- Clarity: a clearly articulated mission and destination, expressed through purpose, vision, strategy and a target culture
- Alignment: the most critical resources of the organization are available, organized and strategically deployed to maximize performance
- Vitality: people throughout the organization are motivated and inspired with a sense of energy and purpose so they go the extra mile and do extraordinary things together
- Coherence: continually monitor the context, ensuring the other conditions remain aligned with one another and with the needs of the business in a highly dynamic and fast-paced environment
When these conditions are in place, organizations operate like a highly tuned system. Leaders set a strategy, communicate it effectively, align people and resources around the strategy, and engage and energize the organization so all the parts are moving as one. Individuals, teams and business units know what to do. They know how to work together. To keep the system running effectively, leaders and others maintain coherence by sensing changing patterns in the internal or external environment and adjusting. The system relies on multiple feedback loops about the outcomes the organization is achieving to continuously adapt based on the changing information.
When the business context is more stable and predictable, leaders can rely on more visible and traditional levers of leadership — such as strategy, team composition and organizational structure — to maintain the high performance of the system. But these more formal and explicit leadership tools can create rigidity. As the speed of change accelerates and challenges become less predictable, the organization needs to be more fluid and adaptable. “Agility is going to be one of the things that arises in terms of differentiation and a competitive position for a company,” a board director explains. “It’s also a quality that will differentiate in terms of leadership — the ability to anticipate and adapt, the ability to prioritize the right things in the moment and reprioritize.”
As they move to a more fluid, adaptable leadership model, leaders will increasingly leverage the less visible elements of leadership, such as culture, trusting relationships and organizational engagement, and personal traits such as empathy and humility. These “beneath-the-surface” attributes like intuition, instincts, feelings and values are naturally more flexible and can be powerful drivers of outcomes, but they also are harder to see and manage.
Leaders naturally embraced many of these under-the-surface traits and leadership approaches during the pandemic. Many individual leaders discovered that empathy and humility helped them connect better with people in a time of crisis and keep the organization engaged and aligned amid disruption — even as they had to rely on virtual communication tools. Top leadership teams found that they could move faster when they shared information more freely and proactively and developed more trusting relationships with their peers. Organizations adopted more agile processes on the fly to respond to the challenges of the pandemic, increasing collaboration across disciplines, empowering teams closest to customers, decentralizing decision-making and aligning a dispersed workforce through purpose and values. “There is no question that a lot of the things that we learned are going to stay because they showed us that we can be more productive, more agile and more flexible in terms of where and how people work,” one CEO tells us.
Individual leaders: Looking deeper to character and capacity
When the conditions are predictable and the near-term objectives of a role are clear, a leader’s career experience and the capabilities he or she has developed are good predictors of how they will perform in a given role. These more easily quantifiable, “above-the-surface” qualities — the specific jobs a person has held, their industry knowledge, functional expertise and skills developed, etc. — reveal how a leader gets results and are more directly related to the expected outcomes of the position.
When market conditions are more dynamic and unpredictable, leaders have to let go of the urge to control and direct and, instead, focus on creating the conditions for success. Leaders can’t direct thousands of people in an organization to feel trust, but they can build trust by exhibiting humility, empathy and authenticity in their interactions and communications. That’s why looking below the surface to an individual’s capacity and character — the more general patterns of behavior, character traits and style preferences — has become more important.
A leader’s capacity predicts how far and fast he or she can adapt and grow, reflecting attributes such as social intelligence, self-awareness, ability to operate in ambiguous situations and problem-solving ability. Character — representing deeply held preferences, motivations, resilience and style — speaks to why people do what they do and informs how a leader will work with a team, align with a culture and respond to development needs.
The pandemic highlighted the importance of these beneath-the-surface leadership traits — humility, empathy, resilience, adaptability, authenticity, transparency. Leaders with these traits have been better able to engage and support their teams and the broader organization to respond to the challenges of the crisis. They had the humility to admit that they didn’t have all the answers and empathy for those who had lost family or friends, were caring for sick family members, had spouses who lost jobs or were just overwhelmed by their work and home obligations. As one CEO explains, “The great leaders in our business who have displayed empathy, support and care have fared better and had more support for whatever changes have been required. And we know that some of the ‘soft’ values, interpersonal skills, empathy, authenticity are even more important than they were perceived to be prior to the pandemic.”
Senior leadership teams: Aligned, collaborative and trusting
Before the pandemic, many leaders would have described their teams more like a collection of talented individuals than a high-performing, highly effective team. Traditionally, leaders’ attention to their team focused on above-the-surface attributes such as composition — having strong individual players — and team structure — having clear lanes of responsibility.
Focusing on these team elements was enough when business and functional units could operate relatively independently, and conditions were stable. But now, top teams have to operate more fluidly and interdependently to continually respond to change. Individual leaders on the top team can no longer think in terms of “staying in their lane” — they have to do what it takes in the moment with other people on the team. The most adaptable and resilient teams are aligned on the big picture and collaborate closely so they can make progress on key objectives even as problems arise or conditions change. This requires strong relationships, trust and healthy team dynamics.
“I think the human side of business is not fully appreciated,” another CEO tells us. “Of course, you have to have the right strategy. You have to have the right team and the right culture — that human element. It starts with an authentic empathy for people, and that leads to trust. You have to be willing to be vulnerable to yourself in front of your team. If you can build that connection with your team, in an authentic, genuine manner, it pays dividends in terms of how your company performs.”
Many top teams learned the value of these beneath-the-surface qualities during the pandemic. With leaders having to act quickly without a playbook on a range of critical issues — related to employee well-being, cash management and costs, supply chain challenges and other strategic and operational issues — many teams changed how they operated. They met more often, shared information more freely and collaborated in ways they hadn’t in the past. Closer, more proactive communication helped drive alignment and build trust. It increased the chances that the implications of decisions were raised and thought through, and eliminated some of the process and bureaucracy that can impede decision-making. “Candor was very important,” one CEO explains. “There was no time for, ‘I’ll try and work this on the side and not let you know about it.’ There was a huge premium on getting the issues on the table quickly so we can work together and solve them, versus trying to do it on your own.”
While executive teams may not continue meeting at the pace they were during the height of the crisis, many leaders have told us that they won’t go back to monthly meetings with highly orchestrated presentations or a more hierarchical, hub-and-spoke style of leadership. As one CEO says, “The team needs to work without everything going through the CEO. When every team member goes his or her way, the team is still working together because we have aligned the mental models and aligned the aspirations.” This approach creates a sort of collective intelligence at the top, enabling leaders to better respond to the rapid pace of change and the incredible amount of information they have to process.
Organization: Leaning into purpose, values and culture to energize and inspire
Leaders have traditionally relied on strategy, organizational structure and hierarchies, and top-down communication to focus their workforce on the priorities for the business and help individuals understand their place in executing those priorities. But amid greater uncertainty and constant change, these tools are less flexible and limit the organization’s ability to respond. Leaders can build the adaptive power of their organizations by inspiring and engaging their people through purpose, values and culture, which serve as the backbone for creating the conditions for success without direct intervention and control.
Purpose communicates the “why” of the organization, helping individuals understand why they are doing what they do. Values provide a sense of how to get things done — what are the right and wrong ways of behaving — and culture signals how individuals work with one another. The right culture can capture the imagination and energy of people in the organization and ignite their potential — make them more or less collaborative, more creative and open-minded or more cautious and planful — without even realizing it. Together, purpose, values and culture tell people what to spend time on and why they’re spending time on it to guide their decision-making, but in a way that is more flexible and responsive to change.
By contrast, strict hierarchies and business and functional silos make organizations more rigid and inflexible. They can encourage people in the organization to see themselves in terms of their place in the hierarchy, contributing to an “above my pay grade” mentality that discourages individual agency and problem-solving. In fact, one company we work with intentionally does not share its organizational structure with internal teams to discourage rigid hierarchies and to signal to employees that they have the flexibility and responsibility — wherever they are in the organization — to serve customers effectively.
Leaders saw the power of purpose and values in keeping their organizations aligned and focused — having a true north amid the disruption — as they responded to the challenges of the pandemic. “Our associates were on a mission. They felt like they were making a difference by helping our customers stay healthy. Our purpose brought out the best in people during COVID,” the CEO of a major US retailer tells us. Many leaders reinforced their shared mission and the sense that “we’re all in this together” by holding regular virtual town hall sessions where they listened to employees’ concerns and took on the tough questions about the company’s response.
People also found that their organizations could move faster and be more adaptable than they previously thought possible. Teams and organizations embraced new ways of working, including more frequent and fluid communication that helped break down long-standing silos and bureaucratic processes. Agile, multifunctional work groups, product development “sprints” and new platforms to bring together teams with the right skill sets emerged as key tools enabling companies to scale their COVID response.
A system of leadership
Finally, it is important to recognize that, as a system, decisions about individuals, teams and the organizational environments in which they operate are interconnected and dynamic. In high-performing organizations, this system of leadership levers is linked by a cohesive purpose and the individual elements reinforce and support one another in achieving desired outcomes. They remain in sync even in an evolving context.
Without the ability to directly control the activities of the organization through traditional hierarchies, leaders will create the conditions for success by bringing heightened focus on the less visible elements of leadership. They will select, develop and enable leaders based on a deeper assessment of individuals’ capacity and character. They will ensure their teams are more than a collection of talented individuals who stay in their lanes, and instead focus on building alignment and developing strong, trusting relationships and healthy team dynamics. And they will bring more precision to how they measure and manage culture and engagement to energize the organization.
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As leaders make important decisions about the right business strategy and structure for the future, they also should consider whether their leadership model supports business performance. The crisis has demonstrated unequivocally that leadership matters. Culture, engagement, individual character and the ability of top teams to work together effectively have distinguished the companies that are responding best to the crisis. These levers of leadership are less visible than those that leaders traditionally have relied on; they also tend to be harder to activate and manage. We believe these less visible levers will be increasingly critical for leaders to manage if their organizations are going to thrive going forward.