Written by
Changeboard Team

Published
26 May 2015

Creating responsible leadership

26 May 2015 • by Changeboard Team

Broken model new responsibility

The past few years has seen a great deal of head-shaking from global economic commentators – not out of pity or judgement, but bewilderment. The model is clearly broken, or at least it has had some serious chips taken out of it, but the concern is why it didn’t work out so well – and what now?

Capitalism has worked so hard for its success, and it achieved it. The current generation in the Western world is generally far richer than their parents or grandparents and now that they have all this largesse upon which to feel comfortable, there’s something missing.

Everything capitalism struggled for throughout the first half of its hardworking life has revealed itself to be hollow and just doesn’t provide a sense of satisfaction and meaning. Its feeling deluded, bruised and it has a deep need to go and ‘find itself’ and turn this all around for the better. And so are many of the people working within its economic construct.

The holy grail of increased productivity, profits, incomes, affluence and wealth hasn't delivered the return on investment in value – not real value anyway. The quality of life, social betterment and individual happiness that capitalism promised has been enjoyed by quite a few, but certainly not everyone.

The epiphany in this identity crisis is that the belief that more of the same but better will improve things holds true to an extent. Simply finding ways to be more efficient, productive and profitable is not in itself an answer. ‘More but better’ now means more core values, but really and tangibly a part of business, visions that really aim to be achieved rather than merely aspired to and ignored, and products and services that honestly take into account the benefit of what they provide. Because it is that sort of premise that binds people to act responsibly.

Economic commentators seem to be anticipating something more daunting than just a cyclical fad. They feel that 'capitalism as usual’ just can’t be sustained and speak of a new wave of social discontent, fiercer distribution struggles and fundamental political confrontations – and interestingly enough, it’s not the underprivileged screaming the loudest.

In fact, if this was a scene from ‘The Emperor’s New Clothes’, to many people’s surprise it would be the business community whispering “he is naked”.

The language of change

As with any new phenomenon, there is a new language to embed it in culture. For years now we have been treated to a new set of buzzwords in economic discourse: ethical management, triple bottom line, social business, bottom of the pyramid, social entrepreneurship, impact economy and the like. These new terms have gravitated to join concepts like corporate responsibility in the diction of leadership.

Everyone is pointing to the dramatic current affairs including financial market failures, public budgetary crises, increasing emerging market competition and demographic change as the catalyst for this semantic fashion, but it seems a little less incidental than that and for more intrinsic.

Capitalism’s cosy Western upper middle class world is not just refurbishing, it’s renovating in a big way and it’s not really a new thing.

For a while now there have been noticeable changes in patterns of investment; towards SRI and Social Capital Markets etc. Consumer preferences are not just focused on product quality – they’re focused on the quality of production. Prospective employees scrutinise the descriptors of organisational branding and fragile political allegiances and plummeting trust in established institutions clearly indicate leaders are facing immediate challenges as a result of capitalism’s midlife crisis and it’s not just talk. Behaviour is changing.

Implications for leadership

I work for an organisation called Common Purpose, but I do honestly believe that this is what leaders need to understand, inspire in people and develop to evolve with capitalisms changing ways. People need a common purpose.

That means it is time for leaders to get serious about values and consider how people engage in value and find meaning.

To achieve this, leaders will need to ensure that their aims, decisions, and actions are grounded within a far more holistic and robust set of ethical values. In the past, founders, board directors, CEOs and senior managers could proudly announce organisational values like: performance, teamwork, excellence, innovation or trust; and they could believe this was a sufficient measure of their brand values and moral guidance of business behaviour. It isn’t enough anymore.

It was exactly this type of legerdemain and spin that helped fuelled this midlife crisis and the subsequent scepticism. If values are not fulfilled, they stop having value. In fact, organisational value as a concept will stop having meaning.

To be successful in actually living values, the very rules of engagement in leadership need to be put into question and challenged.

Established tokens and structures of power, monetary rewards (beyond a certain limit), status, and a glossy brand that says ‘cool’ are all losing currency as a differentiators. Leaders will not get a free ride on the basis of purely institutional attractions.

Today, the investment banker will look into her toolkit of influence where there used to be a pool of bonuses at hand to incentivise high performance. This once-upon-a-time shiny power tool won’t be enough to attract and retain talent in the future and our erstwhile handywoman should start to question just how many of the best MBA students in the future will opt for a banking career as opposed to starting their own social business.

Values need to extend to wider contexts

In the future, leaders will have to test their values far more self-critically against a broader perspective, set of experiences, and likely consequences. They will need to be increasingly aware of a global context of values in terms of what people are really serious about and willing to struggle for and believe in.

If the very political economy the Western world is used to is suffering a midlife crisis, there are bound to be a few sensitivities. The disarray of a cultural shift will cause anxiety, and people will be allergic to sense that they’re living by double standards – particularly if they’ve been banking on the system they know to work, and told it would, for years...then told it doesn’t.

As a result of this, leaders of the future won’t get away with proclaiming tailor-made value sets for particular contexts. They will need to visibly refer to a coherent set of values in all their organisations’ – and their own – actions - and beyond the scope of their immediate area of responsibility.

As an example: a measure of fairness in business leaders is no longer assessed by whether they stand for equal treatment but also by their terms of trade with suppliers and their investment in the next generation. Leaders who do not at least aim to behave consistently in different contexts and in consideration of the consequences of their decisions will be lack moral credibility.

Shift the targets; value and leadership

It really doesn’t matter if you work in the private sector, public administration or in a voluntary organisation: people will not be driven by targets.

Setting a sales goal of £50K this month will not generate the momentum and motivation needed to inspire commitment and engagement. Neither will that next big pitch for a distinguished client, aiming for a top ten place on league tables, providing a big bonus pool and share-prices, publishing a manifesto that sits on an intranet unread, or deciding that rebranding will everything. That’s not how you lead a sense of common purpose.

Leaders’ vision and means of engagement will need to be broader than a single career, a single department, a company, a country or a generation.

At the moment leaders are crawling forward. They are very focussed on their patch, their region, their budget and their targets – when the big issues that will engage, inspire and capture the imagination of people are somewhere in between. That’s where value and leadership – and that new identity for capitalism – will be found.