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THE NEW RULES OF

LEADERSHIP

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THE 5 FORCES CREATING TRANSFORMATIONAL CHANGE FOR CEOS AND THEIR ORGANIZATIONS

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The expectations for CEOs are evolving due to a number of external trends. Their organizations are facing transformational change due to a variety of key drivers. What must leaders do to meet these changing expectations and lead into the future?

It’s a cliche to say that it’s lonely at the top. But it’s true—both literally, in the sense that it’s all too easy for CEOs to become isolated, and figuratively, in the sense that CEOs today are being asked to do more and more. As corporations gain more influence in our society, we increasingly look to CEOs not just to drive performance but to support social change.

The New Rules of Leadership

Leaders must be aware of their external environment. They have to stay on top of trends and understand how those trends will affect their organizations. Here are five key trends that are driving transformational change in organizations and impacting the expectations for top leaders:

1. Transformative Technologies

New technologies are changing the landscape for every company. For example, artificial intelligence (AI) makes data a more and more powerful tool for making better decisions. IBM has an AI tool that can predict when employees are likely to quit. This tool has the potential to save about $300 million in retention costs.

Almost every organization is vulnerable to disruption if it doesn’t stay up to date—and every organization has an opportunity to take advantage of changing technologies to grow. CEOs are aware of these challenges: 72% believe that the next three years will be more crucial for their industries than the past 50 years, according to KPMG.

It’s a leader’s responsibility to understand how technology is changing their industry and the world. Today, staying on top of technological trends is a matter of survival for every organization.

2. Geopolitical Instability

We live in an unstable world. Geopolitical challenges like civil unrest or trade disputes can dramatically impact the bottom line for almost any type of organization. CEOs understand this threat, but most aren’t taking action to meet it: 52% of CEOs believe that geopolitical changes are affecting their companies, but only a few are actually doing something about that risk.

It’s a leader’s job today to anticipate and work to mitigate risks like these. Understanding geopolitical trends with help from experts can help companies prepare for challenging situations.

3. The Future of Work

The future of work is now. Thanks to the enormous disruption created by the pandemic, leaders have a real opportunity to change the way their organizations operate. But there are still many questions, including how much automation will change different industries. Experts are still divided on how many jobs automation will eliminate, with estimates ranging from 5% to 61%.

It’s crucial for leaders to stay focused on the challenges in front of them and avoid overreacting to hype. Organizations with strong, collaborative, creative cultures will fare the best, as they’ll be more nimble and able to respond to changing circumstances. Focusing on supporting employees and building community will be crucial to fostering resilience.

4. Delivering Diversity

The issue of diversity and inclusion is getting more and more attention these days, particularly after the protests of summer 2020. People are looking to CEOs to step up: 77% of people feel that it’s a CEO’s responsibility to drive change on big issues like racial inequality.

But too many companies are still thinking of these issues in the wrong way. Many are still stuck in the so-called “Noah’s Ark Paradox,” or the belief that hiring ‘two of every kind’ magically creates diversity. Without broader culture change, it’s all too easy for these new voices to be lost. It’s a contemporary CEO’s job to create a culture where all voices are truly heard and the organization can actually harness the strengths of a diverse workforce.

5. Repurposing Corporations

Ultimately, the big-picture trend here is that people are increasingly looking to businesses to take a stand on the issues of the day and drive social change: 84% of people expect CEOs to participate in debates on the big issues of the day, from automation to globalization.

This is actually a huge opportunity for CEOs. The best leaders in the future will harness the energies of their employees to drive transformational change in their organizations and meet the challenges of the future.

Today, people look to corporations to do more than simply look after the bottom line. Leaders today are obligated to live up to these five core commitments:

  • Deliver value to customers
  • Invest in employees
  • Deal fairly and ethically with suppliers
  • Support communities
  • Generate long-term value for shareholders

Living up to these five commitments builds trust. An organization that is built on trust will drive greater employee engagement and be better poised to grow in the future.

Leading the Future

Thanks to the pandemic, we’ve just seen how much the ability to respond quickly to change can make or break an organization. Leaders who understand the larger context they operate in are better positioned to spot changing trends, respond to threats, and jump on opportunities. By understanding the new rules of leadership, CEOs can lead their organizations into a constantly changing future.

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