Transformative Leadership - Solving for tomorrow

Key questions for Non-Executive Directors

• How is your organisation transforming to respond to the two critical crises - the energy crisis and generative AI - to ensure its ongoing sustainability?
• Do your people understand why they're transforming and do your leaders have the right skills to successfully lead through transformations?
• How are you challenging the assumptions in your organisation? How can you bring your experience as a director to people who are extremely busy, but need to understand the broader picture?

Discussion

TB: As the first female fighter jet pilot in the Royal Air Force, what did you learn about leadership?

JS: When I became a fighter pilot, my sister said “I used to think that was something special. But if you can do it, then anyone could.” The truth is, when we know people who can do things, it becomes more mundane and accessible. And that reflects on who we are as leaders.

I joined the Royal Air Force (RAF) when I was 18. It was the first year that they awarded 10% of engineering cadetships to women. At that time, women were not allowed to fly. When I became the first British fighter pilot, I was the fifth in the world. But what did I learn about leadership?

1. Situational awareness: This is an expression we use often when flying, but not in the corporate world. It means when you're flying at speed, you have to understand what's going on right in that moment and make decisions about what's coming next. You always have to be thinking about what to do if the weather changes or you need to cut a corner. So understanding the landscape, environment, threats, opportunities and how you are going to reach the target on time, is comparable to modern day enterprise. 
2. Decision making: The biggest shock when I joined the corporate world was the lack of clear decisions. Decisions are easy to make when there's a yes or no answer, but not when there's a grey area. It’s easy to fall into what I call ‘the one hour a week forever plan’. Making decisions and problem solving are key skills that all leaders need to have. 
3. Leadership and followership: In the RAF, you are selected for your aptitude to become a pilot as well as your aptitude for leadership and followership. A really good leader knows when to nurture others and let other people step up to take the limelight. It isn't about ego or self. The RAF made us study different leaders and to be curious about how they worked. And then to practice those techniques with a continual feedback loop. 

TB: I recently came back from seeing my parents in the UK. They are both war babies and I was interested in whether the time we live in now is actually different or just part of a cycle that they've seen before. Unequivocally, they both felt that something really different is happening here and these megatrends were moving quite quickly for them. In thinking about megatrends, do they require a different style of leadership to what we've been so used to?

JS: There's something overwhelming about where we are today, and the way that things aren't disappearing, but layering up upon another. When we started to think about sustainability, it was good enough just to be recycling bottles and cans. But now we have to recycle our food in one place, our papers in another, think about our carbon footprints and more, yet nothing is dropping away. COVID further shrunk our comfort zones and increased anxiety.

PwC has identified five Megatrends, which are characterised as deep and profound trends, global in scope and long-term in effect, touching everyone and shaping the world for many years to come.

• Climate change: While we try to figure out ways to reduce carbon emissions, greenhouse gas levels in the atmosphere are worsening, global temperatures are rising, and extreme weather events, particularly as seen in Australia, are becoming more frequent and more severe.
• Fracturing world: The world is fracturing and becoming multi-nodal as more nation states are competing for influence, with the rest of the world aligning around them and some states acting as destabilisers. Countries are increasingly turning their focus inwards to a local level. The asymmetry of wealth across the world and within countries was further exacerbated by COVID.
• Technological disruption: Transformative technology changes how we function in the world and how we understand humanity. It enables huge value creation, but harmful consequences are increasingly difficult to mitigate. When we start to think about what generative AI may generate, it becomes quite overwhelming. 
• Demographic shifts: The median age in all countries is increasing, but at different rates and from a different starting position. Demographic change is causing some countries’ social systems to break down and a lack of workers in critical areas, whereas other countries face skyrocketing un- and under-employment, weakening economies from emigrating citizens, and strain on social safety nets. 
• Social instability: Massive pressure – resulting from social and economic polarisation, disruption, demographic change, and eroding trust – leads to greater social unrest. 

Another megatrend emerging in the UK is ‘15 minute cities’ a planning concept where everything that you need - shops, schools, parks, leisure options, health care - are available within a 15-minute radius by foot or bike. It’s being trialled in the City of Oxford which has lots of narrow roads and traffic problems, even though 90% of the people were against the idea. If you drive your car outside your 15 minute area more than 100 times in a year, you will now be fined. Despite the protests and questions of trust in the government, trends such as this overlaying each other more rapidly than ever.

The world is facing two critical crises: the energy crisis which includes climate change; and generative AI. If an organisation isn't transforming to respond to those challenges it won’t be sustainable. Every organisation needs to transform. There are two key reasons why transformations fail. Firstly, people don't understand why they're transforming, creating a natural resistance or barrier to change. And secondly, leaders don't have the skills to successfully lead through transformations. That’s not just at the C-suite but leaders throughout the organisation. Leaders who are capable of transforming might not be the people that were promoted based on their technical skills, or length of service.

Our clients are saying they put their people into business schools, which often teach management, not leadership. They are undertaking massive transformations but not marrying the two together and enabling those people who understand how to take people on the journey with them to lead. We need to help people lead through transformation and become truly transformative leaders that understand the big problem.

TB: What is the difference between transformative and transformational leadership

JS: Transformational leadership is about leading through a process or change. Transformative leadership is about making a massive impact on something. We need leaders who understand that the world that we're in needs a different style of leadership. Leaders should not be promoted on their technical skills, but because they know how to influence, collaborate and bring people on a journey. We need people who are going to be bold, happy to be outside their comfort zones and can step up to meet the needs of where we are today.

TB: I guess transformative leadership provides an offer to either just observe and opine upon it or actively engage and ‘grasp the nettle’. It isn't a case of just waking up one morning and seeing things differently. How does that transition occur? How do we start to think and feel differently to get to that transformative state?

JS: One of the biggest challenges for transformative leaders is how you bring the organisation along with you to affect transformational change. In one of our programs - “Leaders Solving for Tomorrow” - we ask each organisation to send five to seven people. If you just send one person, they become a ‘lone wolf’ and don't flourish or succeed. What differentiates a transformative leader, is their ability to collaborate and negotiate.

An important characteristic of transformative leaders is what we call ‘nurture future fluency’. How do you find time to understand what's coming and be curious about it, whilst also being able to hold today in hand to respond to the here and now?

The second characteristic is about solving problems, the problems that matter and not  necessarily the ones your organisation might be focused on. That’s an interesting challenge for Non-Executive Directors. Are you really solving the real problems? Are you challenging the implementation of the strategy and does it deliver value in light of the megatrends, consequences and crises.

The third factor is setting radical ambitions. That’s about being bold. How can we be really radical about what we're going to do? If organisations just continue driving the vehicle, the way they want to, they are going to drive off the cliff. We need to change and move to a different direction and that can't be done alone. How do we cultivate purposeful coalitions across organisations across industries within that ecosystem of change?

Nothing’s simple. There's a whole ecosystem around everything that we need to do and develop within the context of the energy crisis and generative AI. At the centre of these differentiators, you have to be a ‘paradox navigator’. That’s the ability to be psychologically flexible and to look at the future at the same time as responding to now. The ability to navigate the paradoxical nature of where we are today is critical for success.

TB: How can Non-Executive Directors identify and upskill transformative leaders? Can you actually make a person into a transformative leader, or are they simply born that way?

JS: I think that there is something innate about people's curiosity. However, it's the environment within which you exist, the focus on what's going on, and understanding where you should spend your time that helps build that type of leader that you want. It’s about challenging our assumptions.

For Non-Executive Directors, how are you challenging the assumptions in your organisation? How can you bring your experience as a director to people who are extremely busy, but need to understand the broader picture? Some may have a natural affinity but most will need to put the work in. It’s an ‘antithesis of apathy’, to say, “I am going to focus on learning about things that I just don't know about. And I'm going to use that to challenge the board and executive”. That’s what makes a transformative leader.

TB: I work alot across ASPAC and what’s really interesting is how people think about leadership differently depending on the country they're from. How do we tailor our approach to get the best out of the environment that we are operating in?

PwC’s recent CEO Survey indicated CEOs in Australia were less confident about their company’s long-term viability (28% say less than 10 years if they continue on the same path) than their counterparts in the US (20%) and UK (22%). Do you have any thoughts on where CEOs in Australia sit in leading transformative change?

JS: It's about understanding the environment and the context within which you work, and what may be country specific. Only then can you take people on the journey, assuming you have understood that this is an important and urgent journey. And that can only lie with each of us as individuals to do. You need to move urgently but if you move too quickly you leave people behind, and you'll end up asking ‘why isn't anybody with me?’. That's the critical element of being a paradox navigator.

I see an opportunity for the type of leadership that I've always espoused which allows  other people to flourish, to nurture and empower people and to provide them with the opportunity to make decisions. Our educational system takes these amazingly creative, young children and teaches them how to be structured. But when you look at the skills we need, we need people who are going to think differently, be creative, build teams and respond to problem solving and building a different world. 

Q&A 

The role of the board is to create the environment for decision making. Do you think bold leadership is more difficult in today’s environment and the onus on directors is even higher than it's ever been?

JS: There is a breakdown in trust in our institutions and the impact is going to be considerable. Our approach would be to:

1. Understand what needs to be repaired 
2. Rethink where we are today and what needs to change
3. Reconfigure for the future. 

We have the opportunity to be a catalyst for change, but that doesn't mean it is going to be easy.

TB: The pace of change is huge. Sometimes we don't all give ourselves enough credit for our ability to lead through the complexity we deal with day to day. When we talk to senior leaders, there are usually three things on their minds that they are trying to deconstruct: 

1. How do I set a vision for the next three to five years and how do I create a sustainable plan around that? 
2. How do I align my team around vision and plan? People often understand that there is a bigger world out there but there are clashes or paradoxes across different kinds of worlds. How do I align my team to see what I see as the bigger world? 
3. What if I am just wrong and this fails? This plays into the hyper politicisation that we see internationally where people are managing trust and risk in different ways. Their inner motivators perhaps, are not always aligned with their outward motivations. Further, institutions are sometimes confronted with the challenge to move at pace. When we talk about leadership it is micro day / week /month timeframe rather than the multi year transformative macro leadership that you might aspire to. 

I'm a little bit fearful that you might be talking to the converted. What advice do you have to convince people to accept what's happening and they have to do something?

JS: You can lead a horse to water, but you can't make it drink. I have always been one to sow seeds, because when you sow seeds they grow even when you are not there and they flourish into something else.

Research over the last two or three years shows how we can respond differently through nutrition, sleep and other bio hacks that we wouldn’t have thought of five years ago. We don't know what we don't know. We also have to be sensitive to C-suite. They are under nonstop pressure to be performing and delivering to shareholders, regulators and other stakeholders. One thing would be to ask them “Have you understood what is coming, have you spent time horizon scanning?”  That will start the conversations about what people are doing differently. That is where the shift will start. We can't do it alone, this has got to be something that we are doing together.

You spoke about ‘radical ambitions’. I think we all sometimes feel we're not brave enough and we need to be more radical. At what point do you know you're on the right track, and what feedback loops should you look out for?

JS: We're never going to know whether what we're doing is right, because you can only make decisions on what you know. But you can challenge your assumptions, be bold, be radical and pivot as long as you've set your task on getting to a certain point. It depends on how things are treated when they don't go right and if the appropriate feedback mechanism is used. If there is criticism, people live in fear. We are undertaking research in the UK around the ‘paradox of intent’. People have this bold, radical ambition, but worry if something goes wrong and the personal repercussions that may have. How do you build a team with that neurodiversity to help people get over those barriers to success?

I understand that the energy crisis is existential and why we have to decarbonise our energy systems to make the planet livable in the future. But would you say the same about generative AI?

JS: Yes because the world is going to change with what generative AI is going to bring us. We don't know what that is yet but we’re moving to a different level. I don't think people understand what generative AI is going to bring so that’s why we need to pull it out. If, as an organisation, you are still working with the old assumptions that we're going to get this new technology and implement a change program that’s not going to be enough. Things are moving so much faster than that.

Generative AI has already driven serious shifts in the tech platform sector. I'm not particularly interested in the conversation that AI is sort of going to replace us as human beings. That's way too existential. When we read about these things in the headlines, we think there's a threshold moment where suddenly AI will take over. But the everyday adoption of what's happening with ChatGPT is already evident. Is it an enabler to our thinking as humans and a tool to help us advance something? Or is it just a shortcut? The really interesting opportunity is the everyday adoption of generative AI and how we  use that as a base of innovation for other things.