Nine leadership traits driving business success in the Fourth Industrial Revolution

4 minute read

Companies with high levels of 'Fourth Industrial' leadership capabilities outperform their peers in stock-price by more than 30% while those with low levels underperform by 15%. Stephen Wyatt, professor of strategy and leadership at the University of Bath, outlines the key leadership traits driving organisational performance in dynamic, fast-changing contexts

leadership in the fourth industrial revolution

What makes a good leader? This age-old question has been addressed by scholars, business and society figures probably since before written records were first kept. It matters because good leaders have a significant positive impact on the groups they lead; they harness and direct the energies of a group to achieve collective goals. There are several widely accepted leadership attributes (integrity, competence, good judgement, vision) but beyond these there are thousands of different points of view, models and insights.

If you type ‘what is leadership’ into Google, within a second it’ll tell you that there are more than 1.7 billion results. So do we really need another? It seems we do; leaders operate within a context and the Fourth Industrial Revolution (4IR) is seeing profound and rapid changes in the contexts in which many of us live and work. Some might argue that as every situation is unique, leadership traits, beyond the core, cannot be generalised. However there are some clear changes being ushered in by the Fourth Industrial Revolution. It is possible to identify several attributes of leaders that differentially drive the success of businesses in this new context.

In 2015 the World Economic Forum described the profound changes that are happening: “The Fourth Industrial Revolution is about more than just technology-driven change; it is an opportunity to help everyone, including leaders, policy-makers and people from all income groups and nations, to harness converging technologies in order to create an inclusive, human-centred future. The real opportunity is to look beyond technology, and find ways to give the greatest number of people the ability to positively impact their families, organisations and communities.”

Adopting and successfully leveraging new technologies is a part of 4IR but so is being able to act ‘at pace’ as the speed of business and change accelerates. We are also seeing significant changes in the structure of the workforce, becoming increasingly inclusive, even reaching across five generations. Our ways of working are also changing significantly. Where once there was an expectation that leaders had the ability to ‘command and control’ within the boundaries of their organisation, in 4IR leaders must have the ability to ‘connect and collaborate’, reaching across boundaries and sharing resources.

In a study of leadership traits and management capabilities at over 80 corporations, we identified those that differentially drove the performance of the organisations in dynamic, fast-changing contexts. We then tracked the stock-price performance of the publicly-listed firms against peers in their own sector over five years (December 2014-2019). The stock-price of firms that had ‘high’ levels of these capabilities, on average outperformed their peers by over 30%. Whereas the stock-price of those firms that had ‘low’ levels of these capabilities underperformed their peers by approximately 15%.

The first group of differentiating capabilities enable the pursuit, at pace, of a purposeful vision. This requires:

  • Anchored on purpose: Ability to give meaning to others for tasks and interim objectives as well as the ability to make timely decisions, whilst recognising the ambiguity or uncertainty of the situation
  • Think ambidextrously: A willingness to own and to creatively solve the apparent problems of competing objectives, not through compromise but by changing perspectives
  • Continuously drive change: Does not settle for the ‘as is’. Is able to catalyse change in the organisation and win stakeholder support.

The second group of capabilities enable the leader to adapt the organisation in a timely and meaningful manner. This requires:

  • Sensory awareness: Makes sense of the unfolding future through accessing, analysing and combining disparate pieces of data and insight; fuelled by an insatiable curiosity
  • Seize opportunities: A sense of urgency and personal responsibility that drives them to work with others across the organisation to roll-out or scale-up new solutions and behaviours
  • Reconfigure: Looks at the big-picture and displays a willingness to give up or share resources in order to optimise overall performance, reduce complexity or enhance efficiency

The third group of capabilities enhance the most differentiating resource of the corporation: talent for 4IR. This requires:

  • Human-centred: An authentic presence with high empathy and a genuine care for the well-being and inclusion of colleagues and collaborators, flexible in support of others
  • Team-driven: Sees teams as critical engines of performance. Has a positive impact on the performance, interpersonal dynamics and tempo of every team they are a member of or lead
  • Talent catalyst: A hunger for learning. Actively promotes structured upskilling as well as learning on-the-job. Coaches others and seeks feedback for themselves.

Most organisations are not equally strong across all these dimensions. However, our study showed that when these capabilities interact with each other, the overall performance of the company is a product of the combination of these different capabilities. Another key insight was that it is important that these capabilities permeate throughout the management cadre. This is particularly important for ambidextrous thinking: the greater the proportion of the management cadre that are engaged in thinking about both today’s results as well as investing and preparing for tomorrow the better the performance of the corporation, especially in rapidly changing market-spaces. This implies that a traditional approach of separating out the ‘new products’ division from the ‘core’ can be detrimental to overall firm performance in fast evolving sectors.

Stephen Wyatt, pictured below, is professor of strategy and leadership at the University of Bath and author of Management and Leadership in the 4th Industrial Revolution published by Kogan Page

Stephen Wyatt, author of Management and Leadership in the 4th Industrial Revolution 

Published 28 July 2021

The greater the proportion of the management cadre that are engaged in thinking about both today’s results as well as investing and preparing for tomorrow the better the performance of the corporation, especially in rapidly changing market-spaces

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