The Next Generation of Leaders: Building Leadership Capability that Creates Strategic Differentiation
The field of leadership development is at a critical inflection point. How do our organizations out-think, out-strategize, out-innovate and out-execute our competitors? How do we develop leadership capability that creates strategic differentiation, globally?
“To survive in the twenty first century, we are going to need a new generation of leaders” – Warren G. Bennis.
Only leadership can bring about transformational change and over the next decade, pharma leadership will face two profoundly difficult challenges: First, reigniting innovation such that it leads to the creation of cost-effective, tangible improvements in healthcare. Second, morphing the current organization structures into new forms that nurture collaboration, discovery, experimentation and development – and result in new business models. As global pharma organizations grapple with a more technologically intensive and complex agenda, flaws in traditional approaches to talent management and leadership development are increasingly visible.
Building Leadership Capability
Building leadership capabilities is a powerful way of building competitive value yet the track record of leadership development is disappointing. According to the McKinsey report "How Do I Build Leadership Capabilities to Drive Business Performance", organizations must adopt three core approaches and avoid three common pitfalls. First, they should use performance improvement opportunities within their organizations as the real-life context for learning – and avoid generic, off-the-shelf programs. Second, they need to build deeper leadership qualities, not just functional skills, so leaders have the resilience and self-awareness to drive and sustain major change. Third, they should shape a “leadership engine” that integrates capability-building with the organization’s broader norms and management processes –as opposed to a series of one-off, disconnected interventions.
Leading from the Edge
Annmarie Neal, author of “Leading From the Edge” is well-positioned to comment on leadership, having previously held the Chief Talent Officer role in both Cisco Systems and First Data Corporation. Neal is founder of the Center of Leadership Innovation—a worldwide consulting firm that specializes in business innovation and transformation thought leadership and organizational excellence. She brings more than 20 years of global experience, consulting with business executives and senior leaders across a range of industries, to her writing, speaking engagements, business management, and consultation. The book stemmed from Neal’s frustration with leadership capability development and talent management and its failure to translate into strategic differentiation for companies.
Current leadership development practices aren’t working – and in my opinion won’t work in the future".
“The nature of organizations has changed, and the leaders they require in the future will be fundamentally different from those they require for today’s business demands. It is time to recreate leadership for the requirements of the modern organization. To do so is a formidable leadership challenge. Current leadership development practices aren’t working – and in my opinion won’t work in the future. These practices worked well in an industrial economy where the challenge was to scale efficiency, but are failing to produce the caliber and quantity of leaders we require for an innovation economy, where the demands of leadership are to drive new forms of value creation.
In 2009, for example, U.S. companies spent an estimated $12 billion (24 percent of their overall training budgets) on leadership development. Yet despite this huge investment, nearly 60 percent of companies report that they face leadership talent shortages that will impede performance in the next few years. What’s even more alarming for most companies is that nearly 40 percent of their home-grown “high potential leaders” – the people they are spending hundreds of thousands of dollars to develop – often fail within the first 18 months of being promoted”.
Recreating Leadership Development
Organizations that get leadership development right are able to accelerate priority projects, drive major turnarounds, and continuously improve their execution across the globe. While addressing current business needs, they also prepare themselves to respond to future challenges and opportunities.
“The unspoken reality is that leaders cannot be mass-produced. Yet, current leadership development practices are an attempt to mass-produce leaders. It is time to recognize that the practice of leadership development as we have come to understand it is past it’s ‘sell by’ date, if not entirely obsolete. The question facing many of our companies around the globe is: what should take its place?
To be sustainable, any effort to develop leaders must be viewed as a business imperative that is deeply entwined with the organization’s talent and performance management processes, as well as with its broader vision, norms and strategy. In this way, a “leadership engine” can be built into the fabric of the organization – much more powerful than an outsourced, detached set of training programs,” states Neal.
Now more than ever, highly effective leaders can be a powerful source of competitive advantage. Yet many attempts to improve leadership capabilities fail to make a material impact on an organization’s performance. By linking leadership development tightly to strategic, operational and organizational performance imperatives, addressing deeper personal qualities alongside practical capabilities, and building a sustainable leadership engine, companies can unlock perhaps their greatest hidden asset: the transformative power of their leaders.
Through extensive research, executive interviews and many years of experiences working in the field of leadership, Annmarie Neal has identified 10 essential traits that differentiates the next generation of global leaders from the rest.
“Over the years, serving as a management consultant and as the corporate lead in charge of executive development, I have assessed and developed thousands of leaders, most of whom were either preparing for or already in significant global assignments. Working closely with these individuals, I have learned that there are certain notable traits that distinguish those who hold global positions from those who are truly (deep in their being) global leaders.”
1) Strong Sense of Self
An unusually astute sense of self translates into an ability to understand the world and the people around you on many levels and in many different contexts. Purpose to ‘change the world’ coupled with a powerful strength of conviction keeps leaders pushing forward even in the face of obstacles or when pressured by others to do something else.
2) Multi-Modal Thinking
Truly exceptional global leaders possess a rare capacility to rapidly absorb, synthesize, and organize information that helps them understand the world around them, even when that world is radically different from what they have experienced before. Almost simultaneously, they are able to use that new world view to determine how best to lead themselves and their organizations going forward. This multi-level processing enables them to respond faster and more effectively to market changes and opportunities. The ability to make connections and interconnections across industries, technologies, markets, and geographies is an incredibly important skill for the global leader, particularly within the pharma industry, given the complexities of the competitive landscape. It is essential to the process of developing strategies and collaborative relationships that keep a company, even an entire industry, relevant over the long term.
3) Courage to Recreate
In order to be continually relevant we need to continually change, knowing when that which has worked in the past is destined for failure going forward. The dilemma faced by many leaders is that when they find a good model, say Dell’s “Build it to Order,” they have a hard time letting go. For global leaders, this dilemma is amplified, given the need to operate multiple business models simultaneously around the world. Truly global leaders need the intellectual acuity to know what to keep, what to destroy, and what to recreate across their organizations, in order to remain relevant to myriad markets and constituents. The health care industry is under massive reinvention – or at least should be. How will pharma leaders step back, consider how industry trends coupled with market needs will challenge today’s business models and then evaluate how to recreate the future. New forms of value creation are on the horizon – and if the core industry doesn’t solve for these opportunities, new competitors will have room to enter and disrupt.
4) Experimental mind
While more of an operations focus and engineering mentality may have been successful in the past, today's leaders need to be more of an inventor and an experimenter, willing to try out a new idea (a hypothesis) and recognize that failure (disproving the hypothesis) can be just as valuable, if not more so, than when the hypothesis turns out to be correct. Experimentation has traditionally been a core competence within the pharma industry which has birthed brilliant product innovations. How can these same disciplines be applied to business models, go-to-market strategies and operational efficiencies?
5) Freedom to Fail, Fast
Failure is a necessary ingredient to success. Leaders need to learn how to fail: How to understand it, learn from it, and importantly how to recover from it (emotional resilience). Learning how to fail is essential if you want to know how to be successful. Failure is not the opposite of success but rather an integral part of the invention, reinvention, and innovation process. Within each failure are lessons that develop experienced judgment to apply to subsequent reinvention or innovative projects.
6) Constructive Collaboration
Today’s leaders need to see their corporations as if they are part of living systems, in which the success of the individual is dependent upon the success of the larger whole. In the business world, they understand that the success of the corporation is dependent on the success of the broader ecosystems. Never before has the power of collaboration been so critical to the pharma industry. Companies will see the next big innovations and product opportunities coming less from their R&D teams and more from collaboration communities within the ecosystem.
7) Balance Between Control and Chaos
Today’s leaders also need to not only learn to live with, but also to appreciate, messiness on the outer edge of their organizations. This requires co-existing in two worlds, one that is more reminiscent of the past, where a certain level of control and oversight is important to drive today's performance expectations, and another where the leader sets the vision and then gives permission to those working on the edge to self-organize and find solutions - often to problems that have not even been considered or created. By understanding and balancing the needs of both worlds, leaders can help their organizations stay profitable today, which can help financially support innovation for the future. To do so, leaders need to be comfortable with the messiness inherent in a knowledge (versus industrial) economy.
8) Global Change Agent
Leadership, especially at a global level, has a tremendous capacity to change the world, for good or for bad. Unlike industrial age thinking that at times disregarded or diminished the importance of environmental and social responsibility, leaders today need to be much more aware of the impact their operations have and are adjusting processes and policies to promote sustainability. Pharma leaders are well positioned to do good with their products, solutions and services. How will organizations not only create value for the capital markets but also the social environments in which they serve? How will they use the power of their intellectual property to drive economic as well as social value creation?
9) Empathy as a Business Imperative
For many business people, a word like empathy seems too soft for the fiercely competitive, results-driven world in which they live. But empathy can yield some very tangible business results on many fronts, from employee engagement to product design to identifying new market opportunities.
Authenticity is even more critical in a world of social networking, where anything you do or say can be captured and shared with the rest of connected humanity in a matter of minutes, if not seconds. For Frits van Paasschen, CEO of Starwood Properties, transparency is a fact of life. In his manifesto on leadership, written in early 2012 for the employees of his worldwide hotel and resort network, Frits says, “It is not enough to have a strong brand or a great product. People expect to know about the company behind the brand and the people behind the product”. Thanks to Facebook, Wikileaks, and LinkedIn—there are virtually no degrees of separation anymore. All the world’s a digital stage.
These are the touchstones of the new breed of leadership required to carry out the transformative change that is required for pharma organizations to deliver differentiated value in the markets that it serves. Delivering cost-effective and accessible healthcare to patients in developed and emerging markets will necessitate new thinking. Adaptable and agile, the next generation of pharma leaders need to be authentic with a deep sense of purpose and commitment to delivering on these goals.
For more information on Annemarie Neal, visit www.leadingfromtheedgebook.com
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