Expanding consumer populations in emerging markets will pose unique challenges for multinationals in the next 10 to 15 years. To master them, business leaders with global ambitions will need to embody certain key traits, Deloitte research suggests.
The world economy will be different by 2025. The economic center of gravity is expected to shift to Asia, and the majority of the 3.2 billion middle-class consumers worldwide are expected to live in Asia, Africa, and Latin America. To compete with home-grown players in emerging markets eager to fulfil consumers’ individual tastes, multinational companies will need to innovate, but 70% of 1,500 senior executives polled by the Boston Consulting Group in 2014 said their companies’ innovation capabilities were only average.
The most innovative companies, the Boston Consulting Group found, have a strong consumer focus, cast a wide net for new ideas, and worry about hiring and retaining the right talent.
Finding solutions to issues that are complex because of a diversity of markets, customers, ideas, and talent requires traditional leadership skills, such as being able to set direction and influence others, according to the Deloitte research. It also requires thought diversity and leaders who can stitch together different points of view and convert them into insights that drive financial performance, said Suri Surinder, a former Fortune 1,000 executive who heads the leadership consultancy CTR Factor with Manny Espinoza, a retired PwC partner.
“Racial, ethnic, generational diversity – all of this is important because these characteristics lead to people thinking differently,” Surinder said. Leaders who are comfortable with the discomfort of diversity, welcome thought diversity, and harvest it, can bring about more robust, efficient solutions to complex problems, he said.
To attract these leadership skills, companies should embed them in their job advertisements and leadership training, require them in senior leadership appointments, and measure them with the help of key performance indicators that hold leaders accountable.
Business leaders need to embody six key traits to convert diversity into insights that drive financial performance:
Personal commitment to fairness. This trait is often shaped by personal experiences. Leaders committed to fair play prioritise time, energy, and resources to treat all team members with fairness and respect and ensure each team member feels connected. They accomplish that by setting diversity targets as part of the business plan and putting in place assessment mechanisms to see whether these targets are achieved.
Courage to challenge others, the system, and themselves. Agents for diversity challenge entrenched organisational attitudes and hold others and themselves accountable for bias. They acknowledge personal limitations, admit when they make a mistake, and seek contributions of others to change their own behaviour.
Willingness to recognise and mitigate bias. Subtle or unconscious biases, such as stereotypes, favouritism, and groupthink, can result in pay and performance ratings that aren’t based on capability and effort. Processes that are transparent, applied consistently, and include the views of those affected by them can prevent unfair and biased decisions. Being aware of biases and identifying and addressing organisational processes that aren’t consistent with merit help create an environment of fair play.
Openness to different ideas and experiences. A desire for continued learning helps drive open-mindedness, inquiry, and empathy. Curious leaders ask questions to better understand others, listen actively, and withhold fast judgement. They try to see things from the viewpoints of others and accept that some uncertainty is inevitable. Curiosity can have many business benefits, from innovative ideas to greater customer insight.
Tolerance of cultural ambiguity. Deep cultural understanding and lessons learned from the experiences of others allow leaders to value cultural differences and build stronger connections with people from different backgrounds. Research has demonstrated that cultural intelligence is linked to expatriate job performance and improves the effectiveness of multicultural teams.
Collaboration with teams that are diverse in thinking. To successfully collaborate with diverse employees, customers, or other stakeholders, team members must feel comfortable to share their perspectives. Leaders should ensure team members respect each other and be prepared to take appropriate action should a team conflict occur. Diversity of thinking is critical for effective collaboration. Empower a team that is diverse in thinking by giving members the freedom to handle difficult situations, but control for biases and hold them accountable for performance they can control.
—Sabine Vollmer (firstname.lastname@example.org) is a CGMA Magazine senior editor.