The Future of Leadership and Business Schools
Demanding Future Leaders

The Millennial Generation is far more mobile and demanding than employees of the past, as embodied by Japan’s “salaryman,” who worked long hours in corporate hierarchies. As a result, management education and companies must reinvent their offer to capture and nurture future business leaders. CEOs, experts and recruiters met at IESE to debate how to respond to this shift.

The nature of leadership is changing. That was the message from “The Future of Leadership and the Role of Business Schools,” a conference held at IESE’s Barcelona campus in April as part of he school's 50th anniversary celebratons. The event brought together CEOs, recruiters, senior executives and business–school deans to examine the phenomena from different perspectives.

As IESE's Dean Jordi Canals noted, everyone acknowledges that great leadership, now more than ever, requires not just technical know-how but also the ability to work collaboratively.    

One of the key factors driving this change is that talented employees no longer accept the “command and control” model of leadership. Ellen Miller, head of European recruitment and development at the investment bank Lehman Brothers, noted that Generation Y is demanding a better way of working.

They want experiences, flexibility, mobility, non-linear careers and a balanced lifestyle, as well as the opportunity to give something back. As a result, companies are reviewing their value proposition.

But it’s not just companies that need to look long and hard at their offer. “Retention of top talent is the shared responsibility of business schools and all organizations,” said J. Frank Brown, dean of INSEAD. He added that an environment that fosters continuous learning is a top concern for executives.

Another concern for future business leaders is whether their potential employer are a responsible, as well as successful, business. At the same time, businesses schools have a role to play in developing leaders who combine outstanding execution with ethics. Prof. Canals called for some joined-up thinking on how this can be achieved.  

Developing talent

“More and more, we hear people saying, ‘My life matters to me,’” said Julie Fuller, director of global leadership development at PepsiCo. “They are looking for flexibility and work/life balance, and so we have to offer more individualized career opportunities to retain them.”

Alejandro Beltrán, a partner in McKinsey & Company, agreed that new candidates are demanding a better lifestyle. And in the global war for talent, recruiters must create environments in which business leaders can stretch their capabilities. Executives do not want to remain stuck in their silos, so if employers want to retain them, they need to offer opportunities to work in other functions.

This dovetails with a shift on the recruiters’ side of the equation. Previously, the demand was for “I-shaped” people possessing a deep understanding of one discipline. But employers increasingly value “T-shaped” people who have both deep technical knowledge and a broad understanding of other disciplines, such as the social sciences.

Dean Joel M. Podolny explained how Yale School of Management has addressed this change. Yale has swapped its two-year MBA program, delivered in disciplinary silos, for an integrated curriculum. All courses are now multidisciplinary and case studies follow the value chain. “I am part-teacher in six courses,” Podolny said. 
On top of a broad understanding of other disciplines, recruiters require candidates to be intelligent, self-aware and passionate about the company’s product. “Certainly a leader must like what the company is and does,” said Luis Cantarell, executive VP and board member of Nestlé. “In addition,” he said, “they must show tolerance,” which is crucial when your workplace has “more nationalities than the United Nations.”

For Anna Ruewell, director of BP's global MBA program, it is vital that potential employees have integrity and a collaborative spirit. Carlos Costa, senior partner of The Boston Consulting Group also valued a candidate's ability to "work it out with others."

Leading across

Cantarell’s comments on tolerance touched on another huge difference from when IESE was established 50 years ago: the globalization of industry. Franklin “Pitch” Johnson, founding partner of the venture capital firm Asset Management Company, called for greater “sensitivity to foreign customs and attitudes” because “what you do in Santiago is different from Silicon Valley. Let’s face it: Entrepreneurs in Mexico, Spain and Israel face problems that are different.”

But for management education and business to embrace this change, there needs to be more than just a wide range of passports represented around the table. As Hans Ulrich Maerki, ex-president of IBM, noted, “How truly multicultural is a multinational corporation if all 75,000 Indian employees are in India, for example?” Or how true is the boast of top business schools that their MBA classes are diverse if their overseas students are overwhelmingly European or from the U.S.?

“Being 'global' is a mindset as much as a statistic, and future leaders must learn to engage with Asian, African and Middle Eastern mentalities,” Rolf E. Breuer, former chairman of the supervisory board of Deutsche Bank AG said, “Diversity is not just about ethnicity, but also about the person’s experience.”

For Arnoud De Meyer, dean of the University of Cambridge’s Judge Business School, the challenge is how to implement collaborative leadership in communities of people with widely different philosophies. IESE Prof. Pankaj Ghemawat suggested this was far from simple. “Diversity is most likely to impede group functioning … There has to be some way of managing that.”

Another question is how best to teach global strategy. Srikant M. Datar, a senior associate dean at Harvard Business School, indicated that an HBS study found that for most academic disciplines, the top schools tend to favor the same textbooks. “But in global strategy, there is some very different thinking on what that is,” Datar said.

Lessons from leaders

So what can we learn about leadership from current and former CEOs?

Andrea Christenson, CEO and president of the doll, toy and children’s fashion company, Käthe Kruse Puppen, said that CEOs must be honest about making mistakes, as they represent the company to their employees. Ermenegildo Zegna, CEO of the eponymous menswear firm, agreed: “Leadership is about accepting mistakes and having an open management style.”

Nicholas Shreiber, former CEO of packaging giant Tetra Pak, also stressed business leaders’ responsibility to their firm’s employees. He said CEOs should consider the welfare of their employees and their families when making decisions, since creating employment creates wealth in society.

Alfredo Saénz, CEO of Grupo Santander, emphasized the importance of thinking like a client, a perspective that executives may lose as they move upward and further away from the front line.

But for Toyoo Gyohten, president of the Institute for International Monetary Affairs and former chairman of the Bank of Tokyo, the most critical requirement of a CEO is “the ability to cope with a crisis, to cope with the unexpected.”

David Moon, head of European talent management at the pharmaceutical company Merck, concurred. “At the moment we’re facing pricing pressures, greater regulatory scrutiny, the rise of India and China, the American economic crisis. And I hear people saying, ‘When we get back to a normal state again …’ Well, the current state is the new normal and we need to get to grips with it.”

All of the conference’s speakers stressed the importance of humility. “We need to resist the temptation of ‘bigger, better, more,’ and fight constantly against arrogance,” said Rafael del Pino, chairman of the Spain-based infrastructure group Ferrovial. “Arrogance leads to complacency, which leads to bankruptcy in short order.”

What makes a leader?

IESE Alumni Magazine asked new alumni from the Executive MBA and the full-time MBA program, as well as students of the Global Executive MBA program, what they thought made a business leader.

“Humility, to recognize how fortunate we are and to be generous to the less privileged. Integrity - be honest with yourself and others. And the courage to be bold and optimistic about the future and to challenge the status quo when it needs to be challenged. ”These are the three most important qualities for their generation of business leaders, according to Jonas Nitschack and Viniti Mahbubani, representatives of the MBA class of 2008.

In a survey of Executive MBA 2008 participants, contagious enthusiasm was the most frequently cited quality. For the MBAs, this ability to inspire and motivate others by your commitment to the company’s mission was just slightly more high valued than a clear vision of the company’s direction and strategy. In third place, students said business leaders live by their principles and lead by example.

“A leader shows his colleagues the path toward a common goal and creates an atmosphere whereby they take ownership of the mission. A leader is not the boss. He or she is the person who takes the bull by the horns to get her colleagues on the right track and get the job done,” said Miguel Ángel Hernández, director of corporate development at the marketing and communications agency, Quum.   

All of the MBAs agreed that humility is a key component of successful and sustainable leadership. “The ideal leader is a humble person who prevails in the long term over others with a more selfish and forceful style,” said Global Executive MBA participant and Director of the Energy Markets Division at Macquarie Bank, David Heard. “This is because such a leader is guided by the values which give him or her great inner strength to persist in the face of difficulty.”

Leadership: nature or nurture?

“The key to leadership is being able to develop good teams, spot talent, listen, ask the right questions, find people who can do what you can’t and help others grow. This is what business schools need to teach. The real question is, can these things be learned?” asked Marc Puig, chairman & CEO of Puig B&F Group.

For Rafael del Pino, chairman of Ferrovial, the answer is ‘yes.’ “On the question of how much of leadership is in your genes, I think it’s a combination of both. You can develop [leadership]. Initially you are hired for your technical skills and as you rise up the ranks you are valued for your people skills,” he said.

Toyoo Gyohten, former chairman of the Bank of Tokyo, believes that personal charisma plays a significant role in successful leadership. “There is a human magnetism that infects those around you, so you become a central cog in that network,” he said. “I’m not sure if this is something you can gain from management experience or if it is in your DNA.”

For Nick Shreiber, it is not important whether you are a born leader or whether you learn it. “I had to learn how to become an extrovert, to sell ideas,” he said of his tenure as CEO of Tetra Pak. In short, he had to learn how to lead collaboratively.