Leadership   //   June 10, 2022

Bookshelf: Paul Leinwand on the ‘leadership imperatives’ of modern businesses

This article is part of the WorkLife Bookshelf series, which features interviews with authors of recently-published, notable books tackling topics relevant to future of work trends.

Leaders have been under immense pressure to digitize their companies and differentiate themselves to stay ahead, all while remodeling operations to cater to hybrid workforce needs and switch to outcome-based metrics for monitoring productivity.

As advisors to CEOs, boards and management teams, Paul Leinwand and Matt Mani are in a prime position to see how the most progressive organizations are reinventing themselves.

In their new book — Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future — Leinwand and Mani — both principals at Strategy&, PwC’s global strategy consulting business, break down how 12 of the top, global organizations from tech titans like Microsoft and healthcare group Philips to Japanese manufacturing giants like Komatsu — have approached it.

They outline crucial tactics for leaders to adopt and better convert their firms to meet present-day challenges — what they refer to as “leadership imperatives.” We spoke to Leinwand to find out what this looks like.

This interview has been edited for clarity and flow.

What are the leadership imperatives for transforming companies in the digital era?

Our research found seven leadership imperatives for transforming companies in this new age: 

1. Reimagine your company’s place in the world:

Set your ambitions high and recognize what you do uniquely well to leverage those strengths.  

2. Embrace and create value via ecosystems:

Focus on the value you are creating for the ecosystem, clearly define what capabilities you contribute to, receive from, and deliver together, and invest in building trust and deep understanding with your partners.

3. Build a system of privileged insights with your customers:

Gaining privileged insights should be a strategic initiative for your organization. To build a system, leaders should take four key steps:  

  • Establish a foundation of purpose and trust. 
  • Lay out purposeful customer insights and a road map. 
  • Build and enhance your mechanisms for gaining customer insights. 
  • Wire your privileged insights into how you work. 

4. Make your organization outcome-oriented:

Position outcome-oriented teams alongside functions, focusing on delivering the company’s unique value. By investing in a diverse workforce that encompasses a wide range of roles, skills and talents, outcome-oriented companies create self-sufficient teams that rise above their competition. 

5. Invert the focus of a leadership team:

Companies must position their leadership team to help transform the business into a digitally powered, capabilities-driven organization: 

  • Establish the top team with the right skills mix. Don’t focus on titles, but instead roles that focus on building and scaling up the capabilities needed to deliver on the value proposition. 
  • Shift that leadership’s focus to driving transformation rather than responding to current demands. 
  • Take ownership of how your leadership team collaborates and behaves. 

6. Reinvent the social contract with your people:

Employees who understand their organization’s purpose are more motivated and excited about their jobs compared to employees who lack a sense of aligned purpose. Focus on the six dimensions of reaching aligned purpose: purpose, contribution, community, development, means, and rewards.

7. Disrupt your own leadership approach:

One consistency we can be sure of is how leaders must transform themselves as much as their companies. Without changing your own approach, it will be near impossible to evolve your leadership team or to create engagement amongst employees.

How can an organization become outcome-oriented?

By being clear about the few things that matter as they drive value for their customers — becoming more relevant, and being clear about important questions like “why do we exist?”, and “what unique value are we here to provide”? 

But becoming outcomes-oriented also means a shift in [the] operating model. Traditional organizations focus on “functional excellence” and building large functional organizations. Almost by default, this results in losing sight of the end outcome that needs to be achieved, as most customer outcomes, and the capabilities that support them are cross-functional.

In the new operating models being developed, companies choose the most important capabilities and bring the right functional talent together in teams that are accountable for very clear outputs. In some companies, customer development teams are a great example of this — integrating traditional sales roles, with technology, data, supply chain, finance, and marketing talent to drive great integration and value with each customer, and there are many great examples of such teams in the book.

In building an outcomes-oriented company (and culture) leaders will need to bring broad and diverse roles, skills and talents together to deliver value that competitors can’t match when lacking differing perspectives. Additionally, leaders will need people to collaborate fluidly, focused on the outcomes of their work. Collaborating with partners and people outside the boundaries of your traditional organization will also be key.

How does the ‘rewards culture’ contribute to employee engagement for successful companies?

There is indeed a lot of focus right now on people — and the rewards that companies have leveraged and are enhancing to attract and retain people. The research into the 12 companies focused on a comprehensive set of elements to a new ‘social contract’ employers must build for their teams. And that starts with a recognition that the way people perceive value goes beyond compensation. Offering a more comprehensive system of rewards builds a culture of trust with employees that cannot be bought. Regardless of how important a paycheck is to any individual, the point of the social contract is to acknowledge that nearly all employees value other forms of rewards, too.

Employees want to feel valued, and understand their organization’s purpose and how their role contributes to that value. Those that feel they are an asset to your company are more likely to stay. They like seeing that they have contributed meaningfully to some aspect of your transformation, that they have been a key part of a customer’s positive experience, or that they helped to assemble one of your outcome-oriented teams. Individuals also appreciate being recognized for what they do — even something as simple as ’employee of the month’ makes people feel valued, and the ‘beyond digital’ world offers several opportunities to recognize individuals and teams in creative, new ways.

Give some examples of where companies have rethought how they support, reward and engage their employees.

The Cleveland Clinic [non-profit U.S. academic medical center] created a new team structure that supported employees in problem-solving during daily huddles, creating a culture that welcomed feedback from all levels. Working in a hospital, workers face daily challenges, all which require immediate response to effectively address concerns of patient safety or quality of care. To manage, the Clinic leveraged a method called tiered huddles, which are 15-minute focused discussions that occur each morning. Following a set format, caregivers have the opportunity to speak about issues ranging from quality and patient safety to experience and the utilization of resources. This approach engaged the whole organization to solve problems as they happen, as caregivers at all tier levels resolved issues, often the same day. Anything that could not be solved by the specific team would be escalated to senior teams within hours.  The huddles created a sense of community among caregivers, creating a greater sense of support for both caregivers and patients.

The Saudi Arabian start-up, STC Pay, took unique steps to engage its employees to push the limits of what’s possible. The former CEO, Saleh Mosaibah, felt that true innovation is sparked by the people on the ground, either speaking with customers daily or those creating technology and developing software. Attributing success to the personal commitment of employees, Mosaibah considered it critical to ensure employees saw a long-term vision of their growth opportunities with STC Pay, which would lead to innovative ideas that would pay off for years to come. 

Finally, Citigroup realized that in order to create the best-in-life customer experiences it aims to offer, it must stitch together employees with many different capabilities. Instead of having its employees progress their careers through relatively narrow verticals, it enables its employees to grow through many lateral moves, allowing them to gain much broader experiences and collaboration skills. By rewarding loyal employees with new opportunities that fit their career interests, it enabled the business overall to transform, and also look to the future.

Beyond Digital: How Great Leaders Transform Their Organizations and Shape the Future is published by Harvard Business Review Press.