August 24, 2018
Leadership and organizational culture: Keys to navigating uncertainty
As we all know, change in business is inevitable. But in today’s world, change has become increasingly rapid and constant. Consider that in the span of about 18 months, the US withdrew from the Trans-Pacific Partnership negotiations, announced its intention to renegotiate the long-standing North American Free Trade Agreement, imposed new tariffs on Chinese imports, followed up with tariffs on European aluminum and steel — sparking reciprocal tariffs from both the Chinese and European governments — and then proposed the removal of all tariffs between the US and the European Union on non-automotive industrial goods.
Institutional investors are questioning the dollar’s place as the de facto global currency as China’s economy grows and strengthens, potentially shifting the way markets are measured. Bloomberg recently noted the (alarmingly) widening gap between the global FX and S&P 500 volatilities. Historically, the beta between these indexes has been closer to one. The UK’s separation from the European Union and its potential effects, as well as broader global trends such as a rise in nationalism and pressure on immigration, also have the potential to shift the opportunities and risks for businesses.
Business leaders today must navigate this rapidly shifting global economic and geopolitical environment, while also addressing other challenges, such as increasingly vocal shareholders, disruptive competitors and constant technological advancement.
The bottom line? The world we live in is volatile, uncertain, complex and ambiguous. Change is not an event, it’s a constant force and one that is accelerating. Leaders must continually assess the changing economic, competitive and geopolitical environment to determine what those changes may mean for the business, and how the organization should respond. Leaders must address change not as a singular shift, but as a multidirectional constant adaptation to their environment.
This begs the questions: How can leaders navigate and succeed in this modern age of change? And how can you be certain that you’re selecting sustainable leadership teams in an environment where change is now the norm?
For most, the answers won’t come easy, and a universal solution does not exist. However, in our view, a key first step in adapting to the future is supporting, cultivating and selecting for certain attributes that help equip leaders and teams for navigating uncertainty and ambiguity:
- Agility and learning orientation. The link between leadership and learning is getting stronger all the time. In a constant state of flux, leaders need to rely less on what they already know and more on what they and the organization are capable of learning from one day to the next. Leaders who consistently seek input from others and are able to incorporate that input into their own thinking and planning for the future will be better equipped to adapt.
- Collaboration and influence. Simply learning from others is not enough. Leaders must be able to work well with others across their own organizations, and in some circumstances, will need to elevate their ability to partner and sell their ideas to other organizations or even across industries in order to remain relevant. Being able to recognize strengths in others and leverage them to get things done will be key in building more effective teams in the future.
- Strategic thinking. While responding to immediate changes, leaders can’t afford to lose sight of their company’s long-term vision. They will need to quickly understand and digest the implications of changes, especially as they relate to the risks and competitive opportunities created, and know when shifts are warranted based on new information and when the right strategic move is to stay the course. Further, they will need to quickly align their organizations and businesses models accordingly.
Leaders play a key role in shaping culture, so selecting those who embody these attributes help foster cultures that are more flexible and learning-oriented, and that encourage innovation, agility and exploration.
It is unlikely that the pace and scope of change will lessen in the foreseeable future. The paradigm of addressing change as a one-time event or a shift from one era to another is insufficient. Those leaders and organizations that are equipped to constantly adapt to an increasingly dynamic environment will thrive. Those leaders whose perspectives and operating rhythms follow the calendar before the market will lag behind.
Many thanks to Ross Blankenship, member of our Leadership Advisory Services team, for his contributions to this piece.