Kai Peters and Matthew Gitsham on the new qualities that leaders require in the 21st Century

The world keeps changing. Just when you think you know where you are, the goalposts shift again. It can be a frustrating and disorienting experience, and many commentators have observed that being confident and comfortable with constant change is an increasingly valuable characteristic in leaders in the 21st Century. But in a landscape of shifting global challenges, what else is new in the portfolio of qualities, knowledge and skills that can be valuable for leaders as we look towards the second decade of the new millennium?

What is increasingly clear is that organisations are facing a range of new kinds of challenges and opportunities that were just not on the agenda a couple of decades ago. A global mining conglomerate, for example, contemplates a major new development in a remote region in Southeast Asia and has to navigate diverse expectations from host governments, project finance partners, local communities and global NGOs. An airline grapples with the triple dilemma of managing to stay afloat, satisfying consumer demand for more and cheaper air travel and regulatory pressure to include aviation in the European Emissions Trading Scheme. A major clothing retailer struggles to work out how to improve its purchasing practices to improve labour standards across a complex global supply chain and avoid another front-page exposé of worker abuses by a Central American subcontractor.

These are new kinds of challenges, and they are provoking new kinds of activities by organisations. From PR and greenwashing at the more shortsighted end of the spectrum, to meaningful engagement in cross-sector and multi-stakeholder initiatives and real innovation in products, processes and business models at the other.

Organisations are doing new things, and the people who are doing these things are learning from their experiences. And it is our role as management educators to pass on this learning and equip the next generation of organisational leaders with these broader capabilities. As Patrick Cescau, then Unilever CEO, challenged an audience of management educators in 2006:

"Today, and increasingly in the future, we need people with an innate and profound understanding of business's social and environmental impacts and potential... In our view, management education has a key role to play... New skills are required, new understandings. We, business, need managers and leaders with a much broader set of capabilities. You have the task to provide them."

In response to this challenge, our business school recently led a study conducted with a group of leading business schools coordinated by the European Academy for Business in Society (EABIS) for the United Nations Principles of Responsible Management Education (PRME). The study was sponsored by Unilever, IBM, Shell, Johnson & Johnson, and Microsoft.

The research, based on an extensive global survey of CEOs and senior executives conducted in September and October 2008, presents a stark message: 76% of CEOs and senior executives polled say it is important that senior executives have the necessary knowledge and skills to respond to the challenges and opportunities of the 21st century - trends like climate change, resource scarcity and doing business in emerging markets marked by poverty, corruption and human rights violations, for example.

However, fewer than 8% believe that these knowledge and skills are currently being developed very effectively in their own organisations.  Tellingly, fewer than 8% believe business schools have very effective responses in place either.

A parallel study Tomorrow's Global Talent conducted by Tomorrow's Company confirms these findings. This study calls for people capable of acting in the "triple context" of economic, environmental and social engagement. To find people with these capabilities means broadening recruitment to bring real diversity into organisations.

The two studies converge in an attempt to define the capabilities needed for tomorrow's, or better said today's world. Three clusters of knowledge and skills emerged from our school's work: context, complexity and connectedness.

Context

CEOs and senior executives believe that the global leader of tomorrow needs to understand the changing business context - 82% of those polled say senior executives need to understand the business risks and opportunities of social, political, cultural and environmental trends. And they need to know how their sector and other stakeholders (regulators, customers, suppliers, investors, NGOs) are responding. Senior executives also need the skills to respond to this information - 70% say that global leaders need to be able to integrate social and environmental trends into strategic decision-making.

Complexity

The second cluster of knowledge and skills is around the ability to lead in the face of complexity and ambiguity. The challenges and opportunities these issues and trends present tend, by definition, to be complex - there is often little certainty and little agreement about both their precise nature and the response that is required. Leadership in these circumstances requires a range of discrete skills.

Connectedness

The final cluster of knowledge and skills is 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. For different businesses this can mean regulators, competitors, NGOs or local communities. 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.

A need for diverse learning approaches

If these are the kinds of knowledge and skills needed, how can they best be developed? Again, the research sends a clear message. Traditional approaches are not enough: a broad range of learning approaches are required to develop the global leaders of tomorrow. Because the issues are complex, senior executives believe the most effective learning and skills development comes through real experience, whether the learning is on-the-job, project-based or experiential. Learning through direct international experience and engaging with people in diverse social networks not usually associated with the world of the conventional corporate executive can be particularly valuable. These learning experiences can be enhanced by structured reflection through coaching. Learning directly from the experience of others is also important - through mentoring, or communities of practice and other formal and informal learning networks. Getting this right requires clever and innovative design in learning programmes.

So what?

If you are an aspiring leader, ask yourself which qualities and skills you think are important to develop in yourself for the future, and look for a broad range of different learning opportunities to take this forward. If you are considering MBA and executive programmes offered by business schools, you should certainly be asking the question 'Which schools are doing the most to help me build the leadership qualities and skills I need for the future?'

Kai Peters is Chief Executive at Ashridge Business School and Matthew Gitsham is Director of the Ashridge Centre for Business and Sustainability