Leaders must have more emotion, intuition, mission and purpose
There are five elements at the heart of a new model of responsible leadership for an era of “stakeholder capitalism”, according to a study from the World Economic Forum in collaboration with Accenture.
That’s a model of leadership that focuses on strong organisational performance in concert with positive social and environmental impact.
The study suggests that tackling the challenges of the coming decade to accelerate growth and improve societal outcomes will require a wider range of attributes and characteristics from leaders, which include:
Stakeholder Inclusion. Safeguarding trust and positive impact for all by standing in the shoes of diverse stakeholders when making decisions and fostering an inclusive environment in which diverse individuals have a voice and feel they belong.
Emotion & Intuition. Unlocking commitment and creativity by being truly human, showing compassion, humility and openness.
Mission & Purpose. Advancing common goals by inspiring a shared vision of sustainable prosperity for the organization and its stakeholders.
Technology & Innovation. Creating new organizational and societal value by innovating responsibly with emerging technology.
Intellect & Insight. Finding ever-improved paths to success by embracing continuous learning and knowledge exchange.
Adrian Monck, managing director for the World Economic Forum, said the climate crisis, growing inequality and economic fragility threaten human wellbeing “like never before”.
“We need a stakeholder approach in which companies combine entrepreneurialism with purpose, working with others to improve the state of the world in which they operate,” said Monck.
“The good news is that the next generations want to develop the broad range of leadership skills needed to make this happen.”
The report Seeking New Leadership is based on surveys of more than 20,000 people — comprising members of the World Economic Forum’s Young Global Leaders and Global Shapers communities (“emerging leaders”); CEOs and other business leaders; employees, consumers and other stakeholder groups — as well as an econometric analysis of company performance and other original research.
The report highlights the growing demand for businesses to address environmental, social and economic issues in return for their “license to prosper.”
For instance, six in 10 (61%) of the emerging leaders surveyed said that business models should be pursued only if they improve both societal outcomes and profitable growth.
Moreover, the vast majority of both business leaders (79%) and stakeholders (73%) said that the positive potential of emerging technology calls for businesses to reconsider their role in society.
According to the study, many business executives are out of step with stakeholders, who want leaders with more Emotion & Intuition and Mission & Purpose.
Findings from an online focus group of more than 500 people from Generation Y and Generation Z (people born since 1980) conducted as part of the research also suggest that younger people believe that leadership decisions in the coming decade will require a balanced approach across all five attributes of responsible leadership.
Performance Premiums Associated with Sustainability, Trust and Innovation
At the same time, the study notes that profits and responsible leadership needn’t be mutually exclusive; in fact, it finds a link between responsible leadership and higher financial performance.
As part of the research, Accenture examined the financial performance and actions related to sustainability, stakeholder trust and innovation of more than 2,500 publicly listed companies between 2015 and 2018.
A key finding: Companies that achieve high levels of both innovation and stakeholder trust outperform their industry peers financially — with an average of 3.1% higher operating profits as well as greater returns for shareholders.
In addition, companies that achieve industry-leading innovation, stakeholder trust and financial performance display all five elements of responsible leadership to a greater extent than do their peers.
The findings also suggest that only stakeholder-centric business models can unlock the full power of innovation to elevate organizational performance and drive societal progress.
“Organisations have not only the opportunity, but an obligation, to drive organizational growth in tandem with positive social and environmental outcomes. This starts with redefining what it means to lead responsibly,” said Ellyn Shook, Accenture’s chief leadership and human resources officer.
“A new generation is leading the way, focused on driving value while honoring values where a sense of mission, stakeholder inclusion and compassion becomes second nature.
“Through our collaboration with the Young Global Leaders and Global Shapers, we are excited to define and catalyse these new leadership qualities in the individuals and teams entrusted to shape the world’s future.”