The Challenges of Global Leadership

1. The Challenges ofGlobal Leadership Stephen H. Rhinesmith, Ph.D. ASAE & The Center for Association Leadership 2010 Association International Conference Washington, DC

2. Objectives • Examine the challenges of leading in a complex, diverse, and uncertain world. • Understand the mindsets and skills you need to be an effective global executive in this world.

3. Research © 2010 Stephen Rhinesmith, Inc. All rights reserved.

4. Leadership Capacity • A recent survey of 400 Fortune 1,000 companies conducted by the Conference Board in the United States revealed that: • only 8% of the respondents rated their company's leadership as excellent • nearly 50% rated their leadership capacity as fair to poor

5. Global Mindsets and the World It is estimated that substantially less than 1% of the adult population of the world have reached a level of personal development wherein they have a genuinely global outlook. Globally Responsible Leadership, 2005

6. A View of Tomorrow’sLeadership Requirements Source: Laura Tyson, London School of Business, September 2004

7. The leadership challenge “The trouble with our times is that the future is not what it used to be.” Paul Valery, French poet

8. We live in a world that is more complex, more diverse, andmore uncertain…

9. And we facethe perfect storm

10. Exploding technologymakes choices about organizational and personal life more complex.

11. Four power tools of innovation in the 21st century • Information technologies and networks:the impact of computing, microchips, and the Internet on careers, communications, work, creativity, and entertainment. • Biotechnology:the uncloaking of DNA, life sciences, and the impact of genomics on health care, life extension, and medicine. • Nanotechnology:the manipulation of matter at the atomic scale, producing new drugs, fuels, materials, and machines. • Neurotechnology: the use of devices, drugs, and materials to heal, manage, and enhance mental performance and functioning. James Canton, The Extreme Future, 2006

12. Headlines from the future • 2010: 70 Percent of Companies Say Workforce Not Skilled for Today’s Tech Jobs • 2015: Women Hold 80 Percent of Management and Professional Jobs • 2015: Oil Hits $500 a Barrel: World Markets Shatter • 2015: Neuromarket Up 200 Percent on Sales of Created Memories • 2020: Neurotech Device Cuts Depression 80 Percent • 2020: Mobile Virus Infects Cybernetic-Enhanced Brain Devices and Ten Million People Lose Their Memories • 2030: Flood Victims Saved by Rescue Workers with Fish Gills • 2040: Humans With Less then 80% DNA Lose Citizens’ Rights

13. Diverse cultural values, preferences, and mindsets require re-examination of global business strategies, structures, and processes.

14. The world is flat: 10 major flattening forces Govern from the ground up, by the interests, demands, and aspirations of the people, rather than from the top down; See the world as more of a seamless whole—a single market, ecosystem, and community;People tapped into the knowledge pools of others. Fall of the Berlin Wall

15. The world is flat: 10 major flattening forces Fall of the Berlin Wall People tapped into the knowledge pools of others. PC-based to internet-based Internet-based platformtruly connected and flattened the world.

16. The world is flat: 10 major flattening forces Fall of the Berlin Wall People tapped into the knowledge pools of others. PC-based to internet-based Truly connected and flattened the world. Work flow software New applications software and transmission protocols enabledeveryone to do anything with anyone at any time, beyond any barriers.

17. The world is flat: 10 major flattening forces Fall of the Berlin Wall People tapped into the knowledge pools of others. PC-based to internet-based Truly connected and flattened the world. Work flow software Enabled everyone to do anything with anyone at any time. Open-sourcing Thousands of people, worldwide, cancome together online to collaboratein writing everything from their own software and operating systems to dictionaries and recipes.

18. The world is flat: 10 major flattening forces Fall of the Berlin Wall People tapped into the knowledge pools of others. PC-based to internet-based Truly connected and flattened the world. Work flow software Enabled everyone to do anything with anyone at any time. Open-sourcing People come together online to collaborate. Using fiber-optic-connected workstations, any service, call center, business support operation, or knowledge work, which could be digitized, could also be outsourced globally to the cheapest, smartest, or most efficient provider. Outsourcing

19. The world is flat: 10 major flattening forces Fall of the Berlin Wall People tapped into the knowledge pools of others. PC-based to internet-based Truly connected and flattened the world. Work flow software Enabled everyone to do anything with anyone at any time. Open-sourcing People come together online to collaborate. Outsourcing Globally to the cheapest, smartest, or most efficient provider. Offshoring Use China’s (or other developing countries’) labor pool to make things cheap and sell them abroad.

20. The world is flat: 10 major flattening forces Fall of the Berlin Wall People tapped into the knowledge pools of others. PC-based to internet-based Truly connected and flattened the world. Work flow software Enabled everyone to do anything with anyone at any time. Open-sourcing People come together online to collaborate. Outsourcing Globally to the cheapest, smartest, or most efficient provider. Offshoring China’s (or other developing countries’) labor pool. Supply-chaining Collaboratinghorizontallyamong suppliers, retailers, and customers to create value; Proliferating supply chains can force the adoption of common standards among companies eliminating friction at borders.

21. The world is flat: 10 major flattening forces Fall of the Berlin Wall People tapped into the knowledge pools of others. PC-based to internet-based Truly connected and flattened the world. Work flow software Enabled everyone to do anything with anyone at any time. Open-sourcing People come together online to collaborate. Outsourcing Globally to the cheapest, smartest, or most efficient provider. Offshoring China’s (or other developing countries’) labor pool. Supply-chaining Collaborating horizontally. Insourcing Levels the competitive playing field by using companies like UPS tocome right inside a business. This allows huge conglomerates to act small by delivering or repairing quickly anywhere in the world, and small companies and individuals to act big.

22. The world is flat: 10 major flattening forces Fall of the Berlin Wall People tapped into the knowledge pools of others. PC-based to internet-based Truly connected and flattened the world. Work flow software Enabled everyone to do anything with anyone at any time. Open-sourcing People come together online to collaborate. Outsourcing Globally to the cheapest, smartest, or most efficient provider. Offshoring China’s (or other developing countries’) labor pool. Supply-chaining Collaborating horizontally. Insourcing Come right inside a business. In-forming Self-collaboration - “the individual’s personal analog to open-sourcing, outsourcing, insourcing, supply-chaining, and offshoring.”

23. The world is flat: 10 major flattening forces Fall of the Berlin Wall People tapped into the knowledge pools of others. PC-based to internet-based Truly connected and flattened the world. Work flow software Enabled everyone to do anything with anyone at any time. Open-sourcing People come together online to collaborate. Outsourcing Globally to the cheapest, smartest, or most efficient provider. Offshoring China’s (or other developing countries’) labor pool. Supply-chaining Collaborating horizontally. Insourcing Come right inside a business. In-forming Self-collaboration. The steroids Technologies that amplify and turbocharge all the other flatteners –“digital, mobile, virtual, and personal.”

24. The world is flat…and increasingly diverse

25. Diverse employees have rising expectations and different needs, and require new mindsets from their leaders. Millenials Traditionalist Boomer Generation X • Collaboration • Social activism • Tolerance for diversity • Family centricity • Technology-based • Free agency and independence • Street-smarts • Friendship • Cynicism • Conformity • Stability • Upward mobility • Security • Economic success • Personal and social expression • Idealism • Health and wellness • Youth Born 1965–1980 Born 1946–1964 Born 1928–1945 Born 1980–2000 Four generations are being asked to coexist. Based in part on “Meeting the Challenges of Tomorrow's Workplace,”CEO Magazine, 2005

26. Diversity is a common area of focus acrossmany countries… India: Gender Generational differences Regional differences Caste Work history Expats / local nationals Brazil: Gender Social Class Education Race Mexico: Gender Social class European vs. indigenous Japan: Aging population Gender Work-life integration Foreigners UK: Gender Social Class Ethnicity Age Disability France: Gender Education Age Ethnicity Religion South Africa Race Affirmative action s Gender Tribe HIV status Education Language China Generations Gender Educational background Work history Cultural differences by region Disability All who work internationally face cultural differences; many face cultural differences within their own countries. Simmons Associates, Inc.

27. International cross-cultural differences Andre Laurent, INSEAD

28. Windows on the world NORTHERN VALUES EASTERN VALUES • Reliability • Discipline • System • Rigor • Consistency • Caution • Harmony • Consensus • Blending in • Predictability • Modesty • Indirectness WESTERN VALUES • Individuality • Empowerment • Productivity • Speed • Efficiency • Directness SOUTHERN VALUES • Loyalty • Relationships • Hierarchy • Instinct • Spontaneity • Adaptability

29. Forced decisions with unknown consequences create risk, instability, and uncertainty.

30. Conflicting stakeholder demands Consumer activists Environmental groups Regulatory bodies Global suppliers Political constituents Employee unions Emerging markets Community organizers Investors …

31. Learning to live with Paradox

32. Difficult questions are often matters of right versus right, not right versus wrong… these decisions are complicated, troubling, and serious. They are too important to ignore. They are defining moments which reveal a leader’s basic values, test the commitment of an organization and cast a shadow onto the future... The Uncertainty of Right-vs.-Right Joseph Badaracco, Defining Moments: When Managers Must Choose Between Right and Right, 1997

33. Paradoxes The test of a first-rate mind is the ability to hold two opposing ideas in one’s head at the same time and still retain the ability to function. F. Scott Fitzgerald

34. Paradox management requires a balance of “both/and” thinking • For paradox management to work, people must be able to understand various viewpoints and perspectives and understand how they fit together to create a larger whole. • In Gestalt psychology, this is called multistability – or the tendency of different perspectives to go back and forth so that each appears to be a legitimate interpretation of the situation.

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39. Paradox in Eastern and Western Thinking • Eastern Taoist thinking involves multivalue fuzzy “shades of gray” and a nonlinear worldview that sees contradiction and paradox as normal, experiential and coherent common sense. • Western rationalism is wedded to either-or and black-and-white linear reductionism to solve problems rather than balance opposites.

40. Problem vs. paradox Is the issue or situation a one-shot? Can it be solved once and for all with a specific solution? If so, it is a problem, not a paradox. Are there two or more solutions, both of which are “right” in one sense, but have negative consequences if taken too far? If so, it is a paradox.

41. Global Centralization Performance Quantitative Cost Standardization Work Local Decentralization People Qualitative Quality Customization Family Examples of organizational paradoxes Versus

42. Example: the “global vs. local” paradox • Value • Customer responsiveness • Local cultural sensitivity • Local regulatory requirements • Value • Economies of scale • Brand management • Quality control 1 3 historic strength the new fix Global Local 4 failure to adapt neglect of the core 2 • Concern • Increased cost • Lack of best practices • Risk to global partners • Concern • Local alienation • Local competitiveness • Lack of speed in execution

43. The infinity loop of paradox Value Value Concern Concern trade-offs that optimize net upside Force #2 Force #1 trade-offs that minimize net downside

44. Summary • Paradoxes are constant companions in today’s business. • When you encounter them, you need to know how to balance and manage them and hold the tension to produce results. • Managing paradoxes is not about compromising. It is about having the right kind of dialogue with your colleagues and making conscious decisions to move in one direction while being aware of warning signals. • It is also recognizing in that in true paradox management neither side can always win – balance requires sometimes giving the other side what it needs, even if it is against your interests, because next time you will need them to do the same. • Paradox Management is a powerful leadership tool that can increase effectiveness and save time and money from misdirected actions both within a single manager and across group in an organization.

45. Leadership key to paradox management The more complex, diverse, and uncertain the world becomes, and the more leaders are faced with choosing between the right and right of conflicting constituencies. the more leaders must go deep inside themselves to determine who they are, what they are trying accomplish, and what they will have the courage to be known for.

46. The Need for Whole Leaders

47. A new breed of leader is needed forthese turbulent times. “Get me more leaders who are smart, have good people skills, and have the courage of their convictions.” FORTUNE 500 CEO

48. The Global Leadership Imperative survey The Economist Intelligence Unit and Oliver Wyman Leadership Development conducted a global survey of 223 senior executives from large corporations across 17 industrial sectors in the fall of 2005. Responses by Position Responses by Region Responses by Annual Revenue

49. Today’s successful business leader must be a whole leader. Head Heart Provide clear purpose, direction, and strategy. Understand, work with, and develop others. Guts Do the right thing based on clear values.

50. But most organizations are one-dimensional. Companies appear to have the greatest supply of leaders who are strategic, analytical, and purposeful. In shortest supply are leaders who have emotional intelligenceand can develop talent, and who haveclear valuesand thecourage to do the right thing.