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Leadership Challenges in a Hyper-Changing World

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From the Winter 2015/16 Issue "Latin America On Life Support?"

By Michael A. Genovese

The sight was heartbreaking—thousands of refugees scrambling onto a train in hopes of entering Europe, others walking hundreds of miles with no food or water. A few were probably economic migrants, but most were fleeing war. From Iraq, Syria, Afghanistan, and elsewhere, they filled highways, drained the resources of a dozen nations, and, eventually, taxed the patience and political will of a broad swath of European leadership. Germany will take so many, France fewer still. Great Britain will give a little money but take only a small number, while Italy and Greece, already in economic distress, take in tens of thousands. It is an enormous challenge that demands a coordinated effort.

Yet at the very moment strong leadership is most needed, Europe has provided a fractured response. In this age of globalization and “hyper-change”—where technological, environmental, and demographic changes are accelerating at unprecedented rates—decisions need to be made jointly and quickly. So immense is the scope of the refugee crisis that no one nation can effectively deal with it. And, absent effective mechanisms for coordination, the solutions for Europe will require empowered leaders working together.

As the refugee crisis demonstrates, the old methods of go-it-alone leadership have failed in an interconnected world. A new, constructive approach for the 21st century that unites like-minded executives will require a new kind of leadership—a leveraged leadership. The modern leveraged leader is one who musters available resources to bring others to the table, sets the agenda, frames the issues, and offers solutions, all in the hope of aligning forces behind a common effort. The rigid, larger-than-life leader giving orders is outdated. What the world needs are flexible leaders who can recognize and seize opportunities and build consensus among a variety of actors.

CONTEXT IS KING

Leadership is difficult in the best of times. Writing in the first third of the 16th century, Niccolo Machiavelli reminds us in The Prince that to be effective, a leader must have virtu (skill), occasione (the right context or occasion), and fortuna (luck). Machiavelli alerts us that while skill is important, it is not enough.

It has always been critical for leaders to be sensitive to context and changing fortunes, but it is even more true today in this world where situations are rapidly shifting and increasingly interdependent. Thus, it is essential that leaders use their skills to manage and adapt quickly and creatively. This means that leaders must recognize the context as well as the forces of change at work and reconcile these with their goals and values. 

This landscape of hyper-change is not temporary—it is the new norm, creating disequilibrium and disorientation. To insist on the prefix “hyper,” some line must have been crossed. In fact, it is not a single line, but several; the very nature of change is changing. While some argue that change goes through a sprint/rest cycle of rapid transformation followed by stasis and consolidation, a sprint/sprint cycle best captures the most basic nature of the contemporary change process.

Several things are happening at once to transform world. Technological changes occur at a head-spinning pace. Globalization brings all its attendant problems and possibilities. Environmental problems are reaching or have reached a tipping point. And demographic changes suggest trouble in countries with aging populations and shrinking workforces. Taken together, this is a potent new cocktail.

Among individuals, change triggers a set of predictable stresses—anxiety, confusion, fear, frustration, anger, and over-personalization. If individuals deal poorly with change, then organizations fare even worse. There is a rigidity—a “thinking” that develops in most institutions that makes them resistant to change. Participants are comfortable with the status quo. They know the ground rules. Workers know how the game is played and are comfortable repeating familiar patterns of behavior. Yet while threatening, change is also necessary, inevitable, and often worthwhile. It is vital to pave the way for constructive, intentional changes in individuals and organizations amid an environment of hyper-change.

Transformational leadership has always been difficult, but for a new breed of agile leaders, an age of hyper-change may actually create more opportunities than calmer times. In times of crisis, many customary checks on leaders evaporate. When things are going poorly, we may demand change. Change leaders institutionalize a culture of innovation in their organizations. Be it Steve Jobs at Apple or the team at Google, flexible, change-oriented organizations in business and politics attract top talent and respond flexibly and quickly to change. This can be done formally or informally by articulating a vision grounded in innovation and by developing an organizational culture of change. 

DRIVING FORCE: TECHNOLOGY

Technological innovations are the most significant contributors to hyper-change. And these innovations are coming at breathtaking speed. Our brains evolve slowly, but technology changes rapidly. Today, five-year-olds spend an average of six hours each day in front of a screen, while teenagers spend an average of nine hours a day consuming digital media. Every day, we write more than 2 million blogs; we generate over 4.5 billion Facebook posts; and we send upward of 23 billion texts. By the time someone reaches 20, he or she will have been exposed to 30,000 hours of digital information. This changes how “screenagers” think.

Digital literacy “rewires” our brains. Neuroscience has made significant advances in helping us understand how the brain works. Our brains are “plastic and pliable;” they change based on what we see, do, and repeat. New wiring, or synapses, develop. The goal should be to prepare leaders and organizations to deal with these vast changes in technology. We must develop “extended minds” that help us adjust to hyper-change. How to do this? Aristotle had the answer several thousand years ago: habit. Repeated acts form habits, which over time become part of us. 

DRIVING FORCE: GLOBALIZATION

In spite of repeated warnings, we continue to bury our heads in the sand. On a host of issues, we must develop the political will and the public demand to turn things around. Yet there is little reason for optimism.

The most difficult task of today’s leaders in dealing with long-term crises is convincing people that 25 or even 50 years from now is not that far away. As a general rule, democratic systems are not good at long-term thinking. They respond to the moment and the upcoming election. Long-term thinking may make policy sense, but it does not always make political sense.  

The world is faster, closer, and more connected. Globalization is a process that has been going on for centuries, and what was once a collection of semi-independent sovereign states is morphing into a global village. Today, we are more interdependent and interconnected than ever before, and this connecting process will only accelerate. Globalization is changing the political landscape. In Western democracies, office holders are losing their authority to govern. Their legitimacy is being threatened, and it is not altogether their fault.

Today, few of the world’s problems will be solved by national policies alone. Almost every major challenge facing the world now demands global solutions. From pollution to terrorism, the spread of infectious diseases to economic development, all of today’s issues are interconnected. The need to reach complex multinational agreements and to develop cross-collaborative networks to meet pressing needs will, of course, limit the authority of the nation-state. This will further undermine the authority of national leaders. Globalization takes power out of the hands of nations and places it in the hands of the market, multilateral coalitions, and nongovernmental actors. 

Because this power to shape events is slipping through their hands, political leaders will increasingly be unable to satisfy the demands of their citizenry. This will ratchet up the pressure on leaders while also increasing the instability of many regimes. Take Niger, for example. It may want to address matters of pollution, but economic growth in China could undermine its efforts. If China pollutes, Niger “feels the heat” as the environment warms, regardless of Niger’s actions to fight climate change. If Niger’s leaders respond with long-range thinking and curb their emissions, they may lose political traction today; if they employ short-term thinking, the country—and the world—loses in the long run.

But even with growing interdependence, the United States is well-positioned to use “hard power” (military and economic strength) as well as “soft power” (attractiveness of culture, rule of law, society) to gain influence. To do this, the U.S. needs to leverage its considerable resources with other nations to create coordinated responses to try and solve international problems. 

If the power of the nation-state is diminished in a globalized world, democratic leaders will have to rely less on force and develop their smart power skills: their abilities to set agendas, consult, persuade, collaborate, build consensus, network, put together coalitions, selectively (yet less frequently) use hard power, and spread their ideas and ideals.

DRIVING FORCE: DEMOGRAPHICS 

Our looming population crisis stems at once from having too many people and too few. Globally, we have too many people fighting for finite resources, crammed into urban zones, consuming and polluting. Yet the U.S. and Western Europe have too few workers to sustain aging populations being kept alive longer due to medical advances. With aging populations, there will be too few workers to contribute to their care. The United Nations Population Division reports that “the ratio of working-age people to senior citizens in Western Europe will drop from 3.8 to 1 today to just 2.4 to 1 by 2030.”

By now, the entire baby-boom generation has turned 50. Across the globe, we are seeing the beginnings of the so-called “gray tsunami”—the increase in the number of countries with a large proportion of seniors. In coming years, the proportion of the American population over 65 will rise from less than 10 percent in 1970 to about 20 percent in 2030. The number of baby boomers who turned 65 per day in 2008 was 8,000; in 2025, it will top 11,000 per day. Still, the United States is well-situated on the aging issue. The U.S. median age will only be 40 in 2050, and the fertility rate is slightly above or at the replacement rate. The problem of having far too few workers could be largely solved in the U.S. by one rather simple, yet politically difficult step—controlled, sustained immigration. 

We are also witnessing a major gender shift. In the United States, more women than men are going to college, getting degrees, and earning advanced degrees. Women receive 62 percent of associate degrees, 58 percent of all bachelor’s degrees, 61 percent of the master’s degrees, and over half the doctoral degrees. In 25 years, the dominance of white men will diminish. Women will win the power contest, because they will have won the education contest. 

TOMORROW’S LEADER

To deal positively with hyper-change and all the factors driving it, tomorrow’s leaders will have to develop a different skill set. Within governments, corporations, and universities, hierarchy is breaking down. The age of the imperial CEO is over. We will need leaders with a broad understanding and training and who can quickly master a wide variety of skills. To make sound decisions across an array of shifting topics requires the rational and emotional brains to work together.

One key to this decision-making is the development of metacognition.We must think about our thinking. Decisions are made in a world of unpredictability. With the accelerated pace of change, we all too often feel pressed to make key decisions before our cognitive processes have finished. Thinking about our thinking gives us a decision-making discipline that can diminish the grosser manifestations of irrationality.  

Creativity also becomes more important in this hyper-changing world. We must free our minds from the prisons of the past and look at problems from different angles, combine old ideas in new ways, develop connections across disciplines, recognize new relationships, see new patterns, think in paradoxes, get rid of inhibitions, take intellectual leaps, embrace serendipity, and be willing to make mistakes. Intellectual cross-training—learning to be both a generalist and a synthesizer—helps.

Individuals and organizations must constantly adapt to new conditions and challenges. This is where creativity is crucial. Creativity involves asking a lot of why and what-if questions. Closely linked to judgment and creativity is emotional intelligence. Perhaps surprisingly, there is a low correlation between IQ and leadership. More important than IQ is emotional intelligence. Emotional control, situational awareness, self-knowledge, and “other awareness” have much more to do with leadership than IQ. And most great leaders are generalists and polymaths, not intellectual heavyweights. Nelson Mandela and Dwight Eisenhower, very bright men, were not intellectual giants, but they did have a high level of emotional and contextual intelligence.  

In a hyper-changing world, a leader must be flexible and balanced. Great leaders can adjust their dance to fit the music being played. Winston Churchill and George Patton may have been successful wartime leaders, but when the music changed, when they needed to make the transition from war to peace, both struggled and were eventually pushed out of power. Flexible leaders know when to push and when to back away, when to lead and when to follow, when to speak and when to remain quiet, and when to force action and when to refrain. 

To effectively balance priorities, leaders must have both self-knowledge and world knowledge. The Delphic maxim of ancient Greece enjoined the faithful to “know thyself.” Only by leading an examined life can one hope to know justice and act justly. Self- and world knowledge allow the leader to develop a cosmopolitan outlook that crosses borders and cultures. 

In a globalized world, the development of an international mindset is an essential ingredient for success. A greater cosmopolitan orientation and large number of reference points allow a leader to have a broader, more multi-dimensional outlook. Leaders such as Indra Nooyi of PepsiCo and Carlos Ghosn of Renault often exhibit such a cosmopolitan approach. Their orientation is—and must be—parochial in order to protect their organizations. And yet, their narrow interests are best served by being global in orientation.

Leaders like Nooyi and Ghosn define the prism through which the organization or group sees and understands the complex world around them. If a compelling vision is articulated and sold, the purveyor could well become a transformational leader. A vision allows such a leader to see where to go and to move in that direction. A vision is a snapshot of the future, a dream realistic enough to be attainable yet different enough to inspire and attractive enough to gain commitment. It is about selling hope. This is what tomorrow can be, this is how we can get there, this is what it will cost, and this is our ultimate reward. Vision allows others to buy into something bigger than themselves in pursuit of a common goal.

Of course, leaders must develop communication skills and be able to articulate this vision. Communicating is not a leader simply giving speeches. It’s a two-way street: convey a message but listen as well. Leaders both talk to and talk with their teams. Effective leaders must speak, write, and think clearly, but they must also listen deeply.

Even an inspired team needs to be managed. Great leaders know who should be on the bus and who should be off the bus. They know who should be in which seats on the bus and in what direction the bus ought to be headed. Team building, talent recognizing, and talent rewarding are key skills for the effective leader in a world of hyper-change. The effective organization attracts talented people, trains them, praises them, gives them freedom and responsibility, challenges them, ignites their passion, and amply rewards them for their contributions.

Tomorrow’s leaders must also develop contextual intelligence. Effective leaders must be good diagnosticians, and good diagnosticians must develop a contextual awareness that allows them to read the situation accurately and apply the correct remedy to the problem. This very special type of intelligence recognizes that leadership is largely a function of context and that the context or situation sets the parameters of what is possible. As such, the right moment, or occasion, tends to open or close the doors to power. Anwar Sadat, Egypt’s president from 1970 to 1981, both faced and seized the moment of opportunity when he proposed a new relationship with Israel in 1979. By contrast, Mohammed Morsi, a leading member of Egypt’s Muslim Brotherhood who became the nation’s first democratically elected president in 2012, seemed the victim of events and circumstances he could neither control nor master. In the end, Gen. Abdel-Fattah el-Sissi removed Morsi from power in 2013 after only 12 months as president.

Leaders need to see the big picture, reorder priorities, and recognize new and complex patterns. Tomorrow’s most effective leaders may seem less in charge than leaders from the command era, but in carefully framing and communicating narratives, tomorrow’s leaders will be just as important and influential. They may not be great problem solvers, but they will be accomplished in posing the most critical and globally relevant questions. Designing or framing the puzzle and asking questions that spark interest, competition, and collaboration will replace top-down leadership in the coming era.

POWER OF LEVERAGE

Leaders of tomorrow will not be able to deal constructively with problems with outmoded notions of leadership. The command model only works if others unquestioningly follow your commands, which is less likely in the interdependent world of hyper-change. Leaders can only truly lead in the coming years by embracing a leveraged leadership model.

Leveraged leadership uses influence across interconnected networks, bringing together various interested parties—governments, corporations, nongovernmental organizations—to solve problems. To accomplish this, leveraged leaders use every available resource to deal with complex, blended systems. They try to build incentives and disincentives into the negotiating process in the hope of eliciting cooperation. 

Angela Merkel exercised such leadership during the Greek debt crisis as she marshaled the forces of the European Union to fend off a financial crisis in the region, bringing together various leaders as well as cultivating common interests that led to a unified response. In Europe, Merkel has had the resources and leadership approach to pull other nations together. While it remains to be seen if she can replicate her success over Greece to deal with the refugee crisis, her approach and skills make others listen and, at times, follow.  

Leveraged leadership is opportunity-oriented, with a leader constantly seeking ways to bring together diverse actors, build coalitions, and form consensus—always trying to convert leverage into influence and preferred outcomes. It does not dominate, because there are few times when a leader is in a position to dominate. It is a “bring us together” type of leadership. Here a leader is more guide than director, more persuader than commander. It is about finding, developing, and pursuing common interests. A new world needs a new conceptual framework. By conceiving of leadership as a style of cooperation, leaders might be able to cross international barriers to address the toughest issues—pandemics, pollution, security, global warming, shared resources, and shrinking supplies of oil, water, and other global essentials.

CRISIS IN LEADERSHIP

Our leaders are failing us, or so we are told. While it seems as though we live in a world where no one is in charge, in truth, we have many outstanding men and women willing and able to serve society. The goal is to identify the best among them, find ways to lend them support, empower them, and give them the tools necessary for effective leadership. There are several ways we can prepare for the paradigm shift that has already begun.

Innovative companies tend to be flexible and nimble. South Korea’s Shinhan Financial Group, IBM, and Google all realize change is inevitable and that to survive innovation must become part of the corporate DNA. The corporate cultures they built make change an ally to maintain leadership, not an enemy to be vanquished.

Organizations with in-house think tanks, such as the U.S. State Department’s Office of Policy Planning, must develop anticipatory approaches to problem solving. And task oriented bureaucracies such as NASA must—by necessity—anticipate both best and worst case scenarios. Advocates for long-range thinking and predicting can alert the organization to icebergs ahead. Other organizations may employ a planning system that involves a key person high in the organizational food chain (such as a devil’s advocate) whose job it is to alert the organization to the need for change and remind colleagues that they must engage in planning and prediction. 

 Of course, bureaucracies move slowly, change slowly, and innovate slowly. So many leaders are handcuffed by red tape. The world is moving faster, policy domains are more complex and interconnected, and authority and power are more diffused and decentralized. 

 If we are to better manage the world of hyper-change, we must recognize that a new, more challenging context has developed. We need to tailor our leadership training to deal with these new challenges and adjust our organizations to meet the demands of this new world.

Americans, said former U.S. President Bill Clinton, prefer leaders who are “strong and wrong over leaders who are weak and right.” Globalization and hyper-change will compel leaders to take a less aggressive and more leveraged approach to global leadership. Many accustomed to a more muscular form of leadership will not like this paradigm, especially since many of our key rivals—Vladimir Putin in Russia and Xi Jinping in China are moving in the opposite direction. Yet, in the face of the dramatic changes taking place across the globe, only a more cooperative, multilateral, and leveraged approach to leadership can bring about the policy changes needed to solve the world’s most pressing problems. 

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Michael A. Genovese holds the Loyola Chair of Leadership at Loyola Marymount University. He is the author of The Future of Leadership (Routledge 2015). With Todd A. Belt, he co-authored The Post-Heroic Presidency (Praeger 2016).

[Photo courtesy of Christliches Medienmagazin Pro]

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