What’s more important – today’s performance or tomorrow’s transformation? In an increasingly interconnected and competitive global environment, organisations now need to do both at the same time. And that takes a very different kind of leadership.
"We are under intense pressure to deliver on short-term performance in our core business and to meet the dividend commitment we have made to our shareholders. At the same time, our core business is facing increased disruptive threats from new market players. We know we need to transform, but we struggle to find a way to both run today’s business, and also pivot and adapt to build and grow new digital businesses with the required speed and agility…"
These were the words of the Chairman of one of Asia’s largest investment funds, when we spoke to him back in 2019.
The challenges facing his portfolio company are no different from the demands on thousands of organisations around the world. For many, transformation assumes a longer-term process. Performance, by contrast, is seen as a near-term necessity. How to balance this equation remains one of the most essential questions facing best-in-class organisations.
To further explore this operational dilemma, a global team of Korn Ferry experts (comprising members of the Global CEO Succession team and the Korn Ferry Institute) explored and researched what are the common attributes of Enterprise Leaders who are truly able to Perform and Transform.
The rising tide
The COVID-19 pandemic unequivocally proved the need to both Perform and Transform is no longer a nice-to-have. It is a must-have for organisations faced with a rising tide of stakeholder demands. Take one of the largest enterprise technology firms as an example. The company was determined to pivot from product-based to cloud-centric services, even though its core business generates tens of billions of dollars in annual revenue. The firm’s leadership team engaged Korn Ferry to find ways to maintain the qualities that made the company a leader in its field, while at the same time introducing new mindsets and behaviours to enable innovation and evolution.
Because so much of the company’s traditional business sense was embedded in its core culture and capabilities, it took time and effort to preserve what was best and reject what held them back. Only with some degree of self-disruption can larger and more well-established companies hope to compete with smaller, nimbler competitors. As the COVID-19 crisis demonstrated, response time and market adeptness are everything.
Agility, dexterity, resilience – all characteristics an organisation must have to survive and thrive. Yet, for many CEOs and Boards, the ability to assume these qualities is prevented by traditional ways of doing business. Korn Ferry is acutely aware of this operating dilemma that prevents companies from making the jump to a Perform-Transform culture.
As we started applying our initial prototype of Enterprise Leadership in partnership with key clients, we increasingly began to see another major paradoxical question on the minds of many leaders:
"How do we both drive our financial performance and contribute to major issues facing society, such as climate change and sustainability?"
The power of purpose
Our CEO for the Future research is evidence of this challenge. 86% of CEOs interviewed observed a blurring of the lines between business and society and the need for corporations to step up, balance and more broadly influence stakeholders – not just investors and shareholders.
Traditionally, profit and purpose have been viewed as two mutually exclusive and oftentimes competing initiatives. Yet, a growing body of evidence shows that purpose-driven organisations out-perform those that are not purpose driven. Key investors like BlackRock and Singaporean fund Temasek have recognised this – placing purpose and sustainability at the core of their investment thesis.
Increasingly, purpose-led thinking is re-shaping the organisational remit. A corporation’s role in preserving and safeguarding the environment, for instance, has emerged as a leading cause with wide-spread consumer, investor, and shareholder support. For evidence of the movement’s impact, we can look at one of the leading global oil and gas companies that we work with in the Asia arena. Increasingly aware of the need to drive sustainability practices at all levels, our client re-envisioned and openly declared its intention to “create a sustainable future for all.” The gravity of a major global fossil fuels company making this kind of commitment cannot be overstated.
Of course, actions speak louder than words. And to this end, the company has set an objective of becoming net carbon neutral by 2050 with plans to derive 30% of revenues from renewables by 2030. Achieving this goal will be no easy task. It will require the company’s leaders to fundamentally re-think its business model, reassess its investments and sell-off many of its assets. Perhaps most importantly, it will require a major change in mindset. Driving a Perform and Transform agenda is a long-term commitment underpinned by an enterprise-wide plan to create new value in a new era.
Korn Ferry’s engagement with the organisation’s Enterprise Leadership team highlights the very different approach required to:
- Efficiently manage its core oil and gas and petrochemicals operations, where the company has deep expertise and knowledge of the key solutions; AND
- Devote enough of the right resources to explore what’s required to develop new green growth areas, where the future is unclear and the options – though vast – are less certain.
4 Key distinctions of enterprise leaders
This article represents the first step in introducing our insights into Enterprise Leadership to a wider population in our region. We start this process by sharing the four key distinctions that help senior managers make the step change from Executive Manager to Enterprise Leader.
The framework has been specifically designed to underpin and differentiate our work with CEOs, Boards and top teams. However, Enterprise Leadership is not a role. Anyone can choose to step up and adopt the distinctions of Enterprise Leadership.
In this way, the key distinctions can be relevant for leaders across the organisations we serve. Moreover, it can be a useful lens for each of us to look at our own leadership contribution and impact.
1. The what: Enterprise impact
As outlined above, a key starting point for Enterprise Leadership is that it is a world of both-and, not either-or. Enterprise Leaders find creative ways to achieve seemingly competing priorities.
Paradox 1: Enterprise Leaders both run today’s business (Perform) and change the business (Transform).
We are finding that this simple construct really resonates with clients and can be used to describe the strategic issues and priorities facing any organisation. What are the Perform-Transform issues facing your clients? What is the Perform and Transform agenda you’re driving?
Paradox 2: Purpose and Profit - Enterprise Leaders both drive financial performance and create an impact that transcends the boundaries of their own enterprise to impact the wider ecosystem and society they serve.
We take a more in-depth look at the importance of purpose when we explore the 4th distinction of Enterprise Leadership: THE WHY.
2. The how: Perform-transform capabilities
Enterprise Leaders multiply their impact by leading across the enterprise, beyond their areas of direct responsibility to impact the whole enterprise and the wider ecosystem it operates in.
They do so by pivoting and flexing across the four key Perform-Transform capabilities illustrated below. Think of the left- and right-hand side of this diagram as a visual summary of the key Perform and Transform muscles. Few leaders are equally strong across all muscles on both sides – our research suggests that less than 14% of leaders can truly be considered Enterprise Leaders. This makes Enterprise Leadership a team sport. Our unique Enterprise Leadership profile informs the strengths we should build our leadership on, but also highlights the type of people we need in our teams to complement our strengths.
Organisations should ask themselves the following questions:
Do we have leaders with the capabilities to both Perform and Transform? What would it take for us to create the capacity and agility to do both?
As an individual leader, you could ask yourself the following questions:
Which are my strongest muscles, and which could I develop to advance and accelerate our impact? Do I have people around me on my team to complement me? How am I using their capability?
3. The who: Agile mindsets
When we ask Boards to select the attributes of their next CEO, they increasingly respond with words like curious, courageous and empowering. They recognise that in a dynamic, disruptive environment, our domain experience and leadership competencies never completely prepare us for a CEO role. Indeed, the very idea of being ‘ready now’ for a role is a myth. We must therefore assess and develop the capacity of the leader to adapt and grow both into and in the role.
We have identified five agile mindsets that underpin any leader’s capacity to grow into and in Enterprise Leader roles, building the ability to flex across their Perform-Transform polarities.
As you read the following mindsets, think of them as either opening up or closing down your capacity to learn, grow and see new possibilities. Most leaders are not strong across all mindsets, yet the combination of these mindsets becomes increasingly important as you take on more and more Enterprise Leadership responsibilities. The good news is we can not only assess them, but we can also continually develop them. Your traits and preferences no longer dictate your destiny. These mindsets are the important over-rides that can enable your success by opening apertures, overriding your historical hardwiring.
5 Key enterprise leadership mindsets
- Awareness of self and impact: Awareness of our strengths and development areas and our impact on others has long been a foundation of Learning Agility. In Enterprise Leadership, we explicitly recognise that great Enterprise Leaders do not believe the CEO role is a destination, but instead see it as the start line for the next leg of a never-ending learning journey. We also focus beyond self-awareness into the leader’s capacity to translate insights into new habits. A willingness to explore, challenge and reframe your own mindsets is key to this.
- Inclusion that multiplies: Enterprise Leaders believe they can multiply their impact by connecting with and including others. As a result, they proactively seek out and build trust with people who see the world differently from them and create the conditions for them to bring their unique gifts and strengths.
- Integrative thinking: Enterprise Leaders believe situations and people need to be interpreted in their dynamic relationship with each other. As a result, they are able to connect the dots in new ambiguous and complex situations to find creative solutions to seemingly competing priorities that are more than the sum of their parts.
These first three mindsets represent the core raw materials that create the potential for Enterprise Leadership. What really activates and fuels Enterprise Leadership, giving it clear focus, direction and meaning are the final two mindsets.
- Courage across and beyond: Enterprise Leaders believe in their ability and responsibility to identify and address enterprise problems and opportunities even when they are unpopular, fear-provoking, challenging or outside their direct control. As a result, they play a big game that extends beyond their formal role to impact the overall enterprise and beyond.
4. The why: Purpose
The final mindset – purpose – warrants its own distinction. Enterprise Leaders believe they have a responsibility and an opportunity to go beyond their own interests and the interests of their function to make a significant difference to others in the enterprise and beyond.
This is a distinction that has been receiving a lot of attention lately, largely at the organisational level. Indeed, we believe that 2020 represented a major tipping point. Organisations and leaders can no longer ignore or tick-the-box on corporate purpose.
As Larry Fink, CEO of BlackRock, shared in 2020:
“I am increasingly convinced that purpose is the key to organisations realizing their full potential.”
BCG’s recent research similarly highlights that organisations with a strong sense of purpose are more than twice as likely to have Quartile 1 & 2 financial performance.
We believe the same is true for leaders. Purposeful leadership fuels and sustains a leader’s tenacity and resilience in the face of disruption and setbacks. It underpins their courage to step beyond their natural traits and preferences and ultimately is at the heart of a leader’s capacity to inspire discretionary effort from others.
The good news is that helping leaders find and bring to life their purpose has long been a core focus of our Enterprise Leadership Institute (ELI) and Chief Executive Officer (CEO) Institute (CEI) programs – our flagship development program for future CEOs and enterprise level leaders. We have now further elevated our focus on purpose. It is embedded not just in how we accelerate the development of CEO’s and Enterprise Leaders, but also in how we align on success profiles, assess leaders, and then help them accelerate and amplify their impact when they transition into a new role.
Applying the framework
The power in the application of the Enterprise Leadership framework is in how we utilise these distinctions together. We help our clients connect the tangible WHAT (Perform-Transform) impact, with a powerful WHY (personal and organisational purpose), HOW (practical leadership competencies) and WHO (the five differentiating mindsets).
The enterprise leadership framework:
The framework can be applied at three levels: for the individual leader, the team, and the enterprise as a whole. Indeed, our most powerful work is when we mobilise change across all three levels.
As mentioned above, this article represents the first step in introducing Enterprise Leadership to a wider population in our region. In the spirit of practising what we preach, we have been building and iterating on Enterprise Leadership testing out our prototype with key clients. We are now codifying the approach so it can be used by our colleagues at a greater scale across the following building blocks in our leadership advisory and the search area of business:
|Align||Facilitate strategic alignment and create a role success profile.|
|Assess||Identify and assess internal leaders.|
|Accelerate Development||Accelerate development in and into key roles and track progress.|
|Access the Market||Benchmark against and access the best external talent via mapping and executive search.|
|Activate and Advance Impact||Select the successor and accelerate the transition into and impact in the new role.|
The task of the large-organisation CEO has never been more demanding. After a century where growth and profitability took centre stage in the life of the corporation, the stakes have changed. The world is experiencing a series of new and unexpected challenges. From the health and economic devastation wrought by the COVID-19 pandemic, to the longer-term, but potentially more far-reaching consequences of climate change, the world is in search of champions. The modern corporation is well-equipped to respond, should it choose to do so. Meanwhile, the broader stakeholder community is growing impatient. Only by building leadership teams that can Perform and Transform can both investors and stakeholder communities remain satiated. People are the power behind the machine. Perhaps now is the time to invest in them.
For a deeper dive into Enterprise Leadership, download our Enterprise Leadership report.