Leaders find themselves trapped between the old and the new. Overlapping global crises demand that we break free – and shape a better future
The writing is on the wall. The signals of the future are unmistakable. But do leaders have the clarity of mind to heed them – and, more to the point, to act upon them?
We are confronted by the confluence of environmental, technological and social upheaval that is disrupting and rebuilding. This is the era of polycrisis. A new world demands new ways of working and new ways of leading. Yet time and again, we see leaders trapped by the constraints of systems and processes that were created to deal with a world that has disappeared. Those legacies constrain how leaders think about the challenges we face, and limit their options.
In our discussions with leaders working in organizations across all sectors, around the world, we encounter many smart, insightful, talented and purpose-driven executives who recognize the scale of the challenge. They are responding with innovative strategies for transforming their organization. They know that the leaders who will succeed in steering through an era of tumultuous change are those who hear and see the signals of our changing world – and find the creativity and courage to lead in new ways.
Three global crises
Survey the globe today, and it is impossible not to be struck by the scale of the challenges being faced by businesses and societies operating in varied markets in all corners of the Earth. Behind most of the challenges we face lie three fundamental challenges: relating to the environment, to technology, and to social division. Each is an immense challenge – but their confluence makes for an infinitely more complex and challenging prospect.
The environmental crisis The drive for net-zero carbon emissions has transformative implications for today’s economies as we know them. For starters, it will drive business to phase out old ways of generating energy and old ways of manufacturing. Businesses are also deeply engaged with the related crises of biodiversity and other dimensions of sustainability (see Focus section, ‘The nature revolution’, Dialogue Q3 2024). How do we manage the net-zero transition and remodel our economies to ensure we operate within Earth’s planetary boundaries? And critically, how do we do so at the same time as achieving the economic growth that remains vital to huge parts of the world to provide a route out of poverty?
The technology crisis Enthusiasts may debate the ‘crisis’ label – but the unfolding technology revolution has the potential to be vastly disruptive, even while it holds out the prospect of incredible advances. The use of digital technology and generative AI is moving in leaps and bounds, propelled by the development of ever-more powerful models – and of course they are far from being the only technologies changing our world. Huge developments in robotics and biotechnologies are also underway, for instance, and could come to reshape our world dramatically in the coming years.
These challenges are linked: technology will help humanity escape its reliance on fossil fuels and manage the transition to a net zero economy. But more powerful technology uses more power. The computing systems of the future are not only hungry for electricity: they are thirsty for water, essential for cooling. Researchers from the Universities of California, Riverside, and Texas, Arlington, for example, have shown that GPT-3 needs to “drink” a 500ml bottle of water for roughly every 10-50 responses. AI’s water usage could hit 6.6 billion m³ by 2027.
At the same time, climate change threatens to constrain water availability, compounding the crisis that already confronts vast numbers of people around the world. According to the United Nations Environment Programme, at least 50% of Earth’s population – 4 billion people – already experiences water shortages for at least one month of the year. It is a problem that is predicted to get much worse without urgent action.
The societal crisis Around the world, many nations face urgent social challenges. Some relate to the basics of life: to poverty, health and wellbeing. Progress has been made on the UN Sustainable Development Goals for 2030, but it remains uneven. What’s more, many societies are divided, unequal, uninclusive, and riven by collapsing trust and social cohesion.
Fake news is rife. Technology has been part of the cause, creating echo chambers that have driven polarization, and new threats continue to emerge, such as deepfakes, while our increasing reliance on technology increases our exposure to malicious activity and cyber attacks. Paradoxically, technology also holds the key to many solutions: technologies such as blockchain and distributed ledgers, for example, provide a robust method of verification that can help build confidence.
Even so, technological solutions alone are insufficient for managing the societal challenges we collectively face. Bill Boulding, the JB Fuqua professor of business administration and former dean of the Fuqua School of Business (and chairman of Duke Corporate Education) emphasizes the importance of rebuilding trust across society, following precipitous falls in the US and other major economies.
As professor Boulding highlights, leaders need to create clarity about their organizations’ values, lead consistently in line with those values, and continue delivering the work that delivers both business value and social impact, such as on DEI or environmental sustainability. Ding so can quietly defuse some of the contrived points of contention and division that have been stoked by various groups in recent years. (See his Dialogue interview, ‘Leading through division’, Q4 2023.)
Falling trust and weakening social cohesion are both a result of the other crises we face, and an influencing factor in how we collectively respond to those challenges. Already, there has been some backlash against carbon-cutting initiatives; more may follow. Concerns about AI’s impact have been limited – think of the Hollywood strikes – but could yet spark large-scale protest, particularly if some analysts’ predictions of job losses are perceived to be coming true.
The impact on how we lead
These three vectors of change are having a transformative impact on the future of work and jobs. For many organizations, the last four years have been a period of unprecedented shifts and experimentation in how we work, especially as a result of the Covid-19 pandemic. Yet we are set to see more dramatic change in how we collectively work over the next 50 years than at any point since the industrial revolution that started to unfold in the second half of the 18th century.
What leaders need to bring to the table will shift dramatically. Problem-solving and critical thinking skills will need to be complemented by social and interpersonal skills, and the capability to engage communities. Already, the labor market is changing dramatically: smart employers are turning to skills-based hiring, recognizing that demonstrable capabilities trump paper qualifications. A degree is not the ticket to career success that it once was.
The traditional models of career paths are already collapsing. We are redefining the meaning of ‘working age’ as we collectively live longer (giving rise to huge economic challenges as we care for an older population). Already, it cannot be assumed that employees will rise up the organizational hierarchy and serve at their highest career level as the final point before retirement: instead, careers may include peaks and valleys over time, perhaps across different fields. As our familiar ways of working dissolve, a lifetime of learning and development becomes imperative. How will leaders adapt?
Fight, flight – or freeze
How we adapt to change starts with a physical response. We tend to think about this in terms of the fight-or-flight responses to threats, for example when we discussing change management strategies and how to successfully lead teams through change.
Yet there is another, less-discussed potential response to threats: to freeze. That characterizes the collective response to many of the vectors of change that are already reshaping the world around us. We are in a state of paralysis – blinded by the headlights, uncertain which way to leap, and increasingly imperiled by our inability to act.To some extent that is because as leaders, we have obligations and responsibilities for managing the status quo: to deliver results in the here and now. We can’t abandon today’s business to focus solely on the future.
In essence, leaders are confounded by a signaling problem. In economics, signaling theory describes what happens when different parties have access to different sets of information. In our complex and changing world today, we repeatedly see the effects of different parties receiving different signals, reaching different conclusions about the state of the world and about what course of action is required.
Leaders are compelled to work on the basis of traditional signals about markets and consumer preferences, yet those are inadequate for dealing with the scale of the changes now affecting us. We need a new model for interpreting and responding to the signals that will define the future.
Five leadership capabilities for the future
The leaders who succeed in shaping the future will combine a broad-based set of capabilities, that span cognitive ability, social and interpersonal skills, and deep community connections. Here are five of the standout requirements.
Curiosity
The drive to know more about our changing world is crucial, along with the behaviors needed to learn, acquire knowledge, form connections and see unexpected patterns. An openness to learning allows us to find ideas and insight everywhere: not only in the classroom or in a formal development program (important though those are for truly transformational experiences), but also in the resources such as short videos that are readily available on our phones. With just a few taps we can find global experts discussing themes that are relevant to our work. Nurture curiosity, encourage exploration, and follow diverse threads to broaden, as well as deepen, our knowledge and capabilities.
Courage
A critical element of the mindset to succeed in the future is the ability to take a leap and cross the chasm that exists between where we are today and where we need to be. It is the ability to overcome the risk aversion that is typically to the fore when the stakes are high and when we perceive threats on all sides. Courage requires an emotional disposition that tends to optimism about the future, despite all the challenges we face. A better world is possible, if we are brave enough to build it.
Technology mindset
Leaders need to invest in their understanding of technology and how it can be applied, to understand the upsides and how it can create value, as well as thinking critically about the risks and the ethical implications, seeing where humans need to stay in the loop. In particular, leaders need to reflect on how technology impacts on trust and on everyone in society, ensuring that technology is a force to support DEI and does not set it back by entrenching or amplifying biases.
Storytelling
We may be confronted by global issues but leaders forget an important truth at their peril: change may be global but its effects happen at a personal level. We feel them as individuals, in how they affect our jobs, our families and our communities. The human is central to our vision of the future and leaders have to cultivate their ability to tell inspiring stories about their organizations, the journeys that they are taking, and the challenges they are overcoming as they strive to build the future. That requires a high degree of empathy, understanding audiences’ needs and finding ways to connect with them. Without the capability for empathy and storytelling, leaders will find it impossible to connect with employees, customers and their communities alike.
Adaptability
The changes underway will demand supreme levels of adaptability from leaders: in their personal careers and how they meet the needs of their teams, in how they guide their organizations through a period of real turmoil and uncertainty. Leaders will have to adapt to new technologies and new business models, to new requirements to protect the environment, to the realities of a changing social context. They will be confronted by paradoxes to be reconciled, and tasked with navigating a path through the rockiest of terrain. Adaptability will be essential.
Leading for tomorrow
The signals of our new world are clear for all to see. What organizations need are leaders with the courage and capability to act upon them.
We are tasked with shaping a better future, together, to create sustainable value – and help our organizations and societies navigate the crises and challenges that confront humanity today.
Sharmla Chetty is chief executive and Vishal Patel is president of global markets at Duke Corporate Education.
