Would Jack Welch, who led General Electric for 20 years until his retirement in 2001, succeed as a CEO today? His management style, so often lauded, was based on the premise that the CEO’s role was to maximise shareholder value and to command and control a company’s path to high performance. His catchphrase was “Be number one or number two in a market or we exit the market”. Welch’s approach, which epitomises 20th-century management tactics, continues to be admired and taught in business schools and training programmes worldwide.
But this is a mistake. I don’t believe 20th-century tactics remain relevant today. After all, only 13% of the companies that appeared on the Fortune 500 list in 1955 were still on the list in 2011. Our world has become too intertwined, interconnected and interdependent for a leader to guide his company to success based on a steel will and a “best-way-forward-is-straight-ahead” mentality.
To be clear, the problem isn’t Welch. Who wouldn’t want to emulate his success? Rather, the culprits are the designers of management-training programmes. Given significant budgets and entrusted with moulding the next generation of leaders, management trainers are understandably risk-averse, favouring “tried and true” over “emerging and leading edge”. It is time to accept that yesterday’s management cannon no longer works as well in today’s vastly different free-market environment.
In my new book, The Collaboration Economy, I interviewed 21 CEOs from around the world who I believe embody the way forward for 21st-century leadership. Although they represent small, mid-size and large companies, they all share some key characteristics, one of which is that they believe that companies are no longer capable of solely determining their destiny. Instead, they said companies must work to influence the outcome through long-range planning, partnerships and acting in concert with their stakeholders (often ignored in favour of shareholders).
Here are nine essential leadership skills and traits gathered from the interviews:
1. Act with humility Each CEO I interviewed displayed humility, preferring to shine the spotlight on their companies, employees, partners and practices rather than themselves. I think this is a great leadership trait in a collaboration economy.
2. View leadership as a privilege, not a right John Replogle, CEO of consumer goods company Seventh Generation, says this perspective leads him to emphasise actions and investments that further his company’s mission. “I approach my role as CEO as one of privilege, responsibility and stewardship,” he says.
3. Nurture an unwavering commitment to true purpose Connecting with employees around a shared purpose, not just a mission statement focused on financial goals, is key to success. Unilever CEO Paul Polman said his company must “play our part in improving lives, enabling a [more] sustainable way of living by consumers and [providing] shareholder growth. That is our purpose.” Based on that purpose, Polman took the bold step of ceasing to report quarterly profits. “We don’t run the business on 90-day horizons, so why report on that basis?”
4. Serve as activist-in-chief for your constituents Karl-Johan Persson, CEO of H&M, buys nearly $1.5bn of ready-made garment products from Bangladesh each year. Recognising its reliance on Bangladesh labour, H&M is leading a movement to ensure the workers there are treated with respect and paid fair wages. Persson travelled to Bangladesh to meet with key influencers there to make the case for increasing worker wages.
5. Take a long (longer-than-tenure) view An excellent example of this is President Kennedy’s proposal to land a man on the moon before the end of the 1960s. Had he lived, his second term would have been over in 1968, so he might not have been president to celebrate the achievement. But he recognised that this goal was more important to America and its future than any personal glory for him.
6. Believe in and rely on partnerships Replogle of Seventh Generation says that his company relies heavily on its network and uses a chart to measure and track the effectiveness of its partnerships. “Seventh Generation is a living, breathing network. We are about partnering, collaborating, and amplifying our assets. Our company does not have boundaries – there are not start or end points within our company. Everything we do is through a network.”
7. Act with integrity, guided by an ethical compass It’s not difficult to find examples of companies brought down by their own greed, hubris and CEO-led malfeasance. In the collaboration economy, the most successful companies and CEOs will act in a transparent manner. Transparency attracts partners, strengthening a company’s network with players from all sectors – private, public and civil.
8. Have an iron stomach … and patience In a mature industry, major changes rarely happen overnight, so when Grieg Shipping Group subsidiary Grieg Green decided to change how they dispose of unwanted vessels, they knew they were in it for the long haul. “Recognise and accept that you have a long-term battle in front of you,” advises CEO Petter Heier. “The people who don’t want change to occur are waiting for you to run of energy. So it’s in your best interest to demonstrate your beliefs to non-believers, internally and externally.” For Heier, that means travelling to Asia from his home in Norway every six weeks to meet his partners and demonstrate his commitment to change.
9. Feed constructive discontent Coca-Cola CEO Muhtar Kent says his greatest legacy at Coca-Cola will be to help the company and its employees remain constructively discontent. “I’m often asked what worries me, what keeps me up at night,” he says. “And I’ll tell you: arrogance. Because any time anyone begins to think they’ve got it all figured out, that’s when they get wiped out. By a competitor. A new environment. Or some other meteor, right out of the blue.”
If you’re a CEO – or an aspiring CEO – how do these concepts fit in with your worldview and framework for success? What changes would need to be made in your company and in your approach to ready your company for success in the collaboration economy?