THE LEADER OF THE FUTURE 2006
Sally Helgesen


By 1996, when the first edition of The Leader of the Future was published, the stable and highly efficient hierarchies that had served the industrial era were rapidly becoming outdated. Top-down technologies of control were being supplanted by web-like technologies of opportunity, which had the effect of distributing knowledge and power more broadly in organizations and in society as a whole.

As a result, the dominant model of leadership was being challenged. The command-and-control, my-way-or-the-highway heroic leader who had stood unquestioned at the top of the organizational pyramid and relied on positional power and charisma to keep his troops in line was increasingly perceived as a figure of weakness rather than a figure of strength, a testament to the old order and a hindrance to the new. The primary task that faced leaders in 1996 was thus the need to understand the nature of the new technological and economic order, and help their organizations adapt to it.

Meeting this challenge required a certain humility from leaders. It also required that they recognize the true nature and source of one of the most ubiquitous buzzword of those years, empowerment. For although in many organizations “empowerment” remained an empty slogan mouthed by executives who did not believe it actually existed, empowerment was not a management fad but a real phenomenon. Whether organizational leaders liked it or not, people in the ranks were in fact being empowered by a new technological architecture, and by the increasing value of the knowledge they carried around in their heads. Only leaders who really understood the nature of this shift, and had the grace to work within its parameters, were positioned to meet the challenges that lay ahead.

Yet as the industrial economy morphed into the knowledge economy, and as networks eroded and blasted apart formerly closed and orderly structures, many leaders continued to rely upon positional power as the sole basis for their authority, and to insist upon the primacy of their own perceptions. In doing so, they not only failed to exhibit the humility required by the new era, but also failed to comprehend how and why the world around them had changed. Such leaders were increasingly viewed as inappropriate and even dangerous to those in their organizations whom the new technologies had vested with increasing value, and who therefore chafed at the exercise of mere positional power.

The weakness of purely positional definitions of leadership was demonstrated most dramatically in the series of scandals that began unfolding in rapid succession over the ten years since 1996. These scandals have given this period its most lasting epithet: the Enron Era. In every arena–– corporate, legal, accounting, financial, political, governmental, military, medical, regulatory, charitable, and religious–– prominent and often previously admired leaders were undermined and challenged by those they formerly viewed as subordinates whose job was simply to listen, or by stakeholders whose role had always been relatively detached. While ethical problems were clearly a major factor in this unfolding saga, these scandals were also and most profoundly the consequence of the shift to a new economic and technological order. Leaders whose attitudes, presumptions, and self-perceptions were outdated by this shift were punished more rapidly and severely than anyone could have foreseen in 1996.

Demographics also played a role in the reversal of fortunes that many had imagined to be secure. It has often been noted that the most visible and effective whistleblowers in the scandals of the last ten years were disproportionately women: at Enron itself, at World Com, within the FBI, and within that most ancient and cautionary of hierarchies, the Catholic Church. This suggests not that women have superior ethics, as some commentators have maintained, but rather that women have been more acutely attuned to the abuse of purely positional power, and more ready to take action when they perceive it.

This readiness is the understandable consequence of women having been latecomers to the values and beliefs of the old hierarchical system, and of not having thoroughly assimilated its presumptions. As outsiders to traditional organizations, and as harbingers and beneficiaries of the new order, women often had fresh eyes to discern what was going wrong, while remaining remote enough from centers of power to speak truth as they saw it. Thus demographics as well as technology and economics played a part in transforming the way in which leadership has been understood over the last ten years.

In an essay published in the 1996 version of The Leader of the Future, I made precisely this point. However, I had no way of knowing at the time how quickly and ruthlessly those leaders who failed to adjust to the changing environment would be punished. Most were pushed from their positions by the actions of perceived underlings who understood their leaders’ portfolios better than the leaders did themselves, and whose sense of awe for their overlords was diminished by their own technological empowerment. The consequences of their actions now define our organizational environment, placing limits upon it while also opening up new opportunities.

And so in 2006, with the caution of scandals that continue to unfold, leaders face an even more complex set of challenges than they confronted ten years ago. Yet these challenges are nevertheless rooted in the same transformative factors that gave shape to the last decade: the diffusion of knowledge, the widespread access to powerful and cheap networked technologies, and the demographic rise of what are still sometimes referred to as “non-traditional” workers. Thus the challenges that confront leaders in the years ahead will comprise an even more powerful iteration and intensification of the present environment, though the consequences for those who fail to perceive its nature may be even more punishing.

I see this intensification occurring in several distinct arenas, each of which present challenges for leaders in the years ahead. These primary challenges can be defined as follows: the need to foster inclusion, the need to build sustainability, and the need to redefine diversity to focus on values.

Let’s look at each in turn.



Fostering Inclusion

Organizations used to be defined by clear boundaries. It was easy to say who was a part of one and who was not, who fell inside the circle and who remained outside. At the same time, true power in organizations resided within a tight core insiders who made the decisions–– the heads. Those who executed these decisions–– the hands–– had little power, and were often viewed as interchangeable parts, following the factory model.

This situation has changed. On one hand, the definition of “stakeholder” has become far more expansive, now including customers, clients, suppliers, distributors, investors and their advisors, the local community, the global community, and those who absorb the environmental and economic impact of an organization’s decisions. On the other hand, the diffusion of knowledge has expanded the decision-making pool within the organization, requiring that more decisions be made in the units so that specialized and embedded knowledge can be put to use. Thus managing by inclusion–– expanding the definition of who matters and bringing more voices into the decision-making process–- has become a precondition for success.

Virtually all of the organizations that found themselves beset by scandal in the last ten years failed to understand this. They remained places in which a tight core of insiders continued to monopolize every major decision, and did so in isolation from any voices that might dissent. The consequences of this kind of obsolete insider perspective are evident everywhere, and the spectacle has not been edifying. From cronyism and incompetence in government agencies, to the seeming surprise of American auto manufacturers caught unaware yet again by a mismatch between available product and the reality of energy prices, the common thread is the obtuseness and inadequacy of leaders who restrict decision making to a narrow and insufficient base and insulate themselves from anyone who might ask a challenging question.

The pharmaceutical industry provides some vivid examples. In many companies, the operative idea for the last decade has been seeding regulatory agencies with insiders who then have the power to “benefit” the industry as a whole by making it easier to get products to market. This insider approach may have proved successful in the short term, but has had disastrous consequences over time. Diminishing regulatory oversight led to drugs being distributed before they were adequately tested, with catastrophic consequences for the bottom line of several prestigious and formerly highly profitable organizations (not to mention those who may have bought these drugs). In each case, leaders failed to understand the extent to which a transparent environment fostered by empowered consumers with far-reaching access to information could exact revenge upon those whose deepest impulse is to exclude any voices that might prove skeptical–– or even merely urge caution.



Building sustainability

The above example of points to another challenge that faces leaders in the years ahead: building a model of enterprise that can be sustained over the long haul. In American organizations in particular, the structural imperative to focus on the short term as defined by the quarterly statement has led some for-profit organizations to ignore the long, or even medium, term consequences of their actions. In addition, the increasing pressure on non-profits and government agencies to operate “more like business” often causes them to become vulnerable to a similar approach.

As a result, only organizations that almost entirely dominate their market (the Microsofts, the Intels) have been able to afford the long term investment that is required to maintain consistently positive results over time. However, the imperative to dominate the market leads to other problems, since achieving such a position often exacerbates a leader’s belief in his superior understanding of the environment he confronts.

Practicing inclusion–– understanding that stakeholders of every variety must be factored into every decision–– is necessary for building sustainability over the long term. Again to use the example of US auto makers, we can see the long-term consequences of refusing to do so. With the recent and courageous exception of Ford, the inner circle of leaders in these companies have traditionally viewed environmental restrictions as something to be fiercely and unquestioningly fought. This focus has blinded them to the broader picture, in which the adverse effects of over-dependence on petroleum define the common future for manufacturers as well as consumers. Instead of battling restrictions or lobbying for trade sanctions that punish competitors who have acknowledged this reality, leaders in the industry would have been wiser to put their efforts into reforming an economic system that punishes long-term thinking.


Redefining diversity to focus on values

In 1996, diversity was still an issue to which many businesses paid only lip service. In 2006, it is recognized by virtually all forward-thinking organizations as an inarguable business imperative. For example, Jeffrey Immelt, the CEO of General Electric (and a leader who perhaps not coincidentally has articulated an awareness of the need to build sustainable growth in a company formerly famous for its fierce focus on short-term financials), summed up the situation at a recent forum of The Business Council. Declaring that diversity is one of the two major issues that will face GE in the future, Immelt noted that his company has a pool of 50 million highly educated potential traditional workers from which to draw from worldwide–– and 150 million highly educated non-traditional workers.

Given the extent to which organizations now depend upon having a broad base of talent and creativity, we can see why diversity has moved to the forefront of concern. But how do we define diversity? For the last decade, we have defined it demographically, as a phenomenon shaped primarily by the fact that women, Asians, Hispanics, and those of African ancestry now make up the majority of the available workforce. Diversity has thus been simply an acknowledgement of gender and ethnic differences, with some consideration of age and sexual orientation thrown into the mix.

But diversity in the contentious, technologically empowered, niche-focused social environment that is emerging the in the 21st Century requires a more expansive definition, one that admits the extreme variety in opinion and outlook that now characterizes our highly diverse population. Even such workplace fundamentals as what constitutes an acceptable work ethic or how individuals define and pursue satisfaction on the job are increasingly open to interpretation and debate. The rich and challenging diversity of opinion manifest in the workplace, of course, simply reflects the rich and challenging diversity of opinion we find in the larger society, where people are ever-more fiercely divided along political, religious, ideological, sectarian, economic, and social lines. In such a climate, and given the extent to which the information that shapes opinion is both more fragmented and more likely to mirror and reinforce sharply held viewpoints, consensus on any issue can seem almost impossible to achieve.

In the Organization Man of the late industrial years, leaders could forge consensus–– could indeed embody it–– by asserting the power of their position, and could do so with little risk of being challenged. In today’s more skeptical, individualistic, and empowered landscape, this strategy is doomed to failure. Leaders in the years ahead will be able to manage the contentiousness around them only by uniting diverse factions around a strong and overarching vision. Thus Peter Drucker’s original insight about the centrality of vision in what he chose to call Post-Capitalist Society is being vindicated by today’s diverse circumstances. When people are free to disagree on basics, and eager to defend their right to do so, vision rather than the charism of power must be the glue that holds contending elements together. Only those leaders who can bring wildly (and proudly) diverse segments together through the clear and inspiring articulation of a larger vision will be able to leverage the power of diversity, rather than sinking under its fractious weight.



Sally Helgesen is an author, keynote speaker, and leadership development consultant. Her books include The Female Advantage: Women’s Ways of Leadership, the classic in its field, and The Web of Inclusion: A New Architecture for Building Great Organizations, chosen by The Wall Street Journal as one of the best books on leadership of all time. She is also a contributor to Strategy + Business magazine.