CHAPTER 3

Leading High-Performance Organization

Introduction

Organizations today face unprecedented challenges operating in a global environment that is increasingly volatile, uncertain, complex, and ambiguous (VUCA). Leaders are also confronted with increased competition, globalization, demand for growing social responsibilities, and a stream of technological revolutions causing disruption in the marketplace. The turbulence in the business environment demands that individuals and organizations perform at higher levels and with greater speed than at any time in the past. Organizations need leaders to visualize the future, motivate and inspire employees, and adapt to changing needs of both the internal and external stakeholders.

In a high-performance organization (HPO), a “can-do and true believer” mentality prevails. Everyone believes in the vision and mission and demonstrates the values of the organization. People put the organization above themselves, team, or department, as they believe that they are involved in something bigger than simply their own self-interest. They have a strong sense of purpose and values, identify with the organization, and act as if they are the owners. Employees of Disney, Southwest Airlines, and Starbucks are some good examples. They have a reason to work, and they show this each and every day. That is the hallmark of HPOs.

But what or who is influencing these employees and aligning their behaviors? Aligning people is about generating awareness and understanding of the differences between individuals in the way they prefer to work and the way they make decisions or manage relationships. By creating a common understanding, a common sense of purpose and a shared commitment to action evolve.

Organizational leaders and employees alike must place a new emphasis on developing an open and trust-based relationship that will lead to the development of a positive organizational climate and organizational success (Bawany 2014a).

In essence, the heart of the leadership challenge that confronts today’s leaders is learning how to lead in situations of ever-greater volatility and uncertainty in a globalized business environment. This is compounded by the need to deal with scale, complexity, and new organizational forms that often break with the traditional organizational models and structures from which the earlier model of leadership may have been learned (Bawany 2015a). Hence, leaders need to challenge their mental models in their efforts to build and sustain an HPO (Bawany 2018c).

Characteristics or Profile of HPOs

HPOs are the role models of the business world. They are being benchmarked by other organizations as they provide or represent real-world versions of a modern managerial ideal: the organization that is so excellent in so many areas that it consistently outperforms most of its competitors in the same industry over extended periods of time. Leaders want to know more about HPOs so they can apply the best practice approaches and lessons learned to their own companies. Of course, the goal is to ensure that their own organizations excel in the marketplace.

In 1982, when Tom Peters and Bob Waterman published In Search of Excellence, the idea of comparing, identifying, and analyzing the best-performing organizations came into vogue (Kirby 2005). Since that time, many studies have used comparison techniques to tease out what sets HPOs apart. In his book Built to Last, Jim Collins (1994) took a somewhat similar approach. Many business leaders have tried to adopt the practices of the companies profiled in these two books.

But the goal of identifying the most durable high performers through comparison is a difficult one to achieve. One of the problems is that sustaining high performance is a major challenge for any organization across all industries. Interestingly, many of the organizations that were profiled were unable to sustain the high performance.

For years, researchers have been trying to identify and study HPOs. Much has been learned during this time. As Julia Kirby (2005) noted in the Harvard Business Review, management experts continue to build on one another’s work in order to formulate more sophisticated ideas about organizational performance.

The various research works published, including that of André A. de Waal (2007) and American Management Association (2007) report on “The High-Performance Organization Survey 2007,” provide insights into the characteristics of HPOs. Generally speaking, HPOs are superior to their low-performance counterparts in the following areas:

1. Strategy
   1. They define a strong vision that excites and challenges, based on a winning strategy that is clear and well-thought-out. Their mission, vision, values, and operating philosophies are consistent with their strategy.
   2. They balance long-term focus and short-term focus to safeguard the long-term continuity of the business and its contribution to the world. At the same time, they achieve short-term results as well, which makes it possible to plan for the future.
   3. They set clear, ambitious, measurable, and achievable goals, which raises the level of aspiration and creates a sense of stretch.
   4. They create clarity and a common understanding of the organization’s mission, direction, and strategy that is understood by everyone within the organization.
   5. They align strategy, goals, and objectives with the demands of the external environment, so corporate renewal is always based on customer needs.
   6. They adopt the strategy that will set the company apart by developing many new options and alternatives to compensate for redundant strategies.
   7. They adhere to high ethical standards throughout the organization.
   8. They create an organizational design and structure that complement the intended business strategy.
   9. They stimulate cross-functional and cross-organizational collaboration by making teamwork and collaboration top priorities of management. They foster teamwork by stressing the importance of teams for the performance of the organization and develop a team feeling by creating team commitment, getting everyone on the same team, and establishing shared responsibility.
   10. They simplify and flatten the organization by reducing the boundaries and barriers between and around units, thus getting rid of bureaucracy and organizational complexity.
   11. They foster organization-wide sharing of information, knowledge, and best practices by creating the infrastructure and incentives for these.
   12. They continuously realign the business with changing internal and external circumstances by setting up an adaptable business model that can be easily altered on the basis of opportunities in the external environment and shifts in customer needs and market conditions.
2. Leadership
   1. In an HPO, trust-based relationships are maintained with employees at all levels. This is strengthened because loyalty is valued, smart people are treated in a smart manner, people are shown respect, and a learning attitude is fostered. Also, individual relationships between managers and employees are created and maintained, both leaders and employees are encouraged to believe and trust each other, and people are treated fairly.
   2. Leaders live with integrity and demonstrate ontological humility. They lead by example, being honest and sincere and showing commitment, enthusiasm, and respect. They have a strong set of ethics and standards, have credibility, and consistently maintain a sense of vulnerability by not being arrogant.
   3. They make decisive, action-focused decision by avoiding overanalysis but coming up with decisions and effective actions, while at the same time fostering action-taking by others.
   4. They coach and facilitate the development of employees by being supportive, helping them, protecting them from outside interference, and being available.
   5. Leaders stretch themselves and their people by setting high standards, stretching goals, and continuously raising the performance bar.
   6. They demonstrate a repertoire of situational leadership styles that are effective in communicating the organization’s values and by making sure the strategy has been received and embraced by organizational members.
   7. They allow experiments and mistakes by permitting taking risks, being willing to take risks themselves, and seeing mistakes as an opportunity to learn and quickly innovate.
   8. They inspire people to accomplish extraordinary results by demonstrating charismatic leadership, creating a larger-than-life mindset, inspiring all to do their best, and mobilizing individual initiative.
   9. They develop or grow leaders within their organization by encouraging people to become leaders, filling positions with internal talent, and promoting from within.
   10. They stimulate change and improvement by continuously striving for self-awareness and renewal, developing dynamic managerial capabilities to enhance flexibility, and by being personally involved in change activities.
   11. They recruit and leverage on a diverse and complementary management team and workforce to help spot the inefficiencies of their operations and create a climate that supports innovation and creativity in solving workplace challenges.
   12. They are committed to the organization for the long haul by balancing common purpose with self-interest and teaching organizational members to put the needs of the enterprise first.
   13. They hold employees responsible for results and are decisive about nonperformers by keeping their focus on the achievement of results and maintaining, at the same time, clear accountability for performance and making tough decisions.
3. Customer
   1. They go above and beyond to delight their customers through distinctively branded customer experience.
   2. They strive to be world class in providing customers value, think hard about customers’ future and long-term needs, and exceed customer expectations.
   3. They are more likely to leverage on data analytics and on their customer information as the most important factor for developing new products and services.
   4. They continuously strive to enhance customer value creation by learning what customers want, understanding their values, and building excellent relationships with them. They have direct contact with customers, engaging them, being responsive, and focusing on continuously enhancing customer value.
   5. They maintain good and long-term relationships not only with their customers but also with all stakeholders by networking broadly, being generous to society, and creating mutually beneficial opportunities and win–win relationships.
   6. They continuously monitor the VUCA business environment and proactively respond to shifts and opportunities in the marketplace, by surveying the markets to understand the context of the business, identifying trends and exploring scenarios, capturing external information quickly and accurately, anticipating adversaries through careful study and assessment, and creating a warning system to spot changes to which the organization must respond quickly, so as to ensure that all stakeholders’ expectations, particularly those of the customers, are met.
4. Employees
   1. They empower employees and give them the freedom to decide and act by decentralizing decision-making authority and giving autonomy to organizational members to operate within clearly established boundaries and constraints of what is allowed and what is not.
   2. They are superior in terms of clarifying performance measures, training employees to do their jobs, and enabling employees to work well together.
   3. They create a culture of transparency, openness, and trust by establishing a shared understanding, openly sharing information, and fostering informality, yet remaining focused on goals.
   4. Their employees are more likely to think the organization is a good place to work.
   5. They emphasize on readiness to meet new challenges and are committed to innovation.
   6. They encourage employees to use their skills, knowledge, and experience to create unique solutions for customers.
   7. Their high-performance teams have a shared purpose and values that serve as an operating philosophy, enabling them to be adaptable and respond quickly, as necessary, to changes in the environment. Their teams use creativity and outside-the-box thinking in creating innovative resolutions to business challenges.
5. Organizational Culture and Climate
   1. They create a culture that empowers employees to operate within clearly established boundaries and constraints of what is allowed and what is not.
   2. They establish clear, strong, and meaningful core values and make sure they are widely shared and accepted within the company.
   3. They develop and maintain a performance-driven culture by fighting inertia and complacency, challenging the enemies of a winning mindset, focusing strongly on getting high excellence in whatever the organization does, and stimulating employees to achieve high performance.
   4. They create a culture of transparency, openness, and trust by establishing shared understanding, openly sharing information, and fostering informality and are committed to goals.
   5. They create a learning organization by continuously investing in training and upgrading of skills, establishing good management development and top-of-the-line training programs, and constantly identifying and accessing new competencies.
   6. They attract exceptional potential employees with a can-do attitude who fit the culture, nurture highly talented employees, and give bright employees space to change and excel.
   7. They engage and involve employees in developing vision and values and in interactive discussions and decision-making processes and communicate issues and developments important to the organization.
   8. They create a safe and secure workplace by giving employees a sense of safety (physical and psychological), including job security, and by not indiscriminately laying off employees (until it can no longer be avoided).
   9. They master the core competencies. They are innovators themselves. They decide and stick to what the company does best, keeping core competencies inside the firm and outsourcing noncore competencies.
   10. They develop employees to be resilient and flexible and recruit a workforce with maximum flexibility.
   11. They align employee behavior and values with company values and direction at all organizational levels by translating vision into local objectives and letting individuals realize that they have accountabilities and obligations both to themselves and to the organization.

The HPO Framework for Industry 4.0

Leading in Industry 4.0 that is highly disruptive as well as volatile, uncertain, complex, and ambiguous provides a challenging environment for leaders to operate and for executive development programs to have an impact. It also brings forth a much-needed new range of competencies. The new environment has resulted in the necessity for new and different capabilities for organizations to succeed (Bawany 2018e).

We are operating in a hypercompetitive VUCA business environment. The world moves faster today when compared with 20 to 30 years ago. Companies feel the pressure to decrease time to market and improve the quality of products while delivering ever-changing customer expectations to maintain competitive posture, that is, be adaptive and nimble. Deriving results in HPOs has become more and more difficult even for companies with dedicated and knowledgeable employees in their workforce and business leaders to leverage.

A research by the Centre for Executive Education (CEE) found that various leadership competencies are crucial in deriving results and achieving organizational success in an HPO operating in a highly disruptive and increasingly VUCA-driven business environment (Bawany 2016a). These include cognitive readiness (critical and strategic thinking skills), emotional and social intelligence (ESI), managerial coaching and leading team for performance, effective negotiation and conflict management, and cross-cultural communication and diversity management.

The business environment is changing constantly, and a leader must respond in kind in the effort toward the development to be an HPO (see Figure 3.1). Leaders need to challenge their mental models in their efforts to build and sustain an HPO (Bawany 2018c).

Figure 3.1 The high-performance organization

The Results-Based Leadership Framework

There is currently extensive published research on the direct link between leadership effectiveness and sustained organizational performance. Hence, managerial leadership capability should be of primary concern for all organizations since the contribution and motivation of the employees are key toward achieving the organizational goals and objectives. While the organization needs a financial resource, technical and professional knowledge and expertise, and relevant systems and processes, success cannot be assured and sustained unless the leaders are able to utilize these resources creatively and effectively. Arguably, the organizations that are best placed to survive and thrive in the disruptive business environment of the future Industry 4.0 are those that have a strong focus on leadership development practices and a good understanding of what effective leadership means to them.

The organization’s current and NextGen leaders must focus on effectively engaging all stakeholders, in particular, the employees, in delivering results. In the Industry 4.0 era and at a time of continued, significant transitions and challenges, leaders at all levels have a responsibility to ensure that their organization’s mission and purpose are at the heart of what they do.

The concept of “engagement” can be defined in many ways. Essentially, engagement is a measure of how an organization values its employees and how employees value their organization and recognize that every individual is at liberty to decide whether to do the minimum required of them or to do more. Engagement can also be taken to represent the degree of empowerment to which staff are involved in decision making and/or the openness and perceived effectiveness of communication. Hence, leaders at all levels have a key role in cultivating a strong culture of engagement.

This, in essence, is the foundation of the “Results-Based Leadership” (RBL) framework (see Figure 3.2).

Figure 3.2 The RBL framework

Step 1:  The basic premise of the RBL framework is that a highly effective transformational leader would start with a strong sense of self-leadership, developing in particular a high level of self-awareness of their own strengths and area of development in the crucial NextGen leadership competencies. These include ESI along with cognitive (mental) readiness in leading in the highly disruptive, digital, and increasingly VUCA-driven business environment. Next, they need to lead and engage the team by coaching them to success by adopting the proven SCORE High-Performance Team framework that is discussed in Chapter 6.

Step 2:  Organizational climate (sometimes known as corporate climate) simply refers to how employees feel about working in the organization. Organizational climate is the process of quantifying the culture of an organization. It is a set of characteristics of the work environment, perceived directly or indirectly by the employees that are assumed to be a major force in influencing employee behavior and engagement. By implementing Step 1 effectively along with the relevant human resource practices, the leader will create an organizational climate of trust between themselves and the employees who are highly engaged and would want to remain in the organization.

Step 3:  The level of employee engagement is dependent on the organizational climate. Employees who are engaged and motivated are instrumental in delivering the required customer service experience for the client that will result in customer engagement and retention. A consequence of the engaged employees is employee loyalty, which will reduce attrition and, thus, costs of hiring new staff.

Step 4:  Employees who feel fully committed to the organization take great pride in doing their job. They do more than what is expected of them and go that extra mile. In so doing, engaged employees, in particular, the frontline service staff, will have an impact and inevitably influence the buying behavior of customers. The excitement of an engaged employee is contagious and cannot help but rub off on the customer.

Step 5:  The key performance indicators (KPIs) or metrics of success for the organization differ from one organization to another. However, one of the factors driving the profitability and efficiency is the level of customer engagement or loyalty, since the cost of acquisition of new customers is reduced significantly. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees, especially the customer-interfacing service employees. Employee satisfaction, in turn, results primarily from the internal high-quality support services and organizational policies that enable the frontline team to deliver excellent service to customers.

Managers often fail to appreciate how profoundly the organizational climate can influence financial results. It can account for nearly a third of financial performance. Organizational climate, in turn, is influenced by leadership style and the manner in which the leader motivates direct reports, gathers and uses information, makes decisions, manages change initiatives, and handles crises.

The fundamental goal is that organizations must strive to continuously deliver service value and build good customer relationships in order to generate sustainable results through satisfied and loyal customers. Employees being at the forefront of the service delivery chain hold the key to building this satisfied and loyal customer base.

Competencies for Leading in an HPO for Industry 4.0

The once identifiable boundaries of our marketplaces and industries have now become permeable. They shift continuously, sometimes slowly, sometimes quickly, and always give us the feeling that they are slightly beyond our grasp. In this new business environment, leaders must realize that a sustainable future is only possible if organizations can sense, adapt, and respond to change and if they can help their organizations reinvent themselves in an evolving and rapidly changing world.

Leading in the future has seen a common theme emerge—managing challenges in a business environment that is disrupted and predominantly digital. Technological advancements in artificial intelligence (AI), robotics, sharing platforms, and the Internet-of-Things are fundamentally altering business models and industries. These changes are often not only alien to businesses but also taking place at an unprecedented speed. How do we equip and transform the next generation of leaders with the relevant skills and competencies to meet these challenges?

Today, a new set of digital business and working skills are needed. Companies should focus more heavily on career strategies, talent mobility, and organizational ecosystems and networks to facilitate both individual and organizational reinvention. The problem is not simply one of reskilling or planning new and better careers. Instead, organizations must look at leadership, structures, diversity, technology, and the overall employee experience in new and exciting ways.

The reality remains that VUCA world is not going to disappear anytime soon. In fact, it will intensify in the years to come. The chaotic new normal in business is real. The global financial crisis of 2008 to 2009 has rendered many business models obsolete, as organizations from various industries throughout the world fell into turbulent environments. In addition, many businesses have been impacted extremely by technological developments such as social media, which has exploded, as well as an aging workforce in some economies, rapid growth of population in many countries, and global disasters that have disrupted lives, economies, and businesses.

This new normal VUCA environment is impacting organizations to the extent that their leaders’ current set of skills and competencies may no longer be relevant to driving the organization to success. There is a need to continually reassess their readiness and develop the necessary set of competencies for them to lead in this volatile, unpredictable landscape. Leadership agility and adaptability with cognitive readiness are crucial leadership skills that organizations require to succeed in this VUCA world.

It is evident that the impact of the technological change will continue unabated given the constant shifting of the various forces in the business environment. Leading in VUCA times has become increasingly about creating moments of clarity and focus while being proactive and keeping an eye on what is shifting and being prepared to respond to it. Reacting without having any vision leaves employees feeling confused and demotivated.

The Trends in Executive Development Survey has been conducted by Executive Development Associates (EDA) approximately every two years since the early 1980s, and it was in 2016, for the first time, that creating a compelling vision and engaging others around it became the number one trend (Hagemann and Bawany 2016). This finding is consistent in the 2019 Executive Development Trends survey (Hagemann and Bawany 2019).

In the book Leading with Vision: The Leader’s Blueprint for Creating a Compelling Vision and Engaging the Workforce, Bonnie Hagemann, the CEO of EDA, and her coauthors identified the crucial business challenge today—that leaders are facing a ruthless, competitive climate, and to navigate a successful route through the VUCA era requires a new, more thoughtful, and relevant approach. The rapid changes will most likely accelerate. With this comes the need to constantly adjust course and adapt to be agile and purposeful and to engage and develop the talents of everyone in the business (Hagemann, Vetter, and Maketa 2017).

The quantitative and qualitative research indicates that there is a better and much more effective way to do this going forward, one that will ensure higher returns for organizations in talent, innovation, and competitiveness. One way is to connect the hearts of the employees to the vision or mission of the organization and to ensure that they understand their role and feel being a part of bringing it to reality.

Developing the VUCA Prime Leadership Competencies

The VUCA model is helpful in identifying the internal and external conditions that affect organizations today. The VUCA prime model developed by Robert Johansen, distinguished fellow at the Institute for the Future, flips the VUCA model and focuses on the characteristics and skills business leaders must develop to counter the effects of a VUCA environment. Johansen proposes that the best VUCA leaders have a vision, understanding, clarity, and agility (Johansen 2011).

In the VUCA prime model, volatility can be countered with vision because vision is even more vital in turbulent times. Leaders with a clear vision of where they want their organizations to be can better weather volatile environmental changes such as economic downturns or new competition. They can make better business decisions that counter the turbulence while keeping the organization’s vision in mind.

Uncertainty can be countered with understanding and the ability to stop, look, and listen. To be effective in a VUCA environment, leaders must learn to look and listen beyond their functional areas to make sense of the volatility and to lead with vision. Complexity can be countered with clarity, which is the process of trying to make sense of the chaos. In a VUCA world, chaos comes swift and hard. Leaders who can quickly and clearly tune into all of the minutiae associated with the chaos can make better, more informed business decisions. Finally, ambiguity can be countered with agility. Vision, understanding, clarity, and agility are not mutually exclusive in the VUCA prime model. Rather, they are intertwined elements that help managers become stronger VUCA leaders.

NextGen Leadership Competencies

There are two things we can say with certainty about the future: It will be different, and it will surprise. Now, more than ever, leaders are compelled to navigate unfamiliar, challenging times, a quickening pace of change, increasing expectations, and a rising tide of rapidly evolving conditions. This new and different environment is challenging leaders to find new ways to lead their organizations and achieve sustained success. And, because of these circumstances, there is a thirst for a pool of future leaders to be developed with the relevant next-generation leadership competencies and skills. This will enable them to seize the opportunities as well as manage the daunting challenges that have surfaced as a result of this new normal business environment (Hagemann and Bawany 2016).

The rapidly evolving demands of the 21st century include everything from climate change to demography, shifting customer requirements and expectations, rise of technology, globalization, new markets, and new attitudes toward work. Leaders must now operate in a way that inspires and engages employees while simultaneously addressing changing customer requirements and delivering results. Finally, all of these need to be achieved with a sense of urgency, as the experienced leaders of the Baby Boomer generation are retiring.

These diverse and escalating demands on leaders are reflected in the “2016 Trends in Executive Development: A Benchmark Report” published by the EDA. The wide-ranging and in-depth assessment is based on survey results from 466 organizations worldwide, with contributions from presidents, senior vice-presidents, chief learning officers, and heads of executive and leadership development (Hagemann and Bawany 2016).

It is evident that conventional leadership development practices are no longer adequate. Organizations globally need to incorporate the next-generation leadership competencies in order to address the development needs of their new leaders. This expanded group of upcoming leaders need to have a broader skillset, one that equips them to think and act globally in a VUCA business environment. They must do so while embracing cross-cultural diversity and cultivating collaborative relationships within and outside their walls. These are the hallmarks of the mindset needed to develop effective NextGen global leaders.

The next-generation leadership competencies will include the suite of cognitive readiness skills that can be viewed as part of the advanced thinking skills that make leaders ready to confront whatever new and complex problems they might face. Cognitive readiness is the mental preparation that leaders develop so that they, and their teams, are prepared to face the ongoing dynamic, ill-defined, and unpredictable challenges in the highly disruptive and VUCA-driven business environment. In the 2016 Trends in Executive Development: A Benchmark Report, the ability to create a vision and engage others is reported as the competency most lacking in next-generation leaders. This is consistent with the findings from past years’ survey.

For details of the NextGen leadership competencies, please see Table 3.1 (Hagemann et al. 2016).

 

Table 3.1 Competencies for the next generation of leaders

Top Five NextGen Leadership Competencies

1. Ability to create a vision and engage others around it

2. Critical thinking

3. Ability to attract, develop, and retain the quality of talent needed to achieve the business objectives

4. Inspirational leadership: creating a vision, enrolling and empowering others

5. Leading through change

 

EDA has identified the following seven key cognitive readiness skills, collectively known as Paragon7 (see Figure 3.3), which will develop, enhance, or sustain a leader’s ability to navigate successfully in this new normal:

1. Mental cognition: Recognize and regulate your thoughts and emotions
2. Attentional control: Manage and focus your attention
3. Sensemaking: Connect the dots and see the bigger picture
4. Intuition: Check your gut, but don’t let it rule your mind
5. Problem-solving: Use analytical and creative methods to resolve a challenge
6. Adaptability: Be willing and able to change, with shifting conditions
7. Communication: Inspire others to action; create fluid communication pathways

Figure 3.3 Paragon7 cognitive readiness competencies

The detailed descriptors of each of these seven cognitive readiness competencies are shown in Table 3.2.

 

Table 3.2 Descriptors of Paragon7 cognitive readiness competencies

Metacognition	Attentional Control	Sensemaking
Metacognition is monitoring and managing your emotional and mental processes. Metacognition comes from the words “meta” meaning beyond and “cognition” meaning thinking. It describes the ability to control your mental and emotional processes and, in turn, manage behaviors and maximize performance. Metacognition involves self-awareness and the use of intentional strategies to self-regulate your cognition, emotions, and actions. Metacognitive individuals and organizations engage in reflective practice. They take time to plan before, during, and after situations.	Attentional control (“mindfulness”) is the skill of actively managing your attention as a finite resource. Attentional control, or mindfulness, is the conscious control of your own attention. People or organizations with high levels of attentional control pick up on weak signals. They can direct and sustain their attention deliberately, without being diverted by distractions, and they can stay focused, even if that sustained attention becomes unpleasant. You can help develop your attentional control “muscles” by practicing attentional shifting and focusing exercises.	Sensemaking is the ability to quickly connect the dots to gain understanding. Sensemaking is pattern-based reasoning; in other words, it’s the process of developing an understanding of an event or situation, particularly when it’s complex and you lack clear, complete, and orderly data. Good sensemakers “put the pieces together” quickly and overcome information gaps. They discern meaning from patterns and recognize how parts of a system fit into the bigger picture, how individual elements interact, and how short-term goals impact long-term strategies.

 

 

Intuition	Problem-Solving	Adaptability	Communication
Intuition comes from your “fast thinking” (elephant) cognitive system. Intuition is fast; our minds quickly generate intuitive judgments without active deliberation. We all use intuition—especially under VUCA conditions—but our intuition isn’t always reliable. It’s important to know when it can be trusted and how to best use it.	Problem-solving is an analytical approach to resolving difficult issues. Problem-solving relies upon three factors: subject-matter knowledge, motivation, and problem-solving “meta-skill,” which is a mental list of problem-solving techniques and decision strategies typically associated with critical thinking and decision analysis tools.	Adaptability is the ability and willingness to change with shifting conditions. Adaptability is the consistent willingness and ability to alter attitudes, thoughts, and behaviors to appropriately respond to actual or anticipated change in the environment. This includes flexibility, resilience, responsiveness, and agility.	Communication is about conveying deeper intent and understanding. Communication is the conveyance of information and sentiments. Clear, honest, and frequent communication facilitates team performance. Beyond that, you can use linguistic tools to help increase saliency, clarity, relevance, and persuasive value.

 

Overall, heightened cognitive readiness allows leaders to maintain a better sense of self-control in stressful situations.

ESI Competencies

The next crucial NextGen leadership competency is that of ESI. Emotional intelligence (EI) has become a major topic of interest in organizations since the publication of a bestseller by the same name in 1995 by Daniel Goleman (1995). The early definitions of social intelligence influenced the way EI was later conceptualized. Contemporary theorists like Peter Salovey and John Mayer (1990) originally viewed EI as part of social intelligence, which suggests that both concepts are related and may, in all likelihood, represent interrelated components of the same construct.

Because individuals in organizations can rarely be successful alone, they must influence, lead, and coordinate their efforts with others in order to achieve their goals—to translate vision into action. A leader’s success rests in large part upon the ability to influence and relate to the different groups in the organization: the superiors, peers, and direct reports.

In 1998, in Working with Emotional Intelligence, author Daniel Goleman set out a framework of EI that reflects how an individual’s potential for mastering the skills of self-awareness, self-management, social awareness, and relationship management translates into on-the-job success for a leader. This model is based on EI competencies that have been identified in extensive published research on hundreds of corporations and organizations as distinguishing outstanding performers (Goleman 1998).

Emotional competence is defined as “a learned capability based on EI that results in outstanding performance at work” (Goleman 1988). To be adept at an emotional competence like customer service or conflict management requires an underlying ability in EI fundamentals, specifically social awareness and relationship management. However, emotional competencies are learned abilities: Having social awareness or skill at managing relationship does not guarantee we have mastered the additional learning required to handle a customer adeptly or to resolve a conflict—just that a leader has the potential to become skilled at these competencies.

Emotional competencies are job skills that can, and indeed must, be learned. An underlying EI ability is necessary, though not sufficient, to manifest competence in any one of the four EI domains or clusters (Goleman 2000). The competencies are classified into four clusters of general EI abilities:

1. Self-awareness
2. Self-management
3. Social awareness
4. Relationship management

Nested within each of those four areas are specific, learned competencies that set the best leaders and performers apart from the average (see Figure 3.4).

Figure 3.4 The Goleman ESI framework

The framework illustrates, for example, that we cannot demonstrate the competencies of trustworthiness and conscientiousness without mastery of the fundamental ability of self-management, or the competencies of influence, communication, conflict management, without a handle on managing relationships.

Self-awareness concerns knowing one’s internal states, preferences, resources, and intuitions. The self-awareness cluster contains three competencies:

 

A) Emotional self-awareness: recognizing one’s emotions and their effects.

B) Accurate self-assessment: knowing one’s strengths and limits.

C) Self-confidence: a strong sense of one’s self-worth and capabilities.

 

Self-management refers to managing one’s internal states, impulses, and resources. The self-management cluster contains six competencies:

 

A) Emotional self-control: keeping disruptive emotions and impulses in check.

B) Transparency: maintaining integrity, acting congruently with one’s values.

C) Adaptability: flexibility in handling change.

D) Achievement: Striving to improve or meeting a standard of excellence.

E) Initiative: readiness to act on opportunities.

F) Optimism: persistence in pursuing goals despite obstacles and setbacks.

 

Social awareness refers to how people handle relationships and awareness of others’ feelings, needs, and concerns. The social awareness cluster contains three competencies:

 

A) Empathy: sensing others’ feelings and perspectives and taking an active interest in their concerns.

B) Organizational awareness: reading a group’s emotional currents and power relationships.

C) Service orientation: anticipating, recognizing, and meeting customers’ needs.

 

Relationship management concerns the skill or adeptness at inducing desirable responses in others. The relationship management cluster contains six competencies:

 

A) Developing others: sensing others’ development needs and bolstering their abilities.

B) Inspirational leadership: inspiring and guiding individuals and groups.

C) Change catalyst: initiating or managing change.

D) Influence: wielding effective tactics for persuasion.

E) Conflict management: negotiating and resolving disagreements.

F) Teamwork and collaboration: working with others toward shared goals and creating group synergy in pursuing collective goals.

 

Importance of Empathy as a Leadership Competency in Industry 4.0

In Industry 4.0, AI, robotics, and automation have gained a rapidly expanding foothold in the workplace, faster than many organizations ever expected. Leading companies are recognizing that these technologies are most effective when they complement humans and not replace them.

As these technologies permeate the workplace, cognitive readiness competencies such as critical thinking, creativity, problem-solving, and ESI gain in importance. One of the critical ESI skills that a leader needs to demonstrate in the workplace is empathy.

Empathy could be viewed as demonstrating the ability to sense others’ feelings and how they see things as well as taking an active interest in their concerns. A leader picks up cues to what’s being felt and thought by listening attentively to understand the other person’s point of view, the terms in which they think about what’s going on.

For example, in the health care industry, empathy and the jobs connected with it will be valued more and more in the future. It makes complete sense. Automation, robots, and AI will perform certain cognitive tasks brilliantly, to the extent that humans will not be able to compete. Where could humans have a chance? Although AI will perform diagnostic tasks or robots might be able to do surgeries, could they talk to a patient with empathy about the risks and consequences of an operation?

Moreover, as digital health simplifies administration and cuts down on monotonous tasks, the workload of doctors and nurses will be reduced, so they will be able to concentrate on what really matters—healing the patient and guiding them through the entire process with care. It is believed that, eventually, AI would be able to mimic even such soft skills but as we are social beings, we will always need the human touch.

Many leaders and managers vaguely understand the impact empathy has on leadership effectiveness. One of the reasons we have found is that very few of them have been trained or taught how to cultivate empathy in their lives and work as a daily practice (Bawany 2017). The empathetic leader puts themselves in their followers’ shoes and attempts to see things from their perspective. Empathy doesn’t mean agreeing with someone. Empathy is not sympathy. Empathy doesn’t mean telling them that they are right or even addressing their concern. Demonstrating empathy shows that you care enough to give someone else’s issue the same level of respect and attention they do.

Empathy can be simply defined as the ability to be aware of and understand how others feel. It is a key component of people-oriented and participative leadership. This would include being sensitive to the feelings, concerns, and needs of the coworkers, and the ability to see the world from their perspective.

Empathy can also be seen as demonstrating an active concern for people and their needs by forming close and supportive relationships with others. Leaders who lack empathy may be perceived by others as cold, uncaring, and having little interest in them as people. Leaders who score high on this competency work to develop close bonds with others. They spend time getting to know people and are able to give their colleagues the feeling that they are personally involved with them. They tend to emphasize the importance of being generous and kind and displaying a sincere interest in the well-being of others. If carried to extremes, however, this closeness may cloud a leader’s objectivity and result in decisions that do not properly consider the organization’s best interests. Hence, it would be crucial for the leader to bear in mind the saying, “familiarity breeds contempt.”

Organizations need to incorporate a different form of development activities for their next generation of leaders, which are likely to include executive coaching, mentoring, personal development, and stretch assignments. Other development activities include psychometric assessments, managerial coaching, performance feedback, and customized training programs developed by internal staff. All of these activities have strong developmental value as components of an overall executive leadership development strategy. In addition, the organization needs to ensure that these leaders are also equipped with cognitive readiness skills and ESI competencies needed for sustained success and effectiveness in a VUCA environment.

“LEAP” Framework for Leading through the Fog in a VUCA-Driven Industry 4.0

To lead and manage the managerial challenges successfully in the VUCA-driven Industry 4.0, leaders need to “LEAP” through the fog (Bawany 2016) and demonstrate the cognitive readiness competencies as explained in the earlier section and at the same time possess the traits depicted in Figure 3.5, which are defined as follows:

Figure 3.5 The “LEAP” framework of leading in Industry 4.0

Liberal: open to developing new behavior, skills, or opinions and willing to adapt or discard existing values if and when necessary to adapt to the new normal.

Exuberant: filled with lively energy with a sense of passion and optimism (while grounded to reality) in engaging the team and other stakeholders.

Agility: proficiently manage change with resilience and demonstrate learning and mental agility within a learning organization with NextGen leadership competencies, including cognitive readiness, critical thinking, and ESI.

Partnership: build a trust-based partnership with teams (by removing silos) as well as externally with other stakeholders, including customers and suppliers.

Microsoft Corporation: Case Study of Leadership in the Development of HPOs

In today’s hypercompetitive, disruptive VUCA-driven business environment, we need a new breed of CEOs and business leaders who are defined less by commanding and controlling or autocratic/coercive and pacesetting leadership styles and more by inspiring and empowering, or authoritative/visionary and coaching leadership styles (Bawany 2017).

A good example of a leader who demonstrates this approach effectively and successfully is Microsoft Corporation CEO Satya Nadella. Unlike his predecessor, the notoriously combative Steve Ballmer, Nadella has dramatically revived Microsoft’s reputation and its relevance by emphasizing collaboration and what he calls a “learn-it-all” culture versus the company’s historical know-it-all one. As Fast Company’s senior editor Harry McCracken (2017) explains in “Microsoft Rewrites the Code,” the results have been eye-popping: more than $250 billion in market value gains in less than four years—a feat that, quantitatively, puts Nadella in the league of Jeff Bezos of Amazon, Tim Cook of Apple, Larry Page of Google, and Mark Zuckerberg of Facebook.

Nadella demonstrates ontological humility: A few months into his tenure, he made a major faux pas at a conference for women engineers that spawned a wave of criticism. He owned the mistake and admitted to biases that he hadn’t realized. The episode ended up building his credibility in the long run.

Nadella’s leadership style is to emphasize what’s been done right. He starts each senior leadership meeting with a segment called “Researcher of the Amazing,” showcasing something inspiring at the company, and, by doing so, he created an organizational climate of trust partnership with his coleaders.

Nadella is a strong believer in talent management and has been personally involved in the recruitment of new talent into the company. He has emphasized the importance of an outsider’s perspective in steering the organization to greater heights. He has put even more focus on unleashing potential within the leadership team, including high-potential leaders. He has created a high-performance-driven culture with his empowering and coaching style of leadership, which relies on managerial coaching as an organizational development tool. He also believes that resistance to change is a behavior rather than a fixed personality trait and that it can be addressed with coaching.

Finally, Nadella demonstrates empathy as he recognizes that his coleaders’ and employees’ perspectives are real and important to them. It may not be real, or important, to him, but it is very real and important to them. He gives it the same level of respect and attention they do.

Conclusion

HPOs exhibit a set of characteristics that are available to almost every company, regardless of the industry and scale of business. However, to achieve sustainable success, companies may benefit from the experience of those that have achieved it. It could be helpful if they are able to examine and benchmark every aspect of the business, including strategy, structure, people, climate, and processes, and take steps to bring their organizations in line with the high-performance profile.

Leading an HPO in a highly disruptive and increasingly VUCA-driven business environment and workplace requires leaders to leverage on their cognitive readiness skills and relationship management skills. This will enable the leader to connect emotionally with the team members so as to understand them better and ensure they always feel confident in what they are doing. The leader does not just feel for their people, they feel with them.