* This blog post appeared on the original Banff Forum blog on June 19, 2013

As enrolment in MBA programs surges and colleges and schools around the world are struggling to adapt their business models and content to new realities, it has become more urgent than ever to take a good hard look at how we prepare our next generation of leaders – and get the existing ones up to speed. This article summarizes observations I’ve gathered over the course of 15 years of teaching senior executives.

What are the future skillsets leaders will need to cope with the new realities?

1- Dealing with ambiguity

Business models are shifting in virtually every industry. The automobile industry is waking up to the sharing economy and is realizing that new generations put owning a car very low on their list of priorities, instead flocking to peer-to-peer rentals and shared ownership. Amazon has disrupted the publishing industry and is quietly taking on food retailers as well as the B2B markets. Skype is now handling one third of calls previously served by traditional telecom companies.

Companies everywhere are also redefining who their customers are: consumer goods companies such as Harley Davidson, which traditionally had to convince dealerships to carry their products, are now in direct contact with their communities or users. The pharmaceutical industry now considers governments to be its prime customers rather than  the doctors who prescribe its drugs or the patients who consume them.

In this world where the most basic definition of the customer is changing, where industry boundaries are blurring and where business models are shifting, future leaders need to be comfortable constantly challenging existing models and reinventing their supply chain and pricing models. And, since no recipe for success exists yet, they will not be able to support their decisions with extensive best practices case studies as they have in the past. Relying on consultants is not an option either as few consultants know more than the players themselves.

Leaders will have to learn to test new concepts, prototype fast and fail even faster.

2- Design

Decision making has been taught extensively in business schools. Managers and leaders have been taught to analyze a situation, disaggregate the problem, identify alternative solutions and choose a path. This process assumes that alternatives are easy to identify and that the difficulty is in the decision of choosing which alternative to pursue.

One of the prominent catalysts of this process is the consulting company McKinsey: “Organizational judgment at its core depends on a disciplined (if not always highly structured) process. In its various steps, the process will include, at the outset, framing the problem to be solved; pursuing the problem through iterative steps that progressively refine the questions that must be answered; engaging diversity of opinion; using fact-based analysis to weigh benefits and risks, and generate and test hypotheses; and pursuing all appropriate options.”

There is another process to decision making that better addresses today’s complexities and it’s called “design attitude.” Instead of focusing on the problem, the design attitude process focuses on designing alternatives that so clearly show the path forward, the decision making becomes simple.

“A design attitude views each project as an opportunity for invention that includes a questioning of basic assumptions and a resolve to leave the world a better place than we found it,” say Richard J. Boland and Fred Collopy in “Managing as Designing.”

I have yet to see a course in business schools that teaches managers and leaders how design.

3- Peripheral vision

Nestle and Danone are moving from defining themselves as food companies to  wellness companies; Google has announced it is moving out of the data business and into the transaction business. The new reality is industries are converging and it is highly likely that a company’s future competitor is not going to come from its traditional industry.

Leaders need to be able to pick weak signals and recognize incoming industry disruption. To do so, they need to tap into new sources of information, to step out of their traditional circles of knowledge and develop peripheral vision. For example, leaders in the retail industry can be inspired by new technology advances, such as augmented reality and drones. Leaders in financial institutions can look at peer-to-peer models and bartering programs to reinvent their services.

This means that leaders need to develop new networks outside of their field or industry. They have to be exposed to concepts they typically don’t encounter in their daily routine.  A growing number of leaders are realizing this, which explains the success of conferences such as those organized by TED ( http://www.ted.com ) that have a wealth of new ideas and concepts.

4- Social media literacy

Social media has the potential to disrupt and enhance any industry, B2C to B2B alike. One can hardly expect leaders who have not experienced and understood social media to be able to assess the impact it can have on their industry or company.

Social media courses are starting to emerge in executive education programs–but only barely. There is an urgent need for the education for future leaders to catch up. This goes beyond simply teaching the use of social media networks. We need to urgently dispel the myth of the digital native. It’s not just about knowing how to use the technology. Tomorrow’s–and today’s–leaders also need to thoroughly understand the long-term effect social media will have on businesses’ supply chains, communication strategy, on the way customer service is handled, just to name a few examples.

5- Humility

We discussed earlier how leaders will need to pick weak signals rapidly, even if those contradict common wisdom. They will need to learn from their customers, from juniors in their teams or within their companies–and even from children. They will need to be comfortable questioning their beliefs and reinventing their models. With the current trend of crowdsourcing ideas, they will have to accept that the best ideas might not even come from their organization or team.

Humility is also essential when hiring, motivating and retaining the GenY teams because it is a quality highly valued by that generation. A company that includes humility increases its chances of being successful in attracting GenY talent.

 6- Hiring

Co-optation has long been the most comfortable way to hire – from the boardroom to the executive suiteBut executives now have to learn to bypass their own cognitive biases and learn to hire talent outside of traditional fields of expertise. This will bring diversity to the executive sphere and the boardroom and that diversity will help decrease the likelihood of blind spots in a team or organization.

For example, retailers should now seek talent from the technology sector since the use of augmented reality, geotagging and digital pricing is increasing. Banks should hire leaders from the telecommunication industry as mobile banking models are on the rise.

7- Ethics

One only has to scan the headlines of major business newspapers to notice the increased scrutiny from the public and investors alike when it comes to ethical behavior.

More than ever, leaders need to develop policies that strengthen the importance of ethical behavior at every level in their organizations. Dupont de Nemours has such a policy: one senior executive recently mentioned to me how each meeting at their organization starts with a “point of contact,” an anecdote or comment about an event that day that embodies why the company values stand true. Future leaders will need to adhere to unequivocal and uncompromising ethics. They need to develop the ability, the skillset and the toolkits to review cases of unethical behavior, analyze how crises can unfold and understand how to respond.

8- Courage

It takes a great deal of courage to whistleblow when ethics are compromised or to fight unchallenged assumptions in the executive suite. It also takes courage to drastically change a company business model or challenge its existing model.

In the 90s, business leaders looked up to Jack Welch. In the future, CEOs such as Paul Polman, the CEO of Unilever, will pave the way. It took courage for Paul to announce to his shareholders that his company will stop providing quarterly results because he believes that a company should be run for the long term, even if it meant losing some shareholders. It took courage for him to realign his organization to corporate sustainability objectives and values.

The best leaders of the future will excel in “influence skills” and understand the importance of ethical conviction.

9- Analytics

One of the most compelling cases for building analytical skills in our leaders is the profound gap that exists today among many executives between the need for them to understand and leverage the so called “big data” and their skillset to do so. Executives are being flooded with data that is being collected from their customers because many are unable to identify what is actually important for them to collect. Companies are letting others decide for them.

As far as strategy formulation is concerned, I am shocked to see that 90% of companies I deal with still only use a SWOT analysis when looking at their markets. Little has been taught beyond Porters’s five forces and it is urgent executives get some analytical training to help them deal with the complexity of the world they now live in.

Finally, the importance of problem solving skills is well documented yet these skills are rarely taught in business schools, despite the fact that all leaders spend most of their time making decisions and solving problems.

10- Reflection

In his book Managing, Henry Mintzberg surveyed managers and found they typically only have one half hour of uninterrupted reflection time each month. Reflection has two purposes: First, it provides time to think when making decisions, decreasing the role of intuition and the bias of the “loudest voice.” Secondly, it allows executives to think about what is important to them and their company and avoid spinning the wheel.

This takes time. Despite how full their agendas may be, leaders need to learn to make the necessary choices to carve out time to reflect. Some leaders create a “third space,” a place between home and the office where they can carve out time to think. Others cultivate the art of personal retreats, such as Steve Jobs who spent time in the desert once a year. Future leaders will not only have to find the way to carve out that time for themselves but also to create the conditions so that their teams can do so as well.

Many executives can also benefit from the use of a personal journal in which they can log their professional and personal reflections.

Estelle can be found at www.twitter.com/competia

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