Transforming Leadership for the 4th Industrial Revolution

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What is the persona of a leader who will survive and thrive in the digital age?

As organisations everywhere begin to adapt and evolve to respond to the 4th Industrial Revolution (Industry 4.0)[1] and the new challenges it brings - the behaviour, capability and mindset of leaders (at all levels), is paramount to creating an environment for success.

In this blog we explore why leaders need to evolve and the qualities essential for the future. 

Why must leadership evolve?

By 2020 half the global workforce will be millennials[2]. Many will be en-route to leadership roles, some will already be leaders. The type of leadership valued and practiced by millennials is subtly changing, with transparency, commitment to cause and active championing of individual differences all ranked highly[3]. There are economic, environmental and social drivers leading to an evolution of leaders:

  • Pace and scale of change disrupting business models

  • Hyper-connectivity increasing accessibility and visibility of leaders

  • Informed customers expecting more responsive services and products

  • Diversity of talent shifting profiles and working preferences

As Klaus Schwab noted at the World Economic Forum, a technological revolution is underway “that is blurring the lines between the physical, digital and biological spheres” where a combination of technologies are changing the way we live, work and interact.

The pace and scale of this change is greater than most leaders have experienced, and they must harness insight from a diverse network to stay innovative. No longer can organisations rely on the ‘guy at the top’ for strategic direction; ideas need to be ‘crowd sourced’ from employees, consumers and the society at large.

Hyper-connectivity, where people have more visibility and desire to engage with leaders, means CEOs are now expected to be on the end of a Twitter feed. The accessibility of data has empowered customers to be more informed, leading to greater expectation of responsive services and more personalised products, and at competitive prices. Consumers will not hesitate to provide direct, damning and open feedback if they feel unheard, and up to 22% of customers can be lost by just one negative review[4], so leaders must be responsive and customer obsessed. 

The concept of ‘talent’ is also changing on many dimensions. As we noted in our Rethinking Talent blog, the rise of artificial intelligence (AI) will fundamentally shift the nature of work. Leaders will need to focus on nurturing the unique ‘value add’ skills that human employees provide, as well as establishing quality relationships that retain these critical skills in a competitive landscape.[5] They will need to learn to manage and motivate increasingly diverse and remote teams working a variety of flexible patterns. The teams of the future will have different development and experiential needs, where millennials want to stretch and grow fast, with social media setting the benchmark.

The combined impact of all these changes means that a different type of leadership behaviour, mindset and capability is essential to drive the culture needed to survive in the dawning era. Herein we explore the leadership personas we believe are vital in the future.

The Humble and Inclusive Leader

Research tells us that leadership behaviours account for 70% of the drivers of organisational culture. Yet in a recent survey, only 20% of 450 London based directors and board members felt they spent enough time managing and improving culture, despite it being a top three business priority.[6]

It’s not just about tone from the top, middle or bottom, it’s about action. A leader’s actions at all levels provide the co-ordinates of what behaviours are truly valued and recognised across an organisation.

We believe there are fundamental leadership behaviours needed to bring significant culture change to organisations entering Industry 4.0: openness; resilience; inclusiveness; humility; and self-awareness.

When Twitter CEO Jack Dorsey returned to Joe Rogan’s podcast[7] to discuss policing the platform, he (nominally) demonstrated a new version of leadership - one where openness and transparency dictate organisational direction. We are all living during a time when people want and expect their leaders to be more human, less perfect and at times a bit vulnerable – regardless of hierarchy or rank.[8]

“Usual suspects get picked for opportunities, are we thinking enough about the unusual suspects?”[9] A diverse workforce brings depth and breadth to decision making, increasing innovation, competition and economic performance. Gender parity alone would add $12 trillion to global GDP by 2025[10]. As we shared in our Gender Parity blog “it’s not just having the seat at the table - it’s about having a voice”. Leaders need to be supported and trained to actively listen to diverse points of view. According to research by Dame Fiona Woolf, whilst 84% employees agreed their leaders made a commitment to create a diverse and inclusive environment, only 15% of mid-level managers felt their leaders’ actions were consistent with their words.[11] Diversity is hard-coded into millennials and Gen Z, so to attract and retain top talent in order to shift your culture, it is essential leaders embrace diversity at all levels.

Are your leaders humble, encouraging diversity of thought and championing inclusivity?

The Curious and Connected Leader

At the FCA Discussion on ‘The Role of leaders in Transforming Culture’ earlier this week, the panel discussed the key skills they believed leaders require when transforming culture: understanding social needs and the importance of belonging; being self-aware, and having the ability to communicate openly. As Tom Blomfield, CEO Monzo, noted it’s not just answering the intellectual question, it’s also about reading the room and building human connections to create a high safety environment for teams.[9]

Beyond self and social awareness, we believe that the core skills needed to nudge organisational culture into Industry 4.0 are: adaptability; collaboration; curiosity; conviction; judgement; and most of all ‘listening’.

The ability to ‘speak truth to (those in) power’ is emerging as a critical organisational skill, and the ability to ‘listen up’ a key leadership skill.[12] Scandals such as Samsung bribery charges, Oxfam’s safeguarding flaws or even the Weinstein cover-up highlight the importance of transparency of action and establishing a culture where it is safe to ‘speak up’ without repercussions, safe in the knowledge that leaders will listen openly and action.

Our research partner John Higgins and his co-author Megan Rietz in ‘Being Silenced and Silencing Others’[12] highlight that leaders play two key roles; their individual ability to speak truths to others and their ability to enable others to speak truth to them. Even the most well-intentioned leader may unconsciously close down a conversation in which an alternative truth and insight is lost. Deepening a board’s understanding of their organisation’s culture towards truth and power can also facilitate stronger, more impactful conversations. Collective Intelligence depends on humility.”[12] Those in positions of knowledge and power need to be open to others having important insight. Particularly with the rise of Gen Zers who tend to believe that change must come from dialogue.[13]

How do your leaders deal with the inevitable silencing and distortion that comes with the effects of power and status?

The Purposeful & Customer Centric Leader

Organisations talk about working collaboratively, being congruent and creating agile tribes. We know that collective leadership reaps better returns and reduces risk of dependency on individuals. The challenge is how to drive collaboration in industries inherently based on individual performance and competitiveness where financial reward has been the primary incentive. The answer is purpose.

In a world where volatility is the new norm and change is a constant, the individuals and organisations that are flourishing are those with a clear sense of purpose based on authentic ethical values.[14] As Mme Christine Lagarde noted “we are all driven by a sense of purpose and that individual purpose should be linked to social purpose…it is only in the last 60 years that profit has emerged as the only purpose for businesses”.[15]

Consumers increasingly expect brands to “take a stand”.[13] CSR values undoubtedly influence millennials looking for an employer[2]. A broader collective purpose and responsibility embedded in leader’s tone and action, is fundamental for organisations to shift their culture and performance in order to be successful in a VUCA world.

In our recent conversations with chairmen and CEOs, we believe we are starting to see the shift in organisations, re-defining their purpose and considering the social and economic impact of their business not just shareholder value.

Does your organisation have a clear and broad purpose that resonates for your people and customers?

The Re-inventive and Disruptive Leader

The ripple of organisations trying to radically change their ecosystem, through agile engineering and ‘flipping the structure’ has transformed top management. Leaders must be a central hub and nurturing nucleus that primarily functions as a guardian; embracing their ability to empower others, manage hybrid and disparate workforce, encouraging people to flourish and learn.

Leaders in rapidly scaling companies need to learn to cope quickly with changing demands and may need help to develop their managerial and leadership talent. An important factor cited by scale up leaders as stopping them from growing their revenues faster is lack of capacity and experience in the senior leadership team. It is hard to grow a company hundreds of times faster than is ‘normal’ without the right training and support.[16]

To continually reinvent and disrupt effectively requires many of the skills outlined already: humility; curiosity; connectivity; adaptability. It also requires deep self-awareness, reflection and resilience.

“Often our blind spot is that we tend to think that it is other people that need to change”.[17] Leaders who are approachable and welcoming of feedback and coaching continue to evolve, those that don’t are left in the dark ages. Organisations such as Tesco and Microsoft[18] make effective use of reverse mentoring, where leaders are paired with more junior people, to open leader’s eyes and dismantle hierarchies. Facilitated ‘expeditions’ into different organisations or social enterprise can equally confront leaders with new ways of behaving and respect for diverse perspectives. 

Are your leaders continually reflecting, reinventing and sufficiently resilient to enable disruptive change?

Building your 4.0 Bench Strength

We believe it is not about sheep-dipping leaders with off the shelf development programmes. Instead development though peer to peer, social, experiential and reflective learning, focused on:

  • Align and engage leaders behind a common purpose and responsibility

  • Use the power of stories and narratives to motivate and inspire

  • Create a culture of speaking up to access the collective voice and manage risk

  • Encourage curiosity amongst leaders to access competitive advantage

If you or your organisation are implementing any initiatives to nurture these types of leaders then we would love to hear your story. Or if you would like to hear more from Wharton Business Consulting and our research partners on these personas, please contact Natalie Wharton

References and Footnotes

  1. 4th Industrial Revolution/Industry 4.0: first introduced by Klaus Schwab (Chairman, WEF) technologies that combine hardware, software, and biology (cyber-physical systems) and emphasizes advances in communication and connectivity

  2. Millennials at Work; Reshaping the Workforce PWC, 2011

  3. Divergent Views/Common Ground The Conference Board Inc, 2016

  4. Data Reveals 67% of Consumers are Influenced by Online Reviews D Hinckley, 2015

  5. As AI Makes More Decisions, the Nature of Leadership Will Change HBR, 2018

  6. Culture eats Strategy for Breakfast. So what’s for lunch A Cave, 2017

  7. Joe Rogan Experience #1258 Jack Dorsey, Vijaya Gadde & Tim Pool, 2019

  8. Powerful things happen when a leader is transparent G Llopis, 2012

  9. ‘The Role of leaders in Transforming Culture’ FCA Panel (Jonathan Davidson, Dr Doyin Atewologun, Hilary Scarlett, Tom Blomfield), 2019

  10. How advancing women’s equality can add $12 trillion to global growth McKinsey, 2015

  11. Unleashing the Power of Diversity Dame Fiona Woolf, City of London Corporation, 2017 

  12. ‘Being silenced and silencing others; developing the capacity to speak truth to power’, M Rietz & J Higgins, 2017

  13. True Gen: Generation Z and its implications for Companies McKinsey, 2018

  14. ‘The Power of Purpose’ J O’Brien & A Cave, 2017

  15. The Financial Sector: Redefining a Broader Sense of Purpose Worshipful Company of World Traders’ Tacitus Lecture, 2019

  16. Building Leadership Capacity Scale Up Institute, 2019

  17. ‘Speak Up: Say What needs to be said and hear what needs to be hear’ M Reitz & J Higgins, 2019

  18. The Same but Different’ The Edge, Spring 2019