The world is more complex, globalized, and technology enabled than ever. At the same time, it is confronting grave problems such as youth unemployment, income disparity, and climate change. Solutions are proving elusive.
Effective leadership is a crucial element in addressing these intractable challenges. Unfortunately, the old rules of leadership are no longer valid. Why? Because the context in which leaders operate has changed. At the WEF’s Global Agenda Council on New Models of Leadership, we have boiled down these changes—and what they mean for leaders—to a short list of four.
1. Globalization means cross-border collaboration
In the past, leaders needed only to be concerned about issues in their own country. Due to globalization, they now have to collaborate with other countries’ leaders as a matter of routine. More and more issues today have a cross-border element. Think, for example, of the Euro crisis.
2. Multiple stakeholders have to be addressed
Leaders need to engage with multiple stakeholders. Again, take the Euro crisis as an example. Finance ministers had to deal not only with their counterparts in other Euro countries, but with the International Monetary Fund, the European Central Bank, financial markets, hedge funds, and of course their own voters. The presence of so many stakeholders makes issues harder to solve.
3. Technology demands speedy response
With the internet and mobile devices, everybody now knows everything the instant it happens. Think of the explosions at the nuclear power station in Fukushima after the earthquake and tsunami in March 2011. These were shown worldwide in real time on TV, then replayed countless times on PCs, tablets, and smartphones. Governments no longer have the luxury of time when crafting their response in a crisis. The same is true for CEOs addressing faulty products. Unless a fast response is forthcoming, discontent can spread like wildfire through the online community.
4. Social media and people power
Until the advent of web-based social media, traditional media disseminated information one-way. Now news has become a two-way street. Leaders have to engage not just with the conventional mass media, but with ordinary people on social media. As the Arab Spring showed, social media can genuinely empower the people, and modern leaders need to treat it with respect.
At the Global Agenda Council, we have been exploring the issue of leadership for a few years. Our conclusion: the old paradigm needs to evolve.
It used to be said that a good leader needed a warm heart and a cool head. Now, in addition to the ability to build emotional connections and make rational decisions, leaders require a third skill: the ability to communicate in a smart and timely fashion via multiple media.
This is just another evolutionary step. In the days of radio, the voice was enough. Then, with TV, overall image became important. Now, with the internet, speed and two-way interaction have become crucial.
Smart, timely communication means addressing multiple stakeholders’ concerns swiftly through a range of channels in a global language. The message will then generate its own momentum through sharing, retweeting, and liking to calm the mood of crisis.
Listen, learn, and lead
The old “warm heart” aspect of leadership is evolving, too. Formerly, leaders tended to belong to the dominant caste. In the Western world, for example, they were usually white males. Clearly this is no longer true. Think of U.S. president Barack Obama, German chancellor Angela Merkel, or the dean of Harvard Business School, Nitin Nohria.
Since a single dominant group can no longer lead by imposing its values, leaders now have to develop a different style. In a diverse world, a leader’s role is to understand different groups’ motivations and differences and, based on this understanding, build rapport and common ground.
Harvard provides a good example of the difference between the old and new styles of leadership. Remember when university president Lawrence Summers resigned in 2006 after igniting a storm with ill-judged remarks about women’s aptitude for science and clashes with black faculty members? His was the old top-down, less diversity-tolerant style of leadership. Summer’s successor, Drew Faust, a woman, proved quite different: cautious, tactful, and sensitive to difference. Her newer approach may not have been intrinsically better than the old, but Harvard became undeniably calmer and more stable under her leadership than it was on Summers’ watch.