Towards a New Concept of Leadership and Innovation

The actual historical events compel entrepreneurial leaders to walk into uncharted waters and discover fresh options.

An entirely new reality is uncovered though the implementation of groundbreaking technology and other new products and services. Clients, partners and consumers are learning to creatively act and interact with this new vision of society and the world.

The question seems to be, will this new forcibly disrupting reality be sustainable or will we simply go back to life as usual after the discovery of a cure or a new vaccine that would arise?

Presently, the answer is not clear. But one thing is true and valid. The digital transformation is here to stay and we all need to take advantage of this time to study or hone new skills, visualize new ways to do business, buy or evaluate new projects as necessities and events are still changing. Re-imagining a different vision of the future is essential.

Now, how to innovate in these new times, and at the same time create new value and differentiation in your organization, product or service?

It is essential to prioritize a wide and diverse scope of thinking by intelligently including all levels of complementary responsibility within an organization creating in this way an authentic capacity to communicate though all available platforms.

Groups, ideas, objectives and milestones should understand that innovation is of utmost importance for it will set the pillars of the future. This is, undeniably, the great big challenge of our time.

Now, where do we start?!

As a jumpstart suggestion, the round-table brainstorming concept complemented with virtual participants where not only fluidity of ideas is encouraged but concrete approval may be collectively agreed upon. This initiative promotes IRT (In-Real-Time) discussion that enables fast-forward unanimous action that effectively benefit a whole array os solutions like problem-solving, de-escalating of contentious events or situations, compilation of suggestions for better performance or productivity to name just a few. Encouraging participation should be praised and acknowledgement systems of promotion might seem adequate if there is a collective consensus that proposed ideas leed to effective benefits or to a common good.

This may be a universally applied vision leading towards a new concept of leadership and innovation.

Collaborative work environments generically foster team building and creative thinking.

Building a sense of community is one of the first steps in creating a more positive company culture.

Up until just a few weeks ago, every startup was implementing this Google-like work culture, where offices have nap pods, video games, joint sitting areas, team activities and collaboration is the key. It establishes resilience, adaptability, resourcefulness, as well as a deep connection to the company vision.

Omri Tamir and Arnon Sobol, startup executives and cofounders of the ScaleUp NY startups community, both assert that the benefits of this way of working are much greater. They list the 5 startup work culture principles that are put to test in this age of COVID-19:

Collaborative Thinking and Team Creativity:

Working in one space naturally encourages collaboration and brainstorming around complicated ideation processes, whiteboard discussions, for example, when a mix of disciplines are involved or ideas spontaneously come up. These kinds of ongoing discussions that are crucial to great team efforts can be lost when working remotely, and interactions are restricted to more formal, limited and pre-scheduled meetings. Those interactions and informal encounters are crucial for employees’ engagement and satisfaction and are rather challenging to achieve when only working remotely.

Team Spirit

Creating a motivated, dedicated and energized team that is focused and passionate about one shared target is usually easier when there are personal interactions and spent time together. It may be over lunch or during a spontaneous ‘’chat beside the cooler.’’ The absence of these important opportunities for informal learning, sharing and collaborating is expected to hamper the way teams solve problems and think together. “Perhaps the solution”, they suggest, “is to allow individual contributors to work remotely on a variety of tasks and balance that with a great office environment for teamwork and collaboration that will eventually build the spirit and the DNA of the company. 

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"Working from home remains optional through October for most employees," said a Microsoft spokesperson.

Both working from home and shorter working weeks have been applauded by human resources experts as an alternative to a mass return to offices.

"It would also give better work-life balance for the people who need it such as part-time students, new mothers, parents who want more time with kids [or] looking after the elderly," said Alin Abraham, a Singapore-based consultant.

"If after Covid-19 employers learn how to employ flexible workers that would be a huge battle won for human resource management," she added.

A shift towards more remote working also allows companies to rethink their expensive office space.

Mastercard said it is currently looking at consolidating some of its offices while Facebook has plans for working "hubs" across the US.

"Post Covid-19, you can imagine many companies shrinking down their real estate and employees can just work from home. It will be an interesting proposition to see how employers can cater to different crowds," said Adrian Tan, of workplace IT firm PeopleStrong.

The new normal

A growing list of business leaders are adding their weight to working from home and more flexible working arrangements, aided by technology and video-conferencing platforms such as Zoom and Google Meet.

"As we start to return to workplaces and find a new normal, alternative working patterns will also help reduce commuter traffic and with social distancing measures," said HR consultant Emily Draycott-Jones.

"Covid has made employers move away from traditional thinking that productivity is contingent upon set hours within an office environment," she added.

Changing the way they work

The big tech giants dominate when it comes to extending flexible work arrangements over a longer term:

Amazon - giving employees the option to work from home until at least October

Barclays - 70,000 staff currently working from home. Also looking to consolidate global offices

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With many businesses likely to be operating to some extent with public money, the public will expect—indeed, demand—that their money be used for the benefit of society at large. Of course, this was already happening: In August, 181 American CEOs vowed to “promote an economy that serves all Americans” in a statement of the Business Roundtable. What does it mean for businesses to do right by their employees and customers? And as the coronavirus pandemic reveals or heightens awareness of social fractures, business will be expected to be part of finding long-term solutions.

The world will see the rise of a contact-free economy. In three areas in particular—digital commerce, telemedicine, and automation—the COVID-19 pandemic could prove to be a decisive turning point.

In terms of e-commerce, the pandemic has accelerated a change in shopping habits that was already well established. These trends could accelerate: Over the three recessions that have occurred in the past 30 years, the pace of automation increased during each, according to a National Bureau of Economic Research paper cited by the Brookings Institution.

In effect, it is becoming possible to imagine a world of business—from the factory to the shop floor—in which human contact is minimized. Businesses may need to reallocate investment—for example, hospitals might offer both telemedicine and clinic visit options—and rethink their strategic plans to take them into account.

The implication is that companies will have to rethink, not tweak, their business models. Investors are likely to take note and to devise ways to incorporate new resiliency metrics into their valuation, as they have begun to do with climate-related risks. Individuals, communities, businesses, and governments are all learning new ways to connect. And businesses are finding faster, cheaper ways to operate. These changes could make for better management and more flexible workforces.

Nurturing a next normal that will be better than what it replaced will be a long-term test for all institutions, global and local, public and private.

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Leaders and managers will need a great deal of resolve and resilience as they seek to navigate an economically and socially viable path toward a “next normal.”

The lessons from previous crises tell us there is a very real risk that inclusion and diversity (I&D) may now recede as a strategic priority for organizations.

1 This may be quite unintentional: companies will focus on their most pressing basic needs—such as urgent measures to adapt to new ways of working; Some of the qualities that characterize diverse and inclusive companies—notably innovation and resilience—will be much in need as companies recover from the crisis.

2 Indeed, it could help companies to unlock the power of I&D as an enabler of business performance and organizational health and contribute to the wider effort to revive economies and safeguard social cohesion. In this article, we explore what companies can do to ensure that I&D remains a core part of their agendas during the downturn, and beyond.

The benefits of I&D are clear now—and that doesn’t change in a crisis

Our research has repeatedly shown that gender and ethnic diversity, inclusion, and performance go hand in hand. Our latest report, Diversity wins: How inclusion matters, reinforces the business case. Over the past five years, the likelihood that diverse companies will out-earn their industry peers has grown. This research also suggests that banks run by women might be less vulnerable in a crisis. And we are seeing, right now, that cities and countries with women leaders are thought to be facing the COVID-19 pandemic more successfully than those without them. It may be, some researchers conclude, that female leadership has a trust advantage giving women the edge in certain crisis situations.

The challenge: Why I&D may lose momentum during the COVID-19 crisis

Progress on I&D could slow down during and after the crisis unless companies consciously focus on advancing diversity and fostering inclusion. As the crisis makes jobs vulnerable, diverse talent may be most at risk. That is seven million jobs.

As the COVID-19 crisis makes jobs vulnerable, diverse talent may be most at risk.

Eroding inclusion. It is also likely to be stronger in organizations that can draw on the full spectrum of diverse talent available to them.

Our research and the research of others suggest that when companies invest in diversity and inclusion, they are in a better position to create more adaptive, effective teams and more likely to recognize diversity as a competitive advantage.11 Meanwhile, other companies might struggle. Their responses to I&D during the COVID-19 crisis could mirror the broader stances toward I&D described in our report Diversity wins, where three broad categories of approaches emerged.

Diversity winners and fast movers. Our experience with companies in this group suggests that many of them will view their existing strengths in I&D as a way to bounce back more quickly from the crisis while they actively seek to boost representation and inclusion.

Moderate movers and resting on laurels. Further separation between diversity leaders and laggards is possible, and companies in the muddy middle could make huge progress (exhibit). When leaders and companies reaffirm their commitment to I&D, they can seize the moment as they stretch for gains in five key domains where, our research suggests, I&D frequently makes a significant difference to an organization’s performance.

Opportunity 1: Winning the war for talent. Remote working may have some downsides, as we’ve mentioned earlier, but its benefits, particularly increased flexibility, may play a more significant role in the long term of retaining women, who often shoulder a disproportionate share of family duties. The wholesale shift to remote working is also opening up access to a whole new array of talent that may not have been available to companies previously: working parents, dual-career couples, and single parents are all better suited to a flexible workplace and remote working.

Opportunity 2: Improving the quality of decision making. Our research has demonstrated that organizations investing in diversity and inclusion are strongly positioned in this regard, in part because diversity brings multiple perspectives to bear on problems, thereby boosting the odds of more creative solutions. Diverse companies are also more likely to have employees who feel they can be themselves at work and are empowered to participate and contribute. What’s more, “they may also encourage greater scrutiny of each member’s actions, keeping their joint cognitive resources sharp and vigilant.”13

When companies invest in diversity and inclusion, they are in a better position to create more adaptive, effective teams and more likely to recognize diversity as a competitive advantage.

Opportunity 3: Increasing customer insight and innovation. For example, one study found that over a two-year period, companies with more women were more likely to introduce radical new innovations into the market.14 A separate study found that businesses run by culturally diverse leadership teams were more likely to develop new products than those with homogenous leadership.15 Similarly, our forthcoming research on Latin America has found that employees in companies committed to diversity are about 150 percent more likely to report that they can propose new ideas and try new ways of doing things.

Opportunity 4: Driving employee motivation and satisfaction. McKinsey research on Latin America showed that companies perceived as committed to diversity are about 75 percent more likely to report a pro-teamwork leadership culture.16 Instead of letting remote working erode inclusion during this crisis, companies can reaffirm their commitment to I&D by capitalizing on its advantages in flexibility and access to talent. Proponents of I&D should show the leaders and managers of their companies the business benefits of I&D and the critical importance of inclusive leadership to ensure that all employees feel valued and motivated at a time of increased vulnerability. There are already many examples of small and employee-driven initiatives to support neighborhoods, towns, and cities, of companies encouraging employees to give back to them in nonfinancial ways (such as volunteering), and of larger corporations coming together to find innovative ways to minimize the pandemic’s impact on public health and to limit disruptions to economies and supply chains.

If there is one thing this crisis is demonstrating, it’s that the interdependencies among business, government, and society can no longer be ignored. Organizations that do so are likely to be rewarded in the longer term.

Seizing the moment to forge a new commitment to equality

The experience of diversity winners we have studied has shown that if companies deploy a systematic approach to I&D and don’t fear bold action to foster inclusion and belonging, they are most likely to reap the rewards. We believe that now is the time to be even bolder.

After the 2008–09 crisis, when we asked companies what they believed to be the key organizational dimensions needed to emerge successfully from a crisis, most emphasized the importance of the leadership team and the ability to define a clear direction for the company going forward—both dimensions in which diversity plays a vital role.

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Uncertainty will stay with us for many months, so it will be almost impossible to define what’s “normal.” What we need to think about is not a “new normal” but a new reality—a “new now.”

For leaders, the challenge of guiding people through uncertainty and into the new reality brings timeless needs into sharper focus. To offer a comprehensive vision of how companies can adapt to this rapidly unfolding reality, we’ve detailed critical people priorities:

During the crisis, we see an accelerated adoption of smart work (such as remote work, travel reduction, and virtual meetings). In the new now, smart work will be the standard across organizations.

During the crisis, most companies implement effective measures to bring health and hygiene to the next level. In the new reality, a new paradigm for skills and talent will emerge.

During the crisis, we try to manage workforce flexibility. In the new now, leadership will come from the head, heart, and hands—the focus of our discussion here.

During the crisis, organizations endeavor to stand together with employees and society. In the new now, this momentum will lead to purpose-driven culture.

During the crisis, companies drive their digital readiness. In the new now, the bionic organization will emerge with a new operating model and robust digital backbone.

LEADERSHIP WITH HEAD, HEART, AND HANDS

Successful organizations will depend on leaders who are as empathetic as they are capable. Whether they do is a deciding factor in which companies emerge from this crisis stronger than before.

To hone their empathy and ability to adapt, leaders require three elements (see the exhibit):

The head, to envision the future and the priorities required to succeed.

The heart, to inspire and empower employees.

The hands, to ensure innovative and agile-execution capabilities.

 THE HEAD

As uncertainty reigns supreme, the responsibility of leaders to craft vivid visions of the future and to lay out a clear path to success becomes more important than ever.

Microsoft excels at creating an aspirational vision that helps guide everything from the company’s overarching strategy down to individual employees’ actions and motivation. He went on to describe how Microsoft’s tools are being used in telemedicine, in e-learning for students forced to stay at home, in remote work, and for cybersecurity at a time when workers are rapidly adopting new digital tools. The proof is in the pudding: in China, the company has seen a 500% increase in Microsoft Teams meetings, calling, and conferencing.

The lesson for the new now is clear: a powerful vision will help people thrive in their work—not only at disruptive technology startups that routinely set their sights on changing the world but at businesses everywhere. The challenge for leaders in the new now is to give direction, provide autonomy, and focus on outcomes rather than activities—especially as work continues to become more flexible and distributed.

 BENEFITS TO LEADING WITH THE HEAD, HEART, AND HANDS

The benefits of combining a vision with strong practical leadership skills and deep empathy may seem difficult to quantify, and the effort required hard to justify.

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It is likely never more important than now for boards of directors and executive management teams to tackle the right questions and jointly guide their organizations toward the next normal.

Recently, we spoke with a group of leading nonexecutive chairs and directors at companies around the world who serve on the McKinsey Resilience Advisory Council, a group of external advisers that acts as a sounding board and inspiration for our latest thinking on risk and resilience. They generously shared the personal insights and experiences gained from their organizations’ efforts to manage through the crisis and resume work. The 15 themes that emerged offer a guide to boards and executive teams everywhere. Together, they can debate these issues and set an effective context for the difficult decisions now coming up as companies plan their return to full activity.

Managing through the crisis

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 Boards must strike the right balance between hope for the future and the realism that organizations need to hear. Boards and managers may have some hopes and dreams of their own. Boards and managers feel like they might be grappling with only 5 percent of the issues, while the vast majority are still lurking, unknown. Managers need to do their best to find out what these issues are, and then work with boards to ensure that the organization can navigate them. This may be a new capability that very few organizations have now, and they will likely need to spend real time building it.

Top managers are easily adapting to working from home and to flexible, ill-defined processes and ways of working, and they see it as being very effective and also the wave of the future. Many people in the trenches think it is the worst thing to happen to them (even those that are used to working remotely). Remote working is raising the divide between elites and the common man and woman. Don’t overlook the risks faced by self-employed professionals, informal workers, and small businesses. Boards and executives, but also academics, need to debate the question. Why did companies ignore the issue of inadequate resilience in their supply chain? Global companies, despite their experience, may find it harder to address and engage directly with diverse, volatile, and potentially conflicting stakeholders. Companies need help with government relations. How can companies manage this process carefully to emerge from the crisis with a stronger balance sheet? Many companies are caught right now and are sacrificing their bottom line in order to pay for their financing. Remote working increases the “attack surface” for criminals and state actors. The world is looking not just for new things but also for new ways of doing things (especially on the people side, where we need new behaviors, long-term rather than short-term), capabilities, and work ethics.

This is not to say that there are no efficiencies to be sought or found, but more that the trade-off between efficiency and resiliency needs to be defined far more clearly than it has been in recent years.

It is the board’s responsibility to coach and advise its management team, especially when the terrain is trickier than usual. Apart from all the operational focus needed for the return to work, it is even more important that boards and management teams take a step back to reflect upon these 15 core themes. In summary:

Take the time to recognize how the people who (directly or indirectly) depend on the company feel.

Have aspirations about the post-COVID world, but build the resilience to make them a reality.

Strengthen your capability to engage and work with regulators and the government.

Watch out for non-COVID risks, and make sure to carve out time to dedicate to familiar risks that have never gone away.

Find out what went wrong, and answer the uncomfortable truths that investigation uncovers.

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