JANUARY 20, 2020 RESEARCH REPORT
- The social, economic and environmental challenges of the 2020s require new approaches to leadership and responsibility.
- As organizations put sustainability and equitability at the heart of their organizations, they will need a broader range of leadership skills and attributes.
- An ability to master Mission & Purpose, Technology & Innovation and Stakeholder Inclusion must become second nature.
- We reveal the Five Elements of Responsible Leadership that high performing organizations display.
The decade to deliver
As we enter a new decade, businesses and organizations are facing a range of challenges that are forcing them to redefine responsible leadership:
- Climate change: 65% of CEOs agree that they need to decouple economic growth from the use of natural resources.
- Global economic fragility: 87% of CEOs believe that global and economic systems need to refocus on equitable growth.
- The Fourth Industrial Revolution: New technologies have to be managed for both their potential promise and their peril.
- The risk of leaving people behind in the workplace: Investment in emerging technologies doubled 2017-2019, but only 18% of organizations planned to significantly increase spending to reskill their people in the next three years.
These issues are encouraging a wider range of stakeholders to raise their voice and to influence decision makers. Leaders are beginning to acknowledge the need for change.
72% of CEOs say citizen trust will be critical to their competitiveness in the next five years.
61% of emerging leaders (the World Economic Forum’s Young Global Leaders and Global Shapers) say that business models should only be pursued if they generate profitable growth and improve societal outcomes at the same time.”Organizations have the opportunity and the obligation to drive growth in tandem with positive social and environmental outcomes. This starts with redefining what it means to lead responsibly. A new generation is leading the way, focused on driving value while honoring values.”
— Monika Wood, MBA, Founder/Principal – MW Consulting, Inc.
Combining responsibility with innovation results in better performance
We examined 2,540 publicly listed companies between 2015 and 2018, indexing them according to their sustainability & trust levels, their innovation and their financial performance. Companies that combine high levels of innovation, on one hand, and sustainability & trust, on the other, outperform their industry peers, with 3.1% higher operating profits and greater returns to shareholders. Companies that excel at innovating alone, without achieving sufficient levels of sustainability & trust, see a negligible impact on operating performance (see below).
A new model of responsible leadership is required
Today’s leaders need to deliver value on three fronts: organizational performance, measured most often by short-term earnings; continuous innovation, the seedbed for longer-term growth, often propelled by emerging technology; and sustainability & trust, earned by attending to the interests of stakeholders.
What leadership attributes are required to achieve all three objectives? We asked approximately 2,000 business leaders and 3,000 stakeholders. We also asked more than 1,800 emerging leaders in the World Economic Forum’s Young Global Leaders and Global Shapers communities.
The five elements model of responsible leadership
- Stakeholder Inclusion: Safeguarding trust and positive impact for all by standing in the shoes of stakeholders when making decisions, and fostering an inclusive environment where diverse individuals have a voice and feel they belong.
- Emotion & Intuition: Unlocking commitment and creativity by being truly human, showing compassion, humility and openness.
- Mission & Purpose: Advancing common goals by inspiring a shared vision of sustainable prosperity for the organization and its stakeholders.
- Technology & Innovation: Creating new organizational and societal value by innovating responsibly with emerging technology.
- Intellect & Insight: Finding ever-improving paths to success by embracing continuous learning and knowledge exchange.
Company executives and stakeholders value different leadership qualities
Company executives recognize that leaders of responsible businesses need to exhibit all Five Elements. They place strong emphasis on Technology & Innovation (Te). But companies’ stakeholders see things differently. Consumers, employees and others have a far greater interest in leaders with highly developed Mission & Purpose (Mi) and Emotion & Intuition (Em). This suggests that organizations may find it hard to meet the expectations of wider society unless they modify their leadership qualities and seek a stronger and more balanced Five Elements profile.”This is the decade to deliver. A new model of responsible leadership can help address the world’s most pressing problems in ways that unleash new waves of growth that are more sustainable and equitable.”
— PETER LACY, Senior Managing Director – Accenture Strategy, Europe, UK & Ireland and Accenture World Economic Forum Lead
Making responsible leadership a reality
Responsible leadership becomes real when it learns from and ultimately reflects those it serves. Getting started means addressing head-on some potentially uncomfortable questions. We suggest three:
Who are your stakeholders and how well do you really know them?
Do they include non-traditional and diverse interests? How important is each group of stakeholders to your organization? Do you understand the negative and positive consequences of your organization’s actions?
Is your leadership team on course to have a balanced Five Elements profile?
In discussions, does the Five Elements profile resonate with your leadership team? Do you draw upon these attributes, skills and mindsets when making strategic decisions? Are the Five Elements present in how you grow and build your future leadership teams?
What do you need to accelerate and scale responsible leadership qualities throughout your organization?
What barriers exist? What opportunities and burning platforms can accelerate progress? Are there particular tools, support, or types of collaboration that can spur progress at an individual, organizational and ecosystem level?