A Special Kind of Leadership

In a recent article by Heidrick & Struggles, the global search firm, they speak of the ‘new normal’ meaning a business environment characterised by more porous organisations that are being influenced by more voices and interests, expressed by increasing numbers of stakeholders. 

Their research suggests that this new normal is ‘a shift from shareholder dominance to stakeholder power’, a sense that businesses must be ‘in society’, not operating at arm’s length from it.  Think of the increasing power of activist shareholders, of active citizens who oppose fracking and such like.  

Leaders now need to take a whole new set of dynamics into account as they seek to satisfy customers and make a success of their organisation.  This requires Chairmen and Non-Executive Directors to adopt a fresh approach to board leadership.  It requires a special kind of leadership.

Divergent Thinking

The research referred to above shines a light on the need for “diversity of thinking” – the requirement that boards and their leaders should reflect the diverse perspectives of the organisations they lead, the customers they serve and the society within which they operate. 

To truly reflect society, to deal with uncertainty and complexity, and to drive sustainable business value creation, boards and their leaders must adopt new and different perspectives.  What is needed is an environment that fosters diverse thinking and actively encourages authentic dialogue.

The reality is that organisations, and the boards that govern them, face a new and more complex set of business challenges.  Stakeholders are often vocal and increasingly interconnected, and demand a say not only in what products and services are sold but also in the way they are designed, sourced, manufactured and distributed.   

As Heidrick & Struggles point out, this shift from ‘shareholder dominance to stakeholder power’ has been aided and abetted by the power of social media to demand and ensure transparency and disclosure from the organisation.  Every decision can now be analysed, critiqued and challenged from multiple angles in real time by groups of digitally empowered stakeholders, including employees.  

Of course gender and ethnic diversity are necessary, but it is agrued that this is nowhere near enough to help boards shape their response to an increasingly complex environment whilst also driving performance.   Boards must consider introducing a deeper diversity of thinking to see alternative perspectives and deal with the new reality.  A diverse board will have the right balance between thinking skills, technical knowledge and experience.  This level of diversity is consistently identified as a critical driver of board effectiveness, especially in turbulent times.

Thinking Styles

Divergent thinking styles in a board helps it to explore and evaluate many possible avenues and a range of possible solutions.  Listed below are four associated thinking preferences identified by the research:

  • Analytical thinking – this convergent approach is by far the dominant style of thinking in the boardroom, in part because board processes favour linear, logical approaches and also because much of formal education focuses on equipping us with analytical skills. A bedrock capability, analytical thinking helps boards unravel simple / complicated governance, regulatory and business management issues.
  • Innovative thinking – a divergent style where thinking is not limited to the realms of logic and practicality.  Einstein provides a rationale for this kind of thinking -“we can’t solve problems by using the same kind of thinking we used when we created them”.
  • Imaginative thinking – a style characterised by looking at the bigger picture and the longer term – addressing the issue of what ‘might be’.  In essence this style is about imagining the future, rather than addressing past problems. 
  • Relational thinking – an empathetic style that is sensitive to the impact decisions may have on others and on group dynamics. Relational thinkers think about networks of relationship, how they are held together in a web, the collective power and influence they hold and how that power and influence can be leveraged.

We know that many current board members, through their formative years and careers, have generally developed, favoured or adopted an analytical thinking style simply because that is the dominant approach in education and business.  The demand to conform to group norms, even for independent minded board members, is strong. 

Yet we know also that many board members can adopt and may even have a strong, natural tendency, somewhat suppressed, that is at odds with the clinical rationality of the analytical approach.  For example, relational thinkers are much more likely to use emotion and intuition to help them navigate business issues, especially those concerning people.  They will also be concerned with the impact of decisions on critical stakeholder groups and will use their ability to put themselves in the ‘shoes of others’ when assessing the implications of a decision.  This style is critical when trying to predict the reaction of employees or customers to change.

Suggestions for Boardroom Leaders

So what can leaders do to encourage and unlock diverse thinking in the boardroom?   Here are some suggestions for boardroom leaders:

  • Assess the current level of thinking diversity in the board and map against strategic business goals. Is there a gap?   Diversity must be rooted in the attainment of business goals.  To be sure, the needs of the business must drive diversity, not the other way around. 
  • Create a board culture that actively seeks alternative perspectives.  The leader will play a critical role in this by setting the tone, modeling types of behaviours, seeking alternative views and encouraging challenge and open dialogue.
  • When appointing directors, especially NEDs, don't just consider technical expertise and skills sets.  Look beyond analytical thinking.
  • Consider ways that new appointees can complement or contrast with other board members, perhaps seeking diverse professional or social backgrounds.  Someone with a not-for-profit background may bring a high degree of relational thinking to the table.
  • Look beyond the diversity of the board. Given what we know about stakeholder power, seek out and listen to a range of diverse stakeholder views before making critical board decisions.