Where to for Leadership?

Thursday, May 1, 2008 - 10:12

With the world's economic axis shifting, research suggests that leaders everywhere have universal similarities as they face the No.1 trend: the rise of complex challenges. By Deborah Tarrant

In the early 1990s, Professor Robert J. House of the Wharton Business School in the US had a prescient notion. Looking at the global nature of business, he set out to determine what defined leaders around the world and compare their styles and values.

House launched the Global Leadership and Organisational Effectiveness (GLOBE) research program, the most in-depth study of its kind, gathering data from 61 nations with the help of 170 cross-cultural scholars. The ongoing study has produced findings with stronger significance in 2008.

The world watches, currently, with something approaching awe as its economic axis shifts and China and India emerge as global powerhouses, while the US teeters. The business community was gobsmacked recently when the Chinese Government stepped in to bail out Morgan Stanley, the No.2 US investment bank, to the tune of $5 billion. Then the Chinese state-owned aluminium corporation, Chinalco bought a chunk of one of the world's biggest mining companies, Rio Tinto.

The message is clear: understanding what drives the leaders of the new-order business worldwide is paramount for survival.

What leaders are

The GLOBE study has provided insights. It tells us that effective leaders everywhere have universal similarities. They are charismatic, dynamic, optimistic, socially adept - not narcissistic - and are expected to be trustworthy and have foresight.

However, they also have differences. While essentially all rely on team performance, there are significant differences in how participative they are.

Chinese family firms are headed by leaders who are more authoritarian and controlling than their US and Australian counterparts. American and Aussie employees can expect to share in decision making, while those in China - and many other Asian and some European countries - frequently do not. Including employees in important decisions may even indicate a weak leader to some.

There's also the power differential. In southern Asian countries - Iran, India, Thailand, Malaysia, Indonesia and the Philippines - the status of leaders is paramount. One of the GLOBE study participants, Professor Neal Ashkanasy of the University of Queensland's business school, recalls an occasion during a business meeting in Thailand when it took hours to organise the seating so the right people were next to one another, and no one was offended.

Arguably, globalisation is the headline leadership trend of the moment. How to deal with and operate alongside leaders from different cultures is crucial, but it is just one of the key challenges facing today's business leaders.

Last year, researchers Corey Creswell and Andre Martin at the Centre for Creative Leadership (CCL) in the US, asked almost 250 senior executives worldwide to pinpoint the 10 key leadership trends in business. Their results revealed the major pressures facing business leaders and, therefore, the issues that are shaping leadership styles.

Figures from the Australian Bureau of Statistics show just under 30 per cent of all workplace training is aimed at managers and preparing people for senior executive roles; yet what exactly are they being trained for? What styles of leadership are going to work in the increasingly complex 21st century?

The new complexity

Globalisation was just one of a raft of issues the participating leaders in the CCL study named as being part of the No.1 trend for leaders: the rise of complex challenges. Inevitably, fuelled by the escalating pace of change, the combination of changing market dynamics (the growing global emphasis among them) and talent shortage, leaders are being asked to do more with less and respond even faster to changes in their industries and economies, report Creswell and Martin.

Partially linked to the global attempt to grapple with this challenge is the need to perfect the art of virtual leadership in a world where we are continually being asked to bridge cultural, geographical and functional boundaries, enabled by technology. The CCL study says that 92 per cent of respondents believe face-to-face and virtual leadership require different skill sets.

Also top-of-mind for participants was the innovation revolution and the incessant quest for the next big thing. Frontrunners in this, cited by the researchers, are the well-reported efforts of Google, Apple and Honda. Perhaps, significantly, what emerged from the research was the insight that leaders can't go it alone. The leader as an isolated hero figurehead appears to be dead.

Collaboration trend

One clear leadership trend is collaboration. "Recognising the need to work with others, share the power and sometimes step back for others - within the organisation and beyond it - is a hallmark of the new leader," says Shaun Killian, Founder of the Australian Leadership Development Centre.

Internationally, organisations such as software behemoth Microsoft are already on top of this trend, teaming with other technology companies to address issues they face.

"For example, in leadership training alone, there's an increasing move by companies to team up with four or five others to develop leadership competency frameworks because the challenges they are facing are so similar," says Killian. "Often there's more difference from unit to unit than company to company. They offer leadership programs internally that acknowledge the context isn't just about one organisation. As leaders hop from one employer to the next, through their alliance, the companies are retaining the knowledge they pour into people."

With this new spirit of cooperation is the idea of leadership as a collective, Killian says. "With management mobility and people jumping into positions all over the world, organisations are realising the importance of management teams working as a collective so everyone is singing the same tune and not pulling staff in 100 different directions. The idea of leaders working together is something that's a strong trend."

It's basic, says Killian, but it's something leaders find hard to do. "They tend to rise to their position because they are good at taking charge and looking after their own patch, not working with other leaders who run different divisions within their organisations. Collective leadership often means putting some of the individual's objectives aside and focusing on change for the greater good.

"Change is an increasing reality in organisations and, from a staff perspective, often it seems as though the left hand doesn't know what the right hand is doing."

Being authentic

Another leadership theory, which also brings into focus these concepts of the collective and doing away with the leader's ego, is authentic leadership (see box on page 16). Very influential in current thinking, authenticity emanated from the Gallup Leadership Institute at the University of Nebraska in the US.

According to the theory, notably authentic leaders steer away from silver-bullet solutions and buzzwords, and work more organically.

"The authentic leader is looking after the welfare of the people he or she happens to be leading," says University of Queensland's Neal Ashkanasy. "A derivative of the positive psychology movement founded by Martin Seligman, it focuses on trying to get the best out of people rather than trying to fix things. 'What are you doing well and how can you do it better,' rather than 'What are you doing badly and how can you stop that'. It's all about being authentic and true to yourself as well."

Authentic leaders are essentially ethical, putting the interests of the collective first. Recent sharpening of the focus on authenticity follows the inappropriate leadership behaviours that created corporate collapses in the past decade.

While programs to develop leaders abound, arguments rage over their success, with some studies suggesting less than 15 per cent of management training actually results in changed behaviour. This has given rise to the reappearance of the old nature-versus-nurture debate. Even those in the business of training leaders admit it.

"While leadership can be developed, if you are going against your natural way of operating, it's an incredibly hard thing to do," says Killian. "Actually identifying people with the right natural skills or potential to lead, and helping them with development and career succession into leadership roles saves time and money. Putting the right sort of people into leadership positions helps and stops the turnover rate for leaders, which is high."

It goes without saying that common to all leaders is the imperative to deal with people. The complexity is in the types of people they deal with.

Leaders in Western cultures, for example, are now contending daily with the requirements of generation X - with its high emphasis on work/life balance and disinterest in corporate climbing - and members of generation Y, who want everything now.

Both groups place far higher value on relationships than they do on organisational loyalty. They will follow leaders they have admired to another section, company or, five years on, they'll rediscover them and go to work for them again.

However, in other countries, particularly in Asia, where hierarchy and authority is often valued over relationships, a relational style of leadership is not necessarily going to work. It begs the question: what are the universal skills for leaders in a world of change, contrasting styles, blurring geographical boundaries and diversity? How much should leaders be changing to suit what may be, in any given day, a welter of scenarios, operating modes, etiquettes and mores?

"Under the circumstances, the most desirable skills are adaptability and social intelligence, the ability to read the norms and the cues of a situation, and to influence others through social relationships," says Killian. "They have become crucial because they deal with variances between cultures and generations."

Adaptability, however, is an inherent trait, although it's possible to develop. "Studies have shown, with focus and time it's possible to address ingrained aspects of personality and adopt new habitual behaviours and mental outlooks. Developing a skill that's not natural takes repetitive practice. Then, like learning to drive a car, it becomes automatic."

Full-range leadership

Professor Paul Kirkbride, Associate Dean of Mt Eliza executive education at Melbourne Business School, is also examining overarching leadership models as a solution to the current leadership dilemmas. Factoring in different fads and fashions may be a waste of time or even bad for business, he says. "There's a lot of froth talked about leadership," comments Kirkbride. when approached for this interview.

But as an example of something that has worked, Kirkbride points to the full-range leadership model developed by the late US management professor Bernard Bass, which delivered much vaunted and proven transformational leadership, to cover the gamut of contingencies for a globalised world.

Essentially, transformational leadership looks at what behaviours move organisations forward. Exemplary transformational leaders have an open door, are available for their followers, spend a lot of time listening, gleaning information and learning the expectations and needs of the people in the organisation. Ultimately, they stimulate people intellectually so they see things differently. "You can exhort people to change but if you're not helping them to see things in a different way it's hard for them to move forward," observes Kirkbride.

This model encompasses visionary or charismatic leadership, the ability to give people a novel, exciting vision in a few words so it conveys passion, and rolls in collaborative and collective styles as well.

"Most powerfully, Bass found that people who engage in these behaviours become a role model for others," he says. "It's about making decisions that show you are really walking the talk. Do you make the right decisions, lead not in a self-interested way but in the interests of the greater organisation?."

As we attempt to grasp the nuances of far-flung business partners, we should be mindful, says Kirkbride, that good leaders around the world fundamentally do the same things. "They intellectually stimulate, listen to subordinates and provide a vision, but in different cultures they do it in different ways."

Australians who are going global don't want to be aping the leadership styles of others but need to retain their Australian styles, he advises.

Indeed, the GLOBE study says that Australians had very much their own style of leadership. Like Americans, we lean towards egalitarianism, giving others a fair go, but the Australian leader also has an autocratic streak, reported Ashkanasy and Sarah Falkus in The Australian Enigma for the GLOBE study.

Appreciating difference

Just as cultural quirks inform our leadership style, Australian managers need to understand the same goes for others.

As the chief learning officer for a conglomerate from 2002-2006, Kirkbride himself saw firsthand the potential high risk in misunderstanding cultural differences. Responsible for the top 250 leaders in a $US8 billion global business, Kirkbride had a place at the executive table in New York where a frequent discussion topic was the low-key leadership style of an SBU head in Sweden. Kirkbride simply directed attention to the bottom line - the Swedish business was doing about $US1 billion in revenue - to highlight the achievements of this quiet, participative leader who didn't fire from the hip, American-style.

"A largely American executive team saw Swedish behaviour as not being the kind of leadership they understood, although within the culture he was operating in, he was a success."

Through its executive development programs, Melbourne Business School is working closely with Australian companies going global. "One of the first things we advise is not to expect standards of success to be the same in different markets," says Kirkbride.

"The great assumption is that those behaving differently have ways inferior to your own, although when you take in their cultural perspective, those behaviours are successful. You could destroy subsidiary businesses in Thailand, Malaysia or China by imposing a culture on it that isn't going to lead to success."

Ashkanasy agrees: "We are not going to be able to move globally, especially with people from the Asian continent, without understanding their outlook."

As Australian companies make their way into the new powerhouse economies, the need to partner or run a joint venture with someone from those cultures who can translate is increasingly recognised.

"Australian leaders must accept they are not just speaking a different language, they are living in a different world," says Ashkanasy.

Importing leadership talent

Understanding the nuances of different cultures matter, but adopting a one-size-fits-all approach for a particular market won't suffice either. For instance China, despite its traditional emphasis on authority and trust, has a new class of Western-educated entrepreneurs. In India, the impact of a generation of fast-moving business imagineers is being felt.

One of the best ways Australian leaders can learn about differing global leadership styles is by operating globally, not simply exporting but importing talent.

"Businesses don't really change their mindsets until they bring people [leaders] from other cultures back to Australia," Kirkbride reports. "When judging the global aspirations of a company, I ask about the composition of the senior executive team. If it's all Australian, I would hazard a guess it's not very global.

"You need those people's perspectives in the executive decision-making team, and it's that level of difference that leads to innovative decisions. A global organisation faces an inherent tension: it needs to have difference because it knows that leads to some advantage, but, in fact, difference is difficult to deal with and can lead to conflict."

Kirkbride, however, comes to a cautionary conclusion. "Leadership has become an over-simplistic umbrella term." Frequently the problems blamed on leadership are other problems in disguise. Next time you feel inclined to blame the leader think more about the problem, he suggests. What really keeps the CEO awake at night?