 2008) have focused on the personal level and internal dimension (bottom right).
It is our contention that few thinkers and even fewer practitioners effectively operate in all four quadrants. The shift from systemic to holistic thinking may sound like just another conceptual distinction but, we believe a new kind of personal and brand leadership is in the works. This shift will be at the heart of tomorrow’s sustainable business success.
¹ By mega-forces (in Figure 1), we are referring to increased resource constraints, climate-induced weather pressures, transparency demands, higher expectations of stakeholders along the end-to-end value chain, and tougher environmental and social regulation.