The Changing Landscape of Leadership

As leaders, our ability to deal with global disruption whether it impacts our organization’s supply chain, sales and distribution capability or cash flow is regularly being tested.

Whether we’re talking about disease outbreaks or financial crises, events beyond any individual or organization’s control can force us to sharpen our ability to lead in unpredictable times.

As global disruption ebbs and flows, what role should leaders play, and what strategies can you deploy to get ahead of this unpredictable curve?

Odgers Berndtson released its Leadership Confidence Index in 2022. It found confidence in leadership had almost doubled in the past two years, jumping from 24% in 2020 to 42% in 2022.

It is a striking statistic, and from it, one thing can be deducted with certainty; around the world, more leaders than expected are performing better than they were before the pandemic. Yet the statistic tells another tale. More than half of leaders did not perform well and lost the confidence of their teams and organizations. These juxtaposing circumstances reveal much about the global state of leadership performance and leadership acquisition today.

How we arrived at these circumstances is clear. COVID-19 resulted in a crisis where business as usual no longer existed.

In the newly created environment, many leaders rose to the challenge, adapted to the new state of play, and realigned their organizations with skill and purpose.

Ultimately, the pandemic provided an environment in which the best leaders could show ‘what they were made of’ and their capabilities shone through. If there was a single sentence summing up these types of individuals, it would be: “leaders who people will follow, not because they have to but because they want to.”

Yet 58% of leaders did not fall into this category. Unable or unwilling to adapt they stuck rigidly to the playbook of the past, applying outdated skills to a novel situation. Often, these were leaders more at home talking to their boards about share price and public opinion than having an honest conversation with those they led. Their capabilities centered around achieving market share and growth as opposed to managing disruption, or more importantly, inspiring teams to deliver results during disruption.

Many didn’t know what hit them, and were unable to swim in the current of the new world, and have or are currently being replaced. It has resulted in a new cohort of leaders worldwide.

This new breed of leader is organizationally facing. They understand that the board and their people are of equal importance. Their decision-making is often inclusive, they place trust in their senior executives and genuinely care about those they lead – not because it’s in vogue but because they genuinely value them.

These leaders often have a different thought process from their predecessors.

Their skills lie in reading market signals and adapting to them swiftly. They are strategists and change agents who can ‘see around corners’. They can extrapolate from major trends and take advantage of the findings, turning change into opportunity, and importantly inspiring others to deliver on that change. Behaviourally, they are more akin to an entrepreneur than a traditional manager; innovative, brave, humble, and naturally inquisitive with a desire to learn. Above all else, they embrace and even thrive on disruption.

Such a dramatic change to the leadership paradigm has dramatic consequences. Globally, the number of leadership searches has increased exponentially. Across APAC the search industry has seen 43% growth, while the reshuffle of executives in South America has resulted in double the normal number of searches we would make for general managers in Chile, Peru, and Argentina. In the UK, and across the U.S., the story is the same – explosive demand for new leadership talent.

Much of this demand can be laid at the feet of the pandemic. 58% of leaders were not up to the challenge and therefore need replacing. But another, more significant factor is also at play here; the expectation of the disruption to come. Our own Index reveals the majority of executives (79%) believe the level of future disruption will either increase or maintain at the same pace.

And we know that the majority of boards feel the same way and want to future-proof their organizations against this disruption with the sort of leader who can manage and take advantage of it.

But the supply is scarce, and on top of this, regional conditions have upended the leadership acquisition market. Across counties in APAC, zero-tolerance lockdowns and stringent work permits have resulted in an exodus of strong talent. Combined with a limited local supply and deglobalization shifting the traditional leadership footprint to other countries in the region, the pool of high-performing leaders is now almost completely different.

In South America, tourism has been in freefall, the cost of many raw materials has exploded, and crop yields are expected to be lower while the price of fertilizer has shot up. Political instability and a withdrawal of significant investment have added to the disruption. Even countries like Chile that have become accustomed to relative stability now face uncertainty. For leaders, the economic environment has been rewritten. Many are retiring and more are being replaced.

In the U.S. and the UK, technology transformation much like it is elsewhere in the world is no longer just a sector but a function of every industry. It’s challenging everything from business models and back-office operations to the very products and services a company sells. For years, the notion that leaders should be tech-savvy has been gaining momentum. Now it’s an absolute necessity, with a core skill being the ability to know which technologies to invest in, and which ones not to.

And across every industry and country, supply chain chaos, rising inflation, and the ESG and diversity agendas are near-universal challenges that are a leader’s responsibility to resolve.

The current climate has become a catalyst for exponential demand and short supply. What makes a high-performing leader is very different from what it was before the pandemic. At the same time, the business environment has altered who those leaders are, where they come from, and the types of skillsets they have. On the one side boards expect more of their leaders and on the other, there is a shortage of leaders who can genuinely deliver on these new expectations.

Yet they are out there. To find them, it will often require an organization to ‘go outside their lane’ and look for leaders in adjacent or even completely different industries.

It will mean genuinely leaning into diversity and inclusion and searching for leaders who are nothing like what has come before.

And it will mean enabling individuals from the second layer of senior management and helping them to step up. Above all, it means disregarding the traditional blueprint of what a leader should be and embracing the new leadership paradigm.

As a comparison, The Harvard Business Review recently released a study that examined how 1,890 senior executives around the world view their organization’s ability to manage disruption. The results were quite staggering: Only 15% of respondents expressed a reasonably high level of confidence that their leadership team is “fit to lead through future disruption,” while 61% reported being “tentative” and 24% are outright “worried.” The two top reasons given by executives who worry the most were lack of vision/buy-in and resistance to change inside their organizations.

The Conference Board, a global business membership and research association, noted similar findings in its C-Suite Challenge 2020 report: “CEOs’ internal concerns include talent and skills shortages, disruptive technologies, and building an innovative culture.”

Trust in our culture at large, in our institutions and in our companies is significantly lower than a generation ago.

In any normality trust is paramount, but given current world events, never has there been more need for increased trust, a shared understanding and language to talk about the specific behaviours that affect trust can result in more productive conversations about team performance. Those conversations can even create stronger bonds between leaders and employees.

But leadership trust isn’t a one-off initiative. It requires continued effort from all team members. And it takes leaders who are willing to show integrity, change behaviour, and take on the hard work of collaborating across boundaries and dealing with differences.

Research shows that trust represents a core human need we all have: to trust others, to be trusted in return, and to trust in ourselves. When trust is present, people align around the purpose of their team, embrace goals and objectives, willingly collaborate, and are empowered to do their best work.

When trust is absent, or made vulnerably, work becomes more difficult and takes longer to execute. With the pace of change in today’s organizations, leaders need trust more than ever before.

Trust means ‘uncompromised by doubt’. In the workplace, people can’t do their best work if they doubt others’ intentions or capabilities, the direction or viability of the organization, or, most importantly, if they doubt their own ability to keep up with the demands placed on them. This is especially true in today’s environment of complex change and ambiguity when employees are being asked to do more with less.

Leadership trust is reciprocal and created incrementally. To inspire trust from others, leaders need to also show trust in them. Over time these relationships build and maintain the trust that teams and organizations need to take action in a fast-paced world.

Our research underscores the need for trust in organizations. In high-trust environments, people show up and to do their best work. They gain productive energy, creativity, speed, and better results. They align around a common purpose, take risks, support each other, and communicate openly and honestly.

Effective leadership requires knowing how to build and keep trust, whether it’s with individuals, on teams, or across the organization.

Finally, there’s no question that disruption will continue to define the course of business and organizations. The challenge for you as a leader is to develop the mindset and organizational culture that will turn the forces of disruption into a catalyst for strategic thinking and creative execution. The term ‘trust’ has been overused forever and, during the last decade, considerably devalued. In The Trust Paradigm book, the authors aim to take the concept back to its essentials and to re-evaluate how real, meaningful trust can be incorporated into management and leadership.

A great quote by American Academic – Clayton M. Christensen:

“We have found that companies need to speak a common language because some of the suggested ways to harness disruptive innovation are seemingly counterintuitive. If companies don’t have that common language, it is hard for them to come to consensus on a counterintuitive course of action.”