By Clare Melford, CEO, IBLF
At Rio+20 I attended the 3rd Global Forum for Responsible Management Education which is the official platform for management-related Higher Education Institutions (HEIs) at Rio. I was there amongst almost 300 representatives of management-related academic institutions as one of the voices of business. We were there to consider the business trends and challenges that these institutions need to pay attention to if they are to fulfil their unique role to train current and future generations to lead the Rio+20 agenda and rapidly scale up business efforts.
IBLF, together with Ashridge Business School, prepared a report, Leadership in a Rapidly Changing World, on behalf of the UN Global Compact Principles for Responsible Management Education (PRME), which was one of the inputs into this Forum. This report is based on in-depth interviews with business leaders, including some who have led the world’s largest and most global companies. It identified some important shifts in the ways business leaders think about and conduct business when they commit to a sustainability agenda. These have critical implications for management development yet despite progress made by many business schools there is still a pressing need for these issues to be fully integrated into the management education ethos and curricula.
The challenge for management academics and HEIs
The traditional assumption that financial growth leads automatically to a more prosperous and stable world is no longer valid, if it ever was. While the majority of businesses and the growth they drive are positive forces in society, there are growing expectations on business, alongside governments and NGOs, to contribute to addressing environmental and social problems through their business models and operations. These can no longer be regarded as peripheral issues, but are central to long term value creation. To rebuild trust and gain recognition for the positive contribution that business can and does make to society, a new generation of business leaders will need to deal with a convergence of their public and business responsibilities and the importance of multi-stakeholder collaboration. They will need to prioritise long-term value creation as much as short-term performance. This, coupled with a changed public perception of business in general, means that business needs talented business graduates who are well equipped to deal with these complex issues.
Our study, and our work with senior executives on the IBLF Leaders Council, clearly demonstrates that increasingly these concerns are being reflected in the language of the Chairs and CEOs of some of the world’s largest global companies – think Anglo American’s Cynthia Carrol, GSK’s Andrew Witty, Unilever’s Paul Polman, Wal-Mart’s Lee Scott, GE’s Jeff Immelt, Nestle’s Paul Bulcke, Petrobras’ José Gabrielli, the list goes on – although evidently not on the scale that is urgently needed.
What pioneers do today often becomes mainstream tomorrow
There are three important trends that management-related HEIs need to pay close attention to:
1. A mindset shift – seeing the possibilities for business to contribute to sustainable development
In the past, the prevailing attitude was that it was the role of political leaders to address the big societal issues of the day, not business leaders. Some engaged in philanthropic activities, either as individuals or through company contributions. But most would have argued such concerns would only be a distraction from their core role and a source of cost.
Fast forward to today’s business leaders and you hear a very different attitude being expressed: that it is essential for senior executives to have a nuanced understanding of the major societal forces shaping our world, and to know where and how to respond through the way they go about their core business, in a way that benefits their business and wider society. A sizeable cohort of business leaders now evidently believes that playing a leadership role in understanding and addressing the major forces shaping society – far from being a source of cost – is now central to how they create value.
2. Embedding sustainability across the business
Many companies recognise that sustainability initiatives and their long term growth are inextricably linked, and have ambitious CEO commitments and HQ-led governance programmes. Yet there is still a significant execution gap with many business leaders struggling to drive sustainability to the core of their operations in order to deliver on their commitments, develop new markets and mitigate risk.
3. A new leadership role – leading change beyond business boundaries in a complex multi-stakeholder world
More and more business leaders are extending their focus beyond the traditional boundaries of their organisations, proactively leading change in consumer and supplier behaviour, industry norms and government policy, for the mutual benefit of their organisations and wider society. Some are leading collaboratively with industry competitors, NGOs and government where challenges need to be tackled and only collective, systemic solutions will do.
This new horizon to their role requires business leaders to develop skill in areas that historically have not been a conventional part of the business leader’s repertoire: contributing to public debate with an informed point of view, proactively leading change in consumer and supplier behaviour, industry norms and government policy, relating well with multiple constituencies, engaging in dialogue to understand and empathise with groups and communities with perspectives contrary to one’s own, engaging in multi-stakeholder collaboration with unconventional partners.
Are businesses doing enough to demand this of business schools?
These trends have profound implications for how organisations think about talent management and leadership development. It is clear that, as recruiters of business graduates and purchasers of executive education programmes, leading businesses need to play an active and positive role working together with business schools to support a rapid scaling up of change. Too often there is a disconnect between business and CEO rhetoric and the messages companies give to business schools through their recruitment and executive development activities.
Businesses need to ensure that their senior management and their next generation of talent fully understand the sustainability challenges ahead and their strategic implications. They need a clear view of the additional skills, mindsets and knowledge that will help them ensure the long term sustainability and competitiveness of their companies. These need to be reflected in the recruitment of new talent, talent management and sourcing of leadership development, which will in turn create demand for change in management education.