Business leaders to get back to basics
Heading out of a decade that began ignobly with the greatest corporate collapse of all time - Enron Corp. - and closed out with the most ginormous financial bailout of Wall Street ever witnessed, the next 10 years for business leaders are expected to be a recalibration of the fundamentals.
"I think what's happened over the last decade is that too many people got enamoured with the bottom line and not so much with building the long-term sustainability of their businesses," says Glenn Rowe, associate professor, strategic management, and director, executive MBA program, Richard Ivey School of Business in London, Ont.
Indeed, experts agree that in the current complex global business environment, no single model of leadership fits the broad range of situations that leaders encounter daily.
Leadership qualities are constant, yet fluid. Those that were important a century ago - for example, integrity, leading by example, motivating people, developing talent, customer satisfaction, creating and maintaining a competitive advantage - remain vital today. Still, other qualities have been less enduring, proving to be panaceas for their time.
As a new decade approaches, the Financial Post canvassed some of the top business schools in Canada to ask what they anticipate the leadership challenges will be and how they are adapting their curriculums to accommodate the emerging trends.
Almost everyone agrees that the fundamentals are important for developing good leaders.
Alex Kondra, dean at the faculty of business, Centre for Innovative Management, Athabasca University in Alberta, says the tech bubble and the scandals of subprime mortgages and asset-backed commercial paper were the result of a lack of focus on the basics.
"A lot of people were running around saying companies had to be valued differently because the old model didn't reflect the new reality. The old model did, it was the emphasis on greed that drove valuations," he says. "There was a heavy emphasis on style over substance, especially with CEOs. People were living larger and it was really detrimental to organizations and destroyed some companies. So to a certain degree there will be a retrenchment and a return to fundamentals."
Ronald Burke concurs.
A professor emeritus of organizational behaviour, Schulich MBA program, at York University in Toronto, Prof. Burke predicts a major challenge for business leaders in the next decade is "be results-oriented and be accountable for getting things done." Not only that, he says top executives also need to hold their staff accountable going forward.
"Too many leaders haven't been able to create environments that capture hearts and minds of their people," he argues. And because there's less money to throw around in bonuses, there'll be a premium on non-financial incentives, and leaders will need to be more inspiring to get their people to buy into their visions and programs.
"Leaders have to use the next decade to regain trust, not only of their people but of the population at large," Prof. Burke says. "Right now, there's a ton of cynicism on Main Street about Wall Street, and that's got to be restored."
Generally, business schools teach value creation, value capture and value distribution with a view of balancing the interests of all the stakeholders.
Often, companies are driven mostly to achieve the short-term, bottom-line results to appease the marketplace and shareholders at the expense of longer-term considerations. Academics agree that senior leaders in the next decade are going to be under pressure to take the longer view, by investing in assets such as research and development, and human resources, to cement the foundation of companies and maintain their future sustainability.
Ultimately, the goal is to develop CEOs and top managers who understand the synergistic combination of making value-based decisions that enhance companies to keep them sustainable in the long run while maintaining their short-term financial stability.
"We need to develop people who have a sense of what is it is to be a strategic leader," says Ivey's Prof. Rowe. "It's the ability to be fluent with those with whom you work, to voluntarily make decisions on a day-to-day basis and enhance the long-term viability of the organization. It's the combination of being a manager and a visionary with his or her feet nailed to the ground."
Sustainability has a new urgency because of the speed of technology and its impact on decision-making and communication.
While corporate leaders have always had to understand their core technologies, they haven't always understood their larger impact on various stakeholders. In the future, they'll have to be more sensitive because corporate decisions resonate almost instantly across the globe, and that means almost every corporate commitment now must involve discussions about the impact on employees, the environment, customers, and other stakeholders, in a way that they haven't before.
All business schools offer courses on ethics, but Prof. Kondra says the strategic planning to determine the curriculum at Athabasca is constantly adapting to the changing world of business.
For example, he says, the school no longer offers separate courses in e-commerce, ethics and social corporate responsibility because they're ubiquitous. Instead, those subjects are now integrated fully throughout the MBA program.
"It's not so much that we don't do it, it's just the way we teach them that has changed," he says.
Ivey is also tinkering with its program, according to Prof. Rowe, not necessarily phasing out courses, but adding more to cover contemporary issues.
The emerging trends getting more attention in the classroom these days are managing cultural diversity, enhancing communications skills and team building.
Increasingly, leaders will need to be more aware of the impact of globalization on all aspects of their businesses. In many ways, that's a return to entrepreneurship and exploiting niches.
At the same time, globalization has increased the need for cultural sensitivity not only in new markets, but within organizations that are experiencing cross-cultural diversity.
Gone are the days when almost every company in the United States and Canada was run by white, males who presided over a homogeneous workforce.
And with Canadian business leaders increasingly peddling their wares outside the country, courses in international business are intended to make people more self-aware of their own biases and assumptions.
"In the next decade, leaders are going to have to be more flexible and tolerant in the diversity of their workforces," says Prof. Burke.
In a complex and fast-paced world, leaders in the future will need to learn how to ask more questions, and have fewer of the answers. Top business leaders know the corner office doesn't have all the answers - and they shouldn't pretend to know everything either.
Increasingly, more senior executives will manage employees who know more about products and services than their bosses. In a world of multi-channel information sharing, team building is becoming paramount.
"The world is becoming increasingly complex and it's moving faster and faster with a greater amount of information," says Prof. Kondra. "It makes it really hard to manage any situation without the right team to support the massive flow of information at the rate of change, you will be lost because you can't do it by yourself."
Still, too many CEOs and top managers are happy to be surrounded by those who seek reinforcement of their opinions. Very few champion new ideas and disruptive points of view.
"Too many people are happy to be ‘yes' men and women," says Prof. Burke. "For a leader to be effective in the next decade, I don't think that would be doing you a great service."
In the end, the experts agree the challenges in the decade ahead are about keeping up with the complexity of business and the rapid pace of change, while trying to avoid repeating the mistakes of the past.
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