Being a business leader in the 21st century is tough. This is because businesses now operate in an increasingly complex and dynamic world. For business executives and managers, this situation increases the risks involved in making both strategic and operational decisions.
According to the Developing the Global Leaders of Tomorrow Report, an output of a project led by Ashridge Business School, there are a host of emerging issues and trends that businesses face. Based on a survey undertaken among business executives and thought leaders, the following trends are expected to have the greatest impact—whether as opportunities or risks—on their organizations: (a) increasing legislation and regulation, (b) increasing demand for and scarcity of limited resources (e.g. energy, water, minerals, food), (c) changing consumer preferences in relation to social and environmental performance of products/services, (d) shifts in centers of economic activity with the emergence of China, India, Brazil and others in the global marketplace (d) increasing scrutiny of business behavior and demand for transparency and accountability (e) growing numbers of more wealthy consumers in emerging economies and (f) implications of mitigating and adapting to climate change.
To effectively manage the opportunities and threats associated with these social and environmental trends, organizations will require substantial change in the way they build new knowledge, skills, and ways of thinking among senior executives, managers, and employees. There is also a need to embed the consideration of the above-mentioned trends into the company’s strategic decision making (e.g. making investments, entering or exiting from markets, and innovating to offer new products, services and processes). It is also critical for business organizations to communicate with and engage key external stakeholders, whether in the form of new alliances and partnerships or of multi-stakeholders initiatives to develop joint responses to societal issues. Some of the survey respondents also highlighted the need to stimulate change in organizational culture. For these organizational responses to succeed, businesses must have the suitable talent that will help them navigate uncharted waters.
So what are the knowledge and skills expected of tomorrow’s business leaders? According to the Ashridge study, which was undertaken as part of the European Academy of Business in Society (EABIS) Corporate Knowledge and Learning Programme, these competencies can be grouped into three clusters, namely ‘context,’ ‘complexity’ and ‘connectedness’.
First, business leaders must understand the changing business context and recognize the opportunities and risks of emerging social, cultural, political, and environmental trends. Second, business leaders must develop knowledge and skills that will allow them to lead in a complex and ambiguous world. Third, business leaders must have the ability to understand the actors in the wider political landscape, to engage these actors, and to build effective relationships with various external stakeholders, including regulators, competitors, civil society, and local communities.
For ‘context,’ knowledge and skills that survey respondents thought to be most important are: (a) understanding the risks and opportunities of environmental and social trends for your organization and your industry; (b) ability to align social and environmental objectives with financial goals; (c) ability to articulate the business rationale for pursuing social and environmental objectives; and (d) ability to factor into strategic decision-making broad social and environmental trends that transcend competitive issues within your industry sector. Some also mentioned the ability to use scenario building and horizon scanning tools, the ability to use risk management tools and understanding corporate governance frameworks.
For ‘complexity,’ knowledge and skills deemed most important are: (a) ability to make decisions and manage when faced with considerable complexity and ambiguity; (b) ability to find creative, innovative and original ways of solving problems; (c) ability to be flexible and responsive in the face of change; and (d) ability to learn from mistakes. Some also mentioned the ability to balance shorter- and longer-term considerations, the ability to understand the interdependency of actions and the knock-on implications of decisions, and understanding the ethical basis upon which business decisions are being made.
For ‘connectedness,’ knowledge and skills deemed most important are: (a) ability to build effective partnerships with internal and external stakeholders; (b) ability to engage in effective dialogue with a wide variety of organizational stakeholders, including people with different perspectives and paradigms; (c) ability to identify key stakeholders that have an influence on business success or are impacted by business activities; and (d) understanding the impacts of core business activities, both positive and negative, on the wide range of stakeholders that interact with or are affected by one’s organization. Some also mentioned the ability to translate learning from relationships with external stakeholders into situations within one’s organization, the ability to engage in and contribute to public policy, and understanding the business value of diversity in enabling the organization to have the capacity to understand, anticipate, and effectively respond to change.
At the DLSU Ramon V. del Rosario College of Business, whose mission is to develop future Filipino business leaders, we are aware of these trends and have begun to contemplate about these developments in our attempt to make our business programs relevant to our students. In a subsequent column, I will talk about innovative approaches we have undertaken to create value for the leaders of tomorrow... today.
Raymund B. Habaradas is an Associate Professor at the Management and Organization Department of the Ramon V. Del Rosario College of Business of De La Salle University (DLSU), where he teaches Management of Organizations, Ethics and Corporate Social Responsibility, and Management Action Research. He is also the Director of the DLSU Center for Business Research and Development. He welcomes comments at [email protected]
The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty, and its administrators.