Seeking New Leadership - Responsible leadership for a sustainable and equitable world - Accenture
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Seeking New Leadership Responsible leadership for a sustainable and equitable world In collaboration with Accenture The study represents the first stage of a multi-year initiative between the Forum of Young Global Leaders and the Global Shapers Community, in collaboration with Accenture, to create a new framework for responsible leadership and to help organizations cultivate environments in which it can flourish.
Contents FOREWORD ELLYN SHOOK, PETER LACY, ADRIAN MONCK, AND JOHN DUTTON 4 EXECUTIVE SUMMARY 6 THE DECADE TO DELIVER 8 LEADING FOR VALUE + VALUES 10 THE FIVE ELEMENTS MODEL OF RESPONSIBLE LEADERSHIP 12 VALUING THE FIVE ELEMENTS 14 YOUNG GLOBAL LEADERS AND GLOBAL SHAPERS STAND OUT 18 RESPONSIBLE LEADERSHIP IN ACTION 22 GEARING UP 28 ACKNOWLEDGEMENTS & ENDNOTES 30 APPENDICES 31 2 | Under New Leadership Seeking New Leadership | 3
A foreword by Ellyn Shook The world is at a crossroads. Much of the pressing problems can be addressed in ways Chief Leadership and Human global economy has experienced a long that unleash new waves of growth that are Resources Officer, Accenture period of growth. But too many people and more sustainable and more equitable. communities have not benefited, while Moreover, there’s no shortage of appetite environmental threats and technology risks and energy to tackle the task, especially have intensified. A sustainable future is under among the younger generations Peter Lacy threat. Business leaders know there’s no already at the vanguard of change. “free lunch,” yet too few have found a way to pursue profitable growth in concert with In this introductory paper, we offer organizations Senior Managing Director, positive social and environmental impact. a new compass to help them develop and scale responsible leadership. In the next three Accenture Strategy This ‘decade to deliver’ requires a new years, we will continue to research and foster model of responsible leadership. One that discussion and debate on this important topic. enables leaders to find the sweet spot that creates value and honours values. Professor Klaus Schwab founded the Forum of Adrian Monck Defining the essential elements of that Young Global Leaders and the Global Shapers model is the purpose of this report. Community to help nurture and connect future leaders, turning optimism into concrete change Member of the Managing Board, What’s promising is that an increasingly to improve the state of the world. As these World Economic Forum vocal range of stakeholders—consumers, communities come together in collaboration with employees, investors, business partners, Accenture in the World Economic Forum’s 50th policymakers and wider society—are anniversary year, please join us in our ambitious pointing the way towards a more responsible initiative to prepare the next generation of course. Their demands are underpinned leaders to drive positive outcomes for all. John Dutton by the unifying belief that the world’s most Head of the Forum Foundations and Member of the Executive Committee for the World Economic Forum 4 | Seeking New Leadership Seeking New Leadership | 5
Executive Summary • Executives from companies with strong financial performance signal the growing importance of Technology & Innovation. The immediate task is to test, refine and deepen the thinking presented here. We need to develop scalable learning programmes as well as tools that can tailor the Five Elements Three priorities where diverse individuals have a voice • Emerging leaders (Young Global Leaders Model to the needs of organizations— and feel they belong. and Global Shapers) place greatest and make it imminently actionable. Leading the world’s organizations—businesses, emphasis on Stakeholder Inclusion: and governments, nonprofits—has never been Emotion & Intuition. 61% of those we surveyed say business Organizations eager to join this journey as complex or as demanding as it is today. Em Unlocking commitment and creativity by models should only be pursued if they can start by addressing three questions: Three overarching priorities vie for attention. being truly human, showing compassion, generate improved societal outcomes First, leaders must deliver daily organizational humility and openness. and profitable growth in tandem. - Who are your stakeholders and how performance—as a matter of table stakes. Second, amid high-velocity change, they face well do you really know them? growing pressure to embrace continuous Mi Mission & Purpose. Gearing up innovation that unlocks new value for the long- Advancing common goals by inspiring a - Is your leadership team on course shared vision of sustainable prosperity The Five Elements Model represents the term. And third, leaders must earn and build to have a Five Elements profile? for the organization and its stakeholders. start of a three-year journey for the World stakeholder trust through sustainable and Economic Forum, the Forum of Young Global responsible approaches, meeting increasingly Leaders, the Global Shapers Community, - What do you need in order to accelerate vocal expectations for social and environmental Technology & Innovation. and scale responsible leadership qualities Te Accenture and other organizations. Our goal progress. Finding the optimal path through Creating new organizational and societal throughout your organization? is to stimulate fresh dialogue that sets clear real and apparent trade-offs is no easy feat. value by innovating responsibly with expectations and creates the foundation emerging technology. for a new norm: leadership teams that are A performance premium purpose-built to deliver sustainable growth. Intellect & Insight. Some organizations are further along than In Finding ever-improving paths to success others in creating an environment in which by embracing continuous learning and trust, innovation and strong organizational knowledge exchange. performance reinforce each other, creating a virtuous circle with its own momentum. Companies that combine The Five Elements Model of Responsible top-tier trust with top-tier innovation Leadership was shaped by input from more outperform their industry peers, on average than 20,000 people around the world. Via attaining 3.1% higher operating profits. surveys, we obtained the views of 1,830 World Economic Forum Young Global Leaders St 1 3 Mi and Global Shapers, 2,298 senior company 5 In A Five Elements Model of executives, and 2,971 business stakeholders Responsible Leadership 2 4 Em (consumers, employees, investors, business Te partners, policymakers and representatives of STAKEHOLDER Companies that achieve all three priorities INCLUSION MISSION INTELLECT also appear to stand apart by how they civil society). We hosted three online focus- & PURPOSE & INSIGHT lead. Their top teams exhibit diverse and group discussions bringing together 500 EMOTION people born mostly since 1980—Generations 02 TECHNOLOGY 02 sometimes unfamiliar leadership qualities. To & INTUITION & INNOVATION name just a few: continuous learning backed Y and Z. We interviewed a sample of leaders by data; a stakeholder mindset anchored in individually. And we benefited from other compassion; a technology vision reinforced Accenture research that surveyed more than by creativity; generous humility; and listening 2,500 CEOs and company executives and to intuition. We classify these and others into more than 11,000 consumers and employees. Five Elements, qualities that leadership teams will need to navigate the decade ahead: Amid a consensus on the need to adopt the Five Elements, some differences of opinion Stakeholder Inclusion. are telling: St Safeguarding trust and positive impact for all by standing in the shoes of diverse • Company executives are out of step stakeholders when making decisions, with stakeholders, who signal the and fostering an inclusive environment growing importance of Mission & Purpose and Emotion & Intuition. 6 | Seeking New Leadership Seeking New Leadership | 7
The Emerging technologies require companies to rethink Emerging technologies require companies to rethink what it means to be a responsible business because in the what it means to be a responsible communities business because where they work and Emerging technologies they create require new opportunities companies to rethink to address some of Emerging technologies they cancompanies require have negative side effects. to rethink live. Accenture research reveals that in our most pressing what it means to be a responsible businesssocietal because problems. what it means to be a responsible business because2017-19, organizations’ investments in Emerging technologies require companies they create new opportunities to to rethink address technologies Emerging some of they require companies can have negative side effects. to rethink emerging technologies like AI doubled, Decade ourbecause most pressing societal problems. what it means to be a responsible business Stakeholders what it means to be a responsible business because Stakeholders while only 18% of organizations planned to they create new opportunities to address some of they can have negative side effects. our most pressing societal problems. 12% 15% 73% 14% 15% significantly 71% increase spending to reskill Stakeholders Stakeholders their people—their most important source 12% 15% 73% 14% 15% 71% of competitive advantage. As essential is to Deliver Stakeholders Stakeholders a culture of equality: when people feel they 12% 15% 73% 14% Executives Company 15% 71% Company Executivesbelong, their ability to innovate soars. 7% 14% 79% 28% 21% 51% Company Executives Company Executives The stakes associated with these issues 7% 14% 79% 28% 21% 51% are formidable. And the new way in which Company Executives Company Executives leaders are being held accountable for them 7% 14% 79% 28% 21% 51% poses a fresh challenge in and of itself. The As we enter the 2020s, we have an enormous Businesses and the Fourth Disagree Neither Agree nor Disagree balance of power is shifting. Stakeholders are Agree opportunity—and the obligation—to reconsider Industrial Revolution speaking out and taking action to drive better the way we live, work, produce and trade. Disagree Neither Agree nor Disagree Agree We asked company executives outcomes. A tweet from Greta Thunberg, To better equip ourselves to tackle today’s and business stakeholders— Neither Agree nor Disagree the climate activist, has the potential to global problems, we must build ever greater Disagree Agree including consumers, employees, move stock prices. Generations Y and Z are positive interdependence between the world’s investors, business partners, on the front lines, influencing the debate organizations and the complex systems in which Emerging technologies require companies to rethink Emerging technologies require companies to rethink policymakers and representatives “Emerging technologies require companies to on climate it meanschange, the risebusiness of brands that they operate. This starts by reflecting on how what it means rethink what itnew to be a responsible means business because to be a responsible what to be a responsible because of civil society—how they see they create opportunities to address business some of take stands, they can and a side have negative neweffects. wave of investor we lead—and how we can hold organizational because they createsocietal new opportunities problems. to address emerging technologies affecting our most pressing activism. A recent Global Shapers survey and political leaders to a higher standard. A some of our most pressing societal problems.” what it means to be a responsible of 30,000 young people revealed that their number of connected challenges stand out: business. Examples of these Stakeholders most important criterion when considering Stakeholders technologies include artificial new jobs, after salary, is an employer’s sense • The climate is in a state of emergency: 12% 15% 73% 14% 15% 71% intelligence (AI), blockchain, of purpose or impact on society; this was Current trends will lead to a rise in average machine learning, gene editing, cited by more than 40% of respondents.3 global temperatures of between 2.9°C and 3.4°C by 2100, a shift likely to bring and quantum computing. catastrophic change across the globe.1 Company Executives Leaders Company areExecutives beginning to acknowledge As the charts show, the vast the need for change. The U.S. Business 7% 14% 79% 28% 21% 51% • The global economy is fragile: 10% of the majority of both company Roundtable’s Statement of the Purpose world’s population enjoys more than 50% executives and stakeholders of a Corporation, signed in August 2019 of the income.2 This state of affairs fosters agree that the positive potential by 181 CEOs, emphasizes corporate social injustice and limits future growth. It Emerging technologies require companies to rethink of what emerging Emerging technologies require companies to rethink America’s commitment to create value for it meanstechnologies calls to be a responsible business because what it means to be a responsible business because also fuels the backlash against globalization, forthey businesses create new to reassessto address some of opportunities “Emerging technologies require companies Disagree they can have negative side effects. to all stakeholders, notAgree Neither Agree nor Disagree just shareholders. which threatens the free flow of goods, howourthey most can help pressing address societal problems. rethink what it means to be a responsible business because they can have negative side-effects.” services, data, people and capital. societal problems. There is And, to coincide with its 50th anniversary, the lessStakeholders agreement, however, as Stakeholders World Economic Forum has launched a new • The impact of the Fourth Industrial to whether the negative side- Davos Manifesto. A set of ethical principles to Revolution is only just beginning to 12% 15% 73% 14% 15% 71% effects of emerging technologies guide companies, the Manifesto builds on its be appreciated by most organizations. should require companies to 1973 predecessor, declaring that “The purpose The opportunities of its new and reconsider what it means to of a company is to engage all its stakeholders emerging technologies are not yet be Company a responsible business. in shared and sustained value creation… realized and its risks are not yet Executives Company Executives A company is more than an economic managed (see sidebar: Businesses and 7% 14% 79% 28% 21% 51% unit generating wealth… Corporate global the Fourth Industrial Revolution). citizenship requires a company to harness • People are central to solving these its core competencies, its entrepreneurship, challenges, yet we risk leaving many behind. skills and relevant resources in collaborative Source: Accenture Responsible Business survey of company efforts with other companies and stakeholders Businesses today have an obligation to Disagree executives, Neither Agree nor Disagree April 2019. SampleAgree size: 2,298; Accenture elevate individuals in their workplace, Responsible Business survey of stakeholders, July 2019. Sample to improve the state of the world.” size: 2,971. while respecting and supporting people 8 | Seeking New Leadership Seeking New Leadership | 9
3.1 Operating profit premium equivalent (percent) Leading for 0.6 Operating margin premium (percentage points) Value + Values 3.1 1.4 0.6 Negligible 0.2 Negligible These corporate statements and commitments Those with top-tier innovation alone—without demonstrate a new level of intent. But now achieving sufficient levels of sustainability and leaders need to turn intent into action at a scale trust to steer its positive results or prevent great enough to make a material and sustained its negative consequences—saw a negligible difference for a broader set of stakeholders. impact on operational performance. Top 20% Top 20% Top 20% in innovation only in sustainability in sustainability & trust & trust only and top 20% in innovation For those at the helm of large organizations, How must leadership evolve to pursue navigating these diverse challenges value and honour values in tandem? It must ultimately comes down to delivering on develop a new set of leadership qualities. three fronts: organizational performance, measured most often by short-term Identifying those qualities, and developing Figure 1: Company financial performance premia over industry earnings or their equivalent; continuous a model of responsible leadership, has peer-set average innovation, the seedbed for longer-term been the focus of our extensive primary Source: Accenture Research. growth, often propelled by emerging research. In addition to our analyses of Note: Annual premium of operating margin over industry peer-set average. technology; and sustainability & trust, listed companies, we listened to the views earned by an unyielding attentiveness of more than 20,000 people around the to the interests of all stakeholders. world. These included 1,830 World Economic Forum Young Global Leaders and Global But is it possible to achieve strong Shapers, 2,298 senior company executives, performance on all three dimensions? and 2,971 business stakeholders (consumers, Don’t trade-offs get in the way? employees, investors, business partners, policymakers and representatives of civil From our analysis of more than 2,500 listed society). We also hosted three online focus- companies, the message is clear: not only group discussions bringing together 500 is it possible, it’s optimal. Companies that people born mostly since 1980—Generations combine top-tier innovation with top- Y and Z. Finally, we drew further insight tier sustainability & trust outperform from research streams that explored their industry peers on operational and related topics with more than 2,500 CEOs market metrics. Their estimated operating and company executives, and more than profits are 3.1% higher on average, 11,000 consumers and employees.4,5 and they deliver a higher annual total return to shareholders (see Figure 1). “Responsible leadership isn’t an afterthought, it’s an imperative in the age of AI. It means being proactive in anticipating harmful outcomes and making decisions that advance, not negate, the interests of humanity.” TANIA DE SOUSA DIAS, DIRECTOR AT DUE WEST EDUCATION AND WORLD ECONOMIC FORUM GLOBAL SHAPER 10 | Seeking New Leadership Seeking New Leadership | 11
The Five Elements Model of Responsible Leadership The Value and Essence of the Five Elements • Long-term commitments are implemented with integrity and transparency. Navigating the 2020s responsibly requires five qualities of leadership that we refer to as the • Systems thinking helps the co-creation Stakeholder Inclusion of outcomes in complex ecosystems. Five Elements. Safeguarding trust and positive impact for all by standing in the shoes of diverse stakeholders • Sensemaking leaders help others see when making decisions—and fostering an what’s happening in wider society. inclusive environment where diverse individuals have a voice and feel they belong: Technology & Innovation • Accountable decisions are strengthened Creating new organizational and Figure 2: The Five Elements Model of by diverse participation and perspectives. societal value by innovating responsibly with emerging technology: Responsible Leadership • Guarding and growing stakeholder trust becomes second nature. • Promotion of a tech vision helps people apply new technology to solve problems. • An impact mindset ensures rigorous anticipation of an organization’s activity. • Responsible processes minimize negative consequences and help create new societal value. Emotion & Intuition Unlocking commitment and creativity by being • Cultivation of creativity multiplies the truly human, showing compassion, humility problem-solving potential of technology. 1 and openness: St Mi 3 In 5 Intellect & Insight • People are encouraged to use 2 Finding ever-improving paths to success Em Te STAKEHOLDER MISSION 4 instinct and imagination. INTELLECT INCLUSION & PURPOSE & INSIGHT by embracing continuous learning and Trust Integrity Data-to-knowledge • Humility disarms stakeholders knowledge exchange: Accountability EMOTION Systems thinking TECHNOLOGY Critical thinking through honesty about personal Impact & INTUITION Sensemaking & INNOVATION Continuous learning limits or vulnerabilities. • Data-to-knowledge loops are used to enable 02 Instinct 02 Tech vision Humility Responsible innovation and improve agile decision-making. Compassion Creativity • People are treated as ends rather than means, inspiring emotional engagement. • Critical thinking is encouraged to challenge orthodox ideas. Mission & Purpose • Continuous learning is championed at Advancing common goals by inspiring a all levels of the organization. shared vision of sustainable prosperity for the organization and its stakeholders: For additional detail, refer to Appendix 4. The Five Elements model is designed to be applied to entire organizations, not to individual job descriptions, and should manifest itself at all levels of the organization.6 Source: Accenture Research. Based on complementary surveys of more than 5,000 executives, stakeholders and Young Global Leaders and Global Shapers. 12 | Seeking New Leadership Seeking New Leadership | 13
97% Valuing the Five Te Elements 59% We know that it is possible for responsible approaches and organizational performance to co-exist (see Figure 1). But what do we know about how such organizations are led? Do profitable and trusted innovators display distinctive leadership Em qualities? Do they exhibit the Five Elements more than other companies? To pressure-test our model, we looked more closely at the private sector by 33% analysing thousands of earnings calls covering the past two, three and five years. Mi 18% We isolated those organizations that were successful at navigating the three challenges of profitability, innovation, and sustainability & stakeholder trust. 17% The evidence is clear from all three time periods. To differing degrees, St In all Five Elements of responsible leadership are more pronounced among these profitable and trusted innovators. See Figure 3 for the two year view. TECHNOLOGY EMOTION MISSION STAKEHOLDER INTELLECT & INNOVATION & INTUITION & PURPOSE INCLUSION & INSIGHT “Responsible leadership looks at the environmental, social and political dimensions of business decisions. As consumers, we always make a choice; as leaders, we must drive that choice.” CAMILLA STELITANO, SECRETARIAT ASSOCIATE, ASIAN INFRASTRUCTURE INVESTMENT BANK (AIIB), BEIJING, AND WORLD Figure 3: Profitable and trusted innovators display all the ECONOMIC FORUM GLOBAL SHAPER Five Elements more strongly The chart illustrates extra mentions of words associated with the Five Elements in earnings calls over the past two years, measured as a percentage. Note: Companies in the technology industry may score high on mentions of Technology & Innovation concepts inherently; they also represent a disproportionately large share of profitable and trusted innovators. We therefore ran the analysis again with technology companies excluded; on this basis, extra mentions of Technology & Innovation amounted to 79%. Source: Accenture Research. Standardized by length of earnings calls. 14 | Seeking New Leadership Seeking New Leadership | 15
Stakeholders and company executives value leadership Compared with executives, companies’ stakeholders see things differently. Consumers, employees and others have a far greater interest in leaders with highly developed Mission & qualities differently Purpose (Mi) and Emotion & Intuition (Em) (see Figure 5). The gaps suggest that organizations— even today’s high performers—may find it hard to meet the expectations of wider society unless they modify their leadership qualities and seek a stronger and more balanced profile. The next Looking beyond the numbers, how do leaders themselves define responsible leadership? What generation of leaders embraces this approach. are the views of other groups? First, we asked company executives. They recognize that leaders of responsible businesses need to exhibit all Five Elements. But executives from companies with stronger financial performance stand out by placing far more emphasis on Technology & Innovation (Te) (see Figure 4). St Stakeholder Company executives (all companies) Company executives St Stakeholder Company executives (all companies) Stakeholders (companies with low financial performance) Inclusion Inclusion Company executives 9 (companies with high financial performance) 9 Level of importance given to leadership 8 8 qualities increases from 1 to 9 7 Level of importance given to leadership 7 qualities increases from 1 to 9 6 6 5 5 4 4 In Em In Em 3 3 2 2 Intellect 1 Emotion Intellect 1 Emotion & Insight & Intuition & Insight & Intuition IMPORTANCE IMPORTANCE OF LEADERSHIP OF LEADERSHIP QUALITIES QUALITIES Te Technology Mi Mission Te Technology Mi Mission & Innovation & Purpose & Innovation & Purpose Figure 5: Qualities needed for responsible leadership in business— the views of stakeholders Figure 4: Qualities needed for responsible leadership in business— Source: Accenture Responsible Business survey of company executives, April 2019. Sample size: 2,298; Accenture the view of company executives Responsible Business survey of stakeholders, July 2019. Sample size: 2,971. Question: “Which personal qualities / characteristics are most important for executives in charge of ensuring their companies behave responsibly?” The frequency of cited qualities increases towards the edge of the chart. Source: Accenture Responsible Business survey of company executives, April 2019. Sample size: 2,298. Question: “Which personal qualities / characteristics are most important for executives in charge of ensuring their companies behave responsibly?” The frequency of cited qualities increases towards the edge of the chart. 16 | Seeking New Leadership Seeking New Leadership | 17
Company executives (all companies) Stakeholders St Young Global Leaders and Global Shapers Stakeholder Inclusion Level of importance given to leadership qualities increases from 1 to 9 9 8 7 6 5 4 In Em 3 2 Intellect 1 Emotion & Insight & Intuition IMPORTANCE OF LEADERSHIP QUALITIES Te Technology Mi Mission & Innovation & Purpose Young Global Figure 6: Qualities needed for responsible leadership—the views of the Forum of Young Global Leaders and the Global Shapers Community Leaders and Global Source: As Figure 5, plus: Annual survey of World Economic Forum Young Global Leaders and Global Shapers, November 2019. Sample size: 1,535 Global Shapers and 295 YGLs. Respondents were asked “How important are the following skills for a responsible leader?” and were invited to rank from among a list of Shapers Stand Out 16 skills. Chart (green line) shows the proportion who cited one or more skills from the relevant element in their top 5; this proportion was rebased on a linear scale from 1 to 9 where 1 = 0% and 9 = 100%. Emerging leaders, represented in our research by the Forum of Young Global Leaders and the Young Global Leaders and Global Shapers place greatest emphasis on Stakeholder Inclusion (St). Global Shapers Community, gave the highest priority to Stakeholder Inclusion, Mission & Purpose This mirrors their conviction that social and environmental progress should be non-negotiable and Intellect & Insight (see Figure 6). parts of any acceptable business model; such progress earns a “licence to prosper.” More than three in five (61%) of those we surveyed said that business leaders should only pursue business The intensity of their commitment does not vary materially by gender or geographic origin. models that generate profitable growth and improve societal outcomes at the same time. 18 | Seeking New Leadership Seeking New Leadership | 19
“We need business leaders to inspire and solve the most pressing challenges, to contribute to the greater good and to care more than about profits. Doing well and doing good are not mutually exclusive… they’re mutually dependent.” ERIC DAYTON, CO-FOUNDER ASKOV FINLAYSON AND WORLD ECONOMIC FORUM YOUNG GLOBAL LEADER These values are likely to have staying power. Faced with complex tech-ethical leadership scenarios, adults from Generation Z (born between 1995 and 2001) call on a broad balance of qualities, with Stakeholder Inclusion much more prominent than among Generation Y (born between 1980 and 1994). Intellect & Insight guides decision-making for over two-fifths of Generation Y but only just over a third of Generation Z (see Figure 7). Differences such as these call for multi-generational leadership teams and other ways for organizations to take account of the viewpoints of people of all age groups. 42% 12% 13% 23% 10% Gen Y 34% 12% 14% 31% 9% Gen Z EMOTION TECHNOLOGY MISSION In INTELLECT & INSIGHT Em & INTUITION Te & INNOVATION St STAKEHOLDER INCLUSION Mi & PURPOSE Figure 7: Generations Y and Z draw on a broad range of leadership qualities Source: Accenture Research: Mass Online Focus Groups, November 2019. Sample size 352. Question: “Overall, thinking as an advisor to the individual tasked with making the final decision, which one of the following is most critical to the approach you would take?” Chart shows average split of leadership attributes respondents feel are most critical when making decisions as responsible leaders. 20 | Seeking New Leadership Seeking New Leadership | 21
Satya Nadella, CEO, Microsoft: “Empathy is an existential priority to our business. Our business is to meet the unarticulated needs of our customers. There is no way we can innovate if we don’t listen—not just to their words, but if we don’t really go deep to understand their needs. Life experience teaches you to do that.” 10 Microsoft Challenge: Leadership qualities most emphasized: Overcoming a culture that inhibited innovation. Mi Sensemaking Solution: Developing a collaborative culture that encourages learning from mistakes. Em Humility In Continuous learning Te Responsible innovation St Trust Microsoft’s share price has tripled since so that employees were more comfortable Satya Nadella took over as CEO in February sharing their aspirations with managers. 2014. In late 2018, the company reclaimed its crown as the world’s most valuable listed Crucially, Nadella made it clear that people business for the first time since 2003.7 What could learn from their mistakes—himself drove this success? At first glance, it’s the included. For example, in 2014, shortly result of Nadella’s repositioning of an old- after becoming CEO, when asked to advise school “devices and services” company women who didn’t feel comfortable asking as a modern “mobile and cloud” business. for a raise, he gave an initial response that Underpinning that change, though, is arguably he later regretted. Hours later, he sent an the more difficult transition—changing the internal memo to employees, saying that corporate culture. he had ”answered that question completely wrong.” 9 By showing humility and making an Responsible Before Nadella took the helm, Microsoft explicit effort to combat unconscious bias, employees and partners described a culture he transformed the event into a learning that stifled innovation and made it difficult to opportunity. get things done. Employees sought to please supervisors, rather than being creative and Leadership in Action Moments like these, coupled with compassion taking calculated risks that could lead and empathy, have been core to Microsoft’s to innovation. ability to influence different outcomes. And interestingly, to shape how he leads, Nadella Nadella saw the need to change the culture has drawn on skills learned outside the office. to one where every employee cultivates Specifically, he has noted that his experience a growth mindset. So, he began at the bringing up children with disabilities has As leaders seek to realize positive outcomes for a wide range of stakeholders in the decade ahead, company’s core—by redesigning its mission. influenced how he leads. The support he and we can learn from the experiences of both corporate and civil organizations that are beginning to put The company’s role, Nadella saw, should his family received from the communities the Five Elements into action. Each of the following organizations brings different characteristics of be to “empower every person and every in which they were immersed has had a the Five Elements to the fore, inspired by leaders willing to make different choices to achieve organization on the planet to achieve more.”8 profound impact. And he has explicitly better outcomes. He then revamped the appraisal process brought his understanding of what empathy can do for others to his job. 22 | Seeking New Leadership Seeking New Leadership | 23
Engie Challenge: Leadership qualities most emphasized : Anticipating tighter emissions regulation and rising carbon prices in response to climate change, while battling losses, Engie’s goal was to Mi Sensemaking transform the company to engage fully in ethical and profitable consumerism. Em Instinct Kaiser Permanente Solution: St Impact Going zero carbon. Challenge: Leadership qualities most emphasized : Diversity and social inclusion. Te Responsible innovation In Critical thinking St Inclusion Solution: Impact investment fund. Engie returned to profitability while Clearly, Engie CEO Isabelle Kocher sees Em Compassion transitioning from being a company the transition to renewables as key to the specializing in selling fossil-fuel-based company’s future. But the drive to change also energy to one providing low-carbon energy comes from her own values-driven approach Mi Systems thinking and services.13 to life. The daughter of a senior manager at Alcatel, the French telecoms company, The company’s radical transformation and a biblical scholar, she says spirituality combined instinct and sensemaking to is important to her, particularly in what she In Critical thinking Te Creativity anticipate growing political and social says is her mission to make Engie a driver of momentum for action on climate change the global energy transition. She states that as well as tighter emissions regulation and “whatever religion or wisdom, spirituality and rising carbon prices. values are important to me and to Kaiser Permanente, a US healthcare Bernard J. Tyson, late CEO of Kaiser the business.” provider, created a $200 million impact Permanente, was outspoken about his investment fund to address community vision to create an ecosystem that would Specifically, Engie, formerly Gaz de France, challenges such as housing stability and support a holistic approach to human set a goal in 2016 to become the world homelessness. One early example of how wellness in concert with community leader in the zero-carbon transition. Since these resources will be deployed: A $5.2 wellness, recognizing the role of healthy then, the company has been rapidly growing its portfolio of renewable energy assets, Alongside the need to create million joint investment partnership between surroundings in driving individuals’ health while shutting down or divesting coal-fired shareholder value, Engie’s the fund and the US housing organization, and enabling them to live up to their power plants. For example, in December CEO Isabelle Kocher says Enterprise Community Partners, to acquire potential, regardless of background. His 2019 it announced plans to close coal-fired companies “have the way to a 41-unit housing complex in East Oakland, vision drew on his own humble upbringing power plants with a total capacity of almost 1 help people get out of poverty, California.11 Announced in January 2019, and experience as an African American. gigawatt in Chile and Peru by 2024, following to contribute to the emergence the driving idea behind this partnership is a commitment to build 1 gigawatt of new solar of a different way of living that is to support residents of a San Francisco Bay 16 and wind capacity in Chile, worth $1bn.14 more respectful [of the planet].” area community so that they can remain in their homes as their neighbourhoods gentrify. With a strong commitment to Bernard J. Tyson: CEO, Kaiser The company’s ongoing efforts to reduce inclusion through a systems thinking lens, Permanente (2012-2019): emissions have intensified. Between 2012 and the partnership has also worked with the East “You need to think about the 2018, Engie cut its CO2 emissions in half.15 Bay Asian Local Development Corporation return on investment. But Engie also reversed a fall in revenues that to provide required updates to the property the difference is, the return began in 2013 and was back in the black while preserving affordable housing. isn’t to make shareholders a year after initiating its transformation. richer—the return is to put the money back to use.”12 24 | Seeking New Leadership Seeking New Leadership | 25
Government of Costa Rica Challenge: Leadership qualities most emphasized : Addressing the climate emergency. St Impact Solution: Implementing a cross-industry, cross-sector Mi Systems thinking plan to become carbon neutral by 2050. UOB Te Responsible innovation Challenge: Leadership qualities most emphasized : Navigating job churn. In Critical thinking Em Compassion Te Responsible Innovation Solution: The government of Costa Rica unveiled holistic by design in order to succeed: Equipping its workforce with skills for a digital future. In Continuous Learning in early 2019 an ambitious plan for the “All sectors of society must participate country to become carbon neutral by 2050. to face the great challenge which is to The National Plan for Decarbonization move towards a decarbonized world.” 19 St Trust commits to producing no more emissions Technology and innovation have a central than can be offset by “maintaining and role in the plan, which applies systems extending” its extensive forests.17 thinking and extends decarbonization to a number of industrial sectors: transport Em Compassion Mi Integrity The initiative is one outcome of Costa Rica’s and sustainable mobility; energy, green recognition that the environmental impacts of building and industry; integrated waste climate change also result in systemic social management; and agriculture, land- and economic risks. Accordingly, it places use change and nature-based solutions. In the midst of rapid change in the global Better U was designed be be inclusive. decarbonization and resilience alongside The plan articulates explicit strategies banking industry, Singapore-based UOB It involves employees in shaping the governance principles such as inclusion and for each (including green tax reform, has remained committed to investing in training programme to ensure that it human rights. As President Carlos Alvarado digitalization, open data and transparency, talent to equip its employees with skills for addresses their needs. It uses analytics has noted, the plan aims to deliver “a de- mobilizing public and private funds, and the digital future. The firm raised its training to identify the most effective learning carbonized Costa Rica for the people [as environmental institutional reform).20 budget by 22% to US$19 million in 2018, and approaches and collaborates with local climate change] is the main challenge we launched ‘Better U’ to prepare its 26,000 universities to customize training.23 have as a country and as humanity.” 18 President Alvarado acknowledges that his workers. By the end of 2020, the bank small country has committed to facing a expects that at least 70% of all employees big challenge. But, he says, Costa Rica is globally will have completed the course.22 President Alvarado (a Young Global Leader) has also noted that the effort must be compelled by a strong sense of mission and the country’s tradition of taking bold steps. UOB’s decision recognized that digital Dean Tong, Head of Group HR, skills were important to the future of the UOB: “Anyone can step up and business and for the continued employability say, wait a minute, that’s unfair.”24 of its people. As Head of Group HR, Dean Tong, explained: “Our philosophy as we head into the digital-first era is simple. We’re not going to leave any employee President Carlos Alvarado: “The world today behind. [We designed the programme] to requires courage, as well as ambitious and positive cater to all members of staff, irrespective goals. That’s why we have launched goals which are of their age and their comfort level with clear and optimistic but based on sound plans.” 21 both technology as well as learning.” 26 | Seeking New Leadership Seeking New Leadership | 27
“Responsible leadership is the capacity to mobilize oneself and others to make conscious decisions for a sustainable and flourishing world.” RHEA SEE , CO-FOUNDER, SHE LOVES TECH, CHINA, AND WORLD ECONOMIC FORUM GLOBAL SHAPER Gearing Up This paper is a starting point. Having proposed a model for the knowledge, skills, attitudes, beliefs and mindsets needed for responsible leadership, we now encourage the debate, dissent and discussion needed to help us improve and expand it. We will undertake further research, develop learning opportunities for next-generation leaders, launch ambitious experiments, and create tools to help organizations scale responsible leadership. And as we do, our programme will continue to embrace multi-stakeholder, multi-sector and multi-generational approaches. Today’s organizations can do the same. Responsible leadership becomes real when it learns from and ultimately reflects those it serves. Getting started means addressing head-on some potentially uncomfortable questions. We suggest three: 1. Who are your stakeholders and 3. What do you need to accelerate and how well do you really know them? scale responsible leadership qualities throughout your organization? Do they include non-traditional and diverse interests? How important is each group of What barriers exist? What opportunities stakeholders to your organization? Do you and burning platforms can accelerate engage with them and your critics, seeking progress? Are there particular tools, to understand their perspectives? Do you support, or types of collaboration that understand the negative and positive can spur progress at an individual, consequences of your organization’s organizational and ecosystem level? actions? What are you doing/can you do to influence better outcomes for all? 2. Is your leadership team on As we enter a new decade, we are excited course to have a balanced to explore and hone the qualities needed Five Elements profile? in the people and teams entrusted with shaping the world’s future. In discussions, does the Five Elements profile resonate with your leadership team? Do Please join us in helping reboot you draw upon these attributes, skills and responsible leadership for the 2020s. mindsets when making strategic decisions? Are the Five Elements present in how you Note: The Forum of Young Global Leaders grow and build your future leadership team? and the Global Shapers Community will host a gathering in Whistler, Canada, later in 2020 to accelerate progress. We welcome all interested organizations and parties to join us there. 28 | Seeking New Leadership Seeking New Leadership | 29
Appendices Acknowledgements The authors thank members of the Global Shapers For their support and assistance, we also thank Community and the Forum of the Young Global the following individuals from Accenture. Leaders, as well as other experts and business Project director: Matthew Robinson leaders, for their insights and contributions. In particular, we acknowledge the support of Wadia Core team: Ait Hamza, head of the Global Shapers Community; Bouchra Carlier, Tomas Castagnino, Sytze Mariah Levin, head of the Forum of Young Global Dijkstra, Quentin Drewell, Francis Hintermann, Leaders; and Jill Rademacher, head of Partnerships, Joanne Kaufman, Dominic King, Regina Maruca, Foundations at the World Economic Forum. Matthew McGuinness, Eduardo Plastino. Insights & additional research: We also thank: Khalid Alkhudair, Kelly Buchanan, George Bennett, Alyssa Di Cara, Agata Dowbor, Thomas Cheng, Eric Dayton, Tyler Dimicco, Samantha Luca Gagliardi, Andrew James, Nicolas Freebairn, Aroon Hirdaramani, Nina Jensen, Sean Loterstein, Cathy McAndrew, Oksana Mamokina, Kon, George Leeming, Joe Mazur, Swimmy Minami, Michael Moore, Jean Ostvoll, Vincenzo Kanini Mutooni, Osamu Naito, Hidenobu Nakahata, Palermo, Daniel Shropshall, Guillaume Simon, Linh Nguyen, Rachel Li, Peggy Liu, Juan José Rhiannon Tambini-McGee, Wee Kheng Yio. Pocaterra, Subramanian Rangan, Karen Saez, Ana Saldarriaga, Rhea See, Rhea Singhal, Abraham Sorock, Tania de Sousa Dias, Camilla Stelitano, Alana Strassfield, Esther Tetruashvily, Adrian Thomas, Jonas Wolf, Cheng Charles Xia and Joan Xu. Endnotes 1 World Meteorological Organization under the auspices of the Fortune, “Kaiser Permanente CEO Bernard Tyson Has Died. The 12 Science Advisory Group of the UN Climate Action Summit, “United Lessons He Left Behind Are Worth Remembering”, November in Science”, 2019, https://public.wmo.int/en/media/press-release/ 10, 2019, https://fortune.com/2019/11/10/kaiser-permanente- landmark-united-science-report-informs-climateaction-summit ceo-bernard-tyson-died-clifton-leaf-commentary/ 2 World Inequality Lab, “World Inequality 13 Engie 2017 results: a successful strategic repositioning Database”, 2019, https://wid.world/ poised for growth, https://www.engie.com/en/ 3 Global Shapers Community, 2017, “Global Shapers journalists/press-releases/2017-results/ Survey”, http://shaperssurvey.org/ 14 RenewBiz. Engie mothballs 1GW LatAm coal. 10 December 2019, 4 Kingo, Lise, and Lacy, Peter, “The United Nations Global https://renews.biz/56915/engie-mothballs-1gw-latam-coal/ Compact-Accenture Strategy CEO Study on Sustainability, Engie website, “Enabling the zero carbon transition,” https:// 15 2019”, https://www.accenture.com/_acnmedia/PDF- www.engie.com/en/group/opinions/zero-carbon-transition/ 109/Accenture-UNGC-CEO-Study.pdf#zoom=50 Financial Times, “Isabelle Kocher, Engie – a new kind of 16 5 Lacy, Peter; LaVelle, Katherine; and Zamora, Alberto, power”, May 15, 2016, https://www.ft.com/content/a06b4536- “Striking Balance with Whole-Brain Leadership”, Accenture, 15fd-11e6-b197-a4af20d5575e#axzz49O4U51dj 2019, https://www.accenture.com/gb-en/insights/ The Guardian, 2019, “Costa Rica unveils plan to achieve 17 strategy/whole-brainleadership-for-c-suites zero emissions by 2050 in climate change fight”, https:// 6 See also discussion in World Economic Forum, 2019, “Leading www.theguardian.com/world/2019/feb/25/costa-rica- Through the Fourth Industrial Revolution; putting people at the plan-decarbonize-2050-climate-change-fight centre”, https://www.weforum.org/whitepapers/leadingthrough- 18 UNFCCC, 2019, “Costa Rica Commits to Fully the-fourth-industrial-revolution-putting-people-at-thecentre Decarbonize by 2050”, https://unfccc.int/news/costa- 7 The Wall Street Journal (via Marketscreener.com), “Microsoft rica-commits-to-fully-decarbonize-by-2050 Rode Cloud to Market-Cap Prize”, December 3, 2018, https:// 19 Idem www.marketscreener.com/MICROSOFT-CORPORATION-4835/ news/Microsoft-Rode-Cloud-To-Market-Cap-Prize-27694734/ 20 Costa Rica Bicentennial Government 2018-2022. Decarbonization Plan, https://www.2050pathways.org/wp-content/ 8 Walke, Shivangi, “Transforming the culture at Microsoft—How uploads/2019/02/Decarbonization-Plan-Costa-Rica.pdf Satya Nadella turned around the culture of a 120,000 strong organisation?”, March 22, 2019, https://www.linkedin.com/pulse/ 21 Free translation from the Spanish-language original. transforming-culture-microsoft-how-satya-nadella-turned-walke/ Source: Deutsche Welle (DW) En Español, “Jenny Pérez entrevista al presidente de Costa Rica, Carlos Alvarado”, 9 Quartz, “How do you turn around the culture of a https://www.youtube.com/watch?v=UqSaYhUuqUM 130,000-person company? Ask Satya Nadella”, February 1, 2019, https://qz.com/work/1539071/how-microsoft- 22 The Straits Times, Oct 2019, “UOB launches course for all 26,000 ceo-satya-nadella-rebuilt-the-company-culture/ employees to help build core skills in digital age”, https://www. straitstimes.com/business/banking/uob-launches-better-u- Bloomberg, The David Rubenstein Show, “Nadella Says 10 course-for-all-26000-employees-to-help-build-core-skills-in Children’s Challenges Taught Him Empathy”, https:// www.youtube.com/watch?v=rKCL_MEXqJo 23 Idem 11 Kaiser Permanente, “Three initiatives to tackle housing 24 TechWire Asia, Oct 2019, “Why UOB is investing in a long term, insecurity”, January 15, 2019, https://about.kaiserpermanente. inclusive reskilling program”, https://techwireasia.com/2019/10/ org/community-health/news/kaiser-permanente- why-uob-is-investing-in-a-long-term-inclusive-reskilling-program/ announces-three-initiatives-to-improve-communi 30 | Seeking New Leadership Seeking New Leadership | 31
Appendix 1: About the Research Accenture and World Economic Forum Surveys The findings in this report, including the Five Elements Model of 2019 Whole Brain Leadership Survey United Nations Global Compact/Accenture Responsible Leadership, draw on four streams of research: (Accenture) CEO Study on Sustainability 2019 Quantitative and qualitative research: The study traces the development of • Surveys of business leaders and stakeholders (see Appendix 1). corporate motivations in engaging with • A survey of 200 C-suite executives environmental, social and governance • Online focus groups of people from Generation Y issues. It suggested nine leadership and Generation Z (see Appendix 1). • A survey of 5,700 consumers qualities that will enable business to be a leading actor in driving the United Nations • A survey of the Forum of Young Global Leaders and • A survey of 5,700 employees Sustainable Development Goals. Global Shapers Community (see Appendix 1). Surveys conducted in France, Germany, Italy, Spain, the United Kingdom and the United • A survey of more than 1,000 CEOs and • Economic data science analysis of company 1,500 senior company executives. States between February and April 2019. leadership and performance (see Appendix 3). • In-depth interviews of more This study presented 15 skills and than 100 CEOs. For more information on the mapping of survey data to behaviours of the leaders, resembling the Five Elements Model, see Appendix 2. the strengths of the “whole brain”. For more detail on the Five Elements, see Appendix 4. Annual Survey of the Forum of Young Global Leaders and the Global Shapers Community 2019 Responsible Business Survey The survey, conducted in November (Accenture). 2019, included questions relating A survey of senior decision-makers and to responsible leadership. stakeholders (consumers, employees, investors, business partners, policymakers, 1,535 Global Shapers and 295 Young Global and representatives of civil society) to Leaders responded from all global regions. understand their / their organizations’ priorities, drivers and barriers regarding responsible business: 2019 Mass Online Focus Groups • A survey of 2,298 company executives We conducted three mass online focus groups • A survey of 2,971 stakeholders in India, the United Kingdom and the United States, engaging with over 500 participants Surveys conducted in Australia, Brazil, in order to understand generational views China, France, Germany, India, Italy, on responsible leadership. We used Remesh, Japan, Spain, the United Kingdom an online platform, to convene participants. and the United States, and across 16 Responses were analysed and segmented in industries, between April and July 2019. real-time using natural language processing. 69% of the participants were aged 18-25; 18% aged 25-39; and 13% aged over 40. 32 | Seeking New Leadership Seeking New Leadership | 33
Appendix 2: Categorizing leadership qualities under the Five Elements Model We tested for the importance of leadership qualities from multiple sources and categorized them under the Five Elements. 1 2 3 4 5 St Em Mi Te In Stakeholder Emotion Mission Technology Intellect Inclusion & Intuition & Purpose & Innovation & Insight ANNUAL SURVEY OF Includes diverse Is seen as trustworthy Makes sense of ambiguity Understands emerging Delivers value for others THE FORUM OF YOUNG stakeholders in decisions or uncertainty technologies GLOBAL LEADERS AND Demonstrates vulnerability Committed to data- Demonstrates empathy Sees alternative Committed to continuous driven insight THE GLOBAL SHAPERS Navigates by intuition possible futures innovation COMMUNITY Takes a stand on social issues if needed Pioneers change at Knows and pursues Cultivates leadership systems level the tech frontier in others Champions core values and ethics ACCENTURE WHOLE Empathy and self-awareness Ability to influence, coach Having a clear vision and Understanding of Results orientation BRAIN LEADERSHIP and empower others strategy for the team new technologies SURVEY Ability to synthesize diverse Critical reasoning thinking and viewpoints Intuition Willingness to embrace Creative thinking and and enact change experimentation Creating an inclusive team environment Ability to lead others Data analysis and interpretation Being vigilant to the external environment ACCENTURE Stakeholder centricity, Passionate, sincere but Honest and just, Proactive, advocating for Competent and strong, RESPONSIBLE communication skills, assertive, friendly, patient committed and compliant training and staying up to inspiring and decisive, feedback and negotiation and involved, trustworthy with sustainable goals, speed with technology, strategic, efficient, BUSINESS SURVEY skills, open-mindedness, and serious, moral and socially responsible, innovative, focused on smart and intelligent, listening and understanding fair, ethical, transparent advocating for equality the long-term, visionary experienced, professional skills, empathetic 34 | Seeking New Leadership Seeking New Leadership | 35
Appendix 3: Economic data science analysis How do business executives deliver responsible leadership? We combined indicators of financial Step 1: Constructing the Dataset performance, technology innovation and sustainability & stakeholder trust into an econometric estimation and natural language processing exercise to answer this question. We did so in four steps: We constructed a dataset of publicly listed companies over the 2015-2018 period which, in addition to the usual company characteristics such as size or industry, covered: Sustainability & Stakeholder Trust each company’s R&D, evidenced by mentions ► Step 1: Constructing the Dataset in patents (20% weight); strategy, evidenced Sustainability & Trust pillar of Accenture’s by mentions in Form K-10 (30% weight); and Competitive Agility Index 2019 powered by adopted technology base, evidenced by ► Step 2: Estimating the Financial Premium Arabesque S-Ray®. This is a multi-dimensional mentions in earnings calls (50% weight). compound of metrics scoring companies between 1 and 100 on sustainability ► Step 3: Identifying Profitable and Trusted Innovators and stakeholder trust performance. Profitable Growth We included multiple measures of financial ► Step 4: Listening to CEOs Technology Innovation performance drawn from Capital IQ and the Growth and Profitability pillars A metric scoring companies between 1 and of the Accenture Competitive Agility 100 on the adoption of, and innovation with, Index 2019 powered by Arabesque leading technologies. We used machine- S-Ray®, a multi-dimensional compound learning techniques to train a natural language of financial performance metrics scoring processing algorithm to identify mentions of companies between 1 and 100. the application of six emerging technologies (AI, augmented and virtual reality, robotics, cloud, blockchain, and the internet of things) The final dataset includes 2,540 within patents, Form 10-K annual reports, and companies after excluding observations earnings calls. The results were used to build corresponding to companies with outliers an index measuring: technology innovation in in Ebitda margins (top and bottom 5%). Profitable Growth 20 Technology Innovation Profitable Growth (company score minus industry 20 Technology Innovation (company score minus industry median) (company scoreindicated median) minus industry by size of dot, (company score minus industry median) median)coloured indicated byifsize blue of dot, positive and coloured grey if negative blue if positive and 15 grey if negative 15 10 10 5 5 0 -40 -30 -20 -10 0 10 20 30 40 0 -5 Sustainability & -40 -30 -20 -10 0 10 20 30 Stakeholder 40 Trust (company score minus Sustainability & -5 -10 industry median) Trust Stakeholder (company score minus -10 -15 industry median) -15 Note: Year 2018. Each company is represented by a dot. 36 | Seeking New Leadership Seeking New Leadership | 37
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