The 2020s urgently need effective and ambitious business leaders, working to create a more sustainable and inclusive future. Caroline Ashley, Forum's Global Director of System Change Programmes, discusses the keys skills needed for effective leadership and explains why it's all about CHARM.

This article was originally published by iBAN and has been republished with permission. 

22 February 2021

The 2020s urgently need effective and ambitious business leaders, working to create a more sustainable and inclusive future. CHARM summarises the key skills that I have seen leaders need to be effective. I don’t use ‘charm’ just to mean being charming – though it does help to have something between persuasion and popularity. By ‘charm’ I mean that an effective leader needs to excel in:

CH – navigating Change

A – setting Ambitious future-fit goals

R – with appropriate appetite for Risk

M – while working on Mindsets

CH is for navigating change

Leaders must have the capacity to navigate turbulence, keeping a view on the short, medium and long term all at the same time. How they respond to crises, such as the COVID-19 pandemic is meaningful; some have responded with more integrity and innovation than others, quickly adapting factories or apps for public good, rather than simply cancelling orders from suppliers who had already purchased materials. Navigating change is not just about a passive response or preparation for turbulent events. 

Effective leaders constantly update and challenge their understanding of how change happens and the role their business has in shaping change, including through networks, influencing policy, informing consumers, and setting expectations. 

As Sally Uren, Forum for the Future Chief Executive, has argued in a letter to Sustainability Leaders, the coming decade of delivery will not live up to expectations unless leaders are skilled in understanding patterns, networks, complexity, resisting forces, and agency. For example, when BP committed to net zero, it also left three trade associations, shifting itself to be as an actor for change.

A is for ambitious future-fit goals

The progress of inclusive and sustainable business has so far been incremental. How can we improve our ambition? How can we benchmark performance and then outperform others? The Paris Agreement to combat climate change helped change mindsets amongst governments, it brought agreement on an ambitious aim, and then progressively reviewed how to get there – the ‘ratchet’ tactic for achieving ambition. The same must apply to business leaders.

A vision that is ‘ambitious’ should mean truly future-fit – aligned with a future of net zero carbon and no poverty. If leaders first set their vision in alignment with this goal for the future, then they will have to ask what can we do, what is enough and what is the gap we must bridge? For example, incremental change is a commitment to support smallholder suppliers to increase earnings. A commitment to eradicate poverty in supply-sheds, working on living income, diversification and with partners might take longer, but is truly future-fit.

R is for risk appetite

Leading a company into a sustainable inclusive future is not risk free. Quite the opposite. It will only be achievable if leaders embrace the innovation gap. “If we now know exactly how we’re going to achieve a goal that we set for 2030, it won’t be ambitious enough.” So said a leader at beverage company Diageo to my colleague James, as he reflected in his blog sharing lessons from Diageo’s recent new sustainability strategy.

It’s too easy to slip into thinking that risk strategy is all about minimisation and mitigation. Really, the first step is recognising the appetite for risk, and then deciding how best to manage it, and communicating to staff that taking risks is OK.

M is for mindset

I’m a huge advocate for ambitious business commitments, but I’m even more adamant that commitments are nothing if not backed up by action. What businesses do and say really matters. But our mindsets and our priorities also matter, and ultimately have a huge impact on how much change we can generate. Mindsets reflect the narratives, assumptions, and social norms that we all hold about how the world works, and what is relevant or irrelevant in understanding it.

It is often easier to spot competing narratives issue by issue. Is tax something to avoid? Or is tax payment something to be proud of? There are changing assumptions on tax. Is unpaid housework drudgery to minimise or something that is of high value to recognise? My former colleagues at Oxfam are working hard to get it recognised and valued. Is investment in labour rights, producer organisation, and transparency a way to minimise risk of harm or reputational damage, or a way to build better supply chains? Is carbon reduction a necessity to keep up with because that’s what’s happening, or is it an opportunity to create business value in entirely new ways?

Our recent report on the future of sustainability examined how we will emerge from the COVID-19 crisis, and identified four different and competing trajectories, all with contrasting mindsets: ‘There is not enough to go around so we must compete and retreat’; or ‘technology will solve our problems if we worry less about privacy’; or ‘there is no new normal so flexibility and opportunism rule’; or ‘yes we can seize this moment to transform the system and regenerate our societies and ecosystems.’ These represent competing mindsets about the future of capitalism. One of the fundamental distinctions is about profit: is profit the purpose to which all business operations defer, or is profit the means for businesses and companies to create social value?

Effective leaders are aware of mindsets and assumptions – of their own and of others. This awareness makes it much easier to understand blockages and opposition, and to shape long term change. Effective leaders will recognise, challenge them, and contribute to reshaping them.

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