In the face of increasingly rapid change, disruptive technology, geopolitical uncertainty and growing societal pressures, the role of leadership and business in society is changing. What does this mean for future leaders and what skills will be required of leaders to successfully navigate this complex landscape? This was the starting point for a panel discussion hosted by the Canadian Centre for Advanced Leadership in Business (CCAL) as part of an event celebrating its sixth anniversary. The panel brought together Mac Van Wielingen, Geoff Cummingand Elizabeth Cannon with moderator, Adam Legge. No doubt, it was an audacious topic with no simple answers. Exploring issues of deteriorating trust in business and leaders, the impact of short-termism and the role of ethical leadership – the panel provided unique and inspiring insights. This blog highlights some of the key ideas and themes explored.
Are the pressures and demands on business leaders increasing?
Be it changing regulation, public policy, or increasingly vocal special interest groups, the amount of responsibility and demands on business and leaders today feels heightened. From the perspective within a university, Elizabeth Cannon shares that these same challenges exist.
The role of the university is to best prepare students to enter the business world, and to provide research and scholarship that informs how to respond to change and what the future might look like. Leaders need to understand these dynamic forces and integrate them into strategy.
Mac Van Wielingen argues that the complexity of this exercise reveals the necessity of comprehensiveness – explaining that each element is material, and each must be considered.1 In this way, Van Wielingen sees strategy as a tool to wrap our arms around complexity.
Embracing this vision requires a different mindset for leaders, which includes looking broadly and comprehensively at all fundamentals impacting business and how they are integrated into purpose. Purpose within business is itself a complex and highly debated concept. Milton Friedman famously argued that the sole purpose of business is to generate profit and create shareholder value, putting the rights of shareholders above all other stakeholders.2 This view shaped much of modern economic theory. However, others understand purpose from a broader perspective, arguing that business can deliver societal value alongside financial returns.
Geoff Cumming points us to, what he calls, the first principles of business, as delivering goods and services to society. In Cumming’s view the expectations placed on business can be misleading. Cumming believes that it is not business’ role to lead society, but rather to operate within the context and values of society, for which we all share a responsibility.
Discussion of purpose is commonly polarized between those who advocate for profit as the sole consideration and those whom are demanding a broader, more considered social purpose. Van Wielingen provides a perspective that it is not one or the other, but rather that we are constantly trading-off between the four variables of profit, time, risk and human experience.3 For example, we make decisions about capital within a given time frame, and there is always associated risk. Profit is an imperative – without it a business does not survive – however it is not the whole story. Van Wielingen states that we need to be explicit within purpose about our commitment to issues such as human experience and sustainability. Such issues should be integrated into the core of purpose, and not simply grafted on.
"Profit is an imperative – without it a business does not survive – however it is not the whole story."
In a world of continued complexity, dynamism and change, how can leaders ensure that they and their organizations are adaptive and resilient?
Exploring how organizations and leaders can be built to be more adaptive and resilient, the panelists agreed that a commitment to continuous learning is required.
Van Wielingen identifies the driving forces behind continuous learning as the humility to be open to new ideas combined with a deep curiosity to understand. For him, the organization of the future is one that embraces the concept of a learning organization. In a learning organization,employees continually create, acquire, and transfer knowledge.4 These behaviours help an organization to adapt to change and increased competition.
Another take on this, is the adoption of an entrepreneurial mindset, which as Cannon shares, has been embraced by the University of Calgary. Regardless of the model of learning and development an organization chooses, a commitment to learning and the application of knowledge is a critical aspect of organizational culture that supports adaptability. Van Wielingen elaborates that within individuals and organizations there is no room for complacency (thinking we are safe from failure) or for arrogance and ego (thinking we know and are better than). Sustainable business success in today’s environment requires leaders who are open to diverse perspectives and willing to consider alternative solutions.
At an individual level, Cumming equates these qualities to character. He believes that character is not something that is fully defined as we enter the workforce but is developed through life experience and is influenced by our role models. To better prepare students for a challenging and tumultuous business environment, Cannon points to ways that universities can provide students with life experiences outside of the classroom, and the role of the university in developing a strong community.
As many jobs become more specialized requiring deep technical knowledge, Cumming encourages students to also put a premium on breadth of knowledge and experience. He shares that an outcome of globalization is increased competition, requiring leaders to understand international pressures and drivers. Cumming reminds students not to ignore the past, for a depth of understanding of where we have been, can assist with seeing more clearly into the future.
Business is facing an eroding basis of trust within the public, and in some cases for valid reasons such as Volkswagen, Wells Fargo and the catastrophic failures of the 2008 financial crisis. What steps need to be taken to rebuild trust as responsible leaders and businesses?
A 2018 survey by Edelman measuring the state of trust in our society, found that 60% of respondents believe that most CEOs are driven by greed rather than making a positive difference in the world.5 Edelman describes our current global state as a new phase in loss of trust. This is characterized by an unwillingness to believe in information, and a loss of confidence in the source of information.6 This is resulting in a world where there is no common fact, objective truth, and an erosion of faith in institutions.
Within this context, the need for ethical leadership is arguably more important than ever.
Van Wielingen believes that to create trust and ethical behaviours in an organization, it needs to be modelled from the top down (creating a trickle-down effect,)7 with directors and senior management embodying an ethical culture. Ethics need to be linked to purpose. Van Wielingen clarifies, this is not to say that our purpose is to be ethical; however, part of purpose should be to create an environment where people can thrive, develop, and find fulfillment. Van Wielingen shares that throughout his career he has always told employees, “I want you to experience a great work environment.” It is in this kind of purpose where a true transformational culture can exist. Cannon supports Van Wielingen’s assertion, stating that it is the responsibility of leaders to set that ethical high-bar. She adds that in her experience, building a strong culture of trust internally is an enabler of great strategy. It allows an organization to engage employees in a shared vision and to generate results. One of the ways that Cannon has seen this work at the University of Calgary is through seeking and broadly sharing feedback.
In the wake of the ethical failings highlighted by the likes of the Volkswagen emission scandal and the #MeToo movement, Cumming suggests that the silver lining is that individuals no longer feel that they need to be silent. At all levels of an organization we need to embrace the value of honesty and the responsibility to speak up against wrongdoing.
What needs to change to create more effective leadership and long-term oriented organizations?
In a cycle of billable hours, quarterly earnings and micro-leadership tenures, the day-to-day grind of our roles are filled with deadlines and short-term time horizons. However, being continually focused on the short-term comes at an expense. Recent research by McKinsey & Company suggests that short-termism may have cost U.S. businesses $1 trillion in market value between 2001 and 2014.8
Cumming identifies part of the problem as being the literal structure of terms and contracts for leaders in business and politics, alike. He emphasizes that although our society is often myopic – leadership shouldn’t be. In fact, Cumming shares, “In my investing career, I have found that it is a huge advantage to be able to look longer term.”Van Wielingen echoes a similar perspective, saying that he often encounters business leaders who see contemplating the long-term as a luxury that they do not have time for. The consequence is getting stuck in a cycle of short-termism, which Van Wielingen equates to a “reckless urgency”; believing that there is something almost negligent in the avoidance of the future. While there is no silver bullet or simple answer, Van Wielingen sees the need for a long-term framework within which significant decisions are made, and a long-term vision is set. This framework is called strategy.
Cumming challenges us to ask, “What truly valuable contributions have been achieved in a short time frame?” He points to the fact that all the greatest accomplishments from the moon landing to major medical breakthroughs have been the culmination of long-term effort. For each of us on our own leadership journey, our lifetime is a culmination of experience that makes up who we are – and hopefully allows us to forge a path forward that is guided by character, a strong moral compass and driven by purpose.
Want to learn more about the concepts and themes explored by the panel? In preparation for the discussion the panelists reviewed that following five articles:
- Larry Fink's Annual Letter to CEOs - BlackRock
- Mac Van Wielingen: Fraser Institute Founder's Award Speech – Viewpoint Group
- 2018 Edelman Trust Barometer - Edelman
- The most overlooked leadership skill? Having a moral compass – World Economic Development
- The case against corporate short termism – McKinsey & Company
About the Author:
Senior Communications Consultant
Building on almost of decade of public company investor relations and corporate communications experience, Megan is keenly interested in the role of corporate governance specifically in the areas of performance managment, ESG integration and culture. Megan has a Master of Science in Media and Communication from the London School of Economics and an MBA (Finance) from the University of Calgary.
This work has been funded by Viewpoint Foundation.
1) For more information on Van Wielingen’s views on the “necessity of comprehensiveness” see Viewpoint’s January 31, 2018 blog titled “Mac Van Wielingen Explores Drivers of Performance.” Available at: http://www.viewpointgroup.ca/blog/mac-van-wielingen-explores-drivers-of-performance-in-talk-to-senior-leaders
2) M. Friedman. (1970) The Social Responsibility of Business to Increase Profits. The New York Times. Retrieved from:https://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
3) M. Van Wielingen. (2017). Fraser Institute Founders Award Acceptance Speech. Retrieved from:http://www.viewpointgroup.ca/public/images/Speaking_Events/2017/Fraser_Institute_Distribution_Speech_-_October_12_2017_FINAL.pdf
4) D.A Garvin., A. Edmondson. F. Gino. (2008). Is Yours a Learning Organization? Harvard Business Review.
5) Edelman. (2017). 2018 Trust Barometer. Retrieved from: http://cms.edelman.com/sites/default/files/2018-02/2018_Edelman_Trust_Barometer_Global_Report_FEB.pdf
6) To read more of Viewpoint’s work on the dangers of fake news see our January 30, 2017 blog titled, “The Importance of Questioning and Evidence-Based Knowledge Sharing.” Available at: http://www.viewpointgroup.ca/blog/the-importance-of-evidence-based-knowledge-sharing-and-decision-making-in-the-face-of-fake-news
7) J. Zenger., J. Folkman. (2016) The Trickle-Down Effect of Good (and Bad) Leadership. Harvard Business Review. Retrieved from:https://hbr.org/2016/01/the-trickle-down-effect-of-good-and-bad-leadership
8) McKinsey & Company (2017). The Case Against Corporate Short termism. Retrieved from: https://www.mckinsey.com/mgi/overview/in-the-news/the-case-against-corporate-short-termism