What will it take to rebuild trust in capitalism and create a sense that it can provide for the needs of a broad and diverse set of stakeholders?
Firstly, we must recognise that the world has changed in terms of who senior leaders need to relate to. In the 'old world' it was all about shareholders - keep them happy and all would be well. Now the capacity to understand and respond to a much broader range of people is critical. In the words of Kipling, it is about being able to ' talk with crowds and keep your virtue, or walk with kings - nor lose the common touch'. As leaders we often live in a bubble were we work and play with a group of very similar people, to the detriment of decision-making and reputation. As with human reproduction, if the genes are too similar the risk of sick children increases; and this, in the public's perception, is a problem with Davos - even though reality, as with many things in life, is more complex. This capacity to look outwards also relates to thinking about the future. 2016 has brought to light our collective difficulty in this regard: our ability to predict events and the consequences of those events is becoming increasingly challenged and has no doubt contributed to the lowering of trust seen in the 2017 Edelman Trust Barometer. This is clearly a problem that needs to be addressed.
Secondly, we have to think differently about how to structure and operate organisations. Public companies (and their associated models of management), hierarchies, risk management and HR policies appear in general to be failing to create organisations that can innovate, utilise employees' potential, and develop the right products and services. This is causing an increasing number of people to question their utility. In his 2014 book Reinventing Organisations Frederic Laloux describes a number of organisations that are experimenting successfully with new models of management, trusting people to manage themselves and recognising that economies of scale often lead to diseconomies of motivation.
Finally, we need to recognise that the ego is a leader's biggest servant, and can derail (both the leader and the organisation) and lead to sub-optimal performance at the same time. Jim Collins, in his work on Level 5 leadership, recognised that those who were not focusing on status, money and position were leading organisations that were creating more long-term shareholder value. Indeed, he described the executive capable of leading a company to greatness as one who combines 'extreme personal humility' with 'intense professional will'. More and more leadership development practitioners are creating interventions that focus on this challenge, many with roots in spiritual and/psychotherapeutic worlds.
In summary, to lead through the challenges that we face today, and that are on the horizon, we need leaders who can understand the world, organisations and themselves in a ways not historically associated with what it takes to take on a senior leadership role. Purpose (organisational and individual) is often seen as a unifying theme that operates across these boundaries. But this is not purpose as seen through a PR/marketing lens: it is grounded in concrete actions coming from the core of the business. In the short term these actions are often costly, require a leap into the unknown, but can frequently lead to profitable growth. This sends a strong signal that a company takes its role in and service to the world seriously.
For those of us in business schools and similar organisations, focusing on one of these issues is not enough. We need to work across all three dimensions in an integrated way if we are to be of use to our students, participants and client organisations.
This article is based on a speech I gave at an EY event in Davos 2017 that focused on Purpose. With many thanks to Valerie Keller from EY for her inspirational leadership in making this happen and the amazing team that works with her. I am working with EY in my capacity as Associate Dean for Executive Education at Said Business School, University of Oxford, where we are currently working with the their Beacon Institute to examine this strong relationship between human-centric purpose and corporate performance.