At the BSR Conference 2015, which takes place November 3-5 in San Francisco, we will explore a number of ideas related to our theme, “Resilient Business, Resilient World,” and key among these ideas is leadership—the subject of one of our Conference tracks.
Resilience can refer to the ability to withstand disruptive shocks, manage complexity, and recover from tough times—but it also implies evolution, nimbleness, and long-term thinking. Building resilient companies, communities, and systems requires a different kind of leader—one who has a broad understanding of the risks and opportunities facing companies, who is adept at engaging with a variety of stakeholders, and who demonstrates flexibility and a commitment to ethics and impact. These leaders are rare, but they are critical to guide truly resilient companies.
In late 2012, BSR, Changing Consciousness, and Executiva published the report “Sustainability and Leadership Competencies for Business Leaders,” which explored the competencies needed to develop resilient leaders—particularly senior managers, executive teams, and boards. What follows is an overview of our findings, as well as developments since the publication of our paper.
Six Skills of Resilient Leaders
Until recently, the sole mandate of the company was to create shareholder value. Today, the company is expected to create many different kinds of value, and shareholders are only one constituency. That's because there is now a much broader understanding that our world is economically connected, ecologically interdependent, and socially accountable.
In this context, the role of the business leader is more expansive and more public. Resilient leaders must be able to interpret trends and societal moods, change their organizations internally, act effectively on a global stage, and build strong relationships with diverse constituencies.
Traditionally, business leaders have been recruited, developed, and promoted for their operational—mainly internally focused—change-management abilities. But today, a new set of external change-management abilities need to be developed as well. We still need effective management and operations of companies, but we also need to change the driving force for their forward momentum.
Our report identified six leadership competencies deemed most important for business leaders in this changing landscape, and these are still relevant today:
- External awareness and appreciation of trends: We need leaders who can interpret long-term societal trends and anticipate how governments, NGOs, and society are likely to react to them. These leaders must understand the risks and opportunities these trends will bring for their organization, and they must be able to develop strategic options for the business.
- Visioning and strategy formulation: Resilient leaders can effectively communicate the vision of what the company is aspiring to become—in other words, how the company will be profitable by addressing a societal need, internally and externally.
- Risk awareness, assessment, and management: Today’s leaders need to address risks far beyond operational physical risks, such as risks to corporate reputation, stakeholder relations, business continuity, or even customer demand. Leaders need to focus particular attention on high-impact, low-probability risks that could jeopardize the company’s future.
- Stakeholder engagement: To be truly effective at stakeholder engagement, leaders need to learn to be comfortable listening to and engaging with people of varied backgrounds and points of view—and see them as true co-owners of the business’ journey, not just a group of people to whom they are communicating.
- Flexibility and adaptability to change: Resilient leaders demonstrate the ability to lead when there is considerable ambiguity about the best way forward. They listen carefully to voices inside and outside the company for new information that might require a change of direction, and they think creatively about new ways of doing things.
- Ethics and integrity: All business leaders interviewed for our study named ethics and integrity as the overarching competency. It’s not enough to have ethics policies; leaders need to show how ethics and integrity are embedded in company culture.
Integrating Resilience into Leadership Development
Since we first interviewed business leaders for our 2012 paper, many of the leading companies have implemented the internal aspects of sustainability into their operations, and some of the advanced leaders have tried to fundamentally change the way they do business in terms of their core products and services.
Now their focus is on how to integrate these competencies into all stages of leadership development, from recruiting and promotions to rewards and incentives. Doing this helps companies respond to society’s expectations and it helps them innovate for the future.
This plays out in different ways. Barclays and GlaxoSmithKline—two companies that have weathered concerns about their ethics and culture—have integrated ethical considerations into sales and employee-incentive structures.
When it comes to leadership development, two things are affecting how companies are developing their leaders: the changing nature of communications and new approaches to collaboration.
In the past, stakeholders were typically large organizations focused on specific issues; today’s stakeholders are more diffuse, often represented by individual citizens with greater influence due to the prevalence of social media. As a result, many companies are helping their leaders become more digitally savvy. At Bain & Co. and Total, for instance, senior executives are “reverse mentored” by junior employees who are digital natives.
The nature of collaboration has also changed, moving from the public-private partnerships models we saw when writing our 2012 report to more collaboration across companies, industries, and different stakeholder groups. To account for this trend in multifaceted collaboration, several companies are working with different industries, stakeholders, academic institutions, government, and thought leaders on leadership-development programs that emulate the new “border-free” working environment. One new example is the Forward Institute, launched in the UK in 2014 as the home of a fellowship that will act as the pre-eminent, cross-sector development experience for the next generation of leaders. Often, these programs include on-the-ground experience in emerging markets or with challenged local communities, to give leaders a deep personal experience of what the world looks like.
The leaders emerging from these programs report breakthroughs in understanding of how to navigate the future for themselves and their companies. They bring innovative ideas for the business and find themselves promoted more often than their colleagues. Most leaders report a higher level of commitment to their companies and their potential to solve societal issues through their products and services.
There are many different ways to help develop resilient leaders, and we have found that the companies that invest in these competencies help create not only resilient leaders but resilient companies that support a resilient world.