Are Your Leaders Equipped for Changing Business Climate?

What made leaders successful in the past will not do in a vastly changing society: large generational differences between workers; vast technological advancements; high ethical expectations; unparalleled transparency; shift in economic gravity towards east and south; as well as strong regulation and enforcement. These new realities represent a conundrum for leaders: how to ensure ambitious yet responsible decision-making?

While organisations recognise the need to adapt to the changing environment, many are unsure of how to equip leaders with a greater sense of responsibility, without making them risk averse and indecisive. Meanwhile, leaders ask themselves what setting tone from the top and leading by example means for them in practice. Surely, the responsibility of leaders may vary but tend to fall into three areas: commercial responsibilities to create value; legal responsibilities to adhere to laws and regulations; and ethical responsibilities to meet basic principles of conduct. The challenge for business leaders is to meet these sometimes conflicting responsibilities simultaneously - instead of increasingly ‘outsourcing’ analysis and sometimes decisions, to specific functions such as legal or compliance.

When Sony Music raised the price of Whitney Houston albums with more than 50% on iTunes immediately following news of her tragic death, customers protested and the practice had to be instantly scrapped. What seems to have been a perfectly rational economic - and arguably legally defendable decision - turned into an ethical nightmare. We have asked dozens of business leaders to view the situation specifically through these commercial, legal and ethical lenses. In a matter of minutes, they come up with ideas to meet the three responsibilities simultaneously - and in ways which would result in greater, not smaller, profits (suggestions include keeping prices unchanged while donating part of increasing sales to a foundation that supports people with drug-related problems). It follows that specialist functions have to move from being in the ‘right-answer business’ - providing a yes or no - towards equipping business people with these lenses for better decisions. 

Managing organisations in today’s changing business climate requires new perspectives and skills to ensure what we refer to as responsible leadership: the ability to make responsible decisions and to create the right conditions for others to do so - through own words and actions, the speak-up climate leaders establish and the behaviours they reward. 

Do your leaders have these skills?