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.
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.
- 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.
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: