Leadership Innovation 2.0

Kenneth Mikkelsen By Kenneth Mikkelsen, Journalist,
Founding Director and Knowledge Broker at Controverse
16 May 2013

 

 

Economic unrest, changing market conditions and tough competition mean companies have to change their approach to leadership and equip leaders to get by in a new business environment.

Over the past few years many well-known businesses have gone under. The investment-banking firm Lehman Brothers and the Swedish car manufacturer Saab are just two of the well-known companies that were brought down by economic unrest and changed market conditions.

According to Richard Foster, professor at Yale University, the average life expectancy for a company trading on the S&P 500 stock market index has dropped by more than 50 years over the last century. In the 1920s, companies stayed in this exclusive club for approximately 67 years, but the current average is only 15 years. He estimates that by 2020 over 75 per cent of the companies in the S&P 500 will be companies that we haven’t heard of yet.

  Leadership Innovation 2.0
   

It took General Motors 51 years to move from first place on the S&P 500 index to not being included at all. This happened in 2009, when the company had to beg the US government for a capital injection to avert looming bankruptcy. Kodak went down an almost identical route: after 131 years of trading, they had to ask for a reprieve from their creditors in January 2012, and they have now initiated drastic austerity measures to salvage what is left of the company.

The big question is how to proactively stay at the forefront and avoid ending up in a crisis situation.

Mathias Hovind, Vice President, Nordic at Mannaz, believes that the answer is obvious.

‘The most important factor for being at the forefront is the ability to innovate and develop – your products, processes and, in particular, your organisational set-up. Over the last few years we have seen how an outdated notion of the role and function of leadership has contributed to steering companies into the red, rather than into the black. So there is a great need for innovation – especially in how we perceive leadership as a way to develop our companies,’ he says.

Technology influences management

Many leaders have reacted to the financial crisis by introducing strict financial management controls and a focus on short-term solutions. By increasing control, they have attempted to manage change and complexity. However, according to Hovind, micromanagement is not the solution to the challenge.

‘Today’s leaders are forced to make decisions under tremendous pressure. But there isn’t much point in reefing the sails if the ship is sinking. Hence, in the future we will see more people involved in processing information and providing input on how to solve business-related challenges. That way, we can manage the complexity better and get more relevant suggestions that will lead to an intelligent way forward. When we systematically incorporate the organisation’s capabilities, not only do we end up with more sustainable decisions, we also encourage higher levels of motivation,’ he explains.

The Internet and interactive Web 2.0 technologies are already establishing a brand new framework for the way employees can collaborate. One of the most successful leadership ideas is ‘co-creation’. This involves companies sharing their knowledge to a much greater extent and generating their ideas, innovations and development initiatives with others – including clients and competitors. This is a development that fundamentally changes the conditions of leadership.

‘Every leader ought to familiarise themselves with and understand the new technologies, because today knowledge creation is a social process that increasingly takes place in the virtual world. Leaders must handle communication across and outside an organisation through these channels, which can help accelerate idea creation and innovation. The value of knowledge thereby also changes gradually from “know-how” to “who we know”,’ says Hovind.

In reality, this also means that the old-fashioned, top-down style of leadership is on the way out. More companies will move further away from the traditional decision-making structure, where a closed circle within the company’s top management makes the decisions, believing that they know best and that they have the necessary insignia to dictate their ideas to the rest of the hierarchy.

Time to Innovate - Executive Summary

Collaboration is strengthened online

The public availability of thoughts and views brought about by the Internet and the new digital technologies opens up a radically different way for us to organise ourselves and our work. Social networks and collaboration platforms aimed at the professional market are quickly gaining ground. The American research company Forrester estimates that these types of social platforms will grow by 61 per cent annually until 2016, at which point the market will reach a turnover of $6.4 billion.

‘The new technologies enable employees to enter into new, shared-interest communities and to connect with others who share their passion in a certain field. The companies that are able to handle and make use of these opportunities and the knowledge generated in these networks will be tomorrow’s winners. Knowledge arises through social exchange – it doesn’t live in someone’s head – and the interaction and knowledge production on the Internet truly emphasises this point,’ states Hovind.

In July 2012, the McKinsey Global Institute published a survey that shows that knowledge workers spend 28 hours a week writing emails, seeking information and collaborating internally. The survey determines that the introduction of Web 2.0 technologies, such as social networks, wikis, discussion forums and crowdsourcing, could potentially increase employee productivity by 20–25 per cent.

Hovind says, ‘We can reap profits by reorganising ourselves using new technologies. But crowdsourcing and virtual tools require us to be open about the fact that a company cannot know everything itself, and that we need to be prepared to embrace the new media. In many organisations, leaders will need to change their sense of leadership and thus there will need to be significant changes in leadership practices and organisational behaviour.’

A new type of leader

As technology changes traditional ways of organising employee collaboration, new opportunities will arise for leaders. In the future, the most important leadership task will be to support employees’ self-determination and creative opportunities for expression.

‘Leaders must come to terms with the fact that their job is to be the architect of the company’s processes. Their role will be to act as enablers who think holistically, put things into perspective and connect the right people, ideas and competencies. The leader should not be a bottleneck, but should instead provide opportunities for the organisation to use and develop its knowledge,’ explains Hovind.

The significant paradigm shift lays in the very fact that technology, as we know it, has changed from supporting business to creating business. The companies that don’t understand this new reality not only run the risk of overlooking and missing out on opportunities in the future, they also risk ending up the same way as Kodak, Saab and other pioneers that didn’t manage to adapt in time.

About Mathias Hovind

Mathias HovindMathias Hovind joined Mannaz in 2012 as VP for Leaders Nordic. Mathias supports complex organisational development processes through building leadership capability in order to realise the common ambition and manage the common task. Mathias has both extensive experience from the perspective of an external consultant and an internal Change Manager. This combination means he can understand and design solutions that create measureable value for clients. Mathias has facilitated E*MBA programmes for several years being an integral part of a highly skilled international faculty.

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