By Tania Lennon and Ric Roi
AI is reshaping the world of work and changing the way in which people create value for business. This means what we seek, measure and develop in leadership talent needs to change. Tania Lennon and Ric Roi, IMD professors, explore the shifting demands on leaders.
As AI rewrites the world of work, the demands on leaders are rapidly changing. With change increasing at 183% in the last four years alone and the capabilities for role success shifting 37% every three years, success in the future is likely to be driven by very different factors than those that were important in the past.
Yet talent management has failed to keep up with these changes. Prevailing talent practices focus on risk management, shaped to achieve the goal of delivering continuity and consistency. For example, the use of benchmarks based on past incumbents seeks to ensure a similar talent profile for the next person in the role, with an implicit assumption that they will meet the same kind of challenges.
This mismatch is pushing talent into the red zone for many leaders. The large gaps emerging in the talent pipeline mean that getting the right talent is the second biggest concern for CEOs after technology, while 80% of CHROs do not believe they have the capabilities their business needs to thrive.
The changing drivers of success
These gaps prompted us to conduct a major review of talent management practices. We scoured academic and practitioner literature for evidence of the talent markers that are emerging as the most important for sustained success in a dynamic AI-enhanced business world. Five key shifts stood out from this research.
- From speed to complexity. The ability to rapidly grasp information, draw in relevant knowledge and experience and make fast decisions is still highly prized in many organizations, especially in rapidly moving industries such as financial services and consumer goods. However, AI has already significantly exceeded the capabilities of even of the best human in this space. AI has replaced humans in data analysis and complex data integration, operating at close to the speed of light. Humans have been pushed into the ‘tough stuff,’ the problems characterized by ambiguity, novelty and paradox. These kind of thinking challenges require leaders to move beyond deductive and inductive reasoning into an abductive approach where they are exploring and comparing potential explanations.
- From depth to range. Value today is sustained through creative and innovative ideas. Deep experts possess complex mental representations of their domains and a lens on problems that enables them to see things in different ways, important characteristics that can contribute to innovation. However, this depth of insight also acts as a constraint on thinking, keeping experts within the guardrails of their discipline. Leaders today need to be able to move beyond the confines of their education and profession, looking at situations from multiple perspectives. In our research, cognitive range – the ability to move between different thinking strategies – was demonstrably linked to business outcomes such as profitability. This fits with research showing that CEOs with more breadth of experience deliver better performance than those with more narrow or specific experience in volatile and dynamic commercial conditions.
- From confidence to curiosity. Human brains are already primed to persist with their existing beliefs and assumptions. Confirmation bias pulls our attention toward facts that support our current understanding, while cognitive dissonance prompts us to ignore conflicting information. Yet in a volatile and change-rich world, leaders need to become adept at challenging their own thinking. Factors such as metacognition (being aware of your thinking processes and biases) and cognitive agility (actively adopting different lenses on situations) enable leaders to break free from linear, established assumptions to shape new solutions.
- From skills to adaptation. Skills remain important; in fact, our research suggest they account for about 12% of the variance in sustained performance. However, skills have a short shelf-life. Obsolescence rates are increasing, with technical skills in particular operating in 18-month cycles. This means leaders need to constantly identify, acquire and apply new skills. In fact, our findings suggested that 42% of the variance in sustained performance was related to the capacity for ongoing learning and adaptation. This includes both motivation to learn and the cognitive abilities to extract, crystallize and apply new insights and capabilities.
- From director to architect. The traditional role of the leader was the guide and director. They set and communicated the direction and defined the plan for consultation and execution. In a highly complex and connected environment, an organization led by a single individual is unlikely to be successful. Today, leaders need to create the conditions that enable them to harness the diverse strengths, capabilities and insights of their people. This requires them to architect the work climate by drawing on a wide range of levers, for example, fostering collaboration for collective intelligence and designing work to allow people the space and time they need to wrestle with complex challenges. Leaders can also encourage people to build networks and connections and to invest time in their ongoing learning and development. Architects are thus the ultimate enablers, setting the stage to allow others to play out their talents.
Cultivating key capabilities
So how can current and aspiring leaders cultivate these talent markers? There are three core foundations.
Learning and adaptation. Motivation to learn drives ongoing systematic development that develops the complex capabilities and judgement that are important today. It facilitates the constant refreshing of skills and capabilities, to enable people to maintain relevance in a changing world. It also underpins a mindset of curiosity and experimentation, encouraging people to learn through questioning, testing and reflecting.
Range. Building range enables leaders to respond to dynamic and changing conditions. Range operates in three spheres. Firstly, in the strategic realm, range is about building a portfolio of tools and approaches that work across time horizons, in both structured and unstructured contexts and in data-rich and information poor environments. Secondly, in terms of behaviors, range is about a wide repertoire of leadership and influencing styles and the ability to choose the right one for each situation. Thirdly, in a cognitive context, range is about being able to identify, extrapolate and evaluate data and information to explore alternative hypotheses.
Breadth of experience. The broader the range of experiences you can harvest, the more you are primed for success in a dynamic environment. This includes experiences spanning different types of business challenges and environments, such as working across industries, countries, companies and functions. It also includes different types of problems, pitting your capabilities against new challenges to see what you are capable of.
As the actions above show, successful leaders today need to equip themselves to navigate uncertainty, explore ambiguity and ride the waves of change. These are the talent markers that enable leaders to develop their future readiness to sustain success in an AI-enhanced world.
Future-Ready Talent: Building a Talent Pipeline for Sustained Business Success by Tania Lennon and Ric Roi is out on the 28th July, published by Kogan Page, priced £32.99
Tania Lennon
Ric Roi
