Many organisations are discovering that the leadership style that scaled those organisations to where they are today will no longer deliver the business performance and outcomes that stakeholders demand.
The current disruptive environment – including changes in consumer expectations, technology, political and regulatory environments, and workforce and market demands – is forcing organisations to rethink the way they operate.
Organisations need to improve their adaptive capacity, innovate to stay relevant and perform in complexity to deliver value to customers, community and shareholders. The great leadership that contemporary organisations need is the practice of many – not just those at the top.
Effective leadership improves business performance and customer outcomes, in turn strengthening financial performance and market position. It shapes organisational culture and employee engagement, which enables organisations to outperform others in customer loyalty (10 per cent), profitability (21 per cent) and productivity (20 per cent).
We have seen this in action. A Nous leadership development program for a global systems organisation improved operational leadership, resulting in higher customer satisfaction scores, increased on-time delivery, reduced contract expenses and improved process efficiency.
Society demands a new way of leading. People are seeking greater purpose, action and connection, which translates into expectations for businesses they interact with.
To thrive, organisations need collective leadership driven by aligned intent, networked relationships, appreciation of diversity, and decisive, adaptive action. In rethinking the way organisations operate, we need to change how we think of leadership and the way we develop that leadership.
Nous has partnered with private, government and not-for profit organisations across sectors for more than 20 years to solve complex strategic challenges and partner through transformational change. We work with clients to improve business performance through leadership and have put this into practice in our own organisation.
Contemporary leadership will enable organisations to build and sustain customer and employee commitment; to deliver operational excellence; and to mobilise, respond to and shape conditions.
Four key qualities of contemporary leadership demand attention:
Organisations increasingly seek positive impact for their customers and the world; in fact, citizens are demanding it. As we will consider later in Leading Edge, amid increased regulatory and community scrutiny, leaders of financial services organisations are shaping their culture to put the customer at the centre to deliver better outcomes for customers.
Leaders recognise that pursuing purpose can improve their organisation’s performance. Purposeful leadership helps attract and retain talent, increases customer growth and loyalty, and improves an organisation’s ability to transform and innovate. American companies that stayed true to a purpose beyond profit outperformed the stock market average by 15 times over 50 years.
Leadership needs a shared purpose beyond financial metrics to enable quality decision making – exploring the ‘why’ and the ‘how’. Purposeful leaders articulate and lead around shared purpose and create connection based on values to build trust with employees and customers.
Leaders must operate in real-time in complex and dynamic environments. The rate and magnitude of change is greater than ever, and many previously successful businesses have shut because they did not evolve. Adaptive leadership helps an organisation to prioritise, innovate, learn and harness talent to solve critical challenges that improve performance now and in the future.
As we will explore in Leading Edge, universities invest heavily in innovative strategies and need to empower leaders to implement them. Where traditionally the department head, dean or vice-chancellor has been akin to a chair, they now need to actively step into their leadership task to lead achievement of the institution’s corporate goals.
Leaders promoted to new roles are more likely to fail if they cannot adapt to new challenges. Adaptive leaders do not operate in ‘set and forget’ mode; they understand that even a successful business model needs intervention and experimentation to thrive. They see leadership as a recurring activity that forces the organisation to face critical challenges and mobilise resources. Adaptive leaders shape the stress and pace of the organisational system to drive innovation. They value diversity, explore possibilities and respond by thinking and doing things differently.
A hero-leader or a small pool of geniuses at the top is not effective for organisations that want to scale. Organisations with distributed leadership see leadership as a practice shared by many, not a formal position. Distributed leadership creates opportunity to influence, collaborate and mobilise toward a clear purpose.
Activating more leadership at more levels achieves outcomes that are greater than the sum of individual actions. Distributed leadership cultivates a network of leaders serving a shared purpose and results in organisational adaptability, faster decision making and improved performance.
Distributed leadership has proven successful in the school context. A single heroic leader at an individual school can no longer do it all; distributed leadership across the whole school system is required to achieve system-level education improvement. Distributed leadership contributed to a 12 percentile increase in student learning through increased school capacity for academic improvement.
As we see elsewhere in Leading Edge, in utilities and infrastructure, the workforce is highly diverse and geographically distributed, which requires distributed leadership across all levels to deliver operations effectively, safely and efficiently.
The business case for diverse, inclusive and connected organisations is well articulated, and intentional leadership is required to reap the benefits. Leaders that foster internal and external networks will collaborate, connect and explore divergent thinking to scan for ideas to shape their organisation and sector.
As Leading Edge will explain, financial services organisations are learning from their own sector and looking outside to tech and other service sectors. There are further opportunities to learn from sectors with parallel regulatory challenges, such as health and aviation.
Tapping into diverse perspectives builds an organisation’s capacity to influence market position, open new and novel product and service opportunities, and improve productivity and culture. Exposure to colleague and client feedback, new contexts and social networks is crucial to leadership maturity. Connected and inclusive leaders develop meaningful relationships built on respect and reciprocity, and nurture their network. Teams with inclusive leaders are more likely to report high performance (+17 per cent), high-quality decisions (+20 per cent) and collaborative behaviour (+29 per cent).
Contemporary leadership requires contemporary development strategies that fuse a theoretical understanding with practical experience. In work with clients, Nous has used four innovative development methods to build contemporary leadership:
Learning experiences that support leaders to learn ‘in work’ build capability through trying new things, practice and reflection. Successful leadership programs are up to five times more likely to link content to work that stretches participants to apply their learning in new contexts spaced over time.
This develops leaders to deal with real problems and progress solutions to business issues as part of the learning experience, not as an add-on activity, delivering immediate value to the organisation and the leader. This type of learning can include just-in-time learning and bringing the workplace into the learning environment for supported problem solving.
Nous put this into action when we designed and delivered a multi-level leadership development program for a large media organisation undergoing major transformation. We designed just-in-time interventions, established leaders’ agency to bring real challenges into the room, and integrated skill-building to collaboratively solve as a leadership cohort.
In another program for an ASX 20 financial services business, we developed leaders’ capacity to solve their own business improvement challenges through immersive experiences and insight-generating discovery.
Leaders build capability through trying new things, practice and reflection. An effective learning experience involves an ongoing loop of learning, where the leader learns a specific technique, puts it into practice and reflects on what worked or did not and why. This loop of learning supports the leader to embed the learning into daily practice. Encouraging individuals to practice new behaviour that contributes to better leadership provides a six-fold increase in the success rate of leadership development.
Self-awareness and reflective capacity are fundamental to successful leadership. Looking back, recalling what has happened and synthesising insights helps leaders make sense of the experience and apply learning in future situations. In one organisation, Nous raised the bar on performance and productivity for a distributed group of leaders in a world-leading global resources business by developing critical skills embedded through routines.
Modern leaders expect more from workplace learning. Leaders need experience-centric, continuous learning to unlock greater value in leadership development. With 85 per cent of people learning at work through online searches and 70 per cent learning from peers or reading, traditional workshop-based programs are no longer the building block of leadership development.
Organisations can develop future-focused skills and build agile learners by blending modes of learning to maximise access and impact. For example, best-in-class organisations are 76 per cent more likely to use micro-learning and gamification techniques.
Recently Nous pioneered blended learning in a large education organisation, locally delivering a leadership program that reached more than 1,500 participants in 30 months, with unprecedented outcomes. Blended learning makes professional development more accessible, cost-effective and available on-demand. More learning, by more leaders, more often, can unlock the adaptive capacity of the leadership system.
Behavioural insights are being deployed to many consumer situations, and they can also apply to learning. Leaders are more likely to make development choices that offer the greatest impact for their organisations when the opportunities are framed in ways that excite, inspire and motivate.
Behavioural insights offer strategies to build leadership capability and shift leader behaviour. Learning can be enhanced by leveraging hierarchy and networks, facilitating viral change and using insights from behavioural science (nudges). These can subtly facilitate changes in behaviour and decision-making, leading to increased learning adoption and outcomes.
Recently Nous leveraged nudges and social pressure as part of a leadership and culture program for one of Australia’s largest health services that improved the staff behaviour take-up percentage by double digits.
Each sector brings its own opportunities and challenges. What works in one context may not work in another.
Across Leading Edge, we will explore how a shift in approach to leadership and leadership development is required to shape success in several sectors: utilities and infrastructure, financial services, higher education and school education.
Get in touch to discuss how we can advance the leadership capacity and capability in your organisation.
Our Leading Edge series features fresh thinking on leadership in utilities and infrastructure, financial services, higher education and schools.
Published on 21 February 2020.
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