Friday 26 / April / 2024
We live in times of unprecedented complexity. Global forces and technological changes have catalysed disruption to the point it has outpaced our ability to adapt.
2016 was the year in which rising dissident voices rose to an undeniable pitch. Brexit, the election of Donald Trump to the US presidency and the shift towards extremes in many European countries. Around the globe, social contracts are breaking down and a new narrative between the governing and the governed has not yet been crafted.
Computing power is increasing to the point we stand on the cusp of the Fourth Industrial Revolution. Artificial Intelligence is progressing at such pace that by 2029 it is expected that machine intelligence will be indistinguishable from humans’.
Today, the iPhone contains far more information and processing power than the original supercomputer. Quite literally, we’ve never had more data and advice at our fingertips. Yet, we have never felt a greater need for insights and wisdom. We have never had so many laws and so few examples...
In 2017, for the first time in human history, people over the age of 65 will outnumber children under the age of 5. The epicentres of economic activity are shifting, so that by 2030 one third of mega cities will be in India, China or Africa. Business paradigms have transformed, with the emergence of any-to-any ecosystems that combine winner-takes-all dynamics with an asset-light yet talent-heavy approach (Airbnb, Uber, Alibaba, Facebook, Hyperloop)fundamentally changing the nature of competition across untold number of industries.
The digital revolution has allowed consumers to impose a C2B worldwhere they take the driver seat in defining what good looks like and decide the fate of businesses and industries through clicks and likes. In today’s world, they set not only the bar but also the economic equation by defining the “worthiness” of products and services. They dictate that the journey is as, if not more important than quality and price, ushering the way for a more experiential economy.
Exponential and somewhat unpredictable change is our‘new normal’, and this is challenging many of the assumptions and beliefs underpinning our decision making and placing much higher demands on leadership.
Against this backdrop of constant change, being an effective leader today is a totally different ballgame.
On the one hand, thanks to the hyper-connectivity of our world and the power of social media, a leader can benefit from the magnified impact of his or her actions; on the other, is the heightened level of scrutiny and debate for every action a leader takes or fails to make.
Moreover, you are no longer responsible and accountable for your actions and results only to your Board of Directors, or to your shareholders but to a much more complex web of stakeholders, most of whom do not know you, yet have and express expectations of you. But how does one become effective in truly understanding, anticipating and effectively addressing the needs and wants of all stakeholders.
The litmus test of it lies in what you are able to deliver and the level of trust and comfort you inspire in your stakeholders. Are you making a difference? Is your definition of impact in line with theirs? Increasingly such impact goes beyond financial performance to encompass organisational health, culture, environmental footprint, one’s broader contribution tocommunity, and the sustainability of your business. In simple words, it is about people feeling that you are touching their lives.
In this new reality, the HOW is as important as the WHAT – it is no longer sufficient to simply demonstrate achievement, what matters just as much is the way in which you succeed, the values and behaviours that define your journey. These determine how you deal with both success as well as failure.
The shareholder activism that shook the corporate world in the early 2000s – Carl Icahn vs. Time Warner management, Roy Disney and Stanley Gold vs. Michael Eisner and Disney management, to name but a few – was, in my opinion, the seed of what we are currently witnessing and the precursor to the need for responsive leadership.
In my mind, today’s deficit of trust and strong anti-establishment current is a cry for responsiveness.We cannot hope to succeed as leaders if we fail to address this new reality with effective remedies.
What cannot be ignored as an important limiting factor is the environment in which leaders are evolving. The current capital market framework does not reward a focus on long-term value creation and, while after the 2008 recession ‘quarterly capitalism’ was a hot topic of discussion, the pressure on leaders across both private and public sectors to maximise short-term returns has not eased. Dominic Barton, Managing Partner of McKinsey & Co. refers to this as the need to ‘fight the tyranny of short-termism’.
Moreover, the global economic outlook is still sluggish, especially in advanced economies that are suffering from stagnating consumer demand, declining productivity growth and income inequality.
According to International Monetary Fund forecasts, advanced economies are expected to grow at approximately 1.7 per cent in coming years(while emerging markets will grow at approximately 4.3 per cent). This implies it will take just over 40 years for a developed country to double its GDP (compared with 16 years for a developing country). Such a low growth environment will make it very challenging for leaders to generate enough economic surplus for distribution.
This context, combined with people’s demands for instantaneity in our hyper-connected world, inevitably pushes leaders to focus on the trees and lose sight the forest. But change will not come on its own. Responsive leadership will also require driving the paradigm shift that will be essential to meet the rightful demands of all stakeholders.
Such transformation cannot and does not need to happen at the expense of performance and results. We have seen time and again how a number oforganisations have owned the problem and been able to address it head on, while reaping the benefits of business success and sustained investment flows despite low levels of profitability and financial performance. Amazon is one such companythat has defied the odds – in 2015, it became the fastest company ever to reach $100 billion in annual sales, and it just started reporting profits, over 20 years after its founding. Two decades during which investors were willing to be patient and to believe in Jeff Bezos’ vision and sense of purpose. Recently, Tesla shareholders overwhelmingly approved the SolarCity merger, buying into Elon Musk’s vision of a diversified, renewable energy ecosystem – in spite of Tesla’s cash drain and SolarCity’s $759 million loss in the first 9 months of 2016.
Last year, I led an initiative at Majid Al Futtaim to define the 25-year strategic direction of the Group. An effort that was met withsome scepticism by a number of industry experts and stakeholders. Yet, I am convinced that it is only by focusing on long-term value creation that one can hope to deliver the breakthroughs in performance and organisational health that leadership is all about. As Lewis Carroll once wrote ‘if you don’t know where you are going, any road will take you there’.
Having a long-term perspective, a ‘true North’ is just the start. In a world in which a leader’s actions are under the microscope at all times, by all kinds of stakeholders, and where the potential impact from making the wrong call can be tremendous, fact-based decision making acquires much greater significance.
Relying on a pragmatic approach and on insights drawn from available evidence rather than unsubstantiated biases and dogma will be critical.
And, in making fact-based decisions that create long-term value, it is extremely important to engage with all your stakeholders – to listen to their needs, anticipate their concerns and ultimately ensure we are holding up our end of the bargain and they are getting their ‘fair share’ of the pie.
Otherwise you may think you are leading while, when looking in your rearview mirror, you will realise that you are actually leading no one but merely managing the status quo.
Although it is full of opportunities, our world is deeply unsettling. We need to rewrite the narrative on leadership and set an even higher standard for ourselves to ensure we are able to take a long-term view, deliver breakthroughs in value creation that transcend financial performance, and redefine the terms of the ‘social contract’ with all our stakeholders.
Of course, this is much easier said than done. It not only requires what Marvin Bower referred to as the ‘forehearing’ as well as the foresight and courage to act in the long-term best interests of your stakeholders. It also demands from every leader a large dose of humility, a desire to learn and adapt, tolerance for ambiguity and the energy and persistence needed to achieve extraordinary results and transform organisations, communities, even countries.
Today, responsiveness is the lowest common denominator of leadership. Yet, it is the ‘secret agent’, a necessary component often found in alarmingly insufficient quantities.
We are set on a course, not of our choosing,that is imposing an important choice on each of us – either accept the forces at play and get up to lead or give up and accept to be led, because the world has lost its patience with mediocrity, with ‘good enough’.
This will be either exciting for some, or totally demotivating for those who have lost their sense of purpose, their ‘why’. I personally find it mostly energizing, and feel blessed for the opportunity I have been given to lead at such times. - The writer is Chief Executive Officer, Majid Al Futtaim – Holding
