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Considering the myriad challenges facing the world economy, there is little expectation that a strong recovery is imminent. It could be years, even decades, away. There also is growing recognition that the old, pre-crisis way of doing business is never coming back. In its place is "the new normal"―a different kind of competitive landscape buffeted by geopolitics and global instability, rapid technological change, unique financial pressures, a rising tide of data and information to filter through, and the proliferation of new corporate business models.
While some classic strategies and skills will continue to be effective, leaders in this brave new world of business will need to lead differently. Most notably, the mind-set that made leaders successful in the past probably won't ensure success in the future. In fact, several recent studies and surveys have identified critical thinking as the number one requirement for successful leadership in the 21st century.
Critical thinking enables leaders at every level to understand the impact of their decisions on the business as a whole and ensures both alignment with organizational goals and accountability for results.
Yet there is mounting evidence that many current and emerging leaders lack this quality. And it is this competency gap that is shaking up and reshaping leadership development as we have come to know it.
There's going to be no room for old-school leadership development in the new normal.
Leadership in the New Normal
In the wake of the economic crisis, we all know what a failure of leadership looks like. Companies such as AIG and Lehman Brothers serve as stark examples of what happens when decisions are based upon erroneous, partially false or incomplete information and when management fails to think clearly and strategically about the full implications of its actions. The resulting fallouts put an end to business as usual and created a new normal that looks markedly different from anything anyone has seen before.
"We are experiencing not merely another turn of the business cycle, but a restructuring of the economic order," wrote Ian Davis in a March 2009 essay in the McKinsey Quarterly. As global economies emerge from the crisis and continue to shift during what promises to be a protracted recovery, business organizations must be prepared to do things differently if they expect different results. In this demanding, dynamic landscape, it is only natural that they also require a different mind-set from those in charge.
The equation works like this: Thinking drives behavior; behavior drives results. So enterprises that want to change the results―and, indeed, change the organization itself―can achieve the highest leverage by changing the thinking of leaders and managers throughout the organization.
But what kind of thinking―or rather rethinking―will be required of leaders if they want to succeed in the new normal?
?Why Critical Thinking Is Critical
Identified by the Department of Labor as a foundational skill and the "raw material" that underlies fundamental workplace competencies, critical thinking appears to be exactly what is needed from leaders who are navigating the volatility of the new economy.
Diane Halpern, an award-winning professor of psychology at Claremont McKenna College and a widely read author on the subject, offers this definition in her seminal book, Thought and Knowledge:
"Critical thinking is the use of those cognitive skills or strategies that increase the probability of a desirable outcome. It is used to describe thinking that is purposeful, reasoned, and goal-directed―the kind of thinking involved in solving problems, formulating inferences, calculating likelihoods, and making decisions. . . . It's the kind of thinking that makes desirable outcomes more likely."
If ever there was a time for clear, discerning, solution-centric thinking, this is it.
In a recent study from The Conference Board, 150 companies and more than 80 thought leaders weighed in on what they saw as the characteristics of leadership necessary to face the future. The results pointed to "an environment of extreme cognitive complexity in many industries, requiring extraordinary strategic thinking skills and the ability to make high-quality decisions quickly in the face of competitive pressures and uncertainty."
At the same time, in Are They Really Ready to Work?―a subsequent report from The Conference Board, in collaboration with Corporate Voices for Working Families, the Partnership for 21st Century Skills and the Society for Human Resource Management―critical thinking was singled out by 77.8 percent of employers as the number one skill of increasing importance over the next five years.
The irony, of course, is that other research indicates that many current and future leaders lack the kind of mind-set needed to lead in the 21st century.
For example, every two years since 1983, Executive Development Associates (EDA) has conducted an extensive survey on trends, growth and the evolution of executive development. The 2009/2010 EDA Trends in Executive Development: A Benchmark Report revealed trouble on the horizon for corporations seeking future business leaders.
To gauge the readiness of the next generation of verlander grey jersey leadership talent, EDA asked senior executive development professionals to share their views on the strengths and weaknesses of the incoming leadership group―the people who are most likely to fill executive-level positions in the next three to five years―and the subsequent impact on executive development.
The survey identified "hot topics" in executive development for the next two to three years. At the top of the list was leadership, followed by "business acumen, honing skills in strategy execution, leading/managing change, and talent management."
But when asked "What competencies are your leaders lacking?" their responses indicated little confidence that leaders had what it takes to execute in these critical areas successfully. Here's what they said was missing:
Strategic thinking
Leading change
Ability to create a vision and engage others around it
Ability to inspire
Understanding the total enterprise and how the parts work together
In a March 3, 2010, article by Mary Welch posted on Womenetics.com, a female-oriented business media platform and verlander grey jersey one of Forbes' Top 100 Websites for Women, EDA CEO Bonnie Hagemann succinctly described this disconnect.
"What a leader needs the most, the next leaders lack," said Hagemann. "They can't think critically. They can't think at a high level and a low level at the same time."
Anecdotal evidence from the ranks of corporate executives supports the concern that current and emerging leaders lack the critical-thinking skills they need to lead going forward. In Leadership Matters, a 2009 paper published by Heidrick & Struggles International (H&S), one of the world's leading executive search and leadership advisory firms for more than 50 years, CEO Kevin Kelly and Leo T. Csorba, an verlander grey jersey H&S partner, wrote:
"Countless CEOs have confided in us that what keeps them up at night is whether their leaders are sufficiently developed to head off the next crisis. They worry about whether their leaders are able to make the tough decisions and take the necessary actions to not only drive earnings and revenue growth, but [also] to mitigate risk and ward off ethical lapses.
"Boards and executive teams must ensure that their future leaders are not only the smartest, most innovative guys and gals in the room, but also the wisest; not only the most confident, but also the most authentic; and not only the most driven, but also the most ambitious for the enterprise as a whole."
