What Are The Key Elements of Leadership Job in Disruption with
Dr. Nenad Filipović
Resolving the paradoxes related to disruption and changing the business model to fit new realities. How to keep the organizational spirit and energy high in today’s world? These are some of the questions tackled by Dr. Nenad Filipovic MBA Project Director and Executive Education Director of the IEDC – Bled School of Management. Disruption is an event or sequence of events that threatens the sustainability of the business model or as Dr. Filipovic would simply say: no more “business as usual”. That is why it has to be dealt urgently and efficiently.
Dr.Filipovic suggested “The Survivors Club” – a book by Ben Sherwood as a good example for explaining how people react when dealing with life threatening situations. He pointed that active passiveness (acting only towards the right direction and not in panic) is really important for survival. New solutions require out of the box thinking and a lot of self-confidence and persistency.
Leaders deal with many paradoxes in times of crisis. Ambiguity vs. Certainty is the one of them, to be able to provide employees the sense of certainty in the space of values and behaviors rather than the business model itself. In terms of this, Dr. Filipovic pointed positive thinking and appreciative enquiry as a leadership technique for recognizing the positive in things and people and trying to understand what can be done to make things happen rather than looking for problems and who went wrong. Another paradox is Safety vs. Humanity. Leaders need to balance between economic safety and health safety since in times of crisis ethics is often violated. Ensure and provoke better social integration.
In terms of Safety vs. Humanity paradox Dr. Filipovic pointed that every crisis requires more than just rationality as a crisis management tool. We need to look at the people not only as numbers but as human beings, try to motivate and support them, beware of the importance of fairness and the language that we use to address our people – show empathy. Value contribution of every employee towards the outcome, e.g. nurses and janitors contribute to healing as much as doctors through empathy and support for the patient.
“Zombies with vision” is the quotation of Dr. Filipovic for the short-term leaders. Since in times of crisis companies often face liquidity issues owners’ expectation push to focus to the short-term period, while leaders need to focus on short-term and long-term managing. Financial success is the result of market performance, internal operation efficiency and the people (human capital) and culture. That is why we need to consider the importance of human capital contribution on the future of the company.
How do we consider the mistakes and the speed of decision making? Dr. Filipovic suggested that in a situation of disruption it is impossible to avoid mistakes, but some of them can be extremely costly. Most of the companies treat all mistakes in the same way which he considers as a big mistake. Companies typically look at the business outcome (or revenues) as a measuring indicator of the damage done. Regional organizations and companies are dominated by power and rules. Recent studies suggest that autocratic leadership creates fear. We have to take every opportunity to learn from mistakes.
Smart mistakes are the ones that people learn from and become better as a result of making them in the first place. Stupid mistakes are the repeated ones, they need to be sanctioned and killing mistakes need to be prevented either directly or through culture mechanisms and vision. In order to adjust to continuous change a leader needs to be agile, faster and remove fear. Rules vs. Wisdom were the other paradox tackled by Dr. Filipovic. He suggested that we create so many rules as an alibi not to take action and agility, and become more proactive and creative.
Complex problems require wisdom and adaptive leadership. In times when trust is endangered we keep adding rules because we believe that they will prevent people from doing wrong things. While trusting people is tricky in change management trust is central element. Even though disruption requires a high level of trust, these days the level or trust is historically low, and even 75% of the employees don’t trust their boss. We need to understand that we have to rebuild trust and wisdom, since collective wisdom as a team is the goal for long term success. The role of the leaders is to find, understand and use the drivers of trust in the organization.The last paradox is the kind of leadership type. Hero vs. Servant type.
We experience a global influence of Anglo-Saxon managerial behavioral styles known as macho leader stereotype. Studies suggest that performance of companies of macho managerial style give bad results. Autocratic leadership dominates these days even though they fаil as leaders. That is mainly because of lack of empathy.
For that reason it is important to provide a support to leadership in way of couching and mentoring. Coaching on a psychological side and mentoring on holistic business views. Companies that tend to be high performing already have good emphasis on good leadership development. As a result of this, the gap between well managed and badly managed companies and their performance became even bigger. Dr. Filipovic then stated the six core principles and actions that need to be implemented in terms of good leadership:
- Alignment of leadership
- Clearly define who is in the leadership team and what are their roles and responsibilities accordingly.
- Whom do we trust and where do we get the information needed.
- Clarity of roles and assignments in the team
- Defining a core scenario and directives that can be easily followed.
- Managing operational viability
- Defining how is the business model affected by the disruption changes and understanding the implication of disruption for operational models
- Market research and strategy on demand for product and services and how to deliver services
- Maintaining financial viability
- Creating relevant financial scenarios
- Find financing sources if revenues continue to drop
- Developing new business model
- Focus and understand who are my customers and create new value for them, either through loyalty, brand and subscription
- Build core assets and competencies
- Develop new ecosystem because the changes in digital technology and AI takes transformation of the operating culture in the society
- Maintaining the customers’ trust and engagement
- Active communication and understanding in the process is really important
- Maximum customer support even though historically the level of customer support is really low nowadays
- Engage customers in order to keep them close and refit in order to meet their needs
- Maintaining employee trust and engagement.
- Fairness of rules, showing our employees empathy
- Openness when addressing employees
- Emotional closeness
The core leadership reaction to disruptive changes is the fight or flight reaction. We have to believe that the fight is meaningful, otherwise we cannot lead. In times of disruption is important to keep the balance between burnout vs. bore out. That is why we need to practice empathy over bravery and seek support and help when needed. We have to take care of ourselves, learn new things, and adapt. Also it is important to understand the expectations of the stakeholders and confirm personal priorities.