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August2022

McKinseyExplainers

Whatisleadership?

Leadershipisasetofbehaviorsusedtohelppeoplealigntheircollectivedirection,toexecutestrategicplans,andtocontinuallyrenewanorganization.

2Whatisleadership?

Allleaders,toacertaindegree,dothesamething.Whetheryou’retalkingaboutanexecutive,manager,sportscoach,orschoolteacher,leadershipisaboutguidingandimpactingoutcomes,enablinggroupsofpeopletoworktogethertoaccomplishwhattheycouldn’tdoworkingindividually.In

thissense,leadershipissomethingyoudo,notsomethingyouare.Somepeopleinformalleadershippositionsarepoorleaders,andmanypeopleexercisingleadershiphavenoformalauthority.Itistheiractions,nottheirwords,thatinspiretrustandenergy.

What’smore,leadershipisnotsomethingpeoplearebornwith—itisaskillyoucanlearn.

Atthecorearemindsets,whichareexpressedthroughobservablebehaviors,whichthenleadtomeasurableoutcomes.Isaleadercommunicatingeffectivelyorengagingothersbybeingagoodlistener?Focusingonbehaviorsletsusbemoreobjectivewhenassessingleadershipeffectiveness.Thekeytounlockingshiftsinbehaviorisfocusingonmindsets,becomingmoreconsciousaboutourthoughtsandbeliefs,andshowingupwithintegrityasourfullauthenticselves.

Therearemanycontextsandwaysinwhichleadershipisexercised.But,accordingtoMcKinseyanalysisofacademicliteratureaswellasasurveyofnearly200,000peoplein81organizationsallovertheworld,therearefourtypesofbehaviorthataccountfor89percentofleadershipeffectiveness:

—beingsupportive

—operatingwithastrongresultsorientation—seekingdifferentperspectives

—solvingproblemseffectively

Effectiveleadersknowthatwhatworksinonesituationwillnotnecessarilyworkeverytime.Leadershipstrategiesmustreflecteachorganization’scontextandstageofevolution.Oneimportantlensisorganizationalhealth,aholisticsetoffactorsthatenableorganizationstogrowandsucceedovertime.Asituationalapproachenables

leaderstofocusonthebehaviorsthataremostrelevantasanorganizationbecomeshealthier.

Seniorleadersmustdevelopabroadrangeofskillstoguideorganizations.Tentimelesstopicsareimportantforleadingnearlyanyorganization,fromattractingandretainingtalenttomakingcultureacompetitiveadvantage.A2017McKinseybook,LeadingOrganizations:TenTimelessTruths(Bloomsbury,2017),goesdeeponeachaspect.

Howisleadershipevolving?

Inthepast,leadershipwascalled“management,”withanemphasisonprovidingtechnicalexpertiseanddirection.Thecontextwasthetraditionalindustrialeconomycommand-and-controlorganization,whereleadersfocusedexclusivelyonmaximizingvalueforshareholders.Intheseorganizations,leadershadthreeroles:planners(whodevelopstrategy,thentranslatethatstrategyintoconcretesteps),directors(whoassignresponsibilities),orcontrollers(whoensurepeopledowhatthey’vebeenassignedandplansareadheredto).

Whatarethelimitsoftraditionalmanagementstyles?

Traditionalmanagementwasrevolutionaryinitsdayandenormouslyeffectiveinbuildinglarge-scaleglobalenterprisesthathavemateriallyimprovedlivesoverthepast200years.However,withtheadventofthe21stcentury,thisapproachisreachingitslimits.

Foronething,thisapproachdoesn’tguaranteehappyorloyalmanagersorworkers.Indeed,alargeportionofAmericanworkers—56percent—claimtheirbossismildlyorhighlytoxic,while75percentsaydealingwiththeirmanageristhemoststressfulpartoftheirworkday.

For21st-centuryorganizationsoperatingintoday’scomplexbusinessenvironment,afundamentallynewandmoreeffectiveapproachtoleadershipisemerging.Leaderstodayarebeginningtofocusonbuildingagile,human-centered,anddigitallyenabledorganizationsabletothriveintoday’s

Whatisleadership?3

unprecedentedenvironmentandmeettheneedsofabroaderrangeofstakeholders(customers,employees,suppliers,andcommunities,inadditiontoinvestors).

Whatistheemergingnew

approachtoleadership?

Thisnewapproachtoleadershipissometimesdescribedas“servantleadership.”Whiletherehasbeensomecriticismofthenomenclature,theideaitselfissimple:ratherthanbeingamanagerdirectingandcontrollingpeople,amoreeffectiveapproachisforleaderstobeinserviceofthepeopletheylead.Thefocusisonhowleaderscanmakethelivesoftheirteammemberseasier—physically,cognitively,andemotionally.Researchsuggeststhismentalitycanenhancebothteamperformanceandsatisfaction.

Inthisnewapproach,leaderspracticeempathy,compassion,vulnerability,gratitude,self-awareness,andself-care.Theyprovideappreciationandsupport,creatingpsychologicalsafetysotheiremployeesareabletocollaborate,innovate,andraiseissuesasappropriate.Thisincludescelebratingachievingthesmallstepsonthewaytoreachingbiggoalsandenhancingpeople’swell-beingthroughbetterhumanconnections.Theseconditionshavebeenshowntoallowforateam’sbestperformance.

Morebroadly,developingthisnewapproachtoleadershipcanbeexpressedasmakingfivekeyshiftsthatinclude,buildon,andextendbeyondtraditionalapproaches:

1.beyondexecutivetovisionary,shapingaclearpurposethatresonateswithandgeneratesholisticimpactforallstakeholders

2.beyondplannertoarchitect,reimaginingindustriesandinnovatingbusinesssystemsthatareabletocreatenewlevelsofvalue

3.beyonddirectortocatalyst,engagingpeopletocollaborateinopen,empowerednetworks

4.beyondcontrollertocoach,enablingtheorganizationtoconstantlyevolvethroughrapid

learning,andenablingcolleaguestobuildnewmindsets,knowledge,andskills

5.beyondbosstohuman,showingupasone’swhole,authenticself

Together,theseshiftscanhelpaleaderexpandtheirrepertoireandcreateanewlevelofvalueforanorganization’sstakeholders.Thelastshiftisthemostimportant,asitisbasedondevelopinganewlevelofconsciousnessandawarenessofourinnerstate.Leaderswholookinwardandtakeajourneyofgenuineself-discoverymakeprofoundshiftsinthemselvesandtheirlives;thismeanstheyarebetterabletobenefittheirorganization.Thatinvolvesdeveloping“profileawareness”(acombinationofaperson’shabitsofthought,emotions,hopes,andbehaviorindifferentcircumstances)and“stateawareness”(therecognitionofwhat’sdrivingapersontotakeaction).Combiningindividual,inward-lookingworkwithoutward-facingactionscanhelpcreatelastingchange.

Leadersmustlearntomakethesefiveshiftsatthreelevels:transformingandevolvingpersonalmindsetsandbehaviors;transformingteamstoworkinnewways;andtransformingthebroaderorganizationbybuildingnewlevelsofagility,human-centeredness,andvaluecreationintotheentireenterprise’sdesignandculture.

AnexamplefromtheCOVID-19eraoffersausefulillustrationofthisnewapproachtoleadership.Inpursuitofavaccinebreakthrough,atthestartofthepandemicModernaCEOStéphaneBancelincreasedthefrequencyofexecutivemeetingsfromonceamonthtotwiceaweek.Thecompanyimplementedadecentralizedmodelenablingteamstoworkindependentlyanddeliverontheboldgoalofproviding100milliondosesofvaccinesin12months.“Thepacewasunprecedented,”Bancelsaid.

4Whatisleadership?

Whatistheimpactofthisnewapproachtoleadership?

Thisnewapproachtoleadershipisfarmoreeffective.Whilethedynamicsarecomplex,countlessstudiesshowempiricallinksamongeffectiveleadership,employeesatisfaction,customerloyalty,andprofitability.

Howcanleadersempoweremployees?Empoweringemployees,surprisinglyenough,mightmeantakingamorehands-onleadershipapproach.Organizationswhoseleaderssuccessfullyempowerothersthroughcoachingarenearlyfourtimesmorelikelytomakeswift,gooddecisionsandoutperformothercompanies.Butthistypeofcoachingisn’talwaysnaturalforthosewithamorecontrollingorautocraticstyle.

Herearefivetipstogetstartedifyou’realeaderlookingtoempowerothers:

—Provideclearrules,forexample,byproviding

guardrailsforwhatsuccesslookslikeandcommunicatingwhomakeswhichdecisions.Clarityandboundarystructureslikeroleremitsandresponsibilitieshelptocontainanyanxietyassociatedwithworkandhelpteamsstayfocusedontheirprimarytasks.

—Establishclearroles,say,byassigningone

persontheauthoritytomakecertaindecisions.

—Avoidbeingacomplicitmanager—forinstance,if

you’vedelegatedadecisiontoateam,don’tstepinandsolvetheproblemforthem.

—Addresscultureandskills,forinstance,by

helpingemployeeslearnhowtohavedifficultconversations.

—Beginsolicitingpersonalfeedbackfromothers,

atalllevelsofyourorganization,onhowyouareexperiencedasaleader.

Howcanleaderscommunicateeffectively?Good,clearcommunicationisaleadershiphallmark.Fundamentaltoolsofeffectivecommunicationinclude:

—definingandpointingtolong-termgoals—listeningtoandunderstandingstakeholders—creatingopeningsfordialogue

—communicatingproactively

Andintimesofuncertainty,thesethingsareimportantforcrisiscommunicators:

—givepeoplewhattheyneed,whentheyneedit—communicateclearly,simply,andfrequently—choosecandorovercharisma

—revitalizeaspiritofresilience

—distillmeaningfromchaos

—supportpeople,teams,andorganizationsto

buildthecapabilityforself-sufficiency

Isleadershipdifferentin

ahybridworkplace?

Aleader’srolemaylookslightlydifferentinremoteorhybridworkplacesettings.Ratherthanwalkingaroundaphysicalsite,theseleadersmightinsteadmodelwhathybridlookslike,ororchestrateworkbasedontasks,interactions,orpurpose.Beingcommunicativeandradiatingpositivitycangoalongway.Leadersneedtofindotherwaystobepresentandaccessible,forexample,viavirtualdrop-insessions,regularcompanypodcasts,orvirtualtownhalls.Leadersinthesesettingsmayalsoneedtofindnewwaystogetauthenticfeedback.Thesetacticscanincludepulsesurveysorlearningtoaskthoughtfulfollow-upquestionsthatrevealusefulmanagementinsights.

Additionalconsiderations,suchasmakingsurethatin-personworkandtogethernesshasapurpose,areimportant.Keepinganeyeoninclusivityinhybridworkisalsocrucial.Listeningtowhatemployeeswant,withaneyetotheirlivedexperience,willbevitaltoleadersinthesesettings.Andafocusonoutput,outcomes,results,andimpact—ratherthan

Whatisleadership?5

arbitrarynormsabouttimespentinoffices—maybeanecessaryadaptationinthehybridera.

HowshouldCEOslead

inthisnewworld?

Justasforleadershipmorebroadly,today’senvironmentrequiresCEOstoleadverydifferently.Recentresearchindicatesthatone-thirdtoone-halfofnewCEOsfailwithin18months.

Whathelpstopperformersthrivetoday?Tofindout,McKinseyledaresearchefforttoidentifytheCEOswhoachievedbreakawaysuccess.Weexamined20years’worthofdataon7,800CEOs—from3,500publiccompaniesacross70countriesand24industries.TheresultistheMcKinseybookCEOExcellence:TheSixMindsetsThatDistinguishtheBestLeadersfromtheRest(Scribner,March2022).

GettingperspectiveonleadershipfromCEOsthemselvesisenlightening—andillustratesthenuancedwaysinwhichthenewapproachtoleadershipdescribedabovecanbeimplementedinpractice.HereareafewquotesdrawnfromMcKinsey’sinterviewswiththesetop-levelleaders:

—“Ithinkthefundamentalroleofaleaderisto

lookforwaystoshapethedecadesahead,notjustreacttothepresent,andtohelpothersacceptthediscomfortofdisruptionstothestatusquo.”—IndraNooyi,formerchairmanandCEOofPepsiCo

—“ThesinglemostimportantthingIhave

todoasCEOisensurethatourbrandcontinuestoberelevant.”

—ChrisKempczinski,CEOofMcDonald’s

—“Leadersofotherenterprisesoftendefine

themselvesascaptainsoftheship,butIthinkI’mmoretheship’sarchitectordesigner.That’sdifferentfromacaptain’srole,inwhichtherouteisoftenfixedandthedestinationdefined.”—ZhangRuimin,CEOofHaier

—“Ithinkmyleadershipstyle[canbecalled]

‘collaborativecommand.’Youbringdifferentopinionsintotheroom,youallowforareally

greatdebate,butyouunderstandthat,attheendoftheday,adecisionhastobemadequickly.”—AdenaFriedman,CEOofNasdaq

—“Weneedanurgentrefoundationofbusiness

andcapitalismaroundpurposeandhumanity.Tofindnewwaysforallofustoleadsothatwecancreateabetterfuture,amoresustainablefuture.”—HubertJoly,formerchairmanandCEOofBestBuy

Whatisleadershipdevelopment?

Leadersaren’tborn;theylearntoleadovertime.Neuroplasticityreferstothepowerofthebraintoformnewpathwaysandconnectionsthroughexposuretonovel,unfamiliarexperiences.Thisallowsadultstoadapt,grow,andlearnnewpracticesthroughoutourlifetimes.

Whenitcomestoleadershipwithinorganizations,thisisoftenreferredtoasleadershipdevelopment.Programs,books,andcoursesonleadershipdevelopmentabound,butresultsvary.

Leadershipdevelopmenteffortsfailforavarietyofreasons.Someoverlookcontext;inthosecases,askingasimplequestion(somethinglike“What,precisely,isthisprogramfor?”)canhelp.Othersseparatereflectionsonleadershipfromrealwork,ortheyshortchangetheroleofadjustingleaders’mindsets,feelings,assumptions,andbeliefs,ortheyfailtomeasureresults.

Sowhat’sneededforsuccessfulleadershipdevelopment?Generally,developingleadersisaboutcreatingcontextswherethereissufficientpsychologicalsafetyincombinationwithenoughnoveltyandunfamiliaritytocultivatenewleadershippracticesinresponsetostimuli.Leadershipprogramsthatsuccessfullycultivateleadersarealsobuiltaround“placescapes”—thesearenovelexperiences,likeexploringwildernesstrails,practicingperformingarts,orwritingpoetry.

Whencraftingaleadershipdevelopmentprogram,therearesixingredientstoincorporatethatleadtotrueorganizationalimpact:

6Whatisleadership?

Findmorecontentlikethisonthe

McKinseyInsightsApp

Scan•Download•Personalize

—Setupforsuccess:

•Focusyourleadershiptransformationondrivingstrategicobjectivesandinitiatives.

•Committhepeopleandresourcesneeded.

—Beclearaboutfocus:

•Engageacriticalmassofleaderstoreachatippingpointforsustainedimpact.

•Zeroinontheleadershipshiftsthatdrivethegreatestvalue.

—Executewell:

•Architectexperientialjourneystomaximizeshiftsinmindsets,capabilities,andpractices.

•Measureforholisticimpact.

Awell-designedandexecutedleadershipdevelopmentprogramcanhelporganizationsbuildleaders’capabilitiesbroadly,atscale.Andtheseprogramscanbebuiltaroundcoaching,mentoring,andhavingpeopletrytosolvechallengingproblems—learningskillsbyapplyingtheminrealtimetorealwork.

Whatarem

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