Four Elements Of The Leadership Mindset Of The Future

leadership

Our world faces unprecedented global challenges. Climate change is accelerating. The world’s natural resources are becoming scarcer. And companies are in the midst of a culture crisis, with the #MeToo movement at the forefront. On the face of it, these are grim, even hopeless problems. But there is an inspiring cohort of leaders who see these challenges not simply as problems to be solved, but as opportunities for innovation. They’re the ones who will get out ahead of tomorrow’s market demands and beat the competition––while making a positive impact on the world.

While I was researching and interviewing leaders for my book, FUTURE FIRST, I noticed that––for all their differences––they had some essential similarities. They held various positions in a variety of business models and in industries from cars to solar power. They were women and men, Swedish and Japanese, and identified with a variety of political and social views. But they all created environments where people are encouraged to innovate new business models, products, and services. What ultimately unified them, I realized, was a set of shared mentalities. As these mentalities became clearer, they reminded me of what the best-selling author and psychologist Carol Dweck calls “mindset.” In a nutshell, mindset is the way in which people approach learning, failure, and success. Mindset is critical to how we learn to lead and how leaders help others learn to succeed in their jobs.

As I became aware of the growth mindset common among future first leaders, I began to break down its most important aspects into five defining elements. I began to describe the mindset that this group of leaders shared as “future first.” It was a growth mindset, but one with an emphasis on developing business innovations to meet pervasive social and environmental challenges: global challenges that are here to stay, and are even on the rise.

Here are the four mindset elements all future first leaders share.

  1. They embrace challenges as opportunities for innovation. A growth mindset does not shy away from problems, but is instead excited to solve them through ingenuity and creativity. Embracing global challenges as opportunities for innovation, rather than denying and ignoring them, is the most critical element of a future first mindset. It is how Eiji Toyoda asked the question, “What is the future of automobiles?” that led to the invention of the Prius. Every future first leader who is on the frontier of their industry has a mindset that is motivated by innovation challenges to remake their products and services for a more sustainable future.

Sony takes up the challenge of innovation

Today, Sony pursues innovation in part through in-house competitions in which employees are encouraged to chase down an idea. Employees are invited into a “dragon den” full of high-ranking Sony officials. They pitch their idea. If it’s good, they are encouraged to pursue it. Employees can take time off their normal jobs to follow up on their ideas. The idea isn’t necessarily to create the next Walkman or PlayStation. In many cases Sony executives may realize, in Jeanna’s words, that “if it is a good idea, it is inherently valuable.” Today, Sony is a company of 128,400 employees around the world. They encourage individual employee effort as a way of what Jeanna describes as “not losing the small company mindset and the innovation part of that mindset.”

  1. They overcome presentism. Most of us are wired for the present. This can be helpful when we need to be totally focused on an immediate task, but it becomes a real impediment when we try to make decisions about the future. Given our reluctance to do things as simple as buying life insurance or sticking to a diet, it’s really no surprise that we have trouble acting in the face of huge, de-personalized challenges like climate change. To many people, climate change seems distant, ominous, and unstoppable, like our mortality. We often deal with it in the same way: pushing the issue off into the distant future.

This tendency toward ignoring future challenges goes well beyond the environment. Many companies are hobbled in adopting future-leaning business practices and products by their focus on short-term profits and goals. This inability to look years, much less decades, into the future results in lost opportunities to push their company’s value frontier.

Tala’s (formerly InVenture) credit rating app 

Today it is incredibly hard for billions of people to borrow money. Although many of them will reliably pay back loans, with no financial profile, they have no chance to receive them from banks. This means that a huge chunk of the world’s population is cut off from the most efficient ways of saving against disasters or investing in their businesses.

Tala’s CEO Shivani Siroya looked beyond the short-term thinking that defines traditional lending to develop an Android app that brings credit scoring into the future. Once borrowers download the app, it tracks over 1,000 data points––from texting friends to getting directions––that don’t appear on traditional credit reports. “Over time this data is getting captured on these phones and it provides a really rich picture of a person’s life,” said Siroya.

To demonstrate how the new credit model works, Siroya tells the story of a shopkeeper in Nairobi, who downloaded the Tala app, which began tracking her normal smart phone activity in the form of a non-traditional credit score.

“Innovation within the limits of both profitability and sustainability can create and foster positive ecosystems.”

For example, the shopkeeper called her family in Uganda regularly. This improved her score by 4 percent because people who stay in touch with a few key contacts are better borrowers. From GPS, they could tell that she traveled a lot, but in consistent patterns. Location consistency was worth another 6 percent increase on her Tala credit score. She also communicated with a large number of people. Tala’s research shows that network diversity is valuable; people who communicate with more than fifty-eight contacts tend to be good borrowers.

Once Tala had collected all the data points, they decided to make a loan to the shopkeeper. Since then, she has not only successfully repaid her loan but has also used the money to expand her business to multiple locations. Tala’s ability to innovate beyond the presentism that is usually inherent in loaning money allows them to promote small entrepreneurial activity in the developing world. It also opens up a potentially enormous market for their new credit model.

3. They expand the values in business decisions. Value in the corporate world tends to be measured in terms that sound rational: profitability, competitive advantage, and productivity. But there is a lot that goes into business decisions that is left out of official work meetings. Any decision made by humans will be marked by emotions, personal attitudes, and other input that rarely is explicitly explored by the decision-makers themselves. These harder-to-measure inputs are critical to sound business decisions, because they represent the values of employees, customers, and shareholders.

The past catches up to DuPont

In 1993, scientists working at DuPont Chemical concluded that the PFOA (perfluorooctanoic acid) used in many of their products, like Teflon, caused birth defects, cancer, and death. The leadership had to make a decision. Should they protect the health of consumers and neighbors and replace PFOA with safer alternatives? Or should they continue to use PFOA because changing it would put $1 billion of annual profit at risk? They chose the latter.

For the next twenty years, DuPont knowingly leaked PFOA into the local water supply and exposed their employees to highly toxic levels of PFOA. The company protected its profitable business for a couple of decades, but in 2017 DuPont paid $670.7 million to settle over 3,500 civil lawsuits from private citizens who were sick and dying from PFOA exposure. The Environmental Protection Agency had only begun seriously regulating PFOA in 2015. And the fallout for DuPont is mounting––a recent plaintiff was awarded $5.1 million dollars.

Sometimes what appears at the time to be a perfectly rational business decision is at its core an irrational decision. From a purely financial standpoint, the company has paid less for the thousands of human lives lost so far than the amount of annual profit they have preserved every year since 1993. Yet, the loss of human lives, business reputation, and responsible leadership will erode the company’s value in unforeseeable ways for years to come.

4. They go beyond one-company, one-leader at a time. Companies today––even small ones––are more complex systems than they were forty years ago. They operate in the midst of an increasingly globalized environment held together by a massive physical infrastructure and powerful––and sometimes conflicting––political and economic interests. Leaders have to understand their companies in the context of all these larger systems, including global challenges like climate change, resource scarcity, and social dynamism. One, perhaps surprising, result of all this complexity has been companies discovering the value of working together.

Collaborating with your frenemies 

Ingersoll Rand’s Scott Tew described the move toward more collaboration among companies, saying:

Most of the companies you’ve talked to have the same difficulties that we do in saying, “We’re not quite sure how to solve this fully.” A lot of times people will get you 50% of the way. Or we can shave 20% off of the waste or of the resource used, but we can’t get you all the way to zero. I think sometimes we all have to be a bit humbler and say, “We can’t solve this on our own, so we’d love to have some help and if you have any ideas, please step forward.”

The largest global challenges are too complex to be solved one-company, one-leader at a time.

Innovation within the limits of both profitability and sustainability can create and foster positive ecosystems. If someone creates an electric vehicle and corners the tiny market for electric cars, shutting out all competition, he or she is smothering the possibility of an ecosystem maturing around electric vehicles. This ecosystem will have a bigger impact on GHG emissions, but it will also raise awareness of electric vehicles and grow the market, perhaps resulting in more opportunities for the original innovator.

Future-first leaders understand how their company is made up of many interdependent parts. They see how it’s interconnected with partners, competitors, and consumers within wider ecosystems. They work to embed a future first mindset in their company’s systems.