A circular economy needs new types of leadership

Putting purpose at the core of your business

Over the last months I’ve often stressed the importance of new ways of working if we want to make the #transformation to a circular economy a success - about the need to rethink how we have been doing business in the polymers and chemicals industry. With this also comes the need to rethink #leadership and how we lead businesses.?

In the past, businesses in the polymers and chemicals industry were often led by the maxim of being the frontrunner, of being the first to achieve something. Of course, being first comes with competitive advantages. But the transformation we are facing is bigger than individual companies.?

The way to circularity leads through cooperation and partnerships. Unless one has integrated one’s business model into a full circle, circular value chains have to be collaborative value chains. Collaborative success isn’t built by running in front of your partners, but by crossing the finish line with them. You need a crowd on the winner’s podium, not a single frontrunner.?

The question is: how can business leaders contribute to achieving this??

I read an article by @BCG recently and I liked the approach they described there as #Generative Leadership. While not looking at circularity in particular, the approach fits the needs of the circular economy very nicely: “Generative leaders strive to leave the world a better place than they found it. [...] Generative leaders believe that their obligation to society and the planet is at the core of their businesses, not just an afterthought.” This is exactly what we should be striving for in the polymers and chemicals industry.?

“Leaving the world a better place” as a business purpose brings us to a misconception many leaders may face: there is no discrepancy between sustainability and profitability. Quite the opposite in fact, if you take Neste as an example: our renewable businesses have contributed a major share of our profits over the last couple of years. Also, the term “shareholder value” has seen some change in perception over the last couple of years.

By now, sustainability and purpose have been on the agenda of shareholders for a while already - just think of Larry Fink’s 2019 CEO letter about “Profit and Purpose ”. So instead of seeing sustainability requirements as a threat to business, we should see sustainability as a business opportunity.?

Accept the risks of trying new things

To tackle that opportunity, the transformation to circularity and more sustainable solutions requires us to embrace new technologies and business models. For that, we need visionary approaches and solutions. “Generative leaders look to reimagine and reinvent their business”. Here we come to a second misconception in our industry: risks have to be taken. Especially in the chemicals industry, we tend to be risk-averse. Perhaps understandable as chemical facilities quickly cost billions of euros to build - and who wants to take any risks investing billions of euros??

Yet, we need to leave our comfort zone if we want to make a change and if we want to make that change quickly. We have to adopt some start-up spirit to overcome that risk-aversion. We have to try things and accept that some will work while others won’t - and that that’s actually okay. Trying things that don’t work isn’t a sign of bad decisions. It’s a sign of courage and the willingness to move forward in the transformation.?

Give your employees guidance, but also give them purpose

The risks we have to take serve a higher purpose - and aside from the aforementioned benefits, a true purpose also provides motivation for employees. “Generative leaders create an inspiring and enriching human experience for their people”. Offering employees a purpose to work for not only offers a sense of belonging, but it also provides clear advantages in recruiting.?

A US study from 2018 showed that 9 out of 10 people were willing to earn less money to do more-meaningful work. Hence, if we want to have employees who enjoy their work and are motivated, we would do well to lead by purpose. Because after all, motivated employees do a better job than those questioning the purpose of their job when getting to work every morning.?

Find ways to turn 1+1 into 3

Finally, generative leadership is also about collaboration. “Generative leaders find ways to execute and innovate through supercharged teams that work with agility across boundaries.” Bringing the right people together and forming the right teams is exactly what we need for a circular economy.?

While the generative leadership approach looks at teams within the business, I’d even go one step further: For true circularity, we need to look beyond our own company and team up with other partners - and this brings me back to my first remarks (talking about circles…): we need supercharged partnerships and collaboration, because the impact we can make towards net zero is so much larger when working together.

So let’s embrace new ways of leading by being generative leaders. The firsts who get there can be frontrunners in not being frontrunners.?