Chapter 2

The end of business as usual?

This chapter examines three of the major trends that have been intensified by the relentless advance of modern technology and which demand new forms of a more connected style of leadership if organisations are to flourish. They are:

• the rise of the ‘new’ consumer
• the emergence of the networked society
• the arrival of the ‘Millennial’ generation and the implications for the workplace.

Understanding the big trends

As a leader, I’m sure you are well aware of the myriad challenges you face in trying to ensure that your organisation succeeds in a world with accelerating levels of complexity in what are increasingly unpredictable markets. For many of our clients, the tried-and-tested approaches to leading and managing the business, driving growth and keeping performance on track are proving to be less and less effective. To a large extent, that is because the strategic requirements now are multi-dimensional, where the nature of demand, the multiplicity of choice, the rise of affluence and the availability of information have combined to force an irrevocable shift of power to markets.

The key driver behind much of this change is the rate of technological advancement, with computing power rising exponentially and the ‘Internet of Things’ pushing that power into every area of our lives.¹ Moore’s Law, based on analysis by Gordon Moore, co-founder of Intel, in the 1960s and 1970s, states that computing power doubles every two years, which means that the rate of change is dramatic.² In fact, it is exponential, which means that in the next few years we will experience changes we cannot even conceive of currently. As human beings, we simply aren’t used to this breath-taking transformation of our environment and find it challenging to deal with.

One example of these changes is the shift in both personal and enterpise computing to the Cloud, transforming the way software is used by us all. Other industries that have changed within a few years are taxis with the Uber-led switch to mobile booking and room rental where Airbnb has opened up a new (often private) marketplace.

This chapter will examine three of the major trends which, rooted in this relentless advance of modern technology, are shaping today’s business environment and encouraging the transition to the more connected model of leader:

• the rise of the ‘new consumer’
• the emergence of the networked society
• the arrival of the ‘Millennial’ generation and the implications for the workplace.

The rise of the ‘new consumer’

There is a fundamental and perhaps frightening revolution going on in the way in which organisations and customers interact: fundamental because the old ways of doing business no longer apply, overturned in a short space of time by the push of technology and the pull of globalisation; frightening because very few organisations are structured, either physically or philosophically, to cope with a process that demands such new behaviours.

The problem is that consumers are no longer as predictable as they once were. They are much better informed and hence more sceptical and cynical – although they still want to believe in something. Many want to be seen as individuals but at the same time are keen to be part of like-minded groups, whether physical or virtual. They want companies to give them exactly what they want and when they want it, but they also want the same companies to behave well – ethically and environmentally – while doing so.

Nor do consumers conform any longer to consistent segmentation models, acting differently at different times or in different parts of their lives. These apparently contradictory behaviours make it much harder for companies to plan according to past purchasing patterns or socio-economic class.

This surge in consumers’ awareness and knowledge is grounded in the growing sophistication and accessibility of the internet. It is forcing companies to reflect those aspirations and demands and to do so in line with their stated purpose and direction. Any dissonance between what a company says and what it does can have an almost instant impact on performance.

In an article in Wired magazine, head of brand consultancy People-Made, Brook Calverley, argues that above everything else, what people respond to nowadays is a sense of sincerity, mentioning companies such as online shoe and clothing company Zappos: ‘They are (all) successful because they authentically and truly deliver the things they say they are going to. When thinking about branding and marketing, do not spend too much on what the logo looks like or what your message is. It’s important, but not as important as what you do and deliver, and as making sure it’s a true, authentic and genuine reflection of your values.’³

The emergence of the open and networked society

The emergence of computer and social networks, and the resulting networked society in which we live, increasingly act as the channels through which companies and their customers relate to each other. We are now more connected and open than ever before in our communications. Over the course of the last century television swept into our houses and telephones became ubiquitous. In the past 15 years mobile phones and the internet have changed the communications landscape so that we are now communicating and connecting on unprecedented levels. More than two-thirds of the world’s population will be using smartphones by 2020, according to a report by the Swedish company Ericsson.⁴

The rapid rise in the popularity of social networks in recent years has precipitated an even greater increase in open transfer of information between people within and outside organisations, in the world where we can Skype with new contacts instantly wherever they are and explore the personal and professional lives of anyone who is active on Facebook or LinkedIn. The resulting information overload is said to be affecting cognition, as Eric Schmidt, CEO of Google, says: ‘The level of interrupt, the sort of overwhelming rapidity of information . . . is in fact affecting cognition,’ reducing our ability to learn and think deeply.

The rapid rise of social networks has also reduced the time organisations have to respond to communications by colleagues, customers or competitors and creates new levels of transparency into organisations. While the environment in which a company operates has become increasingly complex, the time it has to respond to situations is reducing significantly.

The social media landscape is changing rapidly, and its influence on people’s lives is growing in a way that means we must embrace it if we are to be able to lead and do business with those people going forward. Our colleagues are also consumers, and each person is using social media in its many forms for connectivity and inclusion as well as for consumption and business. They seek value directly and through association, such as via brand reputation, access to thought leadership and new communities. Solis talks about the importance of ‘listen, learn, adapt’.⁵ Too often there is a gap between what you as a business want to talk about and what they (customers and colleagues) want to talk about. Mutual value lies somewhere in the middle. It’s often said that the best listeners make the best conversationalists. By listening hard, we can continue to learn and adapt to improve how we engage people inside and outside the company.

As leaders of organisations it is important that we understand the implications of the increased levels of immediacy, global reach and interactivity that technology enables, as it opens up new and often more efficient relationships between consumers, between consumers and companies, and between companies themselves. That means we are in a position to have a far greater knowledge of the choices, decisions and behaviours of other people regardless of who or where they are. So our emphasis has to be on insight to drive speed and agility.

This idea of a more ‘open’ society was first mooted in the early 1930s by French philosopher Henri Bergson⁶ and elaborated upon by the Austrian-born British philosopher Karl Popper⁷ during the 1940s. Popper described the transition from a closed society, where deference and respect for those in authority (typically a more dependent or controlled relationship) was the dominant ethos, to a more open and dynamic society, where freedom and independence emphasise a sense of personal responsibility and decision making.

In 2012 the then US secretary of state, Hillary Clinton, told the Open Government Partnership meeting in Brazil that countries could become more secure and peaceful only if they were open: ‘In the 21st century the US is convinced that one of the most significant divisions between nations will be not between east or west, nor over religion, so much as between open and closed societies. We believe that governments that hide from public view and dismiss ideas of openness and the aspirations of people for greater freedom will find it increasingly difficult to create a secure society.’⁸ Respecting rights isn’t a choice leaders make day by day, it is the reason they govern, she argued.

If we substitute organisation for government, these same sentiments should resonate strongly with business leaders today. Social media facilitates a corresponding increase in the open transfer of information between people and groups within and outside organisations. These pervasive horizontal networks move well beyond any artificial limits and pose challenges for traditional companies that are intent on maintaining their boundaries and keeping their information secret because these networks are not managed in the typical and traditional sense.

This freedom of information is also accelerating the opportunity for more distributed and complex forms of leadership to emerge both outside and within the organisational boundaries. Successful leaders will use influence and relationship building to ensure consistent organisational behaviour. Open and transparent relationships become the foundation for trust and collaboration.

Pawel Korzynski, a visiting fellow at Harvard University, has noted that because all managers will be working in an online environment within a few years, this will transform the role of the traditional leader to a ‘leading interweaver who coordinates and facilitates the collaboration of a variety of networks’.⁹ This style of leadership moves away from a rigid hierarchical system based on set lines and distinct rules to being more participative and collaborative, using influence to enable people in the organisation to learn and operate effectively.

Online social networks can be seen as pure forms of the complex adaptive system since many are not ‘managed’ in any typical and traditional sense. Complex adaptive systems have been the subject of much research in recent years into how systems emerge that can adapt and flourish in very complex environments. This has led to increasing research into the forms of leadership that work in complex adaptive systems and I have drawn on this research to formulate the connected leadership approach since it helps to understand how organisations should change to flourish in this unpredictable world. The explosion of such networks is only accelerating the opportunity – and the need – for these more distributed and connected forms of leadership to emerge. This is something that will become more rapid and unavoidable in coming years.

The arrival of the ‘Millennials’

The arrival of the so-called Millennials (those born between the early 1980s and the late 1990s) into the workforce is creating another cultural shift, one that will have a profound impact on how leadership works in practice. Consulting firm Deloitte carried out its fourth annual Millennial Survey among almost 8,000 people in 29 countries on effective leadership and how business operates and impacts society.¹¹ Almost three-quarters of them reckoned that businesses are focused on their own agendas rather than on helping to improve society, with less than one-third (28 per cent) saying that their current organisation is making full use of their skills.

In terms of priorities, Millennials believe that an organisation’s treatment of its employees is the most important consideration when deciding whether it can be classed as a leader. They then consider its overall impact on society, its financial performance, its record for creating innovative products or services, and whether it has a well-defined and meaningful purpose to which it is true.

When evaluating leadership, Millennials pay little regard to an organisation’s scope or scale, its overt charitable activity, or the profiles of senior executives. Overall, Millennials tend to regard businesses’ approach to leadership as too traditional and inward-looking. While they believe the pursuit of profit is important, that pursuit needs to be accompanied by a sense of purpose, by efforts to create innovative products or services and, above all, by consideration of individuals as employees and members of society.

This echoes a large-scale study carried out by leading business school INSEAD, in collaboration with Singapore-based educational think tank the HEAD Foundation (published in Harvard Business Review), into how Millennial attitudes and actions vary across the globe, and the implications for employers.¹² When asked what it is Millennials considered most attractive in a managerial/leadership role, while high future earnings stood out as the main driver globally, the opportunity to influence an organisation rated strongly among a number of regional groupings such as Africa, Western Europe, Central and Eastern Europe, Latin and North America. Earning potential was the most attractive factor in Asia Pacific as well as being a key factor in Central and Eastern Europe. In the Middle East, power to make decisions was the predominant factor. In Latin America, working with strategic challenges was also a key factor for Millennials. So we can see a varied range of factors influencing what Millennials are looking for in managerial/leadership roles, suggesting a generation where power and pay are not the only motivators for career development.

What about Generation Z, the group of people even younger than the Millennials (who are also known as Generation Y)? Global research from Randstad and Millennial Branding reveals Gen Z (born mid to late 1990s) is more entrepreneurial, less motivated by money and more focused on face-to-face communication than the Millennials.¹³ Despite growing up with technology, the majority actually prefer face-to-face communication over tools like instant messaging and video conferencing. They also appear to be more realistic than optimistic, having grown up during recession, suggesting they will come to the workplace better prepared, less entitled and more equipped to succeed.

More than half of both Gen Z and Gen Y state that honesty is the most important quality for being a good leader. Next to that, they value ‘a solid vision’ and good communication skills. As we increasingly separate different generations along narrower age bands, leaders need to learn how to juggle the preferences of four or five distinct generations working side by side in the workplace.

Summary

Rising consumer expectations are driving change in companies around the world. ‘The customer is much more demanding, you’ve got to be agile, you’ve got to be fast,’ says Tanith Dodge, group HR director at Marks and Spencer. Driven by the way the internet has opened up access to information and choice, consumer behaviour is becoming more volatile. This creates problems for those organisations built on more traditional assumptions about supply and demand, with a level of predictability and loyalty built in.

In the open networked society we experience every day, there is increasing complexity that requires a level of agility and transparency that many companies are struggling with. In addition, multi-generational employees from the Millennials (and Gen Z) seek and expect a level of influence that is, from the outset, more challenging of the traditional hierarchy than previous generations.

These factors, driven by the exponential increase in computer processing power and its widespread effects in areas such as mobile internet proliferation, the ‘Internet of Things’ and social networking, are creating an environment for companies that is difficult to navigate with traditional models of thinking and behaving.

A common phrase used by CEOs in many organisations I meet is ‘we are living in a VUCA world’, describing the volatile, uncertain, complex and ambiguous world in which they are operating. Originally used in the US military, the phrase VUCA has become a shorthand for the need to think in a more flexible, joined-up and open-minded way, not always using the same methods as in the past, and being open to new ways of working.¹⁴ One CEO said he was keen to challenge people across the business to think differently, and to embrace change and new ways of achieving growth as the business became increasingly international and complex in itself. This ties in closely with complexity leadership, discussed earlier in this chapter. This connected, sometimes chaotic and unpredictable world requires a new approach to leadership.

Notes

1 Vermesan, O. and Friess, P. (2014) Internet of Things: converging technologies for smart environments and integrated ecosystems, Denmark: River Publishers, pp. 8–9.

2 Moore, G. E. (2006) ‘Chapter 7: Moore’s law at 40’, in Brock, D. (ed.) Understanding Moore’s Law: Four decades of innovation, Philadelphia, PA: Chemical Heritage Foundation.

3 Clark, L. (2013) ‘Tech-savvy customers don’t care about your logo, they care about what you do’, Wired, 20 September, www.wired.co.uk/news/archive/2013–09/20/brook-calverley-branding (accessed 15 June 2015).

4 ‘Ericsson Mobility Report’ (2015) June, page 3, www.ericsson.com/mobility-report

5 Solis, B. (2008) The Conversation Prism, https://conversationprism.com/ (accessed 15 June 2015).

6 Lawlor, L. and Moulard, V. (2013) ‘Henri Bergson’, The Stanford Encyclopedia of Philosophy (Winter Edition), http://plato.stanford.edu/archives/win2013/entries/bergson

7 Popper, K. R. (1945) The Open Society and its Enemies, Volumes 1 and 2, Oxford: Routledge & Kegan Paul Ltd.

8 Dudman, J. (2012) ‘Open or closed society is key dividing line of 21st century, says Hillary Clinton’, The Guardian, 17 April, www.theguardian.com/technology/2012/apr/17/open-closed-society-hillary-clinton (accessed 15 June 2015).

9 Korzynski, P. (2013) ‘Online social networks and leadership: implications of a new online working environment for leadership’, International Journal of Manpower, 34(8), 975–994.

10 Catlin, T., Scanlan, J. and Willmott, P. (2015) ‘Raising your digital quotient’, McKinsey Quarterly, June, 6.

11 Deloitte (2015) ‘The Deloitte Millennial Survey 2015: Mind the gaps’, www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html (accessed 15 June 2015).

12 Universum, INSEAD and HEAD Foundation (2014) ‘Millennials, a six-part series: understanding a misunderstood generation’, http://universumglobal.com/millennials/ (accessed 15 June 2015).

13 Millennial Branding and Randstad (2014) ‘Millennial Branding and Randstad US release first worldwide study comparing Gen Y and Gen Z workplace expectations’, www.millennialbranding.com/2014/geny-genz-global-workplace-expectations-study (accessed 15 June 2015).

14 Stiehm, J. and Townsend, N. (2002) The U.S. Army War College: Military education in a democracy, Philadelphia, PA: Temple University Press.