Recently, I did a keynote with Leaders in Mind in Düsseldorf. I talked about sustainable leadership. I asked the audience what % of leaders actually met expectations. The % that I got from the people present was frighteningly low. Someone even said only one out of 100 were up to standard. There seems to be a lot of bad leadership around.
In VUCA times we need leadership to respond quickly to changes. But we seem to have been unable to build lasting leadership. In a recent HR conference I attended, participants reported their fatigue, their disappointment and their fatalism. Pfeffer rightly says that most leaders do not display humanistic behaviour and are selfish. And indeed, to climb the corporate ladder you need to play the system and follow the unwritten rules of the political culture. To beat them, you need to become one of them.
This sounds like dispair. Should we then stop working to improve leadership? What is the point of leadership education? Or should we even replace leadership with something else? What could that be?
Let’s not be naive
Leaders have to do many things. First, they have to steer towards results. Second they have to support people so that they are able and willing to go for these results. Third, they have to make sure that the organisation is sustainable, future proof. And lastly, they need to survive the many political games, disruptions.
I mainly talk about two Ss, supporting people through sustainable leadership. But I know we should not neglect the steering and the surviving. Bad quality of leadership arises when the focus lies on only one of them, especially surviving. If that happens the objective of leadership becomes self-centred. And this is what often happens in politics. Politicians are tempted not to take the right decisions, but the decisions that get them re-elected.
The message is: leaders should focus on all 4 and adapt their leadership actions according to the situation at hand. Someone who works in a highly political or even toxic environment can create optimal conditions in their own team (downwards) but might need to engage in survival mode when dealing with the board. The biggest challenge is then to make sure that the one behaviour (survival) does not jeopardise other behaviours. Leaders who find themselves under pressure might take short-cuts that are harmful.
That’s why sustainable leadership is important. Leaders should be aware of the effect that pressures, expectations, power, etc. have on the quality of their leadership and on their own character. Again, we should not be naïve about leadership in a volatile context, but we should not stop trying to move forward.
If leadership is not based on human characteristics such as empathy, fairness, kindness, reciprocity and the courage to be human in an unfortunately dehumanized world, it will not be sustainable. Someone made the remark that she experienced this kind of leadership in a start-up organisation, but not in the bigger corporation where she came from.
If leadership is not based on human characteristics such as empathy, fairness, kindness, reciprocity and the courage to be human in an unfortunately dehumanized world, it will not be sustainable.
The Cost of Bad Leadership is High
I have seen many bad examples of leadership behaviour. But I also have seen good ones. And when I talk about good or bad, I am not talking about morals. I am talking about the impact a leader has on their environment. Only a few leaders seem to reach a balanced kind of leadership. Nevertheless improving the overall quality of leadership Is important. Because the cost of bad leadership is very high.
The entire audience agreed to that. We cannot even imagine how much damage bad leaders cause. The cost in terms of demotivation, attrition, silent acts of sabotage … is tremendous. Bad leadership creates a toxic culture, hurts people, destroys trust and goodwill, and damages the reputation of the organisation.
Not all of this has a direct monetary value. But it’s clear that bad leadership is a big problem for the viability or sustainability of an organisation.
(Bad) Leadership in its Context
The surprising thing is that people who display bad leadership can be successful. They can thrive in a context that favours one element of leadership over the other. Some organisations do not mind a leadership approach that is less supportive, as long as results are achieved.
Sustainable leadership implies however that the results are future-oriented and that all stakeholders are served. Organisations that continue to favour results over people, and short-term over the long-term might get in trouble. People are looking for a context where they like to work. If that context is characterised by bad leadership, people will leave and will spread the world.
In times of talent scarcity there is practical interest of being human, next to a moral dimension. Bad leadership comes with a cost, and this might be enough to inspire organisations to invest (more) in the quality of leadership.
This will require a different way of dealing with leadership education. I will deal with this in a next blog.
In my book on “Sustainable Leadership” I explain what sustainable leadership is and how leaders could protect themselves from negative contextual influences. Leaders should base their leadership on sustainable sources, not on unsustainable sources like power, position, pressure or popularity.
Ever since Nike, Apple, Google and Amazon started integrating their products and services into their ecosystems, companies want to copy the model and build their own. But it’s harder than they think. The companies that I mentioned have been building their ecosystem brick by brick, or should I say click-by-click since decades.
And not everything they’ve done was successful. Over the years they have discovered and perfected the way they “surround” their customers with their offer.
The Power of an Ecosystem
An ecosystem is a fully functionally integrated user experience. Devices and services combine into one incredibly relevant experience. And that experience is not pushed on them through intrusive and annoying advertising, but through experience. As the services are so embedded in the lives of the customers, using them feels natural.
And that’s the power of an ecosystem: customers do not want to leave it, because leaving it would diminish the value of the experience. Once you have started with Apple, you are likely to buy another Apple device to take advantage of the App Store, iTunes, IOS, iCloud. Why would you leave it and buy an Android Phone?
Ecosystems are also captive because they create value for their customers that goes beyond the simple usage of a device. They create contexts that allow customers to get access to services in various ways and to experience a seamless integration.
The key to ecosystem thinking is functional integration. Simply put, this is about adding new functions (devices) and integrating them into a customer experience.
Most companies do not own an ecosystem. They can be a part of it, but they have failed to integrate their own products into a captive system. Most companies have added services, without combining them. That strategy determines the customer experience: a series of interchangeable and commoditized product to which there is no emotional or functional adherence.
And when starting an ecosystem, there are no quick fixes. Many organisations underestimate the difficulty of designing, building and maintaining an ecosystem approach. Here’s why.
A first mistake that many companies make is mistaking an ecosystem with an organisation model. An ecosystem is not an organisation. It is not a structure.
The second mistake is that organisations want to introduce the ecosystem idea without thinking it through. Ecosystems are about customer experience. And that means that organisations need to change all bad habits, old ways, … and that the design of services and all that entails needs to breathe the customer.
The third mistake is that organisations are paralysed by the shit of yesterday (an expression I borrow from Peter Hinssen). Legacy systems are clouding the future of Banking, Payroll, Insurances, Tourism, … By holding on to the legacy for too long – maybe for good reasons that have nothing to do with the customer – the idea of fully integrated ecosystems becomes impossible. If this happens, organisations look at the customer through the lens of old technology and old ways of doing things. The customer has however other expectations. And other rights.
Then, a next mistake is that too many organisations do not think about customer experience in the first place. They have an introverted view of the purpose of the organisation, where the customer does not play the first fiddle.
The fifth mistake is that there is an incompatibility between the ecosystem idea and the organisational culture. Ecosystems can thrive when both innovation and agility go hand in hand. But to have this, organisations need to foster autonomy, creativity, trust. The prime directive is to think for the customer first. If every employee, freelancer or person who works with the company would be convinced and empowered to act upon this conviction, the ecosystem idea can work.
And the last mistake is that organisations underestimate the urgency. The big players are increasingly integrating new functionality into their ecosystem (Apple Pay, Amazon buying WholeFoods, …). And new agile players are eating away the market of the established organisations . So there is no time to waste.
Looking at the agenda of most organisations, it seems that they are still thinking in old models and paradigms. How important is experience in contrast to efficiency? How often do boards talk about the customer? How much of the budget is given to customer relevant projects?
The Era of the Customer
2018 is the year of the customer, we might think. Well probably, it’s more like we are in the century of the customer. Let’s not forget that an organisation derives its relevance from the service it gives to its customers, patients, citizens, … Organisations who do not have this notion in their DNA are today’s dinosaurs. Tomorrow they will be extinct. Thinking of products and services as a part of a customer-oriented ecosystem can enable organisations to take a leap forward.
And I know that leadership, organisational design, people strategies should all be directed towards the purpose of the organisation: the customer. An organisation exists only because (and if) it enables someone to work, play, live, heal, succeed, survive, thrive, flourish, …
Let’s make this work in 2018.
This article is an end-of-the-year reflection about the future of organisations and the future labour market. I wish everyone who reads this the very best for 2018, a year that will be disruptive.
By clicking on the pictures you can read more on
The Future of Work is Hybrid and Agile.
The ideal career
Not so long ago the ideal career was stable, with a fixed employment contract. Leaving an organisation was something that people should avoid at all cost. Changing a career orientation is something that was not done either.
Because changing jobs is a risk. And risks were considered to be bad. Why throw away the certainty and comfort of a job and risk an adventure? The psychology of loss is so powerful in career decisions.
Inspire of all the fuzz about new forms of employment, to most people this is still the most preferred employment status.
An Industrial Definition of Work and Organisation
This model of work started in the early industrial era, when people left the countryside to go work in the factories in the cities. They gave up their status of independent (home) worker to become salaried. By doing this they gained certainty and lost the responsibility to “hunt” for work.
The organisation became bureaucratic: hierarchy, top-down decisions, division of labour, command-and-control. And it has worked reasonably for a long time. Why? Because the environment was reasonably stable and predictable. Technological evolution was linearly progressive and took long. There were no surprises.
But there was a downside to this kind of organization. These organisations dehumanised work. People needed to adapt to the work and fit in. And moreover they needed to follow the lines others set out for them. People were seen as one of the input factors, Human Resources. And once the input and throughput were under control, output was guaranteed.
Times are a-changing: the World is VUCA-D.
Today many organisations, not to say most, still follow that model. But the context has changed dramatically. Demographic shifts (longevity, migration, talent scarcity) and Digital Disruption change the way we need to look at work.
Today organisations cannot offer any certainty. The world has become VUCA-D, volatile, uncertain, complex, ambiguous and digital. Organisations cannot know what will happen tomorrow or the day after tomorrow. They can assume, they can guess, they can think in scenarios. But in general, we are very bad at predicting the future.
Yet, organisations need to be prepared for the unpreparable. And a long-term employment relationship does not provide the right answer to that versatility: not for organisations, and not for people either. People tend to fall asleep in a long-term employment relationship. The pampering by organisations stops them from thinking about their future, their plan B.
I always ask people what their plan B is, even when they just start. And the problem is often that they do have a plan B, that is fixed employment, but they do not have a plan A. Sometimes potential needs a push.
The Assignment Economy: A Matter of Exploitation?
We are moving towards an assignment economy. Sometimes this is called the gig-economy. Like musicians go from concert (gig) to concert, workers of the future might go from assignment to assignment. The sequence of assignments might occur within an organization or between organisations. To some this reeks of exploitation because people might not acquire any rights and might find themselves in a precarious situation.
That of course is the challenge. When Uber, Deliveroo and others enter a market, they challenge the status quo. They operate outside established rules and gain a competitive advantage because they have freed themselves from the burden of legacy rules, many of which are simply bad habits.
It’s not because they challenge the rules that they are wrong or right. The good thing is that when they challenge the status quo, a discussion can take place. A new framework can come out of the friction between old and new. And it’s up to us to decide how we can construct that new framework: what kind of flexibility and what kind of protection should we install? That is a discussion on the level of the whole society. The design of a new labour market that enables individuals, organisations and industries to remain or become competitive and that enables sufficient protection for those who are without assignment, that is the real challenge.
The design of a new labour market that enables individuals, organisations and industries to remain or become competitive and that enables sufficient protection for those who are without assignment, that is the real challenge.
The Assignment Economy: A Matter of Empowerment
So the changing nature of our economy and the changing nature of our organizations has an impact on employment and work. There will be a growing number of people who have no fixed relationship with an organization. And also within organisations the relationship with employees is changing.
As organisations need to be more agile (speed, flexibility), employees need to become agile too. And the way to do that is to give people more autonomy, a sense of purpose and the competencies to cope with that uncertainty. Empowerment not only mean giving people more freedom, it also means giving people more energy and a framework that both leaves space to take decisions and gives enough support to have a sense of direction. Empowerment entails also responsibilities!
The Next Organisation
Next organisations will have a small core of employed people (who might own the company too), enlarged by a talent cloud, a group of independent professionals that can help an organization to achieve its purpose. There are different kinds of relationships from fixed, to long-term flexible, to short-term with people that form the talent base. The talent cloud is quite diverse and enables organisations to shift gears fast and accomplish flexible goals.
There might be parts of that organisation that still are in factory mode and governed the industrial way. But this ambidexterity is extremely difficult to organise, so companies with different speeds within, will tend to split up.
And organisations will not stand alone. They will be networked, not around a supply chain, but around a customer and a purpose. And so will people. The traditional hierarchy will probably not disappear completely, but will change and become less dominant. A different kind of leadership will be needed, one that allows for people to take decisions autonomously. I have called that sustainable leadership in my book.
The battle between trust and control
It’s clear that these organisations will have to develop a sense of purpose, but also a sense of trust. Without trust these organisations cannot succeed. Today there is a lot of discussion about self-organisation, autonomous teams, empowerment and the liberated or empowered enterprise.
And at the same time we have never had so many control mechanisms in place. Discipline, authority, compliance, CCTV … it’s all there. There’s a battle going on between control (cost to reduce risk), and trust (a risk that enhances agility). There is never 0% control and never 100% trust. But 0% trust and 100% control would be at least as catastrophic. Of course it should not be a battle, but a quest for balance as trust and control are not mutually exclusive as long as the control is meaningful to those who are subjected to it.
New Organisational Practices
These are the organizational practices that need to be reviewed:
- How will we decide? Top-down or more participative? This is the question about autonomy, empowerment and distribution of decisional power.
- How will we coordinate? Centrally or decentrally? This is the question about steering, follow-up, hierarchy.
- Who determines what we do and how it’s done? Who determines goals? How will we evaluate? This is again a question about empowerment whereas people who are close to the customer will define how the business is run.
- How will we motivate people in both the core and the talent cloud? How will we unite them around the common purpose? This is the question about identification even when people are working on assignments. This is the challenge of building rapid trust within temporary teams.
- To what extent can someone take decisions about how a job is done? This is the question of customisation.
One way to tackle the future challenges in that new labour market is to customize work. In 2011 I said that we’d need a kind of iHR, an HR policy that takes individual characteristics as starting point, instead of taking rules and procedures as framework.
Of course we need to do both. But customisation is about adapting the work (context) to the individual. By doing that we will enable people to work longer and with more motivation. And through customisation, organisations can become agile.
Don’t forget that the essence of HR is to make sure that people are able and willing to perform sustainably. And as careers become more hybrid and flexible, other solutions are needed to lake sure that this happens. The old way of dealing with people within organisations will no longer suffice.
The Return of Ethics
In all this, ethics will become more important. Ethics is about dealing with others according to some values. These values steer behaviour. And so if we could build organisations that inspire to act ethically, we are half way. Ethical behaviour reduces the need for control, supports decision-making, reduces the risk of fraud, allows people to do the right thing, …
A new Labour Market: from exploitation to empowerment?
To many the new labour market seems a return to the past, when home-workers had to find their assignments and where the customer decided whether or not to pay for the work done. The direct and individual relationship between worker and customer lead to a relationship based on reputation, quality of work. This gave rise to exploitation, precarity and aleatory decisions.
The best way to avoid precarity is to work on both the individual level and on the regulation of the labour market.
The Next Labour Market
The current labour market has many defects too. It is in itself imperfect as it is not as inclusive as we would like it to be, or because there is too much distance between the world of work and the world of education.
So if we talk about the labour market of the day after tomorrow, we are still faced with the situation of today that needs to be resolved.
There will be fixed employment. Yes. But that fixed employment will be limited in the time, either because the contract says so, or because the employer will need different skills, or because the employee wants a change. So we need to prepare for that.
I strongly believe that the idea of flexicurity as guiding principle could work. We give people not the job security they want, but the employment security. By focussing on sustainable employability we can make people less dependent from the dynamics of the labour market.
The Next Individual
The concept of sustainable employability must be guiding for how we approach the individual. Sustainable employability means that a person is prepared (willing and able) to work in the future. Being employable is good for the organisation, for the employee and for society. Whatever the employment status (employee, freelance, self-employed), it’s important for everyone to develop one’s own employability. Only then, the assignment economy and the related labour market will not be a problem.
But given the current imperfections of the labour market, we still need to take steps to develop this notion and to integrate all stakeholders in an active approach of sustainable employability: the education system, the employers, the employees, the unions, the government, …
The assignment economy does not have to become a problem. If we are able to build the next labour market, next organisations and help the next individual to rise.
Thank you for reading until the end. If you appreciate this free content, please like and share it. It’s my way of giving back what I have learned to my own network