Digital technologies challenge long-held leadership assumptions that have been promulgated by business education and can pave the way for increasing organisational effectiveness across borders. Learn more in this excerpt from Leading in the Digital World
Leadership education offered by Business Schools, leadership solutions promoted by consultants, and leadership policies implemented by most companies have long made three key, linked assumptions. The first two are these:
1 Most people working together are governed by the common organisational culture, policies, processes, and structures of a single company. Since each company is relatively self-contained, executives can assume a well-understood, shared framework for their leadership initiatives. As long as others (for example, suppliers) adhere to legal contracts, how their people are led doesn’t matter.
2 Most employees share a handful of cultural, lingual, religious, racial, and political heritages. Home-base and similar countries provide companies, even large multinationals, with most of their employees and customers. Therefore, most employees fit into a few categories, and leaders guide people who mostly look like them, talk like them, pray to the same gods, eat the same food, and so on. Business units located elsewhere rely on equally homogeneous local employees. Their leaders graft essential elements of the local culture onto the home-base corporate culture.
‘Received wisdom’ of the US experience
These two assumptions largely held true throughout the 20th century in the US. They therefore influenced American scholars who have long dominated business education. They spread elsewhere as Americans helped set up Business Schools in Europe and Asia and exported teaching material worldwide. The US also awarded more business doctorates than any other country and published most of the top business journals. Thus, its experiences became ‘received wisdom’ everywhere, even when they didn’t quite capture the local context.
Digital technologies make these assumptions unrealistic. By distributing work, they make people half a world away critical to success. They may be from very different cultures and work for organisations with different policies. Radical transparency in these instances may instantly taint a brand name globally by bringing to light problematic conditions in a company’s partner.
Effectiveness across space and time
Among respondents to a survey I conducted (henceforth referred to as the ‘Global Survey’) of 700 mid-tier to very senior executives, roughly 40% each (totalling 80%) ‘strongly agreed’ or ‘agreed’ with the proposition that their work was distributed across space and time. At the same time, they gave relatively tepid support for how their own executives performed in the light of this reality. ‘Strongly agree’ responses dropped roughly by half (22%) and the ‘somewhat agree’ ones rose commensurately in their assessments of their executives’ effectiveness at leading across corporate boundaries. Only 27% ‘strongly agreed’ and 32% ‘agreed’ that their executives led effectively across national boundaries. The roughly 20% combined drops in response to both questions reveal a major weakness.
The Global Survey’s responses typically came from executives attached to large, multinational organisations (roughly 200 attended programmes I taught at IMD) and had the following regional distribution: 27% from the Americas (including Central and South America); 29%, Europe; 6%, Middle East and Africa; 7%, India; 10%, China; 11%, Japan and Korea; 8%, South East Asia, Australia, and New Zealand; and 1%, the rest of world.
Roughly 20 years after the emergence of the digital epoch, the average ratings in the Global Survey for leading across national differences and corporate boundaries were dismal around the world. Data from regions with more than 50 respondents show that none even got close to ‘strongly agree’ on these two questions on average.
India had a relatively stronger rating for leading across corporate differences, but this is probably due to the outsourced knowledge work done there. Continental Europeans rated their companies most harshly. Average scores here were worse than ‘somewhat agree’ and could indicate either a regional weakness or, what is more likely, a greater degree of self- awareness. If the latter, the responses from other areas are optimistic. In any case, globally, leaders have much to improve.
Cultural compatibility and bias
Research shows that individuals from around the world favour leadership styles that are consistent with their cultures. Even today, CEOs are mostly native-born – or occasionally, naturalised – citizens, or from similar and/or neighbouring countries. Western leaders in Asia Pacific believe their local executives are less prepared to succeed them than executives from elsewhere. So those Asia Pacific executives are more receptive to calls from executive search firms. They are also more sceptical of their headquarters than are Asian executives in Asian companies. However, this isn’t just a western problem.
Japanese companies rely heavily on expats (Japanese executives sent abroad), having failed to integrate foreigners (foreign executives working overseas in Japanese companies) into leadership positions. Top Japanese executives know that this failure is hurting their businesses. One interviewee, the most senior HR executive in Southeast Asia, had prepared an 80-page analysis for his corporate officers. He lamented that highly prized fluently trilingual (in Japanese, English and Mandarin) or bilingual (in Japanese and English) foreigners regularly refused job offers, expecting their nationalities to stymie their progress.
The third assumption implicitly made about leadership is this: A company’s leadership standards embody the worldview of its dominant executives. Most executives in leadership positions come from the home-base (or similar) country. Executives from underrepresented backgrounds, or other nations, adapt and conform, or they forfeit the right to lead. The dominant group is overwhelmingly male.
This assumption, unlike the prior two, isn’t solely attributable to US; bias and patriarchy are present all around the world. In most places, women have had to put up with behaviour ranging from unconscious slights to full-on abuse.
Creditably, American and European countries collect and discuss data on this issue. These show they have a long way to go. Among US S&P 500 companies, ‘fewer large companies are run by women than by men named John,’ according to a 2015 New York Times article. In 2018, only 4.9% of CEOs leading European and American companies were women. As a result, many hiring decisions end up enforcing the status quo and perpetuating the misguided notion that the traits associated with being male define ‘good leaders’.
Digital technologies are forcing – and facilitating – a rethinking of this assumption, too. Meaningful work is increasingly thought driven and happens inside people’s heads, not muscle powered and happening outside people’s bodies. Throughout history, men have held power in workplaces globally because they were, on average, physically stronger. This advantage is increasingly irrelevant. Moreover, following a principle of radical transparency can expose discriminatory behaviour worldwide, which puts the ability to attract talented people at risk. As a result, young people, women, minorities, and foreigners are in positions to challenge these anachronistic ideas or withhold intellectual contributions by simply walking away.
This is an edited excerpt from Leading in the Digital World: How to Foster Creativity, Collaboration, and Inclusivity by Amit S Mukherjee (MIT Press, 2020).
Amit S Mukherjee is Professor of Leadership and Strategy at Hult International Business School at its Cambridge, Massachusetts, campus. He formerly held the same title at IMD.