Leadership in times of (cultural) change: Four principles

In the past years, I have had the privilege with zeb and TABULARAZA by zeb to accompany numerous executives at vastly different banks and financial services providers. What they all had in common was the firm demand, made by their management, that leadership now had to be different – in some way. Inevitably, the reactions and my experiences also varied widely.

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Limits of traditional leadership

In most cases, this demand is identified once a company realizes that the mixture of digitalization, demographic change, low interest rates and now inflation does not bode well for traditional approaches and conventional management: developments accelerate and are less predictable. The vast resources of the past have largely been used up and long-established business models are reaching their limits. And for the past two and a half years, all of this has somehow had to be managed in hybrid teams. This is indeed difficult, because old decision-making processes and rituals are not much help in the face of these challenges.

Leadership has to be different now. But how exactly?

The different demands quickly become apparent even in the first meetings with clients. Expectations range from modern leadership training to designing a complete cultural change. Let me be clear from the start: There is no shortage of tips and advice on “successful leadership in times of digitalization”. Google offers almost 790 million entries for “modern leadership” and another 100 million for “agile leadership”. You will surely find countless valuable and reasonable suggestions there. Corresponding leadership training usually offers some insights, too.

And yet: against the above background, the call for leadership training falls far too short of the mark. There are at least three understandable reasons for this persistently strong desire for a quick and simple solution:

  1. Convention: that’s how it has always worked.
  2. Effort: leadership training can be completed quickly.
  3. Delegation: someone else (the trainer) solves the problem.

However, such training leads at best to verbal open-mindedness and hardly affects the rigid behavioral patterns. But that’s what it’s all about: breaking up or at least softening established behavioral patterns, letting go of adopted rituals and procedures, saying goodbye to previous certainties – always with the goal of recognizing and serving customer needs more quickly, flexibly and efficiently. The term that has recently been used to describe this process is agility. And understandably, start-ups are often used as role models. True, they are generally faster because they need to get their concepts on the market as quickly as possible. As to that, they are simply ahead of old organizations with their structures.

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Basic principle of leadership in times of (cultural) change

Executives are only human and therefore have a hard time with such changes – especially since they have done things differently over decades: they have learned that control is important, that professional expertise has top priority and that their own presence is important. Executives will only accept massive changes if they understand their relevance and have trust in them. This brings us to the first basic principle of leadership in times of (cultural) change:

1) Cultural change always starts at the top

First at management board level, then at divisional manager level

Executives must understand the principle of modern and more flexible leadership; ideally, the management board becomes the top expert and makes agility mandatory for the organization.

But what do executives need to do differently today?

Perhaps not so much at all compared to good leadership in the past. It’s just that today, leadership needs to be clearer, more transparent and might also get harder for some of those who exercise it. Basically, modern and more flexible leadership is about adding value. Executives must add value – for the team by promoting collaboration and for the individual employees by helping them to improve and be more successful. They can also add value by being aware of their role model function. Securing entrepreneurial success and strengthening future viability ultimately add value for the entire organization.

2) Adding value

What seems so simple at first turns out to be a massive challenge once you take a closer look at it

When I ask my workshop participants to specifically name their own added value, many of them start staring at the floor. But if you don’t add real value, you are merely a supervisor and not a leader.

You only need a few words to describe the demands on leadership and executives:

  • Respectful, appreciative treatment? Be a role model.
  • One-company approach? Promote collaboration.
  • Empowerment? Help people to improve and be more successful.

Insisting on hierarchical structures has never added any real value. In agile contexts, leadership rather means being a driving force, coach and networker. And you must learn to endure uncertainty.

3) Leadership must be integrated into the personnel management systems

It’s not just about wearing a hoodie

Now let’s get back to leadership training, which is at best a first impulse for coping with these massive challenges. It then requires strong commitment: the specific demands on leadership must be integrated into the personnel management systems. It requires awareness: the demands must be effectively communicated and conveyed. It requires organized relevance: the entire organization must address the demands in a meaningful way. It is imperative to include the business management view (which is the third basic principle of leadership in times of cultural change): demonstrate the economic necessity and ask each team to define their contribution to it. It’s not enough to simply print values and symbols on mugs, hoodies or posters.

And it requires success: initiate innovation in small projects with people who like to shape the future. And finally, it requires ambassadors: train a team that exemplifies, promotes and spreads the demands within the organization.

4) Individual leadership effort

Takes time and cannot be delegated

This constitutes the fourth basic principle of leadership in times of cultural change. It is in this respect that I have noticed the most profound differences in the understanding of personal leadership responsibility in recent years. The (thankfully rare) projects where this responsibility has been delegated to a leadership training are not really getting anywhere. Management boards who seriously enter and enjoy this long-distance race are the ones that actually get their organization moving.

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