I’ve reflected on these oaths – variations have popped up at Columbia, Wharton, and other top schools –  as my business is sourcing and developing talent. Is a candidate more viable and more valuable because she has signed one of these pledges?

The good news is that these oaths seem to be bubbling up from the students rather than being  a top-down imposition from school administrations embarrassed by the number of their graduates who’ve exited their businesses in disgrace (and, in some cases, orange jump suits). While I don’t think that schools can make an unethical person ethical, they can help people understand how they can exercise their ethics in the complex world that executives must navigate. More important, they can stop teaching them – implicitly or explicitly –that pursuit of shareholder value justifies any behavior. It is interesting that it is at business schools that these oaths are popping up yet business leaders will come from engineering and other graduate schools as well. Is there something that has been in the curriculum that has encouraged unethical behavior? Or perhaps it is something in the water.

I am also in favor of students learning and acknowledging that their firms have an impact on the larger world and must be managed accordingly. Those externalities as economists call them are increasingly integral to business decision making. A cost for carbon seems like an eventual inevitability at this point, to pick one example. And the executives at BP, to pick a company at random, would have been well served to think a bit harder about the potential impact of their activities on the environment. The consciousness of the firm as part of a larger system in which both economic and non-economic values must be balanced will be absolutely critical for those who want to be our future leaders.

My fear is that the pledges will become meaningless: something that gets signed so that one can tick off another box in hopes of landing a great job. Business Insider has called the pledges “silly and infantilizing.” More meaningful, and what we at MontaRosa would probe for, are the actions that demonstrate a commitment to ethical behavior. It is great say you are ethical, but how have you demonstrated it? Ethics are not something to pull out when it is easy or convenient and any candidate should be able to come up with several examples.

And one must ask: what is the percentage of graduates who behaved ethically before these pledges existed? If the current signatories would have gone on to be upright, honest business people anyway, is the pledge worth much at all. Is there a baseline against which this can be measured.

So, what is the value of signing the pledge? For now, I’d say that the jury is out. Those who are in the vanguard – that 20% that has organized and supported the creation of the pledge – have demonstrated behavior that an employer should find appealing: starting and working for something shows initiative, drive, and determination. If the percentage of students signing rises to 50 or 60%, the value will be diluted. Results over time will matter: will those who walk this ethical path be as or more successful than their peers to feel no need to make a public declaration? Of course if the signers wind up doing the perp walk in a few years…

But for now, it’s one thumb up and the other hoping for the best.

Kelvin

Check out a recent Financial Times article on this subject.

Sometimes the answer is obvious: the consequences of where you locate your new factory are likely far greater than where you hold the holiday party. Instead, imagine you’re the CEO of a company about to bring a new smart phone to market. Do you put more of your attention to reviewing the feature set, the marketing plan, the distribution mix, or the pricing of the new device? It’s a bit harder, isn’t it?

Recently I had the chance to listen to Tom Davenport and Jeanne Harris, co-authors of Analytics at Work: Smarter Decisions, Better Results, and was intrigued to hear Harris say that when her firm, Accenture, asks client executives to list the ten most critical decisions in their firms, quite often they cannot. The question is met with a blank stare. On the one hand, that bafflement is a consultant’s dream; on the other, it’s quite frightening.

The two appeared on a webcast put on by the International Institute for Analytics to review research Davenport recently completed on how organizations make decisions. He found, for example, that The Stanley Works – a maker of tools and related items – had discovered that pricing decisions were critically important to its business. So much so that it created a Pricing Center of Excellence and has boosted gross margins by 7% or more and put $200M to the bottom line by improving the decision processes around pricing. The results of pricing decisions are even included in managers’ evaluations and compensation reviews.

At MontaRosa we’re in the leadership business and so I put this thinking to the challenges we help our clients meet. We’ve often seen our job as helping the client ask the right questions: How do you best define a given role in your organization? How do you optimize where that person sits, to whom they report, the resources they control, and the purview of their responsibility?

Davenport and Harris helped me put a new lens on this: The questions they inspired me to ask include:

• What are the most important decisions that the person in this role will need to make?
• Does the company think or does it know that these are the decisions that will have the most impact?

It’s a vital distinction. We can use this information to help shape the role and bring forward the best candidates. And then to ask:

• How can the chosen candidate best be positioned and supported to have success in making those decisions?
• Are there organizational overlaps or gaps that might diminish the person’s chances of success and what can we do to help remedy them?
• Are the governance structures in place to give this person the authority and freedom to operate in such a way that they can make and implement these decisions?

Frankly, I don’t think that any company should look at a single candidate until they can answer those questions – and no candidate should accept a position if they are unable to get those questions answered.

Kelvin

Those of us who help firms think about future leadership need to understand how expectations and assumptions about leaders and leadership change from generation to generation. Each new cadre of executives does not, upon reaching a certain age, don a fedora and adopt the mindset of their predecessors. Donna Fenn author of Upstarts: How GenY Entrepreneurs are Rocking the World of Business and 8 Ways You Can Profit from their Success, notes that they come to business from different formative experiences – GenY kids grew up with bicycle helmets, highly structured after-school activities, and “helicopter” parents. “Their ‘wonder years’ were filled with WorldCom and Enron,” she said recently. “They learned that large institutions are not safe or trustworthy. On the other hand, this is also a generation that embraced high-school entrepreneurs. Starting a business in your teens was as cool as being in a band was a generation earlier.”

What does this mean when they come to work? Fenn says that among the most important traits to recognize among members of GenY is that they expect to move around – they fully anticipate changing jobs frequently and will have little long-term loyalty to any one firm. Yet they also expect their workplaces to be extraordinarily employee-centric (remember, these are the people who grew up with lots of activities arranged for them) and they are big on developing transferable skills. In other words, they don’t expect stick around very long and, what’s more, they also expect you to invest in developing them for their next job.

GenY has also developed a reputation for loving the casual: flip-flops as the footwear of choice and a dog as the perfect office companion. “They love a casual feel,” says Fenn. “But that shouldn’t be confused with being relaxed. The GenY entrepreneurs I interviewed for my book were intensely focused and driven. They are committed to creating high-performance workplaces.”

The other misperception that comes with the casual vibe, according to Fenn, is a belief that GenY loves unstructured environments. “Actually they don’t love chaos. They need direction; you can’t just send them off to figure out what to do.”

GenY embraces meritocracies – in their view, everyone’s voice should be heard. This clashes with traditional hierarchies where those who have achieved a certain rank often presume that their stature confers both authority and wisdom. While most companies give lip service to the value of meritocracy and letting the cream rise to the top, GenY fully expects them to deliver on that promise.

Another characteristic of this generation that has particular implications for how we think about leadership is their love of teamwork. This is a generation that grew up with sports leagues where every kid was assured a chance to play and many competitions were structured so that everyone was somehow a winner. That is not how a typical large company is run – they are much more focused on a star system. The most extreme have “rank and yank” or “up or out” policies but even more benign entities often designate certain individuals as “high potential” and fast track them up the ladder. In most organizations today, there are clear winners and losers.

One of the challenges for large legacy companies, according to Fenn, is that they will be competing for the best rising talent against GenY start-ups – firms led by people who know how to create workplaces GenY workers love. Given the propensity of this generation to keep its bags packed for the next move, the traditional big company lures of security, a few extra dollars, and benefits (to the extent these are still offered) will be less powerful than they once were. As always, the most-promising young leaders will have choices and some legacy companies aren’t even going to understand the criteria by which GenY makes its decisions.

GenY is not simply going to learn to fit into our current organizational structures – they are going to change them just as previous generations changed them in their time. Our job is to explore the deeper currents to understand what those changes are likely to be so that the firms we counsel can reap the benefits of this talented, energetic generation.

I won’t hold my breath while you’re thinking.

I’m not looking to bash corporate chieftains. Some of my best friends, as they say, are CEOs – and that’s true. But I’m wondering why, when we ask about CEOs who performed well in a crisis, most people I ask name Jim Burke, head of Johnson & Johnson during the Tylenol poisonings. Burke did an outstanding job – but that was almost 30 years ago. We’ve had many crises since then.

CEOs are generally smart, seasoned people so I began to wonder, how much of your response in a crisis remains under your conscious control? After a bit of research I learned that psychologically your initial response to severe stress is largely hard-wired. When we face a sudden threat – be it a mugger, a fire, or the news that our firm’s liquidity is evaporating faster than mist on a hot summer day – a part of the brain known as the amygdala kicks into gear. It is a primitive part of the brain that drives us to a “fight, flight, or freeze” response. The brain goes into survival mode and suppresses higher reasoning in order clear all avenues for rapid action to counter the perceived threat.

This is the oldest part of the human brain (also known as the hindbrain); one we share with primates. This built-in capacity explains why you pull back in fear during a scary movie when the crazed killer with the chainsaw jumps out. You “know” that the threat is fictitious but the hindbrain takes over for a moment, suppresses your rational thinking, and sparks an involuntary response.

The hindbrain is exactly what you want if someone attacks you with a chainsaw: you won’t get caught weighing options, you’ll do something. However, it can inhibit effective leadership because leading others requires thinking at a higher level and making strategic decisions rather than reacting in panic.

The Emotional Basement

Drs. Leonard Marcus, Barry Dorn and Isaac Ashkenazi of the Harvard School of Public Health call this amygdala-controlled state “the emotional basement.” Marcus, Dorn, Ashkenazi, and their colleagues at the National Preparedness Leadership Initiative have studied leaders during high-stakes, high-stress situations such as terrorist attacks and natural disasters. A bit more frightening than a product recall but useful for our discussion. They refer to effective crisis leaders as “meta-leaders” and one characteristic these meta-leaders seem to share is an understanding that they are in the basement and have to exert conscious effort climb out of it.

How? Those who face life-and-death scenarios fall back on practiced procedures and protocols – think of how hospital workers respond to a cardiac arrest: the doctors and nurses know their exact roles and responsibilities and can act almost instinctively. They practice and build mental immunity to the kind of crises they are likely to encounter. These practiced steps enable constructive activity which, in turn, allows for the emergence of reasoned decision making. Your organization practices fire drills for similar reasons: in case of fire, the hope is that your instant reaction will be to head down the nearest stairwell. You won’t have to think about it.

CEOs, unfortunately, haven’t likely practiced what to do and are thus ill prepared for a novel threat. Do any organizations run “complete financial collapse” drills? Wouldn’t Toyota, vaunted quality process leader, be the least likely to be prepared for a massive quality problem because it would seem to be such a low probability threat?

The Problem in the Mirror

Still, shouldn’t cooler heads surrounding the CEO help quell the storm? The second challenge for leaders in crisis, according to Dorn, is to understand that everyone around them is also likely to be in the “emotional basement.” The leader must help them climb up as well if you expect his or her followers to understand and follow direction.

The problem, it turns out, can be one of mirroring. People tend to mirror, or mimic, the reactions of those around them. This is tied our most basic social instincts: the need to belong and have social cohesion, particularly in times of stress. When an authority figure exhibits calming behavior–  think Rudy Giuliani after 9/11 – the people around the leader are also calmed. If the leader appears panicked, those around him or her can panic, too. If the leader becomes defensive or silent, those around the leader may do the same. The result can be a spiral up – or a spiral down.

“It takes great self-awareness, stamina, and discipline to control one’s gut-level responses in a stressful situation and intentionally elevate your mental activity out of ‘the basement’ and to bring others along with you,” says Dorn. “However, as a leader, it is the most important first step you can take.”

Have I solved my dilemma? No, the cases of individual CEOs and firms require more specific analysis but I do believe that we would be well served to follow brain research to understand more about our hard wiring and certainly devote more attention to the lessons about crisis leadership that can be learned from those who have had to face life-and-death situations and built up mental immunity and resilience. We live in turbulent times; we need to better understand how to prepare those who head firms to lead in them.

I remember him talking about recruiting the CEO for one of the world’s largest technology companies. At the time, the chosen candidate had several leadership options open for consideration, including an executive role at RJR Nabisco. At the time the candidate told the headhunter — and of course I’m paraphrasing here — that he wanted to find something that could be meaningful and lasting for his children.

The candidate was a forward-thinking leader whose frame of reference was the long-term view. He held himself to a higher standard. Which is probably why, in the end, the headhunter managed to convince the candidate to choose the innovative information technology company over one churning out snack foods and cigarettes.

Such leaders still exist today … don’t they?

When I talk to executive recruiter colleagues these days mostly all I hear is how difficult it is to find leaders for top jobs — at companies like Bank of America or GM, as examples — “because it won’t pay enough.”

Surely great leaders are motivated by other things than an executive salary? And headunters have other reasons for a CEO taking the helm for rationale beyond compensation?

Monetary advancement and wealth creation is well known to be an outcome, not an objective, when most serious executives considering a change in employer. So why aren’t we seeing commentary on this in the media and from this search industry that I inhabit?

Of course there are instances of leaders choosing to the right thing. Leaders who take on challenges for their countries, industries, employees … or just because it’s the right thing to do.

Those are the sorts of leaders, and leadership decisions, that inspire me. They care about the future and are focused on the long term. They are good thinkers, innovators and strong, responsible managers. And we need them more than ever as we emerge from this latest financial crisis.

I’ll close this blog with some suggested reading that relates to all this. Check out bestselling author Dan Pink’s latest, Drive: The Surprising Truth About What Motivates Us. In it he makes some brilliant points about what really motivates us. “The secret to high performance and satisfaction at work, at school, and at home,” he writes, “is the deeply human need to direct our own lives, to learn and create new things, and to do better by ourselves and our world.”

That is the ultimate paycheck.

It will also inevitably bring prognostications about the continued rise of China and whether this is going to be “The Chinese Century” or “The Asian Century” as the nexus of economic activity seems to move east. It was in 2009 that the Michael Geoghegan, group chief executive of HSBC, announced that he will be relocating from London to Hong Kong this year, certainly a dramatic example of that shift.

I’m thinking less about that shift – these things rarely move as quickly or in as straight a line as predicted – than about the overall competitiveness of the world’s regions and the implications of that for firm leadership. I revisited an article in Foreign Affairs by Anne-Marie Slaughter, currently at the State Department but then Dean of the Woodrow Wilson School of Public and International Affairs at Princeton, entitled “America’s Edge: Power in a Networked Century.” In it, she posited that the world is moving from being defined in terms of northern and southern hemispheres to delineation into eastern and western hemispheres with the U.S. belonging to an Atlantic bloc comprising the Americas, Europe, and Africa. She called it “quite a promising neighborhood.” No fear of the shift from Slaughter.

One could argue for some time whether this is the right way to cleave the world but let’s take it as true for the sake of how it could, and should, shape leaders’ thinking. If I’m a U.S. or European CEO and my “neighborhood” includes Central/ South America and Africa, I want to take a much broader look than just my firm and share price: I would want to understand the social issues that may offer opportunities or create impediments to the firm’s competitiveness. I may want to get involved in education as Intel has through its foundation that gives out $100 million a year to fund teacher education in hopes of ensuring that it has access to a steady flow of engineers and scientists that will be key to its future competitiveness. I may embrace social enterprise like Danone, which, through its Danone Communities initiative, is creating indigenously run yogurt plants in Bangladesh. They are creating a market while also addressing social needs for employment and nutrition.

I would get a much better handle on how to identify and develop talent in the less-often visited parts of my neighborhood. With the aging of the populations of the U.S. and Europe, firms will need to tap into the talent pools of younger talent in the southern continents. Those that are smarter and faster about it will win the battle for the best of the next generation.

I would want to better understand squatter cities – from the favelas of Rio to the growing urban areas in Darfur – and how they operate as markets as well as sources of talent and innovation. They are wildly different from more established cities in which most firms are comfortable: organization is less formal, infrastructure is improvised, and the processes for keeping order are opaque to many outsiders. There is what looks like chaos but what feels like energy. Firms that can figure out how to operate profitably and productively in these places before their rivals will have an advantage in these previously under-tapped markets.

Finally, I would value facility with languages, experience living in multiple countries, and general cultural fluency as much as attendance at elite business schools when recruiting and developing talent – and that includes the board as well as executive ranks. I would seek out those who are adept at and comfortable with collaboration, community, and self-organization – and then I’d make sure that those who worked for us, again including the board, were from and involved in as wide a swath of the “neighborhood” – teaching, learning, exploring, and contributing – making sure that my firm continually hones it tiger-like attributes of agility, speed, and strength.

What do you think?

Davenport’s main thrust was that companies do not often scrutinize their decision making processes and that the lack of attention can lead to sub-optimal decisions. This echoes earlier work by management guru Adrian Slywotsky of Oliver Wyman, who advocated business process audits. His point was that organizations regularly reexamine their strategies and structure, bring out new products, and enter new markets but don’t put the same emphasis on the underlying processes. In short, the business changes but too often the processes that support the business don’t change and that hampers an organization’s pursuit of the growth and profitability envisioned in the strategic changes.

I thought of these ideas in relation to the ways that organizations choose their chief executives and board members. My team and I have been doing this for a long time and we often see that firms revert to the comfortable and familiar when embarking on a search. Much like Captain Renault in Casablanca, the call goes out to “round up the usual suspects.” They call the same consultants, they put the same board members on the search team, they look to the same pool of candidates, and they use the same criteria to evaluate them. Too rarely do they question the assumptions or challenge the orthodoxies they use as they go about making a choice.

Davenport lays out a four-step process for this analysis: (1) List and prioritize the decisions that must be made; (2) assess the factors that go into each, such as who plays what role, how often the decision must be made, and what information is available to support it; (3) design the roles, processes, systems, and behaviors your organization needs; and (4) institutionalize decision tools and assistance.

At MontaRosa we have an ongoing investment in developing performance metrics that can help firms choose people most likely to succeed in their particular situation. This includes not only actual measurable performance, but also more esoteric performance metrics, including social media perceptions. We also get the chance – particularly with emerging roles such as Chief Sustainability Officer where there are questions about search criteria – to help walk clients through the evaluation and decision-making process. However, even then there seems to be a certain amount of the process firmly set in stone.

This is not to suggest that the wheel must be reinvented with each search but rather that the search, evaluation, and decision-making processes should all be intentional, not accidental, and that the foundations be examined regularly.

I think that the first step is to conduct an after-action review following each c-level and board search. This time should be used to capture what has been learned, what has gone well, and what should be changed for next time. It should include all of the people involved in the process – including the candidate who is now onboard. If it is possible to get feedback from some of those not chosen, include that as well.

Second, appoint a “Team B” to critique your process during a search. These would be bright and candid people, some internal and some external, who would be charged with trying to poke holes in the way you currently identify and select candidates. Much like a devil’s advocate, their task would be to forcefully advance an opposing view without necessarily adopting that view personally (making this distinction removes the fear of possible of retribution). “Team A” likely has a significant investment in the status quo; “Team B” can leave that baggage behind.

Finally, challenge your consultants to articulate their thinking and push your thinking about the criteria that will be used to define the role and identify the prospects. The more that is unpacked and put on the table, the better. I believe you’ll find it to be a fruitful discussion.

The lesson that I take from Davenport’s article is that decision making around senior talent is another hidden pocket of potential competitive advantage. What’s missing is the courage and foresight to think and act differently.

Kelvin: As I’ve been thinking more about the Pillar Trends and the implications for global leadership. If you are right, Eric, the challenges of leading corporations are going to not be so much different as more complex and multi-dimensional. China, for example, may grow robustly at the same time that the United States lingers in a recession because, at least on a consumption basis, there is still plenty of room for growth in China, while the U. S. is a much more mature market.

Eric: Exactly. Right now you hear pundits talking a lot about the thrift paradox. People in the U.S. have begun to save more, trying to recoup some of what they’ve lost in the recent downturn. Though a perfectly logical move for an individual or family, at the macro level it becomes difficult to reignite consumer spending, which of course is such a large part of the U.S. economy. China is in the exact opposite situation: people already save quite a large percentage of what they make. But as China — or the other BRIC countries, for that matter — become consumption as much as production markets, they will become less dependent on spending in the U.S. and Europe. They’ll already have a growth engine at home.

I think that companies have seen themselves as primarily in one of three modes: growth, cost-cutting, or turnaround. You know more about this than I do, Kelvin, but from what I read it seems that boards say “Get me a Mark Hurd” if they are looking for a CEO while in cost-cutting mode and “Get me a Meg Whitman” if they are in growth mode. You get the idea.

Kelvin: That’s right in very general terms. As I look at these challenges, I think that global companies are going to have to find people who can think simultaneously about all three as they focus their attention on global issues. But there’s no reason, at least conceptually, that the skills would be mutually exclusive. In practice, however, individuals tend to feel a lot more comfortable playing either offense or defense. Risk takers prefer offense, for example. Companies I’ve done CEO searches for tend to be moving from one mode to another and express a preference for certain skill sets that drives the search. When Chuck Townsend was named to replace Steve Florio at Condè Nast — a search I was not involved in but a company that’s much in the news these days — the board wanted someone who was less flash and more willing to rein in spending on the editorial side and change the culture from vision-at-any-cost to vision that includes a firm grasp of the cost column in the ledger. Can Townsend lead a cost-conscious retrenchment — a turnaround, even, in some people’s eyes — in the U.S. while also aggressively expanding in growth markets? We’ll have to see but that’s the kind of challenge I see CEOs facing ahead.

Eric: One of the implications I’ve projected from looking at the Pillar Trends is a decline in hyper-specialization and a return to the generalist model among corporate leaders. I see issues like demographic shifts and climate change as requiring innovative, broad thinkers at the top. Do you think that’s accurate?

Kelvin: I don’t know if it is generalist so much as multi-specialist. But perhaps that’s more picking with the words than the concept. I agree that executives are going to need to be broad thinkers and certainly innovative — not just business people with an MBA and years of success with a firm but be well-versed in both the physical and natural sciences, as well as international affairs, and even the arts so that they can draw upon a wide range of knowledge and expertise to solve problems and lead their firms forward.

Are the skills needed for the corner office evolving? If so, how? I’m interested in hearing other views.

Kelvin

photo credit: Steve Parker

But the conversations with the auto industry authority and Eric did hammer home for me that if we simply start with what the next CEO should look like or be experienced in, well then that’s like tinkering with a gas-fuelled engine attempting to compete against the new hybrid and renewable technologies. True change must be fundamental: reinventing governance structures, boards of directors and oligarchic public company leadership models.

It was Eric who gave me the title for the book I should write one day: “How come there are so many books written about great leaders and leadership and yet so few great leaders?” Well, other than the obvious fact the many of these books are the ghostwritten byproducts of executive hubris, the other reason has to be that the very corporate structures and frameworks that govern today’s firms needs a radical change to meet today’s challenges and seize the opportunities. How dare I state this?

1. It is clear that corporate governance as defined by Sarbanes-Oxley is not optimum and certainly not desirable. Rather, it is a flawed and cumbersome regulatory “fix” bolted to an already flawed system And in many cases it was implemented and executed by inexperienced and/or incompetent CEOs and disinterested boards. In times of rapid change SOX can be the millstone around the neck of a drowning business;
2. I enjoyed the observation of an industry colleague the other day that the average age of U.S. board directors goes up by one year every year. It is a closed shop community – clearly unhealthy and undesirable;
3. Today’s companies are increasingly complex and global — they need to be managed more as a neural network than as a command-and-control business. So hierarchical C-suites are clearly not capable or desiring of leading today’s business;
4. Finally the U.S. is not the model for everyone else to follow. There is little incentive for meaningful change, especially under the existing compensation structure that reinforces the status quo. We have to learn from how the Europeans and Asian firms have managed to build world-class companies that are threatening to — or already do — dominate their industries. I’m not saying they have all of the answers but clearly they have some of them.

So rather than focus on what the CEO needs to look like to meet the Pillar Trends I would suggest we start by looking at how the most successful organizations are adapting or transforming themselves – through new leadership structures and roles – and how the new leaders are being groomed. I’m thinking of forward-thinking firms like Credit Suisse and Thomson Reuters. Even Wal-Mart. And there are others.

I hope you’ll share your thoughts here.

Kelvin

photo credit: jiazi

The Greek Philosopher Heraclitus originated the concept that “the only constant is change.” True then, true since, true now. Though I’d argue that change comes much quicker today than when Heraclitus was ruminating on the cosmos.

Think for yourself how different your world is today versus 20 years ago. Or 10 years ago. Or even last year!

For most of my career I’ve been involved with headhunting and leadership development. Wading through the bookshelves of learning on “leadership” one is constantly challenged to think about what makes effective leaders, and what will distinguish the next great leaders of tomorrow. Looking backward doesn’t always help because – as we adapt and change – what worked in the past my not be what we need for the future (in fact, my father’s favorite quote “History is Bunk”)

While thinking about “change” and “leadership” I had an illuminating conversation with Eric McNulty, a thought leadership strategist and former executive at Harvard Business School Publishing. We talked about how society had changed and, in particular, what success means in the marketplace.

In addition to being a good friend, Eric’s also a smart guy. He has conceived a unique way of thinking about societal change and how it relates to leadership. It’s what we call the “Pillar Trends” of successful global leadership:

Kelvin: Eric, what are your four Pillar Trends and how do they relate to successful global leadership?

Eric: Beginning last summer I took a serious look at what the world will look like 10 to 20 years from now. I quickly realized that any predictions I might make about the size of your smart phone or what products we might buy would only be wrong. Predictions are difficult, it has been said, especially ones about the future. What I did see, however were four currents of change that I call Pillar Trends. These are trends that are global, that will affect every global organization, and of which no single organization can change the direction. In short, these are trends for which you must prepare and adapt. I think that they make great lenses for looking at leadership and other critical issues for organizations. The four are: the urbanization of the planet, the aging of the population in the developed world, climate change, and the continued exponential increase in both knowledge and computing power. I could go into each of these in depth – in fact I’m working on a book – but this is a blog after all.

Kelvin: What do these trends mean for leaders today?

Eric: I think that leaders and their organizations have to realize that we are at one of those inflection points at which the world will likely change in dramatic ways. Take urbanization. We have passed the point where more than 50% of the world lives in urban areas and it is expected that we’ll hit 75% by 2050. Yes, that means that New York, London, and Shanghai will grow but much of the growth will happen in the developing world. There will be many newly large cities – cities not on the radar of most executives today – rising up in Asia, South America, and Africa. You need to be thinking about how you will serve these markets, how you will find or grow the talent to lead your operations in these places. It is reported that a million people spend each night sleeping in the cemeteries of Cairo. What opportunities and challenges might they represent for your business? That’s the kind of thing tomorrow’s leaders are going to confront.

You are going to need people who can build infrastructure, not just optimize it. You will likely need more local talent because the ex-pat model doesn’t work at this scale. You will need a new level of cultural dexterity.

Kelvin: What are the risks of not taking action?

Eric: First and foremost, you may find yourself too late in the game to play catch up. As India and China continue to grow, you are going to see more Indian and Chinese companies break into the Global 1000 – and do it by serving their domestic populations as well as through export. They will be smart, aggressive, and have an advantage in local knowledge. They’ll be built for these challenges, while many legacy companies may find themselves slowed by the baggage of having come of age in a very different time and place. Gary Hamel taught me the importance of challenging your industry’s orthodoxies in order to find new sources of competitive advantage. Do it now before someone else beats you to it.

Kelvin: Do you have examples of companies who are doing it right today?

Eric: I have to say that I don’t know of a lot that are thinking this way in terms of leadership development. But Coca-Cola is one. They happen to be headquartered in Atlanta for historic reasons but they operate as a truly global company. Their current CEO comes from Turkey. You’ll find a broad mix of geographic and cultural backgrounds in their leadership ranks. They are used to thinking globally about branding, and now sustainability, while being used to operating locally because of the structure of their relationships with their bottlers.

Phillips went through a major transformation. One part of their business became focused on home health care to serve the aging population; their lighting business has moved aggressively toward energy efficiency. I have not yet seen if these moves have transformed their traditionally fairly conservative corporate culture.

I want to see what some of the “leadership factories” like GE and IBM are doing in this regard. A typical stop for a rising star at GE was their locomotive engine business. It wasn’t a fast-growth market; in fact just the opposite. It was a pretty safe way to see if you could run a major unit. I want to see if they are putting those same people into a sustainability role on the way up because those skills and that knowledge is going to be critical as we look forward.

Kelvin: Let’s be honest. Is it skill or is it luck that’s the real secret to their success today?

Eric: In Coke’s case, they have the right global legacy – that’s luck – but they also have forward-looking leaders who understand that these changes are underway. They have committed to a water-neutrality goal because climate change could cripple their business. They experiment a lot and talk about reinventing the core businesses.

I think we’ve yet to see if a Google or a Siemens or a FedEx, to pick three at random, can adapt.

Kelvin: Thanks, Eric.

This was just an introduction to the Pillar Trend concept. We’ll have much more to say in the days and weeks ahead. In the meantime, please share your thoughts with us.

Kelvin

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