There was also a recognition that the big global problems – poverty, environmental degradation and climate change, and unemployment, especially in the youth – is no longer something outside of business. What is clear to many executives is that these challenges are threatening the very foundations of corporate life.
Just how leadership can respond, and just what it meant to be part of the solution of global challenges was often at the centre of the Davos debate. Some executives argued that the role of corporations remained one of profit creation and delivery to shareholders. Others saw involvement in global issues as part of their outreach activities, whilst others still saw this involvement sitting at the very core of their purpose and mission.
However, there was very broad agreement that the context of leadership has changed irrevocably. Executives point to hyper-connectivity, the needs of the young millennium generation, and a rising discontent with the gap in pay between the top and the bottom, and indeed decreasing trust in leadership. All these push for a re-invention of leadership and indeed the corporations they lead. As one prominent politician observed ‘ there is a crisis of consent’, where the assumptions of the last 30 years are breaking down right across society.
Yet whilst there is agreement on the changing context, what is also obvious is that there are no easy answers. Yes, leaders need to be engaged with their communities – but where does that leave profit and the role of shareholders? Yes, the gap in pay between those at the top and the bottom is looking increasingly untenable – but who is responsible for closing it? These are currently questions for debate. Yet despite this ambiguity I heard some clear areas of certainty emerging around the leadership debate.
One area of certainty is that leadership will increasingly be about working in a complex multi- stakeholder world. There was broad agreement that all of the major challenges debated at Davos – from the euro to poverty and unemployment – are all embedded within complex ecosystems of players who might include governments, NGO’s, other partner organisations, and indeed small niche businesses. These are often hyper-connected networks where the leaders leverage is through influence and persuasion rather than command and control. In these situations the capacity to build deep collaborative relationships across boundaries becomes a core leadership capability.
I also heard a changing rhetoric of leadership. Phrases such as ‘self awareness’, ‘subordinate ego’, ‘inner path’, ‘compassion and empathy’ are being used by CEO’s as much as by professors. An understanding of how these capacities are selected for, developed and supported will indeed be necessary to take these phrases from rhetoric to reality. The challenge is that many of these deep leadership capabilities are learned in life rather than through training, so we need to build much deeper insight and knowledge about the natural processes that encourage and enable these deep insightful competencies to emerge. However, despite this complexity, what is clear is that the rhetoric of leadership at least has begun to shift in a deep way.
The lingering doubt expressed at the end of many debates was about the context in which leadership takes place. Specifically, how can leaders work proactively on global issues when the institutional contexts in which they operate are relentlessly short- term? These complex multi-stakeholder debates will take time and patience to develop and come to maturity – something that the institutional investors and governments are very short of right now.
Lynda Gratton is Professor at the London Business School and Chair of the World Economic Forum’s Council in ‘New Models of Leadership’.