The World’s First 21st Century Leader

By Gill Corkindale on November 7, 2008, Harvard Business Publishing

 

On Tuesday Barack Obama made history as the first black man to be appointed President-elect of the US. In the years and months ahead, he will make more history as he tackles unprecedented challenges: two bloody wars, a global financial crisis, the US’s tarnished reputation, domestic security and healthcare reform. But as the euphoria of his victory gives way to the hard work of transitioning to the White House, we should perhaps pause for a moment to reflect on Obama’s other achievement: his emphatic arrival as the world’s first 21st Century leader.

Let me explain what I mean by this. For much of the 20th century, academics, politicians and business leaders have researched, debated and tried to quantify leadership, the elusive quality that separates great men and women from the merely good. Yet a century on, apart from a few critical moments in history, the ideals of leadership remain little more than theories in textbooks or concepts to be debated in lecture theatres of business schools. Yet this week, Obama changed the game: he has emerged as the living, breathing exemplar of leadership for our times. The first decade of the 21st Century has been a wake-up call to leaders everywhere: globalisation, war, geopolitical shifts, climate change, financial and economic crisis have rendered the old paradigms of leadership obsolete. Times of rapid change and uncertainty demand new qualities of flexibility, humility, adaptability, resilience and what I call “negative capability” (coping with the unknown).

The first defining event of the 21st Century was, of course, the 9/11 terrorist attacks on New York and Washington in 2001. During that crisis new leaders emerged, such as Mayor Giuliani, who presented a calm, dignified and moral face of leadership. Yet few other leaders responded to the call to change. Just after 9/11, I conducted my own research into leadership in crisis. I wanted to find out what effective leaders did to keep their people, communities, and businesses on track during a period of catastrophic change. I surmised that this could yield valuable lessons for leaders during times of less extreme change. I discovered that change and crisis bring very different leaders than those who flourish in ordinary times – and this is why I believe Obama is the first leader to demonstrate the range of qualities needed to deal with our complex age and conditions.

First, let’s examine what some of the most forward-thinking writers of the last century had to say on the subject of leadership. One of the central ideas of leadership in the last half of the 20th century was Max Weber’s concept of charismatic leadership. In 1968 the German sociologist wrote that social crisis was precondition for charismatic leadership, a combination of intelligence, purpose, grace under pressure and consideration for their followers. US academic Noel Tichy built on his work in the eighties and nineties, identifying transformational leaders – courageous, value-driven, visionary people who were comfortable with uncertainty. Transformational leaders emerge in times of crisis or change, in contrast with transactional leaders who manage in steady times, preserving the status quo and strengthening existing structures, cultures and strategies.

Other researchers believed that the measure of a true leader was the ability to display both transformational and transactional styles as the circumstances demanded. Around the same time, Warren Bennis advanced the argument that in a complex and uncertain world, leadership can only be exercised by self-directed, strong, creative, purposeful and self-actualising leaders – those who have listened to their inner voice. Bennis later added that one of the most reliable indicators and predictors of leadership was the ability to learn from traumatic circumstances: emerging from these ‘crucibles’ of change, leaders were stronger and with a more defined purpose

In the 1990s, Peter Vaill of Antioch University added that values were the primary organising principle for action in a turbulent climate. When it is impossible to set goals, leaders need to rely on their inner resources, drawing on non-rational as well as rational abilities, in other words, their deepest convictions. So how does all this theory relate to Obama and why do I believe that he is the world’s first true 21st century leader?  The answer is that he embodies most of the qualities described by these great writers on leadership. Although he remains untested in high office, Obama has nevertheless displayed a remarkable breadth of qualities.

As a man, he remains true to the values of his humble background. Raised by a single mother in Hawaii and Indonesia, he was no doubt tested by his circumstances. Yet he has matured into a thoughtful, considerate, inclusive, relaxed and level-headed man. He has shown humility and connectedness with ordinary people, remaining gracious under attack and undistracted by innuendo and smears. As a charismatic leader, he has revealed a soaring eloquence, fierce intellect, gravitas, passion, conviction and a rare ability to mobilise and inspire diverse groups of people in the US and around the world.

As a transactional leader, he is a consummate professional, intellectual, dynamic, with tenacity, focus, grasp of detail, breadth of knowledge and intellect. His campaign demonstrated superb organisational ability, skilled use of technology, tenacity, focus, grasp of detail and breadth of knowledge. Most important of all, he has emerged as a beacon of hope, showing unwavering faith in his country and its people. His willingness to step up to the plate, despite threats to his life and deep-rooted problems at home and abroad.

As he said in his victory speech, his aim is to restore the US’s enduring ideals of democracy, hope, opportunity and liberty, rather than the recent attractions of wealth and arms. On a more practical level, his challenge is to unite Republicans with Democrats in the new administration, something he appears to be tackling as I write. What are your views on Obama’s leadership? Do you believe he is uniquely well-placed to meet his challenges? Where are his strengths and what are his blind-spots? What resonates with you and what advice do you have for him?

From Innosight, an Innovator’s Survival Guide

By Scott Anthony on October 21, 2008. Source: Harvard Business Publishing

The following was written by Innosight Senior Director Kevin Bolen:

Innovators, are you feeling a bit lonely at the moment? Don’t take it personally. During turbulent economic times, companies naturally tend to turn inward. Talking about the core business that everyone understands and can predict is like eating comfort food on a dreary day — a temporary escape to a better time and place.

Unfortunately, these sentiments alienate those focused on the “new and different” and prolonged isolation can lead to rash, unproductive behavior. Don’t fall into this trap. A more thoughtful response during such times can actually accelerate and expand the returns on your innovation initiatives.

To help you make the right decisions, we offer a brief list of actions that innovators should and shouldnot be doing in today’s skittish climate. We focus on the two main areas most likely to evoke the wrong behavior: the call of the core and the scarcity of funds.

In terms of working with colleagues and leaders in the core business, Innovators should accept the realities of the marketplace and lend a hand. Innosight’s research has shown that innovation can only succeed when the core business is stable so innovators should look for ways their team and personal expertise can help right the ship.

One way to support the core is to temporarily suspend “nice but not necessary” market trials and reallocate resources to research efforts around core clients. Also, innovators can use the toolkit they have developed pursuing new growth businesses to help the core:

• Understand how the jobs-to-be-done for consumers are changing in light of the economy and align your value proposition accordingly

• Conduct a disruptive threat assessment to analyze and counteract the actions of emerging competitors

• De-feature existing offerings to meet just the basic needs of consumers at a lower price point

Innovators should not react to this internal focus of core leaders by trying to cram disruptive offerings into the core business. Trying to force-fit technology or service offerings through traditional business models will not only deprive the concept of the time and freedom it needs to evolve successfully, it will confuse your existing channel and consumers at a time when they too are seeking familiarity and stability.

In short, offer your help and expertise to the core, but don’t offer to assimilate.

Turning our attention to budgets, it is expected that as capital tightens and revenues become less predictable, many across the organization will seek to defend what they have. Instead, Innovators shouldembrace scarcity. Pre-empt the inevitable discussion and voluntarily scale back your line items. You will like find that a sharper focus actually increases your ability to innovate. Ways you can consider “giving back” include:

• Release any part-time team members back to their “day jobs” in the core business – two or three dedicated people will accomplish far more than 30 people spending 10 percent of their time

• Prune your portfolio – prioritize concepts based on anticipated time to profit and upside potential, and temporarily shelve smaller and slower ideas

• De-feature your concepts – look for performance areas where you may be overshooting customer needs and eliminate them. Be ruthless here as consumers will not pay for performance they don’t need.

• Revisit your research approach – make do with small sample sizes, social media input, and low cost interviews to get directional information versus pursuing perfect data

• Reduce the cost of your field trials – start with what you would do if you had no funds then move up gradually from there. Use a 3-D illustration instead of a prototype. Have consumers request samples via a website instead of in-store trials.

Innovators should not respond to the threat of budget cuts by inflating the business case for their ideas. You goose the size of the target market by 15%, reduce production costs by 20%, bring the release date ahead 9 weeks and “Presto!” you are suddenly helping the bottom line! It is your job as the good innovator to resist this siren song as leaders will be looking for any plausible reason to avoid making difficult cuts. The core business must respond diligently to their economic challenges and your new concepts must be allowed to develop at the pace of their market. Attempts to “go big” quickly to save a company rarely, if ever, succeed.

Finally, innovators should respect their role in turning around the economy. The core business you are trying to save today started as an innovation. The core business of tomorrow is a “new and different” idea today. It’s symbiotic. Help the core stabilize during this period and your company will emerge from the downturn faster, stronger and better positioned to innovate than your competitors.

How Recession Will Accelerate Consumer Downsizing

By John Quelch on October 15, 2008. Source: www.discussionleader.hbsp.com

 

Watch out for a new brand of consumer in 2008: the middle-aged Simplifier. She finds herself surrounded by too much stuff acquired. She is increasingly skeptical in the face of a financial meltdown that it was all worth the effort. Out will go luxury purchases, conspicuous consumption, and a trophy culture. Tomorrow’s consumer will buy more ephemeral, less cluttering stuff: fleeting, but expensive, experiences, not heavy goods for the home.

The economic boom of the 1990s fuelled consumption and democratized access to a wider than ever spectrum of goods transforming former luxuries into “must-have” necessities. Millions played the lotteries or aspired to what they viewed on “Lifestyles of the Rich and Famous”. As they grew richer, pressure increased on those below to trade up. And, as they traded up, pressure increased in turn on the well-off to buy even more–the second home, the big screen TV and the latest sport-utility vehicle. Enter the big houses that measured success in thousands of square feet of floor space, topped by the 40,000 square feet, $50m palace that Bill Gates has built outside Seattle. In 2006, 35% of new homes exceeded 2,400 square feet in floor space compared with 18% in 1986. Ironically, these mansions, many owned by business people on the road half the time, grew in number as the size of the average American household declined.

These huge houses had to be filled with more stuff, good news for the home-appliance and home-furnishing industries. Even grocery manufacturers benefited. Larger homes with bigger refrigerators can absorb more inventory. Flat birth rates in developed economies have put pressure on durable consumer-goods companies desperate for top-line growth. Product quality improvements mean these goods break down less often. So durable-goods sales depend on two things: the launch of new, higher-priced, higher-featured, often customized products that persuade consumers to trade in their existing appliances before they break down (think cell phones), as well as household penetration of products such as fax machines and printers previously used only by businesses.

As the world economy slumps, one consumer segment will grow faster than ever. The Simplifiers have four characteristics.

First, they perceive that they have more stuff than they need. Sure, they may collect something specific like porcelain figurines as a hobby, but they are the opposite of the pack rats who fill their attics and basements with “you-never-know-when-you-might-need-it” stuff.

Second, they want to collect experiences, not possessions. And they give experiences rather than goods as gifts to friends and relatives. Experiences may seem ephemeral. They cannot be inventoried except in the form of “Kodak” moments; but they do not tie you down, require no maintenance, and permit variety-seeking instincts to be quickly satisfied. Dining out, foreign travel, learning a new sport will prove more resilient than expected in the face of recession.

Third, their stuff embarrasses them. Their Range Rovers no longer tell the world that they are sophisticated town and country socialites. There are simply too many of them on the road to offer much social status. Worse, they now signal the irresponsible selection of a gas-guzzler.

Fourth, they have wealth that is so assured that it no longer requires conspicuous display. They lease their cars, rent other people’s holiday homes, and would happily outsource other aspects of their lifestyles. They reject the marketer’s continual pressure to spend more money on possessions rather than on education, health care, and other social goods.

These are the consumers who are now trading in their sport-utility vehicles. They include the empty-nester baby-boomers, less confident than before, who are tired of heating unused spaces in cavernous mansions, now preferring smaller houses with architectural character and intimate spaces, more charm and less maintenance. Their families are scattered, unable to share conveniently the family holiday home and often unwilling to inherit the burden of something they will never use. The new economy has made it even easier for consumers to get rid of their stuff. The high-tech equivalents of the yard sale, electronic auction sites, bring Simplifiers together with those who are yet to catch the habit.

This growing segment of Simplifiers presents a challenge to marketers. These are well-off people who value quality over quantity and do not buy proportionately more goods as their net worth increases. Their increasing reluctance to consume will dampen expected demand growth in developed economies further and therefore slow economic recovery, requiring consumer-goods multinationals to further focus their efforts on emerging markets where stuff will still be king.