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A “systems mindset,” which involves looking beyond the immediate impact of decisions in order to take into account all concerned stakeholders, can help to refine and sharpen initial ideas. This together with the concepts below make up Leadership.
The Fourth Industrial Revolution brings with it opportunities to challenge and change existing assumptions behind policies, cultures, and values. Non-traditional players are challenging existing social structures and creating a need for bold leadership.
In its World Economic Outlook report published in late 2018, the International Monetary Fund cited rising inequality is among the most prominent obstacles for global economic growth. Low-income countries in particular require greater investment in physical infrastructure, and an enabling environment for competition and trade, according to the report.
Mobile chat applications like WhatsApp and social media platforms like Twitter have created tremendous opportunities for people to cooperate, and for businesses to promote themselves. But they have also atomized societies, and made entire communities vulnerable to political manipulation. A need to manage the resulting impact will likely be an enduring policy challenge for government decision-makers.
While sharing economy services ranging from ride-hailing to home repair have out-maneuvered regulators by leveraging technology, and transformed many thousands of unemployed or under-employed people into small-scale entrepreneurs, this model has also displaced regulated, relatively well-paid and secure jobs in transportation and other sectors. The technology developments driving this industrial era can be designed in ways that either bolster inclusion of the traditionally underrepresented, or exclude vast swathes of the population and amplify existing problems.
Leaders must try to assess how it is that major technological advances are shaping societies in less-than-obvious ways, creating potential long-term problems with inequality, driving new or increased consumer needs, producing market inefficiencies, and feeding on policy gaps - in order to help uncover the new and disruptive ideas that can positively shape economies, societies, and governments.
An ability to look beneath the surface of attractive statistics like productivity increases, or increased values for investor portfolios, is therefore a key leadership trait. One way to encourage people to reconsider values that feed inequality, and to foster a wider, systemic impact is to build a more inclusive global economy.
A willingness on the part of both private sector and public sector leaders to engage with actors who have differing views on these issues is critical in the midst of the Fourth Industrial Revolution, which demands careful, consensus-based responses to best shape governance in a way that takes diverse values into account.
The opportunities presented by the Fourth Industrial Revolution can be fleeting and difficult to anticipate - making traditional organizational planning less relevant. “Analyse, plan and implement” has given way to more adaptive leadership that relies on experimentation.
Successful platform companies like Uber and Airbnb, which have helped to fuel the sharing economy, were able to achieve systemic impact with relatively few resources and in a relatively short period of time, for example. These companies have also quickly created new challenges for urban policy-makers and traditional industries, illustrating the need for both economic actors and public officials to monitor systemic change and to place a premium on reacting with agility. For example, some traditional consumer goods companies have sought to adapt to the threat posed by Amazon and Alibaba by offering hyper-customized shopping experiences; Nestle is piloting a programme in Japan that collects DNA and blood samples, in order to sell food and beverage products that are personalized.
An ability to experiment with, and pilot new ideas and designs is essential for adaptive leadership. According to a study published in 2017 by Deloitte, one way of developing this ability is to cultivate diverse and inclusive teams, where people feel empowered to speak up. The study found that this generates more and better ideas, and innovative ways of working.
Piloting new ideas works most effectively when it is followed by a rigorous assessment of results. Examples of agile corporate leadership include Careem, the most widely-used ride-hailing app in the Middle East, North Africa and Pakistan, which has been able to differentiate itself from Uber by incorporating local norms and needs; the company’s leadership recognized the importance of women feeling safe when using the service, and the predominance of cash transactions in an under-banked region, for example.
History is filled with examples of leaders who failed to reverse course on ill-fated strategy - whether it was Kodak opting to not aggressively pursue digital photography, or US video rental chain Blockbuster passing on an opportunity to partner with then-nascent streaming service Netflix in 2000. On the other hand, Flickr is an example of successful adaptive leadership; it essentially started as a chat room space, but then evolved into the pure photo sharing platform that was acquired by Yahoo in 2005.
A “systems mindset,” which involves looking beyond the immediate impact of decisions in order to take into account all concerned stakeholders, can help to refine and sharpen initial ideas. An ability to self-correct is also key.
According to a report published by Harvard Kennedy School’s Corporate Social Responsibility Initiative in 2016, systems leadership is needed to address complex problems related to food security, climate change, and gender equality - which cannot be solved with a top-down, pre-planned approach that focuses on one area to the exclusion of others. Instead, these problems call for the engagement of diverse stakeholders from multiple sectors. The contemporary world’s intense interconnectedness demands a new approach to leadership
“Systems leadership” is about leading in a situation where power is diffused, and where the consequences of decisions are magnified and less predictable as their impact progressively ripples across domains. It requires cultivating a shared vision for change, and empowering innovation and collaborative action.
Systems leadership done right also means balancing short- and long-term goals in order to optimize value for everyone, not only for the loudest, wealthiest, or most influential. By cultivating a shared vision, according to the Harvard Kennedy School report, nimble systems leadership can galvanize a diverse array of interested parties and help ensure that their efforts align, potentially producing better results in faster way than would otherwise be possible.
The attributes of an individual “systems leader” include humility, integrity, an interest in the system over one’s self, and an ability to facilitate constructive dialogue. The Harvard Kennedy School report cited as an example the World Economic Forum’s New Vision for Agriculture initiative.
More than 500 different organizations are now participating in related efforts, according to the report; these include working with farmers’ groups to build more sustainable value chains for specific commodities, and sharing farmers’ needs with financial institutions so appropriate credit and insurance products can be developed.
Following the food crisis of 2007 and 2008, which saw the price of food staples like rice, corn, and wheat rise dramatically to the detriment of many people in the developing world, the WEF’s initiative brought together stakeholders from business, government, and civil society to build greater resilience into the food supply chain - a highly complex, fragile system vulnerable to external shocks, over which no single actor can exercise meaningful control. As part of the initiative, 17 companies, including food manufacturers, commodity traders, and beverage producers, came together with key government representatives and civil society members in a neutral space to map out issues, system linkages, and opportunities for action.
Responsibility and Accountability
Leadership during the Fourth Industrial Revolution requires an entrepreneurial state of mind. Successful startups and innovative corporations have demonstrated how to transcend existing leadership methods in a way that creates new ways of functioning as an organization.
Startups, for example, often go through multiple iterations of ideation (the process of generating ideas) as they approach a problem, followed by relentless prototyping. The vast majority of these prototypes fail. However, the relatively limited amount of time and resources spent on developing them (including the handful that actually succeed) makes the process not only sustainable, but often highly effective.
Creating and running an innovative business in the mold of Amazon or Uber requires a greater effort to understand how technology can impact traditional civic and business structures. One particularly appropriate flavor of leadership was described more than half a century ago by anthropologist Claude Lévi-Strauss in his famous 1962 essay The Savage Mind, as “mythical thought.” Mythical thought, Lévi-Strauss wrote, expresses itself by means of a reliable but limited repertoire of skills and abilities - the person in possession of this repertoire must use it for the task at hand, as nothing else is available. Kevin Systrom, the co-founder of Instagram, illustrates the concept of mythical thought well. Systrom had studied management science and engineering at Stanford University, but was a self-taught programmer when he built Burbn, the product that led to the development of Instagram in 2010. Systrom was savvy enough to be able to use these limited skills (in combination with others) to build something that almost instantly drew millions of users, and was acquired by Facebook for $1 billion in 2012.
This ability to move quickly from design to implementation is characteristic of entrepreneurial leadership - which emphasizes mobilizing external resources, pushing through previously-assumed boundaries, and building new business models in the process.
These new models, whether they involve crunching big data to pursue criminal probes, or distributing electric scooters throughout a city centre, are a defining feature of the Fourth Industrial Revolution; they have captured public attention through the ways that they disrupt, and the ways that they transmit the influence and impact of individual entrepreneurs.
Responses to disruptive change must ensure a human-centered Fourth Industrial Revolution. Leadership during the Fourth Industrial Revolution brings with it an opportunity to redefine economic systems, and to take necessary steps to address inequality.
According to the 2018 World Inequality Report published by the Paris School of Economics, income inequality has increased rapidly since 1980 in North America, China, India, and Russia. Meanwhile the share of total national income accounted for by a country’s top 10% of earners has reached as high as 47% in the US and Canada, 55% in sub-Saharan Africa, Brazil, and India, and 61% in the Middle East.
A starkly unequal share of income is only the most obvious indicator of inequality; related gaps are also building within other intersecting dimensions, like gender, skills, and opportunity. Meanwhile emerging technologies are chiselling authority away from governments and handing it to companies and non-state actors, altering the traditional view of governance.
This places significant responsibility on technology pioneers, who have so far operated on the margins of traditional accountability. Public discontent over specific issues such as the way many companies behind major technological advances effectively avoid taxes has grown into a broader concern about the disruptive power these companies can wield over politics and economies.
While new models are needed to expand governance beyond existing public institutions, the private sector must meanwhile demonstrate leadership that goes beyond concern for the bottom line, and takes a systemic view of impact and influence. One example of taking a broader view is the independent foundation established by software firm Zendesk with proceeds from its IPO when it moved into an economically-challenged area of San Francisco; the foundation works to address poverty and the digital divide (separating those with internet access from those going without), and it demonstrates how the benefits of disruptive technology can be harnessed for the good of multiple stakeholders without necessarily creating a new set of losers.
A report published in 2018 by the World Economic Forum described how technology pioneers are increasingly developing their own private rules, certification schemes, standards, and policies which end up as a default means to govern societies spanning across national borders. If governments alone can no longer govern emerging technologies, these or other sources of authority will fill the void, according to the report.
In a technology-driven future that places a high demand on social capital (relationships and shared norms) and skills, the ties between these varying dimensions may only grow closer.
The Fourth Industrial Revolution, a new era characterized by emerging technologies fusing the physical and digital worlds at a potentially disconcerting pace, is opening up competitive gaps among economies and global businesses. The unprecedented impact of emerging technologies calls for leaders to rethink their roles.
Seven of the world’s 10 largest companies by market capitalization are now technology firms, most of which were founded less than a generation ago, and all of which are based in just two countries: the US and China. As they shred old assumptions about how businesses can create value, the ascendance of these market-dominating, often technology-driven firms appear inexorable, creating unforeseeable economic and political consequences.
The uncertainties and opportunities that major technological advances generate will have a dramatic effect on the legitimacy (and effectiveness) of both private sector and political leaders. “Technology leadership” describes the way that these leaders can harness change, in order to meet strategic goals, generate value, and create an inclusive economy.
The blurring of traditional boundaries separating sectors imposes demands on leadership teams, which must go beyond simply understanding major technological advances to understanding how to mitigate their impact on traditional organizational structures.
The International Telecommunications Union estimates that less than half of the global population is now connected using some form of internet-enabled device. This reflects the stubborn digital divide separating those with internet access from those who remain without.
Connectivity growth has been moving in the right direction in the world’s least developed countries, however, with internet user penetration in these areas projected to reach 17.5% by 2017, from 15.6% the prior year, according to an ITU report. The varying pace at which powerful tools like internet access and artificial intelligence are spreading sharpens existing divides and creates challenges for regulators - by removing parts of existing markets from under their purview, and creating new, unregulated sectors (traditional economic actors and workers are also affected).
Technology leadership is not only an ability to operate in the space between technology development, and traditional public and private structures; it is about being comfortable delving into both realms. Twitter CEO Jack Dorsey, for example, must not only understand the nuts and bolts of his product, but also grasp the impact that this platform has on free speech and news dissemination.
Many aspects of the ways that governments and businesses operate are in flux, due in large part to the sweeping technology changes propelling the Fourth Industrial Revolution. Leadership is no exception.
Radically different pandemic experiences have exacerbated global divisions. Vaccine inequities, combined with new strains, have also slowed international economic recovery. However, as the Global Risks Report 2022 makes clear, COVID-19 is only one of the critical global challenges which may become unmanageable unless world leaders prioritize proactive collaboration. Accordingly, the Davos Agenda will focus on driving concerted action among key global stakeholders.
As a precursor to the global business sector’s corporate sustainability movement and the ongoing efforts to mainstream Environmental, Social, and Governance (ESG) actions in the corporate world, the Global Compact has played an important role in driving positive change in the expectations and behavior of the business world.
Today the movement for sustainability is flourishing with new entities at the global and national levels all working toward demonstrating contributions to sustainability.
As a new generation of leaders take on challenges such as striking a healthy balance of views expressed on their social media platforms, developing private efforts to fill gaps in public social protections, and crafting public policies that govern technology access, an ability to apply responsibility and purpose will be key. They use tools such as UN Global Compact’s 2021–2023 strategy that aims to realize the strategic shifts that build upon existing foundations and successes to enable meaningful new strides in the current global, environmental, and social context.