Is there an impending Leadership crisis in emerging markets?
The years 1995-2010 have been kind to the BRICS nations. All of them experienced hockey-stick growth as countries, which was underpinned by local entrepreneurs who leveraged globalization, cost arbitrage, local resources and domestic consumption in order to demonstrate growth.
Organizations grew at 20+% CAGR for a decade or more. Small players became large global or pan-national in size, scale and complexity.
As they grew in size and complexity, over the last 15 years, these organizations fueled the management consulting industry. Their needs to develop systems and processes to manage scale and complexity and drive talent and culture befitting a large entity drove this trend. Across the BRICS nations the big 4 management consulting firms made a majority of their revenues from government enterprises and domestic entrepreneurial businesses.
However, as the wheel of time turns, we are now approaching yet another inflection point in the history of these organizations. This is related to the looming middle-management and senior leadership challenge that these nations and the organizations are going to face. It is true of political parties, of government enterprises and domestic businesses.
The fact is, most professionals who began their career after 1995 have not seen a downturn. They have grown up in hockey-stick economies, riding the waves of fortune. The capabilities they have developed the most are the ability to rapidly respond to demand. In countries like India and China where populations are high, the competitive scenarios for brands was not as extreme and even mediocre brands flourished. Each professional ascribed success to him/herself and did not realize that her growth and development was incomplete and largely skewed towards solving the problem of supply.
In the last 3-4 years, the economic meltdown has finally caught up with the BRICS nations and established it’s grip. Growth has slowed down significantly. Going from 9% to 6% GDP may not appear large but the impact on job-creation, sustainability and the competitive landscape is phenomenal.
The linear predictability of the past is history. Each of these economies is seeing heightened competition from both domestic businesses desperate to maintain the growth to fuel the debt and financial commitments they have made and global firms that have no choice but to focus outside their own 0% growth economies.
Fundamentally, the rules of business, the rules of success, have changed.
With the present crop of senior leaders, those who have seen 30 year careers and experienced multiple cycles, due to retire, the baton must pass on to the younger leaders who have only grown up in plenty and have only seen the dynamic described above. While these leaders bring intent, aspiration, dynamism to the table, they lack a rounded leadership experience, as do the potential successors who follow them.
This then is the challenge for the HR, Talent, L&D professionals and for the Human Capital Consulting firms. How do we support these leaders who are not rounded, to rapidly develop the resilience, agility, depth and breadth to manage the expectations that will be placed on them. How will they find answers to grow in a world they have never experienced before?
The challenges placed by the incumbent leadership pipeline on the Talent professional of today are very different from the challenges faced by HR professionals of a decade or two ago who lived in predictable times and could employ linear approaches to identification and development of future talent and successors.
The same holds true of leaders who are mentoring their successors. They need to do more than they received and they need to do some things differently.
My thoughts on what is needed:
- Speed up iteration of experiences. We do not have the luxury of 10-15 years to grow these leaders. Hence we need to find ways to squeeze an experience set of a decade into 3-4 years. This needs to be done consciously and planfully. And will demand focus on the “70” of the 70/20/10, something that most HR teams have not been good at. These experiences must include breadth, must shatter insular mindsets and beliefs, must foster collaborative approaches.
- Hold on to your retiring senior leaders. Appoint them as mentors and advisors. This also means being careful about how they are positioned because the risk is to perpetuate the old and create barriers for success.
- Scientific assessment for potential. Confirmation bias and intuitive approaches to identifying future successors will ensure repeats of old behaviours, will ensure we select the like-minded, will ensure we select for the present and not the future. Bring in outside in perspectives to senior leadership selection. Use a consistent and unbiased method.
- Deeper board involvement. Boards, whose primary role is to derisk the organization and ensure sustainability of the business, need to get more deeply involved in succession to at least 2 levels below the CEO. This will also ensure a governance over an existing leadership that can tend to be operational by nature.
- Complete revision of the competency set for senior leaders. Many organizations are still referring to 10 or 15 year old competency sets for their senior leaders. These need to be revised and at the earliest, in order to be more relevant to the future these leaders will inherit.
The above are just some ideas for what would make a difference. I would love to hear your thoughts about what’s coming and what needs to change.
While this is largely an emerging markets scenario, I would also be keen to hear about the challenge facing mature markets and slow-economies. If you could share your perspectives in the comments section, that would be very helpful.