In July 2005, American Management Association (AMA) and the Human Resource Institute (HRI) teamed up to conduct a global leadership development survey entitled “Leading into the Future.” The study, which included responses from 1,573 managers and HR experts from around the world, addressed three key questions:
- What are the drivers of change that have an impact on leadership challenges?
- What elements of organizational culture and processes are necessary for effective leadership development?
- What leadership competencies are most important today and will be most important in 10 years?
Following is a partial summary of findings from “Leading into the Future:”
Top 10 “Drivers of Change” That Will Have an Impact on Leadership Challenges
1. Increased global competition
2. Focus on the customer
3. Operating efficiency
4. Accelerating pace of change
5. Need for innovation
6. Increased government regulations
7. Talent retention
8. Product/service quality
10. Information technology
Top 5 “Leadership Characteristics” That Make Execution of Strategy Likely
1. Openness to change
2. Interpersonal communications
3. Support for innovation
5. Group communications
Top 12 “Leadership Competencies”
1. Strategy development
2. Communication skills
3. Developing leaders
4. Hiring talent
5. Fostering creativity and innovation
6. Driving for results
7. Know the business
8. Role model for values
9. Business ethics
10. Know the industry
11. Building relations in organization
12. Aligning organization with the market
The HRI/AMA study identified four broad assumptions about the future—factors that are likely to change the environment in which business leaders operate. These assumptions (Technology, Global Trends, Organizational Structures and Worldwide Talent Pool, as described below) can be used as underpinnings when considering how leadership development might evolve over the next decade or more.
Technological advancement will continue to have a huge impact on societies, businesses and governments over the next ten years. Among the most influential technologies will be artificial intelligence, radio frequency identification inventory control, internet telephony, voice recognition, robotics, biotechnology and materials sciences. In many areas, wireless technologies will allow developing nations to leapfrog over developed nations in terms of communication abilities and infrastructures. In business, technology will continue to be used to cut costs, enable outsourcing and offshoring, manage information and communication, operate on a 24/7 basis, manage and recruit personnel and push transactions closer to the customer. Despite the perception of technology as an impersonal force, data mining will enable companies to customize their products and services as never before, and consumers and investors will gain greater access to business information. It’s even possible that technologies such as 3-D printing will allow companies to push the manufacturing process closer to customers.
Worker accountability will be enhanced by data tracking, and job requirements will change as new technologies open new business opportunities. This dynamic will require lifelong learning on the part of employees. But new technologies will also aggravate certain business problems, such as difficulties in protecting intellectual property and confidential information. There may also be increased integration, standardization and control in order to assure that all the outsourced “pieces” fit, and this could also have a negative impact on creativity and autonomy.
A number of global factors will have a strong influence on business. Among them are macroeconomic free trade initiatives, shifting demographic realities, conflicts and competition for scarce resources such as oil. Leaders will need to react to global insecurities and to shifting demands for labor, both skilled and unskilled. There will continue to be social conflicts among different cultural and religious factions, and disparities in the wealth of different regions will sometimes strain civility and help breed violence. Terrorism will be just one manifestation of this strain. Boycotts, support for theocracies and Luddite-like resistance to technology are also likely to occur. Shifts in geopolitical power (from the West to the East, for example) will exacerbate
attempts to address global issues.
Organizations will face greater global competition, increased governmental regulations from multiple governmental entities, enhanced scrutiny by nongovernmental organizations, and disruption from regional conflicts, which seem more likely than a worldwide war.When civility is strained and divisions multiply, leaders will need strong skills in terms of crisis management, public relations, diplomacy and negotiation. Companies will need to emphasize safety in the workplace and must be resilient in the face of changes, threats or even crises. Gaining support for bold new directions will be difficult despite strong communication technologies.
Business organizations will experience a growing interconnectedness that is driven by an expanded flow of information, technology, capital, goods, services and human resources throughout the world. This trend will not only sustain economic growth but increase interdependence among businesses and regions. The global diffusion of technology will allow medium and small organizations as well as multinational corporations to compete by producing and marketing products and services across borders. Asia will be the engine of change and will shape globalization even as it becomes the largest consumer region in the world.
The future challenge for all companies will be to develop an “agile mindset.” This will be critical when companies restructure and otherwise adjust to the dynamics of a more competitive world market. New organizations will not be confined to the traditional three-level structure of executive, middle management and front line. The standard pyramid with the vertical hierarchy of boxes, while not disappearing entirely, is likely to lead to a more overlapping and highly linked set of satellites connected by information technology. A growing number of organizations will be characterized by an integrated and dispersed set of mobile, multifunctional expert teams rather than by separate functions and distinct regional offices. The key will be to quickly focus and organize resources to support strategic initiatives.
This worldwide integration will require more contractors, partnerships, mergers, acquisitions, alliances and even shared investments with competitors. This does not mean these integrated networks of resources will operate totally independently. On the contrary, through sophisticated and timely information systems, these clusters of organizational capabilities will continue to be guided, supported and monitored to ensure that strategic goals, financial plans and performance expectations are achieved.
Worldwide Talent Pool
The global talent pool will be deeply affected by the aging of the population, immigration trends, generational differences, evolving gender roles, improving education levels and changing societal values in many developed nations. In some of the least developed countries, however, the drivers will be quite different. They will have younger populations but will continue to struggle with issues such as extreme poverty, HIV/AIDS, illiteracy and day-to-day subsistence, as well as, in some cases, social and political disorders and the spread of terrorism.
In the middle will be up-and-coming nations that evolve from the “developing” to the “developed” category. The attractive low-cost labor of China, India and Indonesia—along with new technologies and social reforms—will continue to create a more interrelated world labor market. India will likely expand faster than any other large country in the world, with China a close second. Eventually, nations in parts of Africa are likely to follow India’s example of wealth creation by leveraging their large, young populations of English-speaking, low-wage workers.
Business leaders in developed countries in particular will need to adapt to the talent-pool dynamics with more creative human resource management approaches. Continued outsourcing and offshoring will require the realignment and redefinition of business roles and tasks that have so far been unaffected by these trends. Anything that is “non-value-added” will be changed or eliminated. Leaders of the future will need to be creative, efficient and effective in terms of how they allocate their global talent. After all, their employees must work well together and share a common corporate vision despite living in different countries, being immersed in different cultures and speaking a variety of different languages.
Read the complete HRI/AMA “Leading into the Future” study.