Leadership Trends for 2010

If your business isn't looking ahead, you're already behind

Two results from this year's Best Companies for Leadership survey, conducted by Bloomberg and Hay Group, stood out. First, the Top 20 companies this year are significantly more likely to be primarily focused on "positioning for the future" than other companies.

The behavior of these companies indicates they believe the recession is over. Their focus is on seizing the initiative as the recovery begins to gather momentum. These companies are innovating new strategies, tactics, and execution and are already working to gain a competitive advantage.

Secondly, there is a revealing shift in what the top companies value in leaders. In last year's program, the quality that the Top 20 companies valued most in their leaders was execution—the ability of leaders to achieve results through others. This year, the most valued quality is strategic thinking.

Last year's focus on execution was a clear reflection of the turmoil that virtually every business had to deal with. In the teeth of the recession, with workforce reductions and limitations in resources commonplace, forward-looking companies recognized the importance and value of simply maintaining focus and performance with some kind of consistency.

Eyes on the Future

This year's emphasis on strategic thinking suggests that, like an individual recovering from a personal upheaval, businesses today are taking stock: reviewing their options, rethinking their strategies, considering new opportunities and innovations.

As the recession recedes—but with reduced credit resources and different consumer and business buying patterns—companies are shifting their vision from the short to the long term and choosing to move forward with new strategies and initiatives that offer the greatest potential to affect top-line growth.

At the same time that they are shifting focus from short to long term, this year's Best Companies for Leadership are taking a broader view of what's important. The data suggest that the Top 20 companies this year are more likely than other companies to find value in being inclusive, socially responsible, and globally aware in their outlook.

This result reflects recognition on the part of leading companies that they are operating in a complex and every more deeply interconnected global system and that their responsibilities extend beyond achieving short-term returns in shareholder value.

Expanding Roles for Women

In 2010, for example, women will constitute more than half the total U.S. workforce. Organizations are recognizing that women need to be represented at the highest levels of the decision-making process, not only because it is equitable, but also because it's important to gain women's insights in developing and marketing products and services, and it's important to attract and retain talented women.

Similarly, while globalization is hardly a new idea, leading companies have recognized that there is a difference between being a truly global company and simply being a Western company with global offices.

The top companies are working to put that insight into action—and it's no small task. It requires changes in thinking and practices affecting everything from the design of products and services to leave policies. But in the view of many corporate leaders, it is necessary for a company to become a truly effective competitor in every nation in which it operates.

Advantages of Social Responsibility

This broadening point of view also extends to issues of social responsibility among the Top 20 companies for leadership. In part, this approach represents an interest in good corporate citizenship. But companies have learned that socially responsibly behavior can be good business as well—positively affecting public attitudes, motivating employees, developing new markets, even creating long-term competitive advantages.

For example, during a recent meeting at Procter & Gamble (PG), I learned the company is helping to build schools in Africa—and at the same time providing hygiene products to young women to encourage them to attend these schools without interruption.

This project is a perfect demonstration of the idea of doing well by doing good, as P&G helps to develop a new market for its products while at the same time investing in undeniably positive social goals. Moreover, the managers involved in these efforts gain invaluable leadership experience in developing markets—strengthening the company's current and future leadership ranks.

Positive Public Image

General Electric (GE), a perennial member of the Top 20, has grouped numerous corporate initiatives and development partnerships within two broad, socially responsible themes: environmental responsibility and access to health care.

These initiatives have generated strong marketing and communication campaigns and earned positive press coverage as well. The donation of solar-powered water purification units and medical technologies to Haiti, for example, resulted in several national news stories, helping to generate good will toward GE among all its stakeholders, including the general public, which of course includes current and prospective shareholders.

Even more fundamental to GE's business interests, however, is the prospective long-term gain it foresees from such initiatives. Company leaders expect that both regulatory and market forces will continue to accelerate demand for both more energy-efficient products and technologies and more accessible, lower-cost medical equipment. With its investments and innovations, the company hopes to gain a significant competitive advantage against these market trends—again, doing well by doing good.

Attracting the Young

These kinds of projects offer companies additional benefits: strengthening a company's culture by fostering a common commitment and sense of purpose; helping young leaders plug into a collective identity beyond their role as individual contributors; and supporting recruiting efforts by harnessing the idealism and energy of employees and prospective employees alike.

As companies search for competitive advantages in an increasingly global economy, look for this growing acceptance of and involvement in socially responsible efforts to intensify.

The commitment to leadership development revealed in this year's results is striking—particularly compared with results from previous recessionary periods, when leadership development came to a virtual standstill as companies pared back spending on all activities deemed nonessential.

This year, however—despite the effects of the worst economic downturn in a generation—the Top 20 companies not only entered the recession with strong leadership in place; they also maintained their commitment to preparing and retaining present and future leaders. Even more surprising to me, while the Top 20 companies exhibit these qualities to a higher degree than other companies, the differences are less pronounced than in other aspects of this year's study.

A Broadening View

This study shows that most companies are highly committed to developing leaders from within their ranks—perhaps a reflection of hard-won experience from past downturns. Then, when businesses shut down leadership pipelines, many experienced problematic consequences when economic conditions improved. This time around, more enterprises have recognized the value of having seasoned managers ready to help lead the way into the new opportunities that accompany a recovery.

In part, this focus on leadership reflects the growing challenges today's top managers experience in leading diverse, global enterprises in a highly interconnected world. In this environment, leaders more often face mutually contradictory requirements—for example, the need to cut costs and improve efficiency in a downturn while also maintaining effective leadership development programs.

Arriving at the "right" answer in such dilemmas requires a deep understanding of a company's operations and culture, plus the seasoned judgment to foresee and evaluate the impact of differing options.

Complicating matters, today's multinational companies are affected, to varying degrees of severity, by often unexpected events virtually everywhere in the world. In this unpredictable environment, leaders must be prepared to improvise and shift tactics, all the while keeping broader goals in sight and performance results on target.

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