I found myself reflecting on this the other night as I sat down with two very smart people for one of those marvelous European dinners. Both are business leaders in one of the world’s great pharmaceutical companies. The conversation turned to the growing complexity of the business environment, and the question was inevitably posed: What had I, as a business professor, managed to figure out about what it takes to succeed under such conditions? In no particular order, here are my thoughts:

No Illusions, Eyes Wide Open
Some 15 years ago my colleague Sumantra Ghoshal and I wrote business cases on three companies that were then leaders in their sectors: BP, Royal Bank of Scotland, and Nokia. In one way or another, and for rather different reasons, all of these companies have since struggled. So my first observation is that leaders must constantly acknowledge that their companies are subject to an onslaught of destabilizing forces. Being vigilant and observant about the nature and velocity of these forces is crucial. Effective leaders in complex environments do not succumb to a belief in their invincibility – they keep their eyes wide open to the reality of the world.

Authenticity, Tempered by Custodial Responsibility
Over the course of the dinner, we arrived at the hot topic of authenticity. Various proponents of this notion have urged leaders not to try to conform to a narrow description of what a leader does, much less copy someone else’s style. Leaders are urged to be themselves. Only those perceived to be authentic and who are comfortable bringing their whole selves to work can gain others’ trust and inspire them to pull together. It seems to me that this emphasis on authenticity is an important counterbalance to earlier assumptions that people gained leadership powers by dint of titles or positions in hierarchies. And it certainly resonates with the world’s reverence for Steve Jobs, who created the world’s number one brand while obstinately refusing to be anything but himself.

At the same time, growing complexity in the business environment creates a challenge. For people in organizations facing an external world of mounting chaos, being led by groups of highly idiosyncratic leaders, however authentic, could be confusing and distracting. In particular, when a leader is not a founder, he or she inherits a role as a custodian, and is entrusted with growing and passing on to future generations of employees and shareholders the value that past generations sowed. So yes, be authentic – but don’t break the mold so completely that others need to spend energy figuring out how to engage with your leadership. The world is complex enough without this further variable to be considered.

Strength in Diverse, Collaborative Teams
Thinking again about the problems encountered by BP, RBS and Nokia in the past decade, as different as they were, it’s possible to see a common factor. These firms lacked diverse, highly collaborative leadership teams. At RBS, CEO Fred Goodwin isolated himself from his colleagues, failed to listen to others, and became increasingly selfish in his behavior. At Nokia, the senior leadership team was for a long time extraordinarily homogenous (mostly men, mostly from Finland, mostly software engineers, mostly educated in Helsinki). How likely was it that they would be on top of the rapid developments in Asian consumer markets, or in technology and design emanating from Silicon Valley? At BP, we know top management found it difficult to integrate US assets and build collaborative relationships with the leaders of US acquisitions – contributing to a problem with implementing safety standards globally.

Simply put, as businesses are increasingly challenged by dynamic change and crises, it becomes ever more crucial for their leadership teams to have sufficient diversity to see what is happening from different perspectives, and sufficient collegiality to work collaboratively with each other even when under stress.

There is undoubtedly much more that could be said about leading well in complex business environments. Indeed, in a conference next month – the Global Drucker Forum, in the wonderful city of Vienna – I’ll be participating in a bigger conversation. There will be more smart people seeking answers they can take back to their organizations. Together, we’ll make the way forward for leadership a little clearer. And with luck, there will be time for coffee and streudel.

To do this, corporations have to address three questions: how is leadership ensuring there is sufficient inner resilience to take the corporation through these turbulent times? What is the corporation doing to positively anchor itself in its neighborhood and supply chains? And what role is it playing in solving global challenges such as climate change, endemic youth unemployment, and inequality?

Some leaders are already stepping up. When Unilever’s CEO Paul Polman committed to significantly reducing the environmental footprint of his corporation, he was making a purposeful statement about climate change. When Danone’s CEO Franck Riboud committed over seventy million euros to the Danone.Communities project, he was making a purposeful statement about the role of the corporation in society. When the CEOs of Indian IT giants Infosys, TCS and Wipro built a host of ways to educate Indian children, they were making a statement about their role in India.

These role models are crucial. We need to see more – and at scale! Corporations are unique as institutions in having extraordinary access to the most talented minds from across the world, and in having the innovation processes to bring these minds together in the most productive way. Many have honed their scaling and mobilization capabilities in a way that is far superior to governments and NGOs. Some have become adept at forming global alliances, even with their competitors.

These precious competencies – innovation, scaling and alliances – are crucial to solving global challenges. In the past, it may have been appropriate for corporation to use them in the service of their financial stakeholders, but this is no longer appropriate. The same forces of technology and globalization that have enabled corporations to prosper in the last decades have also brought forward profound global challenges. Those corporations that will prosper in the future will do so because their shareholders, consumers and employees see their leaders describing and living a greater purpose. This is a purpose that sees the role of the corporations not only from the ‘inside’, but also from the ‘outside’, in its neighborhoods and supply chains, and in an increasingly global context.

Corporations must be less precious about their precious competencies. Without an outer focus, those who are taking to the streets to demonstrate against corporations may find more people joining them, and more to be angry about.

AUTHOR:

Lynda Gratton is Professor of Management Practice at London Business School and is the founder of the Hot Spots Movement. She has written seven books and numerous academic articles and is considered one of the world’s authorities on people in organizations.

In 2011 she has been ranked by The Times as one of the top 15 Business Thinkers in the world today and in 2008 The Financial Times selected her as the business thinker most likely to make a real difference over the next decade. She was also in the top two of the Human Resources Magazine’s “HR Top 100: Most Influential” poll, and this year Lynda was number one of Human Resources Magazine’s “Top 25 HR Most Influential UK Thinkers 2011” poll.

Lynda’s full page biography can be found here.