Leadership should be inside-out, not outside-in

By Pratap Nambiar, Published The Straits Times, 6 Jun 2015

I WAS recently having lunch with two very senior corporate leaders and I asked them what they considered to be their biggest challenge in a VUCA (volatile, uncertain, complex, and ambiguous) world. They thought about it seriously and the common response I summed up from different choices of words was "the challenge of continuously and effectively developing leaders".

Leaders know that they need to think and act in a different way today than they have done in the past. What they do not know is that investing in enhancing their competencies is important but not enough. Competencies will only line you up for the race - it will not help you win. The real work is to understand the consciousness of the leader, the underlying beliefs and assumptions that impact decisions and behaviours.

It is also critical to understand the difference between the technical and adaptive challenges leaders face today and know that they cannot respond to them in much the same way.

Professor Bob Kegan, in presenting his adult development theory, has made it quite clear that when we talk about leadership development, we should always refer to the process of growing the leader's mind. A more complex world requires a more complex mind. Professor Ronald Heifetz has repeatedly stated that "the most common error organisations make is to try and solve adaptive challenges with technical means".

Technical challenges are those where the critical knowledge required already exists in the organisation's domain or within its reach to help accomplish the goal.

The leader's job is to harness those available resources and focus them on the task at hand. Adaptive challenges require the invention of new knowledge, the creation of new thinking capacities to accomplish the goal.

An adaptive leader must facilitate the creation of a new mindset, new ways of seeing. He or she must first reorganise himself/her- self before changing the organisation. He or she must develop greater complex capacities of thought which requires transformation.

Mr Bob Anderson, founder of The Leadership Circle, calls it inside-out thinking; as opposed to the most common outside-in thinking process of today's leaders.

They spend almost all their time reacting to external stimuli which is their current reality, without paying any attention to their internal state of being. They continue to be victims of their patterns of action and habits of thought.

They believe that the locus of control is always outside, and do not see how their self-identity is tied up with their self-limiting beliefs and assumptions that shape their decisions and performance outcomes.

It is the structure of their mind (reactive or creative) that shapes their inner operating system, which in turn shapes their performance.

In the 70s, Donnay was the largest manufacturer of tennis racquets in the world. I recall a conversation in the early 80s with Mr Michele Donnay when he wanted to hire me as his GM for the Asian region. He told me how the family had blown away the business by steadfastly listening to Bjorn Borg who told them that lighter graphite racquets were a passing fancy and he would return with his wooden racquet and beat everyone again. I was fortunate that I did not sign the contract because in the next two months the company went bankrupt.

Kodak is yet another company that was a victim of the leader's habits of thoughts that bound it to silver halide chemistry when there was clear and present danger of the world going digital. Its self-limiting beliefs and assumptions, which shaped its sense of identity and self-worth, were never really addressed as it continued to invest in more and more technical solutions to address the adaptive challenge.

Clearly such development cannot come from training but through the process of one-on- one coaching that is based on assessing the leader's current effectiveness and potential utilisation, and understanding each leader's immune system that is blocking implementation.

Leadership author Jennifer Gerber refers to it as the process of expanding the mind through a different way of asking questions. Or more importantly, asking different questions that you have not asked before. Because the questions we naturally ask tend to lead us down a path we feel most comfortable about, a path whose destination is already familiar to us.

In fact, most leaders tend to ask questions to confirm what they already know, not out of any deep curiosity or doubt.

Mr Paul O'Neill of Alcoa decided that he would make his company the safest company in America. He would go for zero injuries in what was essentially an accident-prone manufacturing process. Safety became the measure of excellence on the basis of which progress would be achieved. He brought in a culture of change by focusing on one keystone habit and then watched the other changes ripple throughout the organisation.

The ratio of Costco CEO James Sinegal's pay to worker pay is much smaller than that of CEOs in the US generally, who earn 209 times more than their employees. That means there is less income inequality at Costco, and workers take home a living wage.

After paying its employees 65 per cent more than Walmart on average, Costco generates significantly more profit per employee through a highly motivated and productive team. Mr Sinegal transformed the belief system in his industry by proving that paying employees well is not just the right thing to do, but makes very good business sense too.

Old patterns of thinking can only lead to familiar decisions and will not break open new possibilities. It is the reason why an organisation that wants to focus on enhancing product quality starts out by appointing a dedicated person who is made responsible for quality improvement. Asking different questions is noticing what kind of questions you usually ask and then making an intentional effort to ask a different sort of question.

I was recently facilitating a long and heated discussion among the top leaders of an organisation that was struggling to reduce cost of operations because the competition had dropped prices and clients were shifting away. Suddenly, the CEO asked a different question: What do we need to do if we want our clients to stay with us and pay more than what the competition is asking for?

These are the kind of mindset- shifting questions that every leader in the organisation needs to ask, a mindset that opens the boundaries wide and is able to see possibilities where there was none. When leaders are trapped in a mindset, then we can safely say that their mindset has them, rather than they having a mindset.

The writer is executive chairman of Thought Perfect Pte Ltd, dedicated to the development and transformation of senior leaders.