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Business Leadership 3.0

Written by: Neil Crofts

Article Overview: A few years ago I was discussing business leadership with an experienced business consultant and psychologist. He suggested that the next evolution of business leader would come from an HR background.

Business Leadership 3.0

A few years ago I was discussing business leadership with an experienced business consultant and psychologist. He suggested that the next evolution of business leader would come from an HR background. His hypothesis was that the first generation of big business leaders in the industrial revolution was the idealistic, entrepreneurial and philosophical. They created great enterprise by solving the social problems of the day. Henry Ford is perhaps the icon of this form of leadership. This form of business leadership continues, but is no longer the dominant style. These leaders were followed by what Robert Reich calls “Supercapitalism” and the financially focussed CEO. Here everything is reduced to the binary simplicity of “does it make more money in the next quarter or not?” As competition for shareholders and customers increased the time horizon for this attitude grew shorter and shorter until, in the autumn of 2008, it imploded. Being cynical you might say that Kenneth Lay (Enron) or Fred Goodwin (RBS) are the icons of financially focussed leadership. We are beginning to see the dawning of a new generation of leadership and the “HR based leadership” thinking is only part of it. Will it become the new dominant form of leadership? Was the shock of the credit crunch enough to move us on to the next era of business leadership? This depends to some extent on whether we; as consumers, will continue to demand cheapness over value. As shareholders, will continue demand the greatest short term financial over enduring performance. And as voters will continue to allow lax regulation of business. The reality is that for business leadership to evolve it will need to do it all. Deliver on short and long term financial objectives, be financially competitive, deliver on environmental standards and deliver on a “spiritual” level. My view is that the new level business leaders will start from a base of brand and culture and radiate out from there. The short term financial returns we all understand, but the new level CEO will need to think 5-10 years ahead, as well as the next quarter profits. This means planning the wider direction of the business and being far more in tune with social priorities. The environment will be one of the greatest social priorities of the the next 10 years and also the one of the key dynamics for cost control. Using new technologies to drive down energy consumption and develop “in house” generation will be key strategies for driving cost out of business. Technology will be another key social dynamic as internet and mobile technologies will define how social and commercial relationships are mediated. Technology will also change the cost dynamics of production, transport, communication and administration. The “spiritual” level was not very fashionable with the “financially focussed” CEO, but it will make a comeback with the brand/culture focussed CEO. Spirituality is all about meaning and in the new era long term profitability will depend on a business being meaningful to both staff and customers. In today’s networked, hyper-connected, media saturated marketplace attention is golden. Holding the attention of customers and media requires something considerably deeper than discounts and TV ads. Offering “meaning” to customers creates connections and long lasting loyalty that is far more valuable than discounts. Apple are the meaning masters creating and distributing fantastic products at or below cost to make their core products more meaningful. Most Apple software is given away or sold very cheaply because it generates sales and loyalty for the hardware products. For meaning to be truly valuable it has to go beyond mere utility to create “love” for the product or brand. Love is the bit beyond the logical reasons for any relationship, the part of our commitment that is not necessarily rational, and is therefore more powerful. Long term business success will depend on customers loving our products and our brand. Love depends on trust and delivering value over and above the rational. Meaning for staff is the other part of the “spiritual” equation. We no longer live in an industrial world, few businesses want employees who just do what they are told. We need people to feel inspired, motivated, engaged and responsible. To do this they need to “own” the ideology of the business, to feel passionate about it’s objectives, it’s products and it’s effect on customers, community and society. To summarise - the next generation of business leader will be brand and culture focussed with creative and excellent financial discipline. They will also be technically savvy enough to understand how to use it to innovate to reduce environmental impact and costs. The businesses they create will be loved by customers and staff alike. They will be trusted because of their authenticity and deliver emotional as well as practical value.

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Article Tags: business consultant, business leader, business leaders, business leadership, credit crunch, dominant style, environmental standards, financial objectives, fred goodwin, henry ford, hypothesis, industrial revolution, kenneth lay, kenneth lay enron, level business, psychologist, rbs, robert reich, spiritual level, time horizon



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