Digital transformation and the pace of change are not new. Leading through transformation at a breakneck pace in the midst of a global pandemic, however, is unprecedented.
In a 2021 survey of executive search and leadership consultants, AESC asked its members what topics their clients are discussing the most. The top response by a decisive margin: “Hiring leaders who can drive change.” Boards and C-suites responsible for ensuring their organizations have the right talent for the current environment are looking for leaders who can drive, rather than ride, this tsunami of change.
We asked several members from AESC’s Board of Directors and Regional Councils to address this heightened demand for leaders who can drive change.
—Bill Taylor, Co-Founder of Fast Company, Harvard Business Review December 21, 2016
THE CONTEXT IS COVID-19
The global pandemic is not the impetus for some of the key challenges that organizations face, such as digital transformation, diversity and inclusion, and demands for transparency and purpose. These issues preceded COVID-19 but the pandemic has been an accelerant, increasing the demand for leaders who can navigate and capitalize on change that is fast-paced and unpredictable.
Louisa Wong is Executive Chairman of Global Sage and a member of AESC’s Board of Directors. From her perspective in Hong Kong and China, “change is a given!” She explains, “Change is actually an old topic. There’s incremental change, and there’s overhaul. The pandemic made change urgent. I think that’s what we’re facing today.”
Wong adds, “I can’t imagine any CEO today, if they’re still a CEO, who has not adapted or planned changes in their organization for the last five years. If you are a leader and you’re not a change leader, you shouldn’t be a leader anymore.”
For Wassim Karkabi, Managing Partner at Stanton Chase and a member of AESC’s Asia Pacific and Middle East Council, the pandemic has put years of discussion and planning to the test. “Years ago, we were talking about digital transformation. People were writing articles about it. CEOs were out there talking about it in the news. It was happening only in a very few, well-observed organizations. So digital transformation wasn’t actually being implemented. It was just being talked about. Today, it’s being implemented because the reality is that if we do not implement it, then we’re going to have operational problems. We’re going to have productivity problems. We’re going to have margin problems. And the pandemic was the accelerator to that.”
It’s almost akin to the industrial revolution because of its impact. There are jobs now that never existed five years ago & there are jobs that don’t exist anymore because of the impact of technology.
COVID-19 has been a stress test on traditional leadership. Julian Ha, Partner at Heidrick & Struggles and AESC Board Director explains, “We’re still going through a global pandemic. We’re navigating that. We’re seeing how fragile, uncertain, volatile things are. And certainly organizations, foundations, companies have to be able to rise to that challenge, pivot and meet those new demands. And so, we’re certainly finding our clients need those types of leaders who can pivot, who can be agile, who can adapt. Digital disruption is forcing everyone to deliver in a more efficient way, to innovate to stay viable, to stay ahead of the curve in terms of whatever particular service or offering or product that that organization is delivering.”
“It’s not surprising, right?” Catherine Andersen, a Partner at Omera Partners and AESC Board Director, says, “Technology is making the world change very quickly and in very diverse ways. I think we see it just in terms of the information flow. I’d even go so far as to say that the way information is delivered to us and the speed and the pace at which it’s delivered has impacted the rate of social change that we’re seeing.”
“It’s almost akin to the industrial revolution because of its impact,” she says. For example, “There are jobs now that never existed five years ago and there are jobs that don’t exist anymore because of the impact of technology.”
In the life sciences sector, that’s the norm. Joe Coulter, Chief Operating Officer at Coulter Partners and AESC Board Director, shares, “In our environment, virtually all of our hiring is for change. Most of the roles that we recruit for are roles that didn’t previously exist.”
Coulter observes that digital transformation is much more than enabling work from home during COVID lockdowns. “Clearly digital transformation is a major driver of change, and leaders in general need to be far more data savvy and capable of understanding vast amounts of information. Any company these days has or should have the ability to measure any of its operations. The difficulty for leaders is filtering the vast amounts of available information down to the core of what matters and turning that into action. Management by relatively crude KPIs that existed 15, 20 years ago has given way to a much more sophisticated need to understand data, and that’s before you even get into the worlds of machine learning and artificial intelligence, which have become a key component of the world that we inhabit.”
One key change we are seeing now is a dramatic increase in transparency, which is transforming leadership and organizations. Ian Coyne, Executive Director, Global Information and Intelligence at Coulter Partners says, “If you look at what’s happened both politically and from a corporate governance perspective, if you’re polluting rivers wherever your supply chain starts, then that flows through to your consumer. And the choices consumers make now are driven far, far more by the ethics of the companies they want to buy from. Because large corporations are the most governed and the most spotlighted, they are the ones driving this change. That’s what their customers, consumers or patients want, and it is ultimately the board and CEO’s job to deliver on this.”
They come to us because they want to build something that they can’t necessarily achieve themselves, and they need our skill and expertise to help them to do it. We are helping them see what’s possible.
Who is affected by the drive for change? According to Karkabi, “I would say there isn’t a business out there that’s not attending to change in one way or another. The ones that are not changing are probably suffering tremendously. And if they don’t attend to it, we’re hearing every day on the news about organizations in this part of the world closing down because they don’t understand how to operate in this new environment.”
Even the public sector is being forced to change. “COVID-19, just like war, is forcing innovation on a scale and at a pace that no government would normally contemplate. Across the public sector, what was previously unthinkable is happening. This overhaul of decades or even centuries of procedures and habits is being driven from the center. As one Treasury official notes, his department has switched from being one that “looks for reasons to say no, to one that looks for ways to make things work.” (How COVID-19 is driving public sector innovation, The Economist. April 4, 2020 edition)
Wong insists that leading change goes beyond just surviving the pandemic. “Talking about change, you’re not talking about today, but what it will be like tomorrow or the day after tomorrow. Now that is the kind of leader that will need to imagine and take advantage. And that’s the kind of leader that you need today. The pandemic has made us all equal. You’re a big company, small company, we are all equal in this situation. So how do we become the winner and not the loser in an unprecedented time? Are any of the leaders thinking about that? They think they’re just in survival mode. No, you need to think about how to be the winner in a world that makes us all equal, that is equally bad for everyone. If you want to change your brand, change your identity, this is the best time to do it.”
Ha also sees opportunity in the midst of chaos. “Some businesses are being completely disrupted because of this pandemic. For others it’s an amazing opportunity, whether they’re in the pharmaceutical space, supply chain space, video conferencing space. I’m very sad that it had to take a pandemic to create these drivers. I don’t think anyone would have wanted it this way, but when we look back in history at this period of time, there is just so much innovation that is happening. We see a lot of new business models being created, a lot of new ways of delivering things and just the whole acceleration. It’s just incredible, the rapidity of change.”
A FRESH EMPHASIS ON SUCCESSION PLANNING
“Succession planning should be the number one thing that is on the Chair’s mind. And I think it’s something that should be discussed in every board meeting,” Andersen says. But how does an organization plan for succession in the midst of rampant uncertainty?
“Succession planning should be already planned,” Wong says. “That’s why it’s called succession planning. You think about five years, transitions are one year, and you’ve got three people and you can pick one. That’s the normal succession. Today, with all these changes, when the job itself changes so much, how do you know today that whoever is in that job can do that job three years from now, let alone finding somebody else who can do that job three years from now? And you groom three people to do a job, but you don’t actually know what the job will be three years from now?”
Karkabi describes the need for succession planning among family-owned businesses. “They’re in their third generation and sometimes in their fourth generation right now.” He says, “If the family continues to be the primary stakeholder in the business, the leadership starts to disperse. It starts to dilute with every generation that gets added into the business. So definitely succession planning is on the minds of everybody. I can probably repeat that statement for all of the markets that we manage, including Russia and China, where potentially there are a lot of family run businesses. In China there are also a lot of state-owned enterprises, which are also looking for much stronger succession planning from within.”
Wong believes that succession planning is about more than the next board member or C-suite executive. “What is more important is how do you prepare your organization with the right kinds of traits? Succession needs to start from the middle, even from the beginning, from how you hire graduates, how you train your graduates. Succession is not about a leader, it is about a succession of the company into the future. Succession planning, then, is to be prepared, that you have a lot of employees understanding it, embracing it and racing for it. You have to have more than what you need, because you don’t actually know what you need.”
Succession planning and the search for leaders who can drive change presents opportunities for organizations to execute on their commitment to diversity and inclusion.
Citing a Heidrick survey of executives from around the world, Ha says, “They realize that the business case, the imperative for diversity and inclusion is clear. That’s been litigated before and that’s been resolved. Organizations with a diverse and inclusive workforce perform better than those without. That’s because you can harness the power of inclusion for all types of change, whether it’s innovating, whether it’s having different points of view, whether it’s taking the right amount of risk or managing that risk, whether it’s growing new products and services. Unless you have a diverse set of viewpoints and backgrounds that are actually heard, it’s a lost opportunity. And it’s a real accelerant if you do.”
I don’t think anyone would have wanted it this way, but when we look back in history at this period of time, there is just so much innovation that is happening... It’s just incredible, the rapidity of change.
“Digital transformation and data are significant talent issues, but equally important is finding and enabling diverse talent,” Coulter says. “There are countless research studies that show diverse teams, and diverse companies perform better, so this is the right thing to do commercially and from an equity standpoint. One often overlooked part of the diversity picture is talent that is coming into a sector from outside—this talent can drive creative thinking in the same way that other forms of diversity can.”
“For obvious and very good reasons, life sciences is a very regulated industry and people have to be highly qualified to perform most roles within it. This can create real challenges in terms of diverse hiring because you’re dealing with the broader legacies of inequality in educational systems and society. It’s going to take time for some specialist candidate pools to fully reflect the diversity of society as a whole. But certainly, leaders who can appeal to a broad constituency of different voices within their organizations are really, really important. Just being able to speak the language of a business school or having a particular educational background should no longer be a passport to success.”
Placing someone without prior experience in a CEO role can open opportunities for diverse hiring, however, boards often exercise caution. According to a December 2020 report by Spencer Stuart, “As the succession process unfolds, it is not uncommon for boards to shift their orientation from maximizing upside to minimizing potential downsides of their decision. As one director said, “The worst thing that could happen is to pick a CEO that is a disaster.” For some, prior experience becomes a seemingly logical proxy for future performance. As doubts seep in about an unproven candidate’s ability to succeed, the door closes on a far wider set of leaders with different demographics and backgrounds.” (“Predicting CEO Success: When Potential Outperforms Experience,” Claudius Hildebrand, Cathy Anterasian and Jordan L. Brugg, spencerstuart.com. December 2020)
In addition, the Spencer Stuart report finds, “First-time CEOs also have longer tenures, less volatility in performance and greater shareholder return in the later years of their tenure compared with experienced CEOs.”
ASSESSING AND DEVELOPING LEADERS WHO CAN DRIVE CHANGE
Not only could organizations cast a wider net and consider first-timers in key roles, they could also look at skills from the perspective of the leadership team as a whole.
In addition to everything a leader has to do in the normal course, Andersen says, “Then they have to be adaptable and be quite quick at executing, executing with speed, and doing all of this with vision and engagement. It’s a very tough order and finding all of those elements in one person would be really rare. And so that entire C-suite needs to have quite an array of skills around them.”
Andersen describes a strong leadership bench as a priority of fund managers “who are ostensibly the institutional owners or shareholders of companies. I was talking to one of our top fund managers not so long ago, and in his opinion the most important job for any Chair is to think about a CEO succession plan, and to ensure that there is enough bench strength to easily adapt should a CEO leave for any particular reason, either voluntarily or forced.”
How do you build bench strength? Andersen says, “In assessing your team, you can look to their own inherent adaptability, flexibility and/or change mindset. In developing that ability on teams, I think that it’s really important for boards and CEOs to give a variety of opportunities and situations for upcoming leaders to get exposed to so that they can exercise that muscle.”
For Karkabi, “We normally tend to consider three things when we’re trying to assess leaders. The first pillar is that technical skillset needed to achieve the job, whatever that job is. The second pillar is leadership ability, the behavioral element of you as a leader and how you lead, how you get buy in and so on. And the third pillar is about cultural fit, and that is primarily organizational culture, but also attending to intercultural management, especially with multinationals around the world, or even local organizations here in the Middle East.”
It's in our DNA to provide advice to help the company transform & find a path forward. That is what our profession should be about. The company changes, but I’m still here.
For example, Karkabi says, “Any given organization in Dubai will probably have a wide mix of nationalities working together because it’s primarily an expat country. The local national population is just about 20% of the total population. 80% are made up of 120 different nationalities working together.”
Across all of these areas, Karkabi describes looking for a common denominator: adaptability. “We’re looking for a very specific adaptability profile that allows us to understand whether a person actually has the ability to stretch between what they have been used to, to what they’re going to get into.”
Ha speaks to a function at Heidrick “devoted to agile leadership potential.” He describes a set of assessment tools that considers thinking dexterity, or the ability to solve problems; curiosity, or the ability to seek new experiences and opportunities to learn; tenacity, which is grit and striving for self-discipline; and finally social agility, or the ability to balance being assertive with empathy toward others.
According to Ha, identifying leadership potential is key for clients who want to “navigate this change and prepare for the next need.”
For Wong, “Change itself has got to be in you as a leader, as a person. Apply it to every age and every country and in every corner of the world, you’ve got to believe in and embrace change. It has to be in you.”
Wong adds, “As CEO of a GE company, you need to be an entrepreneur. That sounds contradictory; GE has 150 years. But you need to become entrepreneurial to beat your own record. Think about that—you have to drop your ego.” For example, Wong explains leadership from the perspective of an airline during COVID. “How do you measure winning and losing? If you’re an airline, you’re now down 90%. If you are someone who is always about the ego, you have to be honest with yourself. A leader who can lead a company back up from 90% down is hard.”
A Word of Advice
What would these leaders say to clients, right now?
“You have to have the right leadership in place,” Karkabi says. “The wrong team leader, the wrong CEO attempting to drive change may end up moving it in the wrong direction. Even if it’s just a tangent today, 18 months down the road, that tangent becomes a big wedge.”
Karkabi advises, “Assess your existing leadership team for their ability to drive change, for their ability to flex and adapt to new situations, and for their appetite to want a different future. I’ve seen a lot of leaders who tell you, ‘we want to make change happen,’ but they don’t know what 'there' looks like, yet. They haven’t seen that vision of what 'there' is like, they only know what today is. They have an idea that they need to change, but they don’t know what the new picture looks like.”
Ha says, “Companies are recognizing the need to drive change, which is great; that’s the first step. Then be purposeful about it. Be dedicated, be committed, and get buy-in from your team. You have to communicate that well and cascade it to the organization. Leading today is very different. It’s not by command. I don’t think that works anymore. You have to influence and lead through that convincing methodology.”
“In the work that I do in the leadership advisory space, the main thing that I am thinking about is for leaders to spend more time in reflection on their impact as a leader,” Andersen says. “That impact is not just related to your daily interactions with your team members and your company, it extends to your impact in the community. Now is the time for that reflection. This is a new age of leadership: of humility, self-awareness and understanding your impact and how you can be more effective with your people and within your community and with your stakeholders.”
When asked if somebody who can self-reflect is more likely to be able to change as needed, Andersen replies, “Oh, absolutely. Absolutely.”
Coulter would advise clients to rethink how they look at talent. “Talent is not a finite resource. Humanity has abundant talent. The thing that is finite is experience, and we need to look beyond experience to people’s underlying abilities and potential and start to harness that better. COVID is one challenge we all face, and the remarkable progress we have made this year has been driven by global collaboration and diversity of approach. Just on the Healthcare side there are newer challenges like antibiotic resistance, and much older problems like malaria, TB, and diseases that kill millions of people every year. We know humanity can deal with these challenges if we work together and if we make the most of the talent that we have at our disposal. For too long, too many people have been excluded from consideration. We’ve got to make sure that we flip the talent model over and start to find that talent and ability wherever it is.”
Don’t think about your team or company like a jigsaw; taking a piece out & a new piece exactly fitting in. If you put up obstacles for candidates to hurdle, then you’re going to get very limited diversity in every respect.
Coyne also recommends clients adopt a different perspective on talent. “Don’t think about your team or company like a jigsaw, because then you think about taking a piece out and a new piece exactly fitting in. If you put up obstacles for candidates to hurdle, for example that they need to demonstrate 15 years’ experience in one of five companies, then you’re going to get very limited diversity in every respect.” Coyne advises clients to be open to looking more broadly at candidates. “They might not fill this exact gap in your jigsaw, but there’s a whole other world that they can be a bridge to.” He adds, “Jigsaw thinking is not going to drive change.”
For Wong, her position as a trusted advisor affords an opportunity to say things to a client no one else can. “First, be honest with yourself,” she says.
“I tell a CEO, be honest with yourself. Do you believe in those changes, and do you think you are the change leader? And do you think that your organization is ready for it? Can you let go of those people whom you have become very fond of over the years but cannot survive the future? Are you honest about what would be the worst outcome, and can you live with it? Can the organization survive it?” she says. “I think that is the first step.”
CHANGE, DISRUPTION AND THE PROFESSION
Is there a geography, industry or role that is immune to this need to drive change? “If there is, I can’t think of it,” Ha says. “Between globalization and all these imperatives for change that we’re all being buffeted by, any viable organization, public or private, has been focused on how they can transform themselves, how they can be part of the digital transformation, be more efficient and deliver whatever they’re delivering in a more impactful way.”
This observation applies to the executive search and leadership consulting profession as well.
Ha describes “seeing the need for change and working with stakeholders. Diversity and inclusion is certainly part of that, so you get the best out of your team and culture. Then, working diligently and in a committed, purposeful way to hopefully achieve that change.”
Ha says, “We are implementing many of the things that we’re advising our clients to do. We are putting into action what we’re advocating for others. Search is changing and we believe that these data-driven insights, blending the science with the art in search and leadership consulting is how we want to help change our industry.”
Andersen agrees. “We’re no different to businesses outside of our profession. Those who can adapt, those who can understand what’s going on, those who have an awareness of the impact of change will be consulting to their clients in that way. More than likely they will be successful in what they’re doing and therefore, drive greater change within their own organizations.”
Like our clients, executive search and leadership consulting firms are adjusting to the virtual world. “This year we’ve managed to recruit and grow our team in a completely virtual environment, as well,” Coulter says. “For the first time we have some colleagues I’ve never met in person. We have had to pivot very quickly to be a fully virtual organization and learn how to onboard and train new team members. We were concerned about how they would take to it, particularly graduates at the beginning of their careers, but the reality has surprised us. They have been really effective working from home, with the support of strong induction processes and careful mentoring. We are obviously all looking forward to getting together and enabling face to face integration in the not too distant future!”
More has changed than the shift away from face-to-face recruiting. “The whole replacement hiring, find a safe pair of hands function of executive search I think is largely gone,” Coulter says. “Clients can do that for themselves increasingly effectively, so the search model is changing. We’re increasingly seen as builders of value and enablers of change rather than tickers of boxes. People don’t go to a search consultant just for access to their networks like 20 or 30 years ago. That’s just not the way the industry works anymore. They come to us because they want to build something that they can’t necessarily achieve themselves, and they need our skill and expertise to help them to do it. We are helping them see what’s possible.”
Coyne reinforces that point. “We will always try and steer our clients away from jigsaw thinking, because longterm, successful relationships with them are not built on introducing average candidates.”
“A long-term relationship as a trusted advisor is essential, and that poses an immense responsibility on us,” says Wong. “The client that we had before the pandemic is no longer the same client because they are suffering. They may not even exist tomorrow. We have to think, how can I help that person, that individual, that company, even though there’s no fee today?”
“I would say that we have a burden of opportunity and responsibility,” Wong says. “It is in our DNA to provide advice to help the company transform and find a path forward. That is what our profession should be about. The company changes, but I’m still here. Good times and bad times, I’m still here, doing exactly what I’ve been doing as a trusted advisor.”
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