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The leadership of a firm has a very high bearing on the extent of Enterprise Agility which the company can achieve. Leaders are in a position to influence just about every aspect of a business, including vision, mission, strategy, structure, governance, processes, and more importantly, the culture of the enterprise and the mindset of the employees.
This article is an extract from the Enterprise Agility written by Sunil Mundra. In this article we’ll explore the personal traits of leaders that are critical for Enterprise Agility.
Personal traits are by definition intrinsic in nature. They enable the personal development of an individual and are also enablers for certain behaviors. We explore the various personal traits in detail.
#1 Willingness to expand mental models
Essentially, a mental model is an individual’s perception of reality and how something works in that reality. A mental model represents one way of approaching a situation and is a form of deeply-held belief. The critical point is that a mental model represents an individual’s view, which may not be necessarily true.
Leaders must also consciously let go of mental models that are no longer relevant today. This is especially important for those leaders who have spent a significant part of their career leading enterprises based on mechanistic modelling, as these models will create impediments for Agility in “living” businesses.
For example, using monetary rewards as a primary motivator may work for physical work, which is repetitive in nature. However, it does not work as a primary motivator for knowledge workers, for whom intrinsic motivators, namely, autonomy, mastery, and purpose, are generally more important than money. Examining the values and assumptions underlying a mental model can help in ascertaining the relevance of that model.
Self-awareness helps leaders to become cognizant of their strengths and weaknesses. This will enable the leaders to consciously focus on utilizing their strengths and leveraging the strengths of their peers and teams, in areas where they are not strong. Leaders should validate the view of strengths and weaknesses by seeking feedback regularly from people that they work with.
According to a survey of senior executives, by Cornell’s School of Industrial and Labor Relations:
“Leadership searches give short shrift to ‘self-awareness,’ which should actually be a top criterion. Interestingly, a high self-awareness score was the strongest predictor of overall success. This is not altogether surprising as executives who are aware of their weaknesses are often better able to hire subordinates who perform well in categories in which the leader lacks acumen. These leaders are also more able to entertain the idea that someone on their team may have an idea that is even better than their own.”
Self-awareness, a mostly underrated trait, is a huge enabler for enhancing other personal traits.
Since emergence is a primary property of complexity, leaders will often be challenged to deal with unprecedented circumstances emerging from within the enterprise and also in the external environment. This implies that what may have worked in the past is less likely to work in the new circumstances, and new approaches will be needed to deal with them. Hence, the ability to think creatively, that is, “out of the box,” for coming up with innovative approaches and solutions is critical.
The creativity of an individual will have its limitations, and hence leaders must harness the creativity of a broader group of people in the enterprise. A leader can be a huge enabler to this by ideating jointly with a group of people and also by facilitating discussions by challenging status quo and spurring the teams to suggest improvements.
Leaders can also encourage innovation through experimentation. With the fast pace of change in the external environment, and consequently the continuous evolution of businesses, leaders will often find themselves out of their comfort zone. Leaders will therefore have to get comfortable with being uncomfortable. It will be easier for leaders to think more creatively once they accept this new reality.
#4 Emotional intelligence
Emotional intelligence (EI), also known as emotional quotient (EQ), is defined by Wikipedia as “the capability of individuals to recognize their own emotions and those of others, discern between different feelings and label them appropriately, use emotional information to guide thinking and behavior, and manage and/or adjust emotions to adapt to environments or achieve one’s goal/s“. [iii]
EI is made up of four core skills:
- Social awareness
- Relationship management
The importance of EI in people-centric enterprises, especially for leaders, cannot be overstated. While people in a company may be bound by purpose and by being a part of a team, people are inherently different from each other in terms of personality types and emotions. This can have a significant bearing on how people in a business deal with and react to circumstances, especially adverse ones. Having high EI enables leaders to understand people “from the inside.” This helps leaders to build better rapport with people, thereby enabling them to bring out the best in employees and support them as needed.
An innovative approach to dealing with an unprecedented circumstance will, by definition, carry some risk. The hypothesis about the appropriateness of that approach can only be validated by putting it to the test against reality. Leaders will therefore need to be courageous as they take the calculated risky bets, strike hard, and own the outcome of those bets.
According to Guo Xiao, the President and CEO of ThoughtWorks,
“There are many threats—and opportunities—facing businesses in this age of digital transformation: industry disruption from nimble startups, economic pressure from massive digital platforms, evolving security threats, and emerging technologies. Today’s era, in which all things are possible, demands a distinct style of leadership. It calls for bold individuals who set their company’s vision and charge ahead in a time of uncertainty, ambiguity, and boundless opportunity. It demands courage.”
Taking risks does not mean being reckless. Rather, leaders need to take calculated risks, after giving due consideration to intuition, facts, and opinions. Despite best efforts and intentions, some decisions will inevitably go wrong. Leaders must have the courage and humility to admit that the decision went wrong and own the outcomes of that decision, and not let these failures deter them from taking risks in the future.
#6 Passion for learning
Learnability is the ability to upskill, reskill, and deskill. In today’s highly dynamic era, it is not what one knows, or what skills one has, that matters as much as the ability to quickly adapt to a different skill set. It is about understanding what is needed to optimize success and what skills and abilities are necessary, from a leadership perspective, to make the enterprise as a whole successful.
Leaders need to shed inhibitions about being seen as “novices” while they acquire and practice new skills. The fact that leaders are willing to acquire new skills can be hugely impactful in terms of encouraging others in the enterprise to do the same. This is especially important in terms of bringing in and encouraging the culture of learnability across the business.
#7 Awareness of cognitive biases
Cognitive biases are flaws in thinking that can lead to suboptimal decisions. Leaders need to become aware of these biases so that they can objectively assess whether their decisions are being influenced by any biases.
Cognitive biases lead to shortcuts in decision-making. Essentially, these biases are an attempt by the brain to simplify information processing. Leaders today are challenged with an overload of information and also the need to make decisions quickly. These factors can contribute to decisions and judgements being influenced by cognitive biases. Over decades, psychologists have discovered a huge number of biases. However, the following biases are more important from decision-making perspective:
This is the tendency of selectively seeking and holding onto information to reaffirm what you already believe to be true. For example, a leader believes that a recently launched product is doing well, based on the initial positive response. He has developed a bias that this product is successful. However, although the product is succeeding in attracting new customers, it is also losing existing customers. The confirmation bias is making the leader focus only on data pertaining to new customers, so he is ignoring data related to the loss of existing customers.
Bandwagon effect bias
Bandwagon effect bias, also known as “herd mentality,” encourages doing something because others are doing it. The bias creates a feeling of not wanting to be left behind and hence can lead to irrational or badly-thought-through decisions. Enterprises launching the Agile transformation initiative, without understanding the implications of the long and difficult journey ahead, is an example of this bias.
Guru bias leads to blindly relying on an expert’s advice. This can be detrimental, as the expert could be wrong in their assessment and therefore the advice could also be wrong. Also, the expert might give advice which is primarily furthering his or her interests over the interests of the enterprise.
Projection bias leads the person to believe that other people have understood and are aligned with their thinking, while in reality this may not be true. This bias is more prevalent in enterprises where employees are fearful of admitting that they have not understood what their “bosses” have said, asking questions to clarify or expressing disagreement.
Stability bias, also known as “status quo” bias, leads to a belief that change will lead to unfavorable outcomes, that is, the risk of loss is greater than the possibility of benefit. It makes a person believe that stability and predictability lead to safety. For decades, the mandate for leaders was to strive for stability and hence, many older leaders are susceptible to this bias.
Leaders must encourage others in the enterprise to challenge biases, which can uncover “blind spots” arising from them. Once decisions are made, attention should be paid to information coming from feedback.
Resilience is the capacity to quickly recover from difficulties. Given the turbulent business environment, rapidly changing priorities, and the need to take calculated risks, leaders are likely to encounter difficult and challenging situations quite often. Under such circumstances, having resilience will help the leader to “take knocks on the chin” and keep moving forward.
Resilience is also about maintaining composure when something fails, analyzing the failure with the team in an objective manner and leaning from that failure. The actions of leaders are watched by the people in the enterprise even more closely in periods of crisis and difficulty, and hence leaders showing resilience go a long way in increasing resilience across the company.
Responsiveness, from the perspective of leadership, is the ability to quickly grasp and respond to both challenges and opportunities. Leaders must listen to feedback coming from customers and the marketplace, learn from it, and adapt accordingly.
Leaders must be ready to enable the morphing of the enterprise’s offerings in order to stay relevant for customers and also to exploit opportunities. This implies that leaders must be willing to adjust the “pivot” of their offerings based on feedback, for example, the journey of Amazon Web Services, which was an internal system but has now grown into a highly successful business. Other prominent examples are Twitter, which was an offshoot of Odeo, a website focused on sound and podcasting, and PayPal’s move from transferring money via PalmPilots to becoming a highly robust online payment service.
We discovered that leaders are the primary catalysts for any enterprise aspiring to enhance its Agility. Leaders need specific capabilities, which are over and above the standard leadership capabilities, in order to take the business on the path of enhanced Enterprise Agility. These capabilities comprise of personal traits and behaviors that are intrinsic in nature and enable leadership Agility, which is the foundation of Enterprise Agility.
Want to know more about how an enterprise can thrive in a dynamic business environment, check out the book Enterprise Agility.