Today more than ever, we are relying on our leaders to deliver. We’re asking more of them than we have in decades.
Put yourself in the shoes of a business leader—or, if you happen to be one, keep those shoes on. Here are some of the daunting priorities and concerns likely to occupy your mind every day:
|• Short-term results||• Climate and environmental footprint|
|• The great resignation||• Employee safety and mental health|
|• Speaking out on societal issues||• Employees’ demands for more flexibility|
|• Artificial intelligence||• Shrinking competitive advantage|
|• Geopolitical risk||• Ecosystem collaboration|
|• Customer journeys||• Always-on transformation|
But here is some good news. We ran a year-long research project to examine how business leaders are currently performing and what people want and expect from them. Notably, 75% of the 9,000 employees who responded to our survey said they were satisfied with how leaders performed during the first wave of the pandemic.
Our research suggests that what worked during the pandemic can form the basis for an approach to leading that we call generative.
Generative leaders strive to leave the world a better place than they found it. With so much at stake, they are seizing a rare opportunity to do better not just for their shareholders, but for their customers, for their teams, for society, and for the planet as well. Shareholders are of course vital stakeholders, because as one client told us, “You don’t get to have a long term without a short term.” But shareholders sit alongside a set of other stakeholders whom generative leaders view as vital to the future. Generative leaders believe that their obligation to society and the planet is at the core of their businesses, not just an afterthought. (For an example, see the sidebar, "Generative Leadership Up Close at Microsoft.")
Many leaders labor under the false impression that there must be a tradeoff between doing good for society and the planet and delivering returns to shareholders. But studies consistently show a strong positive correlation between companies' commitment to environmental, societal, and governance (ESG) concerns and financial performance. And this outperformance grows over time—by as much as 40%, according to one study. Research also suggests that the best talent, especially among younger workers, increasingly chooses employers with social and environmental policies that match their own personal values.
Take Ikea’s leadership team, for example. Ikea has a long history of steady and profitable business, but its leaders have never rested on past successes. In 2011, when they decided to fundamentally change their company’s relationship with the environment and society, they took immediate and concrete measures. The company started to carefully measure and report on its carbon emissions and those of its thousands of suppliers, and it rolled out stringent ethical and sustainable sourcing policies. Once Ikea’s leaders had a better view of the company's entire supply chain, they set goals to keep improving over time. They linked those goals to their own annual bonuses and made sustainability a critical criterion in every new business case. And, importantly, they made all these changes while continuing to deliver steady returns to their shareholders. (For another example, see the sidebar, "L'Occitane Group's Triple Bottom Line.")
The generative approach comprises three interconnected elements. First, generative leaders look to reimagine and reinvent their businesses. They think expansively about the future they want to create and focus on the right strategic priorities to reach it. Second, generative leaders create an inspiring and enriching human experience for their people—including outside of work. They lead with purpose, and they work to inspire and empower people at all levels of the organization. Third, generative leaders find ways to execute and innovate through supercharged teams that work with agility across boundaries. They align their people effectively around the work to be done.
In other words, generative leaders lead equally with their head, their heart, and their hands. While these are distinct elements of leadership, they come together to reinforce one another. (See Exhibit 1.) Our data shows that organizations unlock the greatest value when these three complementary elements are working together in balance. But it's rare to find an organization whose leadership team excels at leading with all of them. It requires self-awareness and humility and a hunger to keep growing and improving. Let’s examine what generative leadership looks like in practice.
Generative leaders have bold visions for the future. They seek to reimagine and reinvent their business for the benefit of all stakeholders. For a generative leadership team, ESG is not a token gesture subordinate to the core business. Sustainable practices are essential to how the business makes money.
Generative leaders not only reimagine their own company's products and services. They lead the way across organizations to reinvent their industries. They cultivate and reward creative thinking in their teams. They pursue new technologies and realize ideas that once seemed impossible.
Consider the efforts of Pfizer and other organizations to produce a billion doses of a COVID-19 vaccine in record time. To achieve this breakthrough, Pfizer deployed cutting-edge technology and rigorously prioritized work. Pfizer also engaged in radical transparency, so that all employees understood the vision and what they needed to do to achieve it. In a generative organization, transparency works in both directions, ensuring that the leadership team understands and responds to the perspectives of people on the frontline. The best generative leaders achieve the same transparency, alignment, and feedback with respect to stakeholders outside the organization, too.
Enel, an Italian energy utility, is a powerful example of what can happen when leaders take a generative approach. Francesco Starace became CEO of Enel in 2014. When he and his leadership team decided to move their staid industry into renewable energy, they made some remarkably bold and transformational bets over the course of six years:
To implement these initiatives, Enel reinvented its approach to leadership. It advocates and celebrates team leadership, not heroic individual leaders. In 2021, Guido Stratta, Enel’s head of people and organization, published an essay on “soft leadership,” writing, “We will move from ‘me’ to ‘we.’” This leadership model, he continued, “is attentive to relationships, trust, and respect for each person’s talents, while continuing to focus on achieving objectives.”
Six years after it began this program of reinvention, Enel became the world’s largest supplier of renewable energy. Its bold and creative vision paid off handsomely for shareholders: in those six years, Enel increased its market value by 2.6 times.
Generative leaders seek to inspire and enrich the human experience by building great cultures and workplaces where people can do their best work. Employees value recognition and a sense of belonging and a clear purpose that is bigger than themselves. In fact, in our survey, the top four qualities that employees said they seek in their leaders relate to the heart. (See Exhibit 2.)
Generative leaders achieve these goals by investing in relationships with people. They’re empathetic and give of themselves without any expectations, especially during difficult times. Rather than standing apart, they engage with their teams. They prioritize coaching and development in order to help people realize their full potential. And they push upskilling and reskilling so people can meet the demands of always-on transformation. They also insist on celebrating success, learning, and progress—progress, not just perfection.
Above all, generative leaders genuinely care about people—and that extends beyond the workplace. As Francine Katsoudas, Cisco’s executive vice president and chief people, policy, and purpose officer, told us, “We care about our people even on the weekends.” Consistent with this 24/7 caring philosophy, she alerted her leadership team to managers’ need for more support early in the pandemic, leading Cisco to significantly expand access to mental-health resources.
Cisco cares about its people because it’s the right thing to do, Katsoudas told us. And what’s right also happens to be good for business. Cisco was named the best company to work for by Fortune in 2021.
Best Buy has likewise done an exceptionally good job on the heart dimension of leadership. Under former CEO Hubert Joly, the company undertook a successful turnaround that emphasized the employee experience, while its stock generated annual returns of around 20%. “Everybody was saying, ‘You better cut, cut, cut, close stores, fire a lot of people,’” Joly told Harvard Business Review in 2021. “The usual recipe of turnarounds. No, it started with listening to the frontliners. They had all of the answers. And I spent my first week in a store in St. Cloud [Minnesota] with my blue shirt and my khaki pants, the badge called ‘CEO in Training,’ to just listen to the frontliners.”
“Headcount reduction is the last resort,” Joly said. Rather than increasing value by extracting personnel costs, Joly and his leadership team pushed to find generative solutions. “Everybody wants to do something good to other people, and see how it connects to their work. Create an environment that’s very human. Where there’s genuine human connection. Where you can focus on creating the environment where they can become the best, biggest, most beautiful version of themselves.”
However, improving the human experience is where leaders are most likely to fall short. Our work with clients undergoing major transformations suggests that leaders devote the least amount of time and energy to those qualities. (See Exhibit 3.)
Interestingly, our survey also suggests that employees in advanced economies value the heart dimension more than those in other parts of the world. (See Exhibit 4.)
Generative leaders reimagine leadership as a team sport. It’s no longer possible, if it ever was, for the hero CEO to grapple alone with the complexity of our constantly and exponentially changing world. Instead, generative leadership calls on leaders to form teams of people with different perspectives within and across organizations, making sure that they don't neglect a key voice or stakeholder. They create high-functioning, empowered, cross-functional "supercharged" teams that execute and innovate with agility. These teams can move quickly and in unison, anticipating where the ball will land rather than focusing on where it is today. They adapt to changing conditions. Their members’ primary allegiance is to the team, not to whatever part of their organization they come from. Generative leaders build resilience in their teams by ensuring a balance between sprints and recovery.
Generative leaders build these teams and organizations in several ways. First, they engage directly with team members, showing up at team events and on video calls and other occasions. They even work on the frontline, as Joly did, to see things from the bottom up.
Second, generative leaders ensure that teams work together in the service of the overall purpose and strategy, so that the organization functions as a single entity. They see their role as removing roadblocks. They are willing to dirty their hands to help solve problems.
Third, they cede decision making to their teams without passing the buck. They have the courage to make and own tough decisions, sometimes in the absence of consensus. They incorporate AI and other new technologies into core workflows to speed up processes and free up people to do the things that machines can't do.
Generative leaders also seek to be role models: they are open, curious, vulnerable, and humble, and they seek out and act on feedback. They encourage learning through experimentation, and they reward risk taking and continuous improvement.
Finally, generative leaders embrace ecosystems of partners, especially those that augment AI and other digital capabilities. These ecosystems require leaders to exert influence over people outside of their direct control. For many leaders, this may mean developing a new muscle.
More broadly, generative leaders are engaged with the outside world. They demonstrate connection and influence with outside stakeholders. They are proficient in the world of social media.
Pfizer is a powerful example of executing and innovating at lightning speed as a united team. Early in 2020, Pfizer began a company-wide push to produce a vaccine against COVID-19. Critically, it formed a supercharged team with Germany’s BioNTech, a specialist in the development of mRNA vaccines, and a network of academic experts. Michael Dolsten, Pfizer’s chief scientific officer and president of its worldwide research, development, and medical organization, told us that employees were galvanized to solve this pressing global problem. “Everyone felt that an individual person could make a big contribution to the team effort,” he said. Dolsten credits CEO Albert Bourla with rallying the entire team to do what had never been done before. The sense of shared purpose broke down silos. Pfizer became “an unstoppable team,” he said. “We needed R&D, manufacturing, everybody to perform at the highest possible level."
To reach this goal, Pfizer created multidisciplinary teams among R&D, manufacturing, and other parts of the business. It also inverted the traditional project timeline, imposing a deadline of eight months instead of determining the timeline by working backward from each step in the process. Each step was allocated a time slot within those eight months. Serial processes became parallel whenever possible. These measures allowed Pfizer to have its vaccine available by winter in the northern hemisphere. It’s hard to overstate how ambitious the eight-month deadline was. Dolsten estimated that such a development process would normally take seven or eight years. But Pfizer's teams "didn’t want to let other teams down.”
As we now know, these multidisciplinary teams succeeded in partnership with their collaborators. By the end of 2021, Pfizer had delivered more than a billion vaccine doses globally.
Of course, leadership teams can't wait for a pressing global pandemic to help them break down silos and form teams of champions. What are leaders to do? Are they all in a position to reinvent their businesses, enrich the human experience of their employees, and execute and innovate through supercharged teams? If they’re not close today, how do they get closer?
As we’ve said before, generative leadership is a team sport. It can't be pursued in isolation. The shift from a "me" sport to a "we" sport requires trust and team behavior across the organization, as well as continual feedback, reflection, and coaching. The path will be different for different leadership teams, because no two teams will have identical starting points or needs.
Becoming more generative is a long-term pursuit. Like healthy living or athletic conditioning, it requires fundamental and permanent lifestyle change rather than episodic training or dieting.
Whether you are already on the journey or just getting started, the following practices can help leaders and leadership teams become more generative. They will help clarify the mission of a leader and a team by focusing them on the head, the heart, and the hands of leadership.
Head. To help further develop these capabilities:
Heart. To help further develop this muscle:
Hands. To help further develop supercharged teams and other capabilities:
ABOUT BOSTON CONSULTING GROUP
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.
Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.
© Boston Consulting Group 2023. All rights reserved.
For information or permission to reprint, please contact BCG at email@example.com. To find the latest BCG content and register to receive e-alerts on this topic or others, please visit bcg.com. Follow Boston Consulting Group on Facebook and X (formerly Twitter).