Can Executives Use Market Volatility for Radical Leadership?

01/29/2016 05:45 pm ET Updated Dec 06, 2017

Eighty-five percent of leaders in the U.S. are missing the mindset needed to make sense of the complex business environment. Could this explain the disturbingly high failure to adapt and engage creative talent wasting in companies?

Executives, limited to attaining quarterly results and running hard to maximizing return to shareholders, may liken it to running on a treadmill.

Markets love volatility, but for executive leaders, accountable for achieving ninety-day results, it is a different matter. Surveys tell us executives are aware of the risk of being unable to rapidly respond to surprises. Many may indeed feel powerless to push against a business culture, systems and procedures designed for more stable times.

In contrast, those who have integrated design thinking or engineers able to perceive the social system, hold greater confidence when striding into complex uncertain territory.

The gap between routine thinking, habits and the leadership challenge for today calls for expanding leadership awareness. Traversing the messy middle calls for diligent discipline. Otherwise it's too easy to roll back to familiar, safe thinking that sounds something like:

"That won't work here."

"We have to stick to the five year plan!"

When volatile market conditions collide with conventional beliefs beliefs about how things are tossed in the air. Caught between a rock and a hard place, business executives are given an invitation to step up a level. Staying loyal to what worked in the past adds little to no value to today. Volatility expects more from a leader, regardless of position, but especially so for executive managers.

Volatility is the threshold

  • for leading a company into sustainability and growth?
  • for using adversity to tap into a cohesive effort?
  • for interrupting decision making habits, adding different perspectives, and building empathy.

The stakes are high. Will the company slide into an imperceptible death? Or use volatility to raise the bar on leadership - sparking innovation?

Repeating past patterns of decision-making can not achieve performance breakthroughs. In complexity, decisions must be based on core values or principles, providing a simple guide.

Bigger companies are at a distinct disadvantage. In most, executive tenure exceeds the optimal 4.5 year period. According to research, a long term CEO relies more on inside information, losing sight of external changes. There is greater risk that growth in uncertain conditions could create chaos, with few skills to recover. Technological innovation can make the business model redundant in a heartbeat. Changing social values makes the company out of sync with customers. Ignoring the environment results in a lot of profit going down the drain out of neglect.

Past management skills emphasized focus singularly on profit. The advanced skill set requires balancing short-term focus with a broader perspective. Responding to the effects of global climate change calls for radical leadership. Caring leaders, who recognize business responsibility adds to systemic health, are critical contributors. And it takes courage.

"Every single social and global issue of our day is a business opportunity in disguise." - Peter Drucker

The many moving parts of what is going on in the world challenges leaders to see the full picture. With a broader perspective, the connections between each pixel in the picture are visible. Without capacity to adjust perception, the picture is incomplete. Decisions fail to weigh the true impact.

Steering companies through the transformation zone needs an advanced set of personal skills. Conventional wisdom says management is there to manage people. Now companies are managing knowledge and need cooperation and collaboration to innovate. Failure to remove the annoying barriers points to the executive failure to lead.

In big baskets, three areas emerge to advance skills.

  1. Context - Seeing and making sense of the social and ecological interactions. Weighing the impact of decisions. Tracking the dynamics (including unintended consequences) created by existing measures and systems. Remove what doesn't fit today's need.

Eliminating performance ratings is one example. By applying the neuroscience of being human companies are realizing the benefits. Neuroscientist David Rock reports that manager-employee conversations increase, clearing the way for cooperation. Conversations move away from managing the people to focusing on goals and growth.

  • Decision Making - Executives and managers functioning at the lower levels of leadership awareness are ill equipped when confronted by market volatility. Attention goes to meeting personal needs, chasing power, conforming or avoiding conflict. Lying at the core of the conundrum is addiction to past decision making habits. Brain science tells us decision making follows the well worn path of the familiar past. Paying more attention to repeating patterns will open the opportunities to update decision making.
  • Replace focus on a singular goal with aiming at a higher purpose, applying principles and values. The effect is to engage the social system, which is far more intelligent and powerful. Narrowly aiming for profit and shareholder value reflects a conservative path. Decisions are based on the assumption it is a viable strategy. Not anymore.

  • Growth or Fixed Thinking (Mindset) - A growth mindset believes that you can grow your abilities. A fixed mindset believes that your intellectual capacity is fixed from birth. Applied to business, the difference is marked. Every company or leader will tell you they are growth oriented but their actions will say otherwise. Carol Dweck's research points out "managers in fixed mindset companies emphasize talent but ultimately see less potential in their employees." No amount of talent management will save your company from that belief
  • One characteristic of a growth mindset is openness to learning. The more open to feedback a leader is, the more able they are to see from many perspectives without feeling threatened. The ability to insert mindfulness into decisions or observe experience while moving at a fast pace is another ally in navigating transformation.

    Growth in a volatile economy requires thinking flexibly. For instance, the circular economy is restorative and regenerative by design. Companies turn what is now wasted or destroyed into responsible action. Cost reduction is one of many benefits. Raw materials go back into circulation reducing economic and ecological cost. It's a flip from conventional wasteful practices born out of the assumption that resources are infinite.

    Reaching the level of awareness to meet the challenge of volatility requires a higher level of integrated awareness. The skills needed must stretch to 'sense' the complex interplay of interactions both on the surface and beneath.

    Companies are jettisoning impediments to respond to volatile market conditions. Doing so takes radical leadership and awareness. Volatility is the perfect agent for propelling executive leadership to higher levels.

    Are you willing to accept the leadership growth challenge?

    Dawna Jones provides executives and change agents (decision makers) insights to remove barriers to business being better. Mentor, speaker, business innovator, author-Decision Making for Dummies (on Steve Denning's list of eight noteworthy books for 2014.
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