Summary: In times of digital transformation it becomes more important that leaders incorporate ethics and purpose into their leadership styles and demonstrate clear company goals to get their employees behind them. Doing so they have to overcome the challenge of combining purpose with profits and maybe even create a new type of value driven business model with a vision of more long-term and future-oriented success.
Today’s executives have to become active influencers with a sense of corporate responsibility in their businesses and start to lead their employees instead of simply managing them. As businesses are more and more exposed to economic and political influence, leaders have to find ways to maneuver through unfamiliar territory of changing global economy and international politics. Corporate executives need to switch their business mentality to get on top of the new interdependencies businesses, economies and societies face. To do so they must accept the unpredictable and nonlinear nature of this new system and focus on the broader business and social environment. They must set new priorities and actively shape systems instead of merely operating by given standards.[1]
A number of principles can be applied to oversee the changes that have to be made to this new form of leadership. Executives should observe and understand the broader system in which they operate and should be able to intervene. They must also conduct collaboration in the system and foresee and manage system-wide risks by detecting potential threats. Lastly and most importantly executives must lead with a new more holistic and purpose driven mindset to take their company to another level and set it apart from competition.[2] But it doesn’t work without the entire company standing behind the new business goals. Genuine employee support in achieving a company’s purpose is essential to its success.
In order to build a business with highly motivated employees, you need to create a sense of purpose around your company. Leaders today have to demonstrate that corporate purpose matters and implement it without sacrificing profits. Ultimately purpose is always more important than making money. So it is even more essential to a company’s success that leaders bring their teams together by creating a collective goal to follow apart from money. It is difficult though to fulfill a purpose without money. A purpose has to be implemented in a way that profit follows it naturally and may even result in profit gains. But how can a collective goal be established and how can a business ensure that the long-term purpose isn’t overrun by short-term profit goals? How can leaders ensure that employees don’t lose sight of the company’s purpose and how can this balance be upheld long-term?[3]
Distinguish hedonic goals (concern for relaxation and enjoyment), gain goals (concern for money and position), and pro-social goals. Pro-social goals create a purpose that gives employees clear direction and inspires them to work extra hard — this may result in higher profitability. But the problem is to promote pro-social goals over money gain and enjoyment. The challenge is to make these goals more meaningful to employees on all company levels. Pro-social goals with purpose are the easiest goals to convey to employees. But unfortunately maintaining pro-social goals is fragile. To build a more stable system, leaders have to prioritise pro-social goals over financial goals and target profit more indirectly as a result of purpose. They should then reinforce and support pro-social goals on a consequent basis. This can be achieved through rewarding employees and acknowledging their support of the company goal. Additionally leaders should communicate with employees directly and consistently. Connect employees to the company’s purpose, i.e. to customers, patients, and whoever is on the receiving end of the company’s work. This keeps the purpose visible to employees. Lastly, finding ways to measure the progress generated by pro-social goals, helps to monitor efficiency.[4] Familiarising employees with an overall organisational purpose helps a company to strive towards long-term viability.
Leaders have to ensure that short-term benefits don’t outrival the company’s long-term interests. As many companies have to handle several goals at once which sometimes don’t align in one singular strategy, leaders have to avoid narrow and linear thinking, and instead be bold, agile, innovative and disruptive. The idea of pro-social first and profit second has to be internalised into a company’s overall mindset. Leaders should implement pro-social goals at all levels and push through all the way towards corporate purpose profitability.[5]
To get their team on board, ethical leaders engage best with their employees on a more person level — through conversation instead of giving commands. Intimacy, interactivity, inclusion, and intentionality should be the cornerstones of conversation in the corporate world. To establish a more intimate business conversation, leaders must minimize the distance to their employees and create mental and emotional closeness by talking personally and transparently. Executives must listen to those directly affected by a problem and open up to criticism even when it is personal. Only a straightforward and authentic leader will gain an employee’s trust. He or she should also create an interactive communication environment by setting the framework for two-way conversations and include employees directly in achieving company goals. The more active and intentional an executive’s leadership style, the more likely employees will show their support.[6]
Communicating and living clearly and precisely defined visions/mission statements and derived strategies is absolutely essential to achieve a two-way alignment with employees. Defined corporate conduct needs to be trained and internalised and will support the development of a common ethical culture.
The environment in which business leaders operate has changed, especially during times of digitalisation. Leadership styles of command and control are becoming outdated. The new approach is to lead and not just manage a team. Leaders should not only build a team with the right set of skills but also with the right mindset to integrate well into the organisation culture. Motivation and mentoring of employees and establishing relationships on a foundation of mutual trust and mutual interest are key to becoming a value driven digital leader. Avoid falling short on educating new leaders and make bold decisions, as taking risks builds the foundation of leadership.[7]
In the light of an ever changing business environment in times of digitalization, it is important that executives lead in a bold and agile style, fully engaging in a more purpose than profit driven long-term business model. They should uphold transparency and a personal note in their leader-employee relationship and create an open and trusting environment in which employees can thrive and consciously dedicate their work to the company’s purpose.
About the author: After his studies in economics Dieter Timmermann worked in executive management positions as CIO and CFO for more than 30 years. He led major transformation initiatives for Kraft General Foods, Braun AG, Gillette, Bombardier Transportation, and Zurich Financial Services. Alongside those change initiatives, he conducted process standardisation and implemented off-the-shelf software solutions. Just recently Dieter contributed to digital-cookbook.com as a guest author and advisor.
Literature:
[1] Reeves, M., Levin, S., Harnoss, J. D., Ueda, D. (2017): The five steps all leaders must take in the age of uncertainty
[2] ibid.
[3] Birkinshaw, J., Foss, N. J., Lindenberg, S. (2014): Combining Purpose with Profits
[4] ibid.
[5] ibid.
[6] Groysberg, B., Slint, M. (2012): Leadership Is a Conversation
[7] Wharton (2013): Talking It Out: The New Conversation-centered Leadership
