Sector News

Why the world needs generative leaders

March 31, 2022
Borderless Leadership

Generative leaders leave the world a better place than they found it.

Today more than ever, we are relying on our leaders to deliver. We’re asking more of them than we have in decades.

Put yourself in the shoes of a business leader—or, if you happen to be one, keep those shoes on. Here are some of the daunting priorities and concerns likely to occupy your mind every day:

• Short-term results • Climate and environmental footprint
• The great resignation • Employee safety and mental health
• Speaking out on societal issues • Employees’ demands for more flexibility
• Artificial intelligence • Shrinking competitive advantage
• Geopolitical risk • Ecosystem collaboration
• Customer journeys • Always-on transformation

Each of these issues is complex and high stakes. And as if that weren’t enough, when not on the job, leaders are also worrying about the COVID-19 pandemic’s impact on their own families.

But here is some good news. We ran a year-long research project to examine how business leaders are currently performing and what people want and expect from them. Notably, 75% of the 9,000 employees who responded to our survey said they were satisfied with how leaders performed during the first wave of the pandemic.1 In that uncertain and frightening time, leaders did rise to the occasion. They were creative and flexible because they had to be.

Generative Leadership
Our research suggests that what worked during the pandemic can form the basis for an approach to leading that we call generative.
Generative leaders strive to leave the world a better place than they found it. With so much at stake, they are seizing a rare opportunity to do better not just for their shareholders, but for their customers, for their teams, for society, and for the planet as well. Shareholders are of course vital stakeholders, because as one client told us, “You don’t get to have a long term without a short term.” But shareholders sit alongside a set of other stakeholders whom generative leaders view as vital to the future. Generative leaders believe that their obligation to society and the planet is at the core of their businesses, not just an afterthought. (For an example, see the sidebar, “Generative Leadership Up Close at Microsoft.”)

Many leaders labor under the false impression that there must be a tradeoff between doing good for society and the planet and delivering returns to shareholders. But studies consistently show a strong positive correlation between companies’ commitment to environmental, societal, and governance (ESG) concerns and financial performance. And this outperformance grows over time—by as much as 40%, according to one study. Research also suggests that the best talent, especially among younger workers, increasingly chooses employers with social and environmental policies that match their own personal values.

Take Ikea’s leadership team, for example. Ikea has a long history of steady and profitable business, but its leaders have never rested on past successes. In 2011, when they decided to fundamentally change their company’s relationship with the environment and society, they took immediate and concrete measures. The company started to carefully measure and report on its carbon emissions and those of its thousands of suppliers, and it rolled out stringent ethical and sustainable sourcing policies. Once Ikea’s leaders had a better view of the company’s entire supply chain, they set goals to keep improving over time. They linked those goals to their own annual bonuses and made sustainability a critical criterion in every new business case. And, importantly, they made all these changes while continuing to deliver steady returns to their shareholders. (For another example, see the sidebar, “L’Occitane Group’s Triple Bottom Line.”) READ MORE

By Jean-Michel Caye, Jim Hemerling, Deborah Lovich, Marie Humblot-Ferrero, Fanny Potier, and Robert Werner


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