Trendspotting at the United Nations Global Compact 2010 Leaders’ Summit, and the implications for business schools

30 06 2010

Sitting in the United Nations Global Compact 2010 Leaders’ Summit, I am reminded of something I heard someone say at a conference many years ago. They were speaking of the movement for racial equality in the 1950s and 60s: “Those leading change often overestimate what they can achieve in the short term and underestimate what they will achieve in the long term.”

I think this summit is a story of slow but inevitable change.

In 1999, in the wake of riots in Seattle and Genoa, then UN Secretary-General Kofi Annan made a speech to the World Economic Forum in Davos “I propose that you, the business leaders, and we, the United Nations, initiate a global compact of shared values and principles, which will give a human face to the global market.”

The United Nations Global Compact was formally launched in July 2000, with just 44 companies from around the world. The Global Compact now, ten years on, has nearly 6000 corporate signatories from over 130 countries, and here in New York last week, 1300 business leaders met to review progress and consider the next ten years.

The UN Global Compact worked with Accenture to conduct a CEO survey for this summit. Among many startling findings were the following: 93% of CEOs now believe sustainability will be critical to the future success of their companies; 80% believe a tipping point where sustainability is embedded in the core business strategies of the majority of companies globally will occur within the next 15 years; 54% believe this tipping point will be reached within the next ten years.

As we know, history is littered with examples of slow movements for change that suddenly become rapid, disruptive and overwhelming – change occurs which is so comprehensive that we can hardly even conceive that it was different before. The idea that 80% of business leaders see such a tipping point on sustainability being reached within the next 15 years is therefore a compelling one.

So while there seemed to be something of an underswell of frustration among some business leaders on the floor at the lack of ambition and urgency from some business leaders on the platform, the real story here is that while the last ten years have seen a lot of greenwash, they have also seen some real innovation and change as many organisations have devoted considerable energy to experimenting with new approaches to see whether business really can act on the principles of sustainable development at the same time as being financially sound.

The platform was awash with CEOs, chairs and board members from some of the worlds leading companies: Bank of America, AREVA, Petrobras, ENI, China Minmetals Corp, Tata Sons, Hindustan Construction, Siemans, China National Offshore Oil Company, Munich Re, Infosys, SK, Allens Arthur Robinson, Schneider Electric and more.

We heard about what’s at stake: the state of human development and poverty around the world, ecosystem degradation and climate change, corruption, systematic human rights abuses and violent conflict.

We also heard about what’s at stake for business. Paul Polman, CEO of Unilever cited a recent study by AT Kearney which found that climate change and water scarcity could lead to a loss in earnings for the food industry of 47% by 2018. A number like this makes both management and investors take note he said, and when this is added to the fact that consumers now want products to be doing good for society and the planet as well as for them, and that retailers like Walmart and Carrefour only want to engage with suppliers that have a long term vision for sustainability, you start to get a clear picture of the only viable strategic path ahead. This is why Unilever has made decoupling commercial growth from material consumption a strategic priority, coming alive through commitments to sustainable sourcing and sustainable living – think for example of the company’s commitment that all tea (and it buys 12% of all black tea in the world) and all palm oil it buys will be from certified sustainable sources by 2015.

And as we heard from more and more business leaders on similar themes, the ghost of BP and its loss of more than half its market capitalisation since the beginning of the oil spill in the Gulf of Mexico never seemed far away.

Mayor of New York Bloomberg told us “the future is in our hands, this is not difficult stuff, it just requires some courageous decisions.” Lord Michael Hastings of KPMG reminded us of the story of Ron Wayne, the third founder of Apple, who sold his 10% share of the company in 1976 for US$800. “Don’t get caught out by not seeing the tipping point that’s right in front of you.”

Dennis Nally, Global Chairman of PricewaterhouseCoopers summed up the transition from the first decade of the compact to the second: “It’s taken a decade, but now a critical mass of business leaders have got the message. The next decade is about executing the change, and this presents business leaders with a time-sensitive opportunity for long term competitive advantage.”

And the implications for business schools…

The theme of ‘executing the change’ kept coming up throughout the summit. A representative from GE said at one point “Its not about working out what we’ve got to do, its about making this live in all places at all times across the organisation.”

This presents a clear role for organisations like Ashridge whose core expertise is in partnering for organisational learning and change. It also places a real spotlight on all business schools and institutions involved in developing the next generation of business leaders, a theme that has come up at these kinds of gatherings more and more in the second half of the last decade.

And so its no surprise that one of the key initiatives to have come out of the Global Compact over the past ten years has been the UN Principles for Responsible Management Education, presented to Secretary General Ban Ki Moon at the Leaders’ Summit in 2007 having been developed by a taskforce of 60 business schools globally (including Ashridge). In the space of three years, the Principles now have 300 signatories.

A whole day of this summit has been devoted to a side event for deans and directors of business schools on management education. As an input to this forum, the UN PRME secretariat invited Ashridge and EABIS to lead an analysis of CEO perspectives on the role of management education, drawing on data from the UN Global Compact-Accenture CEO Study.

Key findings include the following: 88% of CEOs believe it is important that business schools develop the mindsets and skills for future leaders to address sustainability, overall citing this as the second most important change that needs to accelerate for the tipping point to be reached, broadly equal in importance to the actions of customers, investors and government regulation.

One in four CEOs say that lack of skills and knowledge among senior and middle management is one of the top three barriers to them as a CEO implementing an integrated and strategic company-wide approach to sustainability, and 86% say their organisation should invest in enhanced training of managers to integrate sustainability into strategy and operations.

This isn’t just about companies in a minority of regions or sectors. These findings are remarkably consistent across different regions globally, across different industry sectors, different sizes of organisation, and across publicly traded, privately owned and state owned organisations.

What does this mean for business schools? Ashridge Chief Executive Kai Peters was quoted: “The clear message from these findings is that the debate about whether the sustainability agenda is a real issue is over. The question now is how should business schools address sustainability strategically… Business schools don’t just need a few specialist faculty. They need all of their faculty to understand sustainable development and see the implications for their own particular areas of expertise, whether that be leadership, strategy, finance, or marketing. As business schools, we need a much stronger emphasis on faculty development across the board.”

Many others contributed similar thoughts. Philippe de Woot of IAG Louvain School of Management spoke of the need for cultural change in business schools, rather than a piecemeal response. “This won’t happen with old professors” he said, “It will happen with a new generation of faculty and new, young deans.”

Rakesh Khurana, Marvin Bower Professor of Leadership Development at Harvard Business School, continued in a similar vein: “Business schools are very poor at adapting to changes in the broader external context. It’s almost as though they’re designed to resist change. They might add a course here or there, but they struggle to change their core model.” He cited three paradigms that are still core assumptions that now need to be revisited: principle agent theory, maximisation of shareholder value, and the notion that markets reflect the value of an organisation to society.

Rakesh also argued the opportunity for change comes when new deans are appointed. He cited several examples of schools across the US where recently appointed new young deans with different educational backgrounds and mindsets are working with entrepreneurs within their schools to lead significant change around the integration of the principles of sustainable development.

This trend towards sustainable development is probably the most urgent of several trends out there that are of material significance to business schools – one could also think of the rapid pace of ongoing technological change, the shift in economic centres of power, how to do more with less as austerity budgets are introduced in the wake of the banking crisis, Generation Y, and what we’re learning about what makes for effective approaches to real learning. With mounting evidence suggesting a potential tipping point on sustainability closer on the horizon, there is a clear strategic choice for business leaders and business school faculty alike: lead the change and seize the opportunity, or risk being overtaken by competitors and becoming increasingly irrelevant. We as a global society need them to choose the former.

As news of nation after nation getting ejected from the football world cup filtered through into the summit, I found myself thinking of the quote about change again, and reflecting that not only does the US now have its first black president, and that the African continent is hosting its first ever football world cup in post-Apartheid South Africa, but that soccer finally really does seem to have become a big deal in the US. Maybe some things really do change.

Ashridge is leading a major research inquiry ‘Leading Organisations of Tomorrow’ which is exploring innovation in leadership development through the experience of eight pioneering organisations that, having recognised the need to adapt to a changing context, have integrated a sustainability orientation into their leadership development strategies. Ashridge is inviting senior business leaders as well as professionals from the fields of leadership development and organisational change to come together to discuss these themes in London on 14 October 2010. You can find more information here.

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Management education needs to change according to new CEO study

25 06 2010

In 2008, the United Nations invited Ashridge and others to lead a CEO survey to understand the perspectives of the business community on the role of management education in helping organisations to make sense of and adapt to a changing global context.

The results were compelling: 76% of CEOs thought it was important that senior executives in their organisations had the mindsets, skills and capabilities to lead in a changing global context marked by trends such as climate change, resource scarcity and doing business in markets characterised by poverty, corruption and human rights abuses.

Yet fewer than 8% thought either their own organisations or business schools were doing a very good job of developing these mindsets, skills and capabilities.

This week, 1300 business leaders have been gathering in New York for the United Nations Global Compact Leaders’ Summit, convened and addressed by Secretary-General Ban Ki-Moon. Notable speakers have included Chairs and CEOs from Unilever, AREVA, Petrobras, Bank of America, ENI, China Minmetals Corp, Tata Sons, PwC, Accenture and many others.

As an input to a forum on management education held as part of this summit, the UN again invited Ashridge and EABIS to take the pulse of the business community on management education, this time drawing on data collected as part of a CEO survey conducted by the UN and Accenture.

Headlines from the UN Global Compact-Accenture Study are:

  • 93% of CEOs believe sustainability will be critical to the future success of their companies.
  • 80% believe a tipping point where sustainability is embedded in the core business strategies of the majority of companies globally will occur within the next 15 years. 54% believe this tipping point will be reached within the next ten years. 

These findings mark a significant shift in thinking since a similar CEO survey conducted by the UN and McKinsey in 2007.

Key findings relating to management education are:

  • 88% believe it is important that business schools develop the mindsets and skills for future leaders to address sustainability. 
  • CEOs believe this is the second most important change that needs to occur for a tipping point to be reached, broadly equal in importance to the actions of customers, investors and government regulation.
  • Six out of the sixteen industry sectors surveyed said this is the single most important change that needs to occur. 
  • One in four CEOs say that lack of skills and knowledge among senior and middle management is one of the top three barriers to them as a CEO implementing an integrated and strategic company-wide approach to sustainability. 
  • 86% say their organisation should invest in enhanced training of managers to integrate sustainability into strategy and operations.  
  • CEOs say engaging with business schools to shape the next generation of leaders should be one of the top three strategic objectives of the UN Global Compact over the next five years. 
  • This isn’t just about companies in a minority of regions or sectors. These findings are consistent across different regions globally, across different industry sectors, different sizes of organisation, and across publicly traded, privately owned and state owned organisations.

These findings underline the timeliness of Ashridge’s research programme ‘Leading Organisations of Tomorrow’, which is exploring innovation in leadership development through the experience of eight pioneering organisations that, having recognised the need to adapt to a changing context, have integrated a sustainability orientation into their leadership development strategies. These organisations include IBM, Ernst & Young, HSBC, IMC Group, Bovis Lend Lease, BT Group, Fairmount Minerals and InterfaceFLOR.

The UN PRME analysis of CEO attitudes on management education led by Ashridge and EABIS is here:

The full UN Global Compact Accenture CEO study can be found here:  

The invitation to the Ashridge Leading Organisations of Tomorrow Symposium on October 14 2010 is here.

Copied  below is an excerpt from the commentary by Kai Peters, Ashridge’s CEO, published in the UN PRME-Ashridge-EABIS analysis:

“The clear message from these findings is that the debate about whether the sustainability agenda is a real issue is over. The question now is how should business schools address sustainability strategically. As the 2008 PRME-Ashridge-EABIS study found, CEOs think this is about more than an optional extra on ethics or new modules on old courses, it is about ensuring the entire management development process is built around helping today’s and tomorrow’s leaders develop the mindsets, understanding and skills to lead in a rapidly changing global context.
 
“For this to happen, business schools don’t just need a few specialist faculty. They need all of their faculty to understand sustainable development and see the implications for their own particular areas of expertise, whether that be leadership, strategy, finance, or marketing. As business schools, we need a much stronger emphasis on faculty development across the board.
 
“It would also be helpful if the various accreditation and rankings bodies could adapt their criteria to give greater recognition and reward to those institutions that are taking the lead in innovating.
 
“At Ashridge we have been experimenting with new approaches for a number of years, and learning from our experiences. We are also leading a major research programme on innovation in leadership development, looking at the experience of organisations that have pioneered new approaches to developing leaders in an age of sustainability, to understand the lessons they have learnt about how to do this well and the wider implications for business schools. Innovative experiential learning approaches are needed. We do not have all of the answers, but we firmly believe that this new agenda is central to business schools in the twenty-first century. We are determined to play our part.”





Supercorp and the new leadership

24 03 2010

Yesterday I had the privilege to join a conversation hosted by IBM with Harvard’s Rosabeth Moss Kanter, a number of senior IBM executives and small group of representatives from the UK’s leading business schools and think tanks, including London Business School, Cranfield, Manchester Business School and the Centre for Tomorrow’s Company. The conversation with Rosabeth was convened to discuss her new book ‘Supercorp: how vanguard companies create innovation, profits, growth and social good’.

In the book, Kanter argues that the companies that are keeping ahead of the curve in terms of market changes and customer needs are the businesses that are also progressive, socially responsible human communities. Kanter looks at ‘vanguard companies’ and explores exactly how they create innovation, profits, growth and social good. The “supercorps” include Banco Real, CEMEX, IBM, ICICI Bank, Omron, Procter & Gamble, Publicis Groupe, and Shirshan Bank.

As the FT’s Stefan Stern notes in his review

 ‘These are companies that aspire to be “big but human, efficient but innovative, global but concerned about local communities… The best have business prowess and clout with partners and governments, but try to use their power and influence to develop solutions to problems the public cares about… The leaders of a vanguard company espouse positive values and encourage their employees to embrace and act on them.” … Vanguard companies understand that the early 21st century is characterised by uncertainty, volatility and complexity, Kanter says. They have grasped the need for diversity in their organisations. They err on the side of transparency, and take a responsible approach.’

In our round table, Rosabeth talked about the massive cultural change that had been required in these organisations to achieve vanguard status, and the role of leadership. She argued leadership in the twenty-first century means putting your values ahead of what people might be telling you are your short term interests, it means people standing up and becoming vocal champions, but also going beyond talk to action as well. Leadership in the twenty-first century is also about collaboration and the skill to build constituencies and coalitions, to coalesce people around tackling major global challenges.

Another review of her book here  explores further some of the implications for leadership…

‘ “Relationships: Persuasion and diplomacy” is one of the characteristics of vanguard leadership. Kanter suggests that such a leader “Can communicate, listen, and inspire. Likes to connect, to collaborate, and to find solutions that are good for many people. Can enlist people in projects and motivate volunteers. Is partnership oriented, seeing opportunities to leverage resources by tapping networks. Work as an effective, enthusiastic mentor.”

However different they may be in most other respects, all of the CEOs of vanguard companies she discusses in this book… possess highly-developed skills for establishing and nourishing relationships within and (especially) beyond their organization. Their effectiveness is explained by ability to see things in context and understand complex interactions between and among many variables. They have a bias for action and are results-driven when seeking solutions for their own organization as well as for the clients it is privileged to serve. They have what Daniel Goleman correctly describes as “emotional intelligence”: exceptional self-awareness (of weaknesses as well as strengths), empathy, respect for individuality and principled dissent, and a sincere delight in others’ achievements. They are also values-driven, take very seriously their fiduciary responsibilities as a steward of resources, and recognize, indeed embrace a higher calling than merely making money…

In vanguard companies, Kanter points out that competences and capabilities such as these are by no means limited to CEOs or only to executives at the C-level. On the contrary, they are developed in those who occupy positions throughout the enterprise, at all levels and in all areas. Kanter concedes that the vanguard model “turns organizations upside down and inside out. They become less hierarchical and more driven by flexible networks. They become more open and transparent to the outside world while bringing society and its needs inside. As an ideal and an aspiration, the vanguard model attempts to reconcile contradictions: to be big but human, efficient but innovative, respecting individual differences while seeking common ground, global in thinking but concerned about local communities.” ‘

Cranfield’s David Grayson posed the question in our roundtable ‘What does Rosabeth’s thesis mean for what we do in business schools?’, and drew attention to Ashridge’s recent research with the United Nations and EABIS where, in a global survey of CEOs and senior executives, 76 percent agreed that senior leaders in their organisations needed to demonstrate the kind of leadership articulated by Rosabeth, but fewer than eight percent thought either their own organisations or business schools were doing a very good job of developing and fostering this kind of leadership at the moment.

There are actually some very strong echoes of Rosabeth’s themes in Ashridge’s research, and also Tomorrow’s Company’s work on Tomorrow’s Global Talent. Ashridge’s work argued that the global leader of tomorrow needs to understand the changing business context – 82% of those polled said senior executives need to understand the business risks and opportunities of social, political, cultural and  environmental trends. And they needed to know how their sector and other stakeholders are responding. Senior executives also need the skill to respond to this information – 70% said that leaders need to be able to integrate emerging social, political, cultural and environmental issues and trends into strategic decision-making.

Ashridge’s research identified a second cluster of attributes around the ability to lead in the face of complexity and ambiguity. The challenges and opportunities of the twenty-first century are complex – there is often little certainty and little agreement about both their precise nature and the response that is required. 88% of those polled say senior executives need the ability to be flexible and responsive to change; 91% – the ability to find creative, innovative and original ways of solving problems; and 77% – the ability to balance shorter and longer term considerations.  

The final cluster to emerge from our work was around connectedness – the ability to understand the actors in the wider political landscape and to engage and build effective relationships with new kinds of external partners, including regulators, competitors and NGOs among others. The mindset with which our current leaders are groomed does not encourage productive engagement with partners outside the organisation. Leaders receive plenty of training in negotiation skills, for example, but on the whole, lack the skills for engaging in effective dialogue and partnership. To survive and thrive, 73% of senior executives say the global leader of tomorrow needs to be able to identify key stakeholders that have an influence on the organisation and 74% say they need to understand how the organisation impacts on these stakeholders, both positively and negatively. 75% say senior executives need to have the ability to engage in effective dialogue and 80% say they need to have the ability to build partnerships with internal and external stakeholders.

Rosabeth was in London for the launch of the Young Foundation’s ‘City Year’ initiative, where young people spend a year working on the pressing challenges of our time. As Rosabeth noted, this kind of thing is now considered an important part of career development. This is new, it didn’t exist 20 years ago, but now even MBAs are queuing up to start their own social enterprises to address the world’s major challenges on a commercial and therefore sustainable basis. This, Rosabeth said, is the new leadership.

Ashridge is currently leading a second phase in our research programme on ‘the new leadership’. The project – entitled ‘Leading Organisations of Tomorrow’ – is seeking to explore in detail how ‘vanguard companies’ are innovating in their leadership development practices to turn this kind of vision into a reality in their organisitions, and foster a generation of leaders equipped to embrace the kind of leadership the twenty-first century demands. We will be sharing some preliminary findings at a major event in London on October 14th this year. Watch this space for more!