The State of Leadership in Uncertain Times | Mike Useem

Why Leadership Is Essential in Uncertain Times

Dan Loney: Leadership, whether it be in a corporate setting or one around a government, could always run into challenges. And in these current times, it seems like those challenges are as great as ever. We have conflict going on in part of the world. We have an economy that’s been going up and down in recent years. And we have a level of innovation involving AI that’s looking to change how we work in many ways. But how do leaders handle scenarios like these, when so much is going on at the same time? A pleasure to ask that question and many others of Mike Useem, professor emeritus of management here at the Wharton School. Mike, always a pleasure to talk. How are you, sir?

Mike Useem: Dan, I’m doing great. And always a pleasure to be with you.

Loney: Let me start right there, because I think that’s the primary question. And you have so much going on right now. In talking with leaders, as you have over your career, how do they deal with so many things going on at the same time?

Useem: Well, Dan, it’s great to be on the program with you. And you asked, in my humble view, the totally right question, which is — in this era, to what extent has leadership become that much more important and vital? And to cite a well-known academic study which really sums up the point — leadership at the top, whether it’s a foundation, a school system, a hospital, a company, or a country, has greatest impact when things are coming apart. When uncertainty is high. When it’s hard to recognize where we ought to be going.

To put that in a more positive framing, leadership has become that much more critical, in my view, the last year or two, in many settings, because the uncertainty of world trade and everything else, is higher. And it puts a bigger premium on people to get the job done. That said, to paraphrase a very famous executive coach, Marshall Goldsmith, who wrote a book with the great title What Got You Here Won’t Get You There — not only do we need a lot more leadership at the moment, when uncertainty is high, it’s going to be different from what we needed in the past. Not completely. Lots of fundamentals are the same. But what got you here won't get you there, so you’ve really got to think about the leadership you’re going to need in the next five years.

Loney: How, then, do we get to that point? I’ve always thought leadership is part experience. As you’re coming up through the corporate ladder, you’re learning about this. But if we need it in the more immediate period, how do we reach that plateau?

Useem: Yeah. Let’s take it in two parts, Dan. Number one, just to remind us how important it is to get it right, to modernize our thinking, to get us up to date on what is going to be vital and ways that work now that wouldn't have worked five years ago, a survey a couple years ago asked people — for what it’s worth, I take it with a grain of salt, but it’s an important finding — that people at the top of the business hierarchy, top of the pyramid, senior managers in U.S. companies, estimate that about a fifth of what they know is no longer useful. And about a fifth of what they should know, they’ve really got to acquire.

Well, if you multiply 20% by five years in a five-year period, it’s going to be almost completely different. That’s a little bit of an overstatement, but it will be different this year compared to five years ago, with the start of COVID. And certainly by the year 2030, it’s going to be different.

And then, Dan, back to your main question. How exactly do we acquire the leadership skills we don’t have right now? There is a theory that somebody is a natural-born leader. You either have it or you don’t. We don’t accept that, on the premise that many leadership skills can be acquired, are acquired. And then the obvious question is, well, how exactly do you do that?

And just to pick one of three directional steps you can take to strengthen your leadership, number one, at least on my list — but there are two others we should talk about — is looking around and just literally being a student of leadership. Life is a classroom. Shakespeare, “All the world’s a stage.” Or more specifically, all the world’s a classroom. So by looking at other people in jobs like your own, looking at your own senior people — by being a great observer of the human nature around you, few better classrooms there are.

How Leaders Can Adjust to Innovation and Change

Loney: Okay. So then let me throw in the component of innovation. And right now, we could use the example of AI. But certainly, there have been examples of innovation throughout time that have forced leaders to open the door more and listen more and understand what the changes were happening, and what was going to occur. How, then, do leaders adjust to a sharp level of innovation when it comes to the forefront?

Useem: You know, I think top of my list on that one is getting out of your office. It seems like an obvious point. But it can be a very significant step if you really get out of your office. Case in point, we tracked a banking executive who understood that banking was changing, fintech was coming. His bank is one of the oldest banks in the country. And to the point of getting out of your office, he decided to take a several-month sabbatical, a learning tour. He talked to the board, got permission from his board of directors, left the company in the hands of the chief operating officer, and he literally went around the country, visited almost 50 other companies, including Apple and Walmart. And the premise behind his, quote, “learning tour,” was that there are a lot of ides out there. And the best way to really appreciate them is to talk, for example, as he did, to the recently retired CEO of Walmart.

The big point is, get out of your office. Get out of the business. Look around. Serve on other boards of directors, if you can find your way onto a seat on another board. Show up for professional associations. Just become a student of leadership. You’ve always been a student. Remind yourself that it’s more important than ever to be so.

Loney: How, then, do leaders deal with global conflict? And I ask that because for many businesses, it may not have a direct impact. It may be a secondary impact. Obviously, for governments, in many cases it’s right at the forefront of all that they have to deal with. But in certain instances, and using what we saw play out in Israel for the last couple of years, there are many companies in Israel who do a significant amount of business here in the United States. And those business leaders had to deal with those companies having to adjust to a significant shift in their day-to-day life over in Israel.

Useem: You know, picking up on that point. One directionality that we advocate is getting out of your backyard, as the person did that I just described. But more generally, getting out of your home country. So we have conducted research recently in Japan, in China, and India, on some of the business leadership agendas that are different from your own. And no better way to think about what you need than to take a look at places where people do it very differently. Much of what they do in Japan will not be relevant. But some of what they do in Japan will be interesting and worthy of concern. So if you’re an Israeli company, a Dubai company, a Japanese company, we strongly advocate looking not only at some of the successes in your home turf there, but getting out of your home turf completely and spending time with people who are doing it in a very different world. And it’s going to be different. You’ve got to translate back. But that’s the agenda.

Loney: Using that as a part of the overall leadership philosophy, does it benefit leaders to tweak their style of leadership along the way over the course of 20, 30 years, as they are leading a company, when they experience these other leadership styles?

Useem: Yeah, Dan. Let me pick up on that with reference to a program that we have long run here at the Wharton School. It’s called the CEO Academy. It’s a slightly ironic phrase for a program. CEO Academy? Don’t CEOs know everything? Otherwise, they wouldn't be there.

But we’ve concluded, not the case. Even people at the very top of the [pyramid], there are plenty of learning opportunities. And in addressing that, we’ve learned through a lot of experiences — CEO Academy goes back 20 years now — that it’s vital for people in business or really in any organizational terrain to sit down and think with people … who have given analytic thought, i.e. academics, researchers, consultants and so on, to what’s happening in the leadership chair. We’ll call it that.

In addition, though, it’s also really important to take time with people who’ve been there and done a lot of what you’ve done. Maybe more. And to turn to them as mentors or coaches. And those two methods of talking to people who think about it analytically, academically — separately those who have done it. If you add to that — we tend to call it the “after actually” view, drawing from emergency services — sitting down episodically and telling yourself you know a lot about leadership, but still, given the evolution we’ve been talking about, not everything. What do you want to do different tomorrow? And that’s a way, Dan, of saying, make it explicit. Just decide, in addition to a pretty good approved diet, a pretty good exercise diet, make it a diet of “after actually” views.

How Leaders Can ‘Reach Down’ to Managers and Employees

Loney: One of the things that has come onto our landscape, our view, in the last several years, is when we see social change going on. And it’s really become something that has filtered into the business landscape as well, because leaders of companies want to hear from their employees. And certainly, not every employee is going to have the same viewpoint on different topics. So these elements from outside the company end up coming inside the walls of the firm, and having an impact on what’s going on in the relationships between employees, managers, leadership, etc.

Useem: It’s a great point because it really speaks to one of those really important elements that define what leadership is now, a requirement that was not so much required, say, 15 years ago. And that is an understanding that the people who work for you — could be 300 people, could be 150,000 — they are there not just as an automaton. They’re people. And in modern times these days, they feel it is appropriate for the company to help them understand why they’re doing what they’re doing. What purpose does it have? What customers are they serving? What improvement in health care delivery are they providing?

That’s an indirect way of saying that leadership increasingly, at the top, requires an ability of people — obviously including you, Dan — to articulate why we’re doing this, what the purpose of it is. And I think 20 years ago, the attitude, maybe a little crudely put here is just, “Get the job done. I’m going to give you a paycheck.” That’s really evolved to, “I want to do something that has purpose, meaning, and services somebody. Maybe other employees. Hopefully, customers as well.”

Loney: A lot of this we’ve talked about from the mindset of the C suite, of the leaders near the top of the food chain. What about middle management? What about the people that are in contact with those employees each and every day? I’m thinking about this larger scale, not only just the social change comment, in terms of how middle managers have had to deal with a lot of this change in recent years.

Useem: Well, here’s one of the great ironies in the terrain we’re talking about. If you think about how we tend to use the word “leadership,” on the face of it, we start by saying, “Well, it’s the CEO. It’s the president. It’s the senior VPs.” But in recent years — and this is one of the great changes that we’ve experienced over the last 20 years — leadership is increasingly coming from all levels, senior management, and middle management.

Case in point. When the great Japanese automaker Nissan turned around a couple of years ago, it was flat broke, almost going out of business. A new CEO came in, and he discovered pretty quickly that in the mid ranks were some great ideas on how to make Japanese cars, the Nissan in particular, more effectively, that were not being recognized further up the food chain there. And as a result, he reached out and he said, “Okay. I want people in the big ranks to help lead us out of our doldrums.” And that didn’t happen.

And then that raises a great separate point, which is that I think senior management increasingly is called upon to draw ideas up from the mid ranks below them. I tend to call that “leading up.” Getting people below you to lead up. To bring an idea to you before you blow it. To speak truth to power. There are a lot of ways to put the same thing. That’s a long-winded way, Dan, of saying that one of the new features of leadership increasingly — in addition to what you said, which is the articulation of purpose and meaning — is the ability to draw people below you into what you’re doing, and to help them lead you. It’s a little bit ironic when I put it that way, but it’s very important.

Loney: Is it fair to say that a lot of those components are things that leaders at various levels have really either had already in their mix, or have built up and added to their mix? Especially in the last five years or so, when you think about where we started at the beginning of the pandemic. And obviously, all that we had to deal with there and all we’ve had to deal with in the last couple of years as well.

Useem: Yeah. To make it very tangible in response to your question there, we’ve tracked a chief executive. Now he’s moved on, but for a while he was the chief executive of a very large firm. And he often said publicly — certainly privately, I’ve heard him say this on many occasions — that as he reached higher and higher levels of the company, finally become the chief executive officer of a huge company [of] 150,000 employees, he said he noticed two things. Number one, the news got better. Which is a way of saying, the bad news was not coming up.

And his jokes got funnier. Which is also a way of saying that there was more deference to him. And thus he adopted — this is leadership 101 these days, in my view — a whole host of methods of reaching down. Reaching out on the premise that the people in the mid ranks often have great ideas about an innovative product. And your job as a senior leader is to help them appreciate that they can lead you, even though it’s a bit ironic to say it that way.

By the way, a footnote on that: When it comes to leading up, you want to do it without ending up getting your head handed to you on a platter. So there’s a warning there. But again, life often does begin at the top. We strongly encourage people in senior ranks to spend time in the employee cafeteria, sitting down, just taking a seat. “What’s going on, guys?”