ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Organizations have been evolving continually since the first modern corporations arose centuries ago. In the past few years, however, they have been hit by more shocks than in the previous decades, forcing them to adapt and build resilience at a pace that few are prepared for. New technologies, major workplace transformations, vastly different employer–employee relationships, and an uncertain global environment are among the many pressing challenges that leaders need to confront—fast. To help you develop strategies for action, here’s a quick look at what’s happening in organizations right now.

AN IDEA

Tackle the big ten

Keep an eye on ten organizational shifts that pose both challenges and opportunities, suggest McKinsey senior partners Dana Maor and Patrick Simon and colleagues in our The State of Organizations 2023 report. For example, the right institutional capabilities are essential to achieve a competitive advantage, but only 5 percent of respondents to our global survey of more than 2,500 business leaders say that their companies have the capabilities they need. Just 25 percent of respondents believe that their leaders are engaged, passionate, and inspiring—attributes urgently needed to succeed amid volatility. But some organizations have forged promising new paths for themselves. Their strategies include a “bold vision,” “comprehensive investment in employees’ well-being,” and “measuring what you want to reinforce,” according to their leaders.

A BIG NUMBER

5

That’s the number of leadership shifts it may take to lead organizations in uncertain times. McKinsey senior partners Aaron De Smet and Arne Gast and their colleagues point to five fundamental changes for leaders to consider making to their mindsets and working styles. These involve “moving ‘beyond’ the current norm ‘to’ an evolved ambition that’s needed to lead thriving organizations in this new, disruptive era,” they say. For example, leaders may need to go beyond delivering profit to achieving impact: this involves moving from effecting incremental improvements to boldly pursuing a future that maximizes value for all stakeholders.

A QUOTE

‘So much of the CEO’s role is taking things that are or could be highly complicated and simplifying [them].’

That’s from a participant at one of the many McKinsey Leadership Forums that we have conducted since 2006. Rising CEOs face a different world today than they did back then. A notable change that we’ve seen among leaders in recent years is a shift from a “command and control” mindset to one of supporting and enabling—which means focusing their energies on the tasks that only a CEO can do. “I try to control what I do and where I spend my time,” one CEO told us. “I don’t do a very good job of it. . . . But I do try to be deliberate about where I think I can have the most impact.”

A SPOTLIGHT INTERVIEW

University of Oxford professor Paulo Savaget doesn’t believe in the myth of the hero visionary. “The most successful leaders are not necessarily visionary,” he says in this McKinsey Author Talks interview. “They provide an environment where people can experiment, where they can test, where they can be flexible.” That includes nurturing unconventional approaches to problem solving, such as work-arounds—which, Savaget says, “are very powerful mechanisms for deviating from norms, from these rules that constrain us.” What Savaget calls “scrappy” organizations (“because they’re feisty, they’re resourceful, they operate in the margins of systems”) manage to beat obstacles by using inventive work-arounds: in one case, a healthcare organization piggybacked on a beverage maker’s distribution system to bring lifesaving medicines to remote areas. Work-arounds like this “allow you to deviate from a status quo that you consider undesirable and get things done effectively, in a very low-stakes way,” Savaget says.

— Edited by Rama Ramaswami, senior editor, New York

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