Business today is shrouded in economic uncertainty, confusion and anxiety. Top executives face pressures to contain costs while finding new customers and fending off competition. This unpredictability compounds the challenges of CEOs and CLOs to navigate change, find and develop talent, prepare for the future and lead growth. In order to succeed, they must be pragmatic idealists — realistic leaders who can imagine what their companies can be.
Over the past two decades, we have interviewed or advised nearly 300 top leaders around the globe and have met with CEOs from world-class companies, including Toyota, Cadbury, Procter & Gamble, Johnson & Johnson, Intel, PricewaterhouseCoopers, New York Life and ING. This research illustrated what makes great leaders successful and how the best CEOs, in partnership with their CLOs, are navigating uncertain times.
The secret: a fresh perspective on building leadership at all levels. With the help of their CLOs, top CEOs are creating cadres of leaders at all levels — people who share psychological ownership for the success of their companies. Their actions enable these leaders to engage people’s hearts and minds, retain the best and brightest through difficult times, focus and align their organizations and challenge their employees to do great work.
These top CEOs are asking, together with their CLOs, what kind of leaders does their organization need? They need effective change leaders, growth leaders and people leaders.
Effective Change Leaders
CEOs have been developing change leaders for decades. What’s new is the need to develop change leaders who can turn today’s anxiety into tomorrow’s productive energy.
Meet Alan Mulally. When he became CEO at Ford Motor Co. in 2006, the automobile giant was in deep trouble. Its market share had been tumbling for more than 10 years, and the company was hemorrhaging nearly $24,000 a minute. Mulally tackled things head-on, increasing everyone’s anxiety. But with openness and constant communication, he began to channel that anxiety into the energy required to move forward. As Mulally saw it, anxiety means “people are thinking about your goals, objectives and plans — and the risk and opportunities. It’s very enabling.”
Under Mulally’s leadership, Ford aggressively restructured the business and accelerated new products and services. Mulally also invested in coaching and developing the next generation of Ford leaders. A year later, Ford won five quality awards from J.D. Power and Associates — more than any other carmaker. To date, Ford is the only big U.S. automaker that has not filed for bankruptcy.
Leaders like Alan Mulally know that change and uncertainty are facts of life and that healthy anxiety is a positive and powerful force for growth. Creating the right amount of anxiety is the key to leading change.
Not everyone understands this. Some leaders think anxiety is a sign of weakness. Fearing their inability to manage anxiety, they deny, resist or run from it, or they try to overcontrol it. But, failing to recognize what they can and can’t control, they end up generating too much or too little anxiety.
Why is it important to turn anxiety into productive energy? Because anxiety lives in the gap between where our organizations are today and where we want them to be in the future. Getting from here to there requires having enough drive to move forward without feeling frantic or frozen. It requires having just enough anxiety.
Just enough anxiety is the human energy that drives an organization forward. In contrast, too much anxiety is chaotic energy that causes people to resist, attack or avoid problems. It creates discomfort and mistakes. And then there’s too little anxiety. Grounded in contentment, it reflects the belief that all is well and that good times will continue unabated with no need for change or improvement. Too little anxiety leads to complacency and stagnation.
Both too much and too little anxiety are dysfunctional and destructive. They hold you back or send you in the wrong direction. Just enough anxiety gives you the energy and focus you need for optimum performance.
The best way to create just enough anxiety for the people around you is to learn to live and lead in paradox. The most successful leaders have mastered three distinct paradoxes: realistic optimism, constructive impatience and confident humility.
- Realistic optimism is the ability to tell the truth about the present while simultaneously dreaming the future.
- Constructive impatience is the ability to build a positive, supportive environment while instilling a sense of urgency and a drive for results.
- Confident humility is the ability to lead with power and generosity at the same time.
The key to building these skills is self-awareness. To paraphrase Harry Kraemer, the former CEO and chairman of Baxter International: “If you’re not being self-reflective, you can’t really know yourself. And if you don’t know yourself, how can you lead others?”
Effective Growth Leaders
Companies have always depended on growth to survive. What’s new is the need to find opportunities in today’s economic climate to keep growing faster than their competitors. Instead of hunkering down, slashing costs and avoiding all risks, next-generation leaders need to learn to grow their businesses from the inside out, with fewer resources and in unconventional ways.
We recently completed a three-year study of growth leaders in partnership with the Batten Institute at the University of Virginia’s Darden School of Business. We interviewed 50 growth leaders in companies such as General Electric, IBM, Hewlett-Packard and Raytheon to find out how they grew their businesses with limited resources and support from their companies and what enabled them to be successful. The results have huge implications for growing companies in our current environment.
Growth leaders think differently. They are hard-wired for opportunity and confident they can shape the world around them. They come to their jobs with diverse expertise from diverse industries and with a bias for action. Take John Haugh at Mars/Masterfoods, who had never worked in candy before being charged with reviving Ethel M, the company’s gourmet chocolate business.
Haugh partnered with target customers early on to create a brand-new concept: chocolate lounges. He opened stores with big comfortable chairs and books on the table where customers can sit and have chocolate fondue, drink coffee or hot chocolate and hang out with friends. Haugh’s unconventional approach spurred growth in the Mars Retail Group.
Growth leaders see differently. They use the resources and capabilities at their disposal and reframe their understanding of the business, continually asking, “What else can we do with what we have?” Like Craig Wynett, they look at everything through an entrepreneurial lens and see possibilities that others miss. As general manager of future growth initiatives at Procter & Gamble, Wynett turned the floor care industry on its head with the introduction of the Swiffer mop. By recognizing that the most important factor in getting your floor clean is the quality of the mop, not the quality of the floor cleaner, Wynett revolutionized the way people clean their floors while helping P&G grow from the inside out.
Growth leaders act differently. They build new growth teams, hire A-players, make small bets fast and introduce learning launches. Tough yet caring, they are quick to call the baby ugly when an idea doesn’t work. At ING Direct USA, Chairman and President Arkadi Kuhlmann spearheaded the company’s move into electronic banking by handpicking only star performers, bypassing conventional banking traditions and making accountability rule No. 1. But he also provided support, encouragement and inspiration. Today, ING Direct is the largest Internet-based bank in the United States.
Effective People Leaders
It’s no secret that people are at the heart of any successful enterprise. What’s new is the need to re-establish the fragile covenant between leaders and their employees.
Greed, massive layoffs and bankruptcies have eroded people’s trust within their companies. Rebuilding this fragile bond takes truth telling and transparency, clear expectations and a gentle touch. It requires that leaders at all levels turn their attention to the human side of organization building.
You have a unique opportunity to help rebuild or strengthen the covenant between your leaders and employees. You can help leaders master these five behaviors:
- Appeal to people’s higher purpose. Isadore Sharp founded the Four Seasons Hotels and Resorts with one ideal in mind: Do unto others as you would have them do unto you. To this day, he hires only people who share his ideal, then empowers them to take responsibility for putting the golden rule into action. The company has won 23 AAA Five Diamond hotel awards, and it has been listed in the “100 Best Companies to Work For” by Fortune every year since its inception.
- Lead with courage and confidence. When CEO Sally Jewell took the reins of REI, the company was on the brink of disaster. This former banker and Mobil engineer jumped right in, sharing information widely, helping employees understand what drove business performance and making difficult decisions.
- Focus people on what’s critical. Kumar Mangalam Birla was only 28 when he took the reins of the Aditya Birla Group in Mumbai, India, after the death of his father. Nobody expected him to lead the company into the ranks of the Global 500, but that’s exactly what he did. He did it by determining what to do more of, what to do less of, what to add and what to eliminate — shifting the company’s focus from fiber-based to ferrous metals and consolidating each business.
- Be honest and transparent. People look for leaders who are authentic and genuine, like Linda Rabbitt, founder and owner of Rand* Construction Corporation. Her honesty, combined with her public praise of people’s best efforts, bought Rabbitt employee loyalty. It also gives her the freedom to raise the bar whenever she needs to, which she does often. Rand is the second-largest woman-owned construction company in the United States.
- Be a teacher and a learner. The best companies invest considerable time in attracting, developing and retaining world-class leaders. Like PepsiCo CEO Indra Nooyi, they know that personal growth leads to professional growth, which leads to organizational growth, which leads to financial growth. Nooyi makes sure that leaders at all levels of the company are developing the leaders who will follow in their footsteps, teaching them about the company’s strategy and culture, as well as learning and growing themselves.
In uncertain times, CEOs and CLOs must work together more than ever before. They must communicate openly and often, strengthen relationships and teams, get people on the same page and accelerate learning and performance in real time. They must bring their agenda to their organizations while bringing everyone in the organization to their agenda.
Using real-time communication platforms, top leaders can convey evolving priorities to every part of their organizations quickly and directly without causing confusion. Additional tools like direct feedback channels with analyses of key trends and urgent issue; quick, user-friendly surveys; leadership forums for sharing knowledge; and links to company internal resources give companies flexible and effective ways to communicate and execute the CEO’s agenda.
Let’s face it: Staying competitive in an uncertain world requires fresh and refreshed approaches to leadership. It also requires a new generation of leaders prepared to meet the challenges ahead. The best CEOs and CLOs are forging new partnerships to turn today’s crises into tomorrow’s opportunities. Together they are linking employees to CEO agendas and helping people learn and grow in alignment with those agendas. They are developing effective change leaders, growth leaders and people leaders — one person, one relationship and one action at a time.