Sustainable Leadership: How to Lead in a VUCA World

By David Ducheyne

How to lead efficiently in a volatile, uncertain, complex and ambiguous world?

Leadership has never been as difficult as it is today. And it has never been as crucial. In this VUCA world people ask leaders to provide certainty. They cannot. In the volatile, uncertain, complex and ambiguous world certainty comes from character. Leaders can base their leadership on empathy, fairness, kindness and reciprocity. These basic human elements are under pressure. 

This book provides both emerging and established leaders with the ingredients they need to develop a sustainable leadership style.

EXCERPT

A newly appointed CEO wrote that she wants to find a balance between her own values and what is expected from her. I hope for her that both are not too far apart. The board of the company chose her to do the job because of who she is, not because of who she is not.

And here is the main challenge for those who are in a leadership role. How can you be a leader and still remain yourself? Something in leadership or in its context seems to urge people to change and become someone else. But leaders are not actors. If I can give only one advice: do not change who you are. You can be (come more of) yourself and grow as a person. But the moment you try and change who you are, you lose the only thing that is sustainable and dear
to you: your character.

This book is about sustainable leadership based on character.

ABOUT THE AUTHOR

David Ducheyne wrote this book as a source of inspiration for leaders who are looking for ways to maintain their leadership in VUCA times. It’s also a documented intention to try and do better.

• Language: English
• Publisher: Die Keure Publishing
• Release date: May 19, 2017
• ISBN: 9782874034572

Book preview

Zimbardo

01

The Context

Context and Personal Choice

Throughout this book I will often talk about context. Context defines our behaviour. The context enables and/or changes behaviour. And context is also the product of behaviour. We often overestimate the power of individual qualities over contextual qualities. We are convinced that we are stronger than the context and that we can change it. This conviction probably comes from our upbringing. We are taught that being independent and self-reliant is important. But it’s an illusion. The power of the context is so big that it even determines our morality²⁸.

Leadership is contextual. It is part of the context, it shapes the context and it is influenced by the context. The leadership crisis is pretty much about how the context leads to certain behaviour and how leadership tolerates or stimulates that contextual behaviour. Despite the strong contextual influence, there is always personal choice. Context is never an excuse to understand, accept or minimise deviating behaviour. Strong leaders will base their actions on personal choice. Weak leaders will hide behind the internal or external context, the circumstances, other people.

The Sustainable Leadership Value Chain

Where does leadership fit in the context? To understand that we need to look at the value chain of which leadership is the start. It’s not a classical value chain²⁹. It’s more a psychological value chain, that I call the Sustainable Leadership Value Chain (SLVC)³⁰. This value chain has the same purpose as the classical one: to create value. The SLVC provides a framework to ask 5 fundamental questions, that define leadership in your organisation.

What is the value your organisation wants to create for whom?

How can you deliver that value? In other words, which behaviour do you need within your organisation to create that value?

What is the context you need to create to foster that kind of behaviour?

How does the external world influence this value chain?

How can your leadership style create the internal context and drive the SLVC?

These are simple questions but they are tough to answer. But if you do answer them you have a recipe that reinforces your leadership and that helps you to execute the strategy of your organisation. My philosophical point of departure is that it is people who create value and not organisations as such. People make the difference.

External Context (VUCA)

© David Ducheyne

Figure 3. The Sustainable Leadership Value Chain.

Which Value for Whom?

Any strategy starts with defining whom you want to serve and what it is you want to deliver³¹. Creating value for someone is the single most important source of purpose and meaningfulness. Every organisation or organisational unit needs to be clear on the value it wants to create and the target groups it wants to reach.

It’s better not to limit the definition of value to economic value alone. Economic value such as profit, future cash flow and shareholder return usually provoke a huge so what? feeling. People are not sustainably motivated by economic and financial targets³². These targets lack emotional value. Of course, the performance of the firm is what ultimately creates sustainability and all that is derived from it (like employment). But in my experience, most people are just not interested in that. So you can do all it takes to inform about financials and get them involved. It simply is not enough.

Value is about customer value. What do you offer to customers that they are willing to pay for? What makes a customer return to your organisation to purchase more of your products or services? Of course this is also valid for non-profit or public service organisations, and for any unit or function within an organisation.

Story 02

The Purpose of HR

I have been working for over two decades in the field of people management within organisations. The function I hold is often called HR³³. What’s the purpose of HR in an organisation? Many people seem to doubt HR can contribute to the success of an organisation. But it can. Let’s take the case of a hospital. The purpose of HR could be to decrease patient mortality³⁴. If reducing patient mortality is the value you want to deliver, you are lucky. It’s a target most people will buy in to. And as a leader – be it in HR or not – you can tap into that purpose to create your story.

HR needs to return to its essence: ensuring that people are willing and able to perform sustainably. HR has buried that essence under layers of procedures, systems and statistics. In its desire to be taken seriously and to conquer a seat at the executive table, HR has betrayed itself.

Yes, but, an HR professional told me, If you do not have systems, you lack control and impact. You cannot show results if you do not fold everything into systems.

HR needs to show leadership itself in the first place. And HR will never succeed if it continues to base its identity on systems that too often do not meet up to expectations. HR needs a compelling story.

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Maybe it’s easier for a leader working in a field like health care to make the purpose of the organisation appealing. It might be easier to define this appealing value. But ask yourself how that same leader should explain budget cuts to the nurses that have chosen to serve patients as a profession, and not to increase the occupation rate of hospital beds or to increase productivity by reducing the service time per patient. They want to help people in the first place.

This is no easy game for anybody. So leaders should define or at least be very aware of the value their organisation wants to deliver³⁵. And it’s very often not about the what, but more about the who and the how.

Story 03

It’s Not About Coffee

I was once in the Starbucks Coffee Shop in the railway station in Gent, Belgium. The place was very crowded. There was only one seat available at the table where the manager of the shop was talking to a group of new team members. I asked if I could join them. The manager said that it was OK. As long as I would not disclose any company secret I could overhear, she added with a big smile. What I heard was very interesting. She was not talking about coffee. She was talking about what each member of the staff should deliver every time a customer comes in. And that was not about serving coffee, it was about being there for the customer.

This is what you find about them on their corporate website

We’re not just passionate purveyors of coffee, but everything else that goes with a full and rewarding coffeehouse experience. We also offer a selection of premium teas, fine pastries and other delectable treats to please the taste buds. And the music you hear in store is chosen for its artistry and appeal.

It’s not unusual to see people coming to Starbucks to chat, meet up or even work. We’re a neighbourhood gathering place, a part of the daily routine – and we couldn’t be happier about it. Get to know us and you’ll see: we are so much more than what we brew.

We make sure everything we do is through the lens of humanity – from our commitment to the highest quality coffee in the world, to the way we engage with our customers and communities to do business responsibly.

The people behind the counter always ask your name when you order. That’s not only to get the right order to the right person. They ask your name so they can connect to the customer. It personalizes the way they talk to you. That sounds easy but it’s not if you want to create this approach consistently and sustainably throughout the organisation. Everyone has to do it, every time, for every customer in a way that is not artificial. How many people work for Starbucks?

Based on visits to Starbucks in Gent, London, Brugge, New York, and San Francisco

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Shareholder Value

Creating value is not limited to shareholder value. An exclusive focus on shareholder value is very limiting. The argument in favour of this focus that it’s the shareholder who takes the risks and who should be compensated for that risk through dividends or an increase of the share price. So in the end it’s about the generation of future cash flow.

I understand this reasoning. But it is not satisfactory. And it is not sufficient.

The shareholder cannot achieve a return without the creation of value for a customer. The creation of shareholder value is derived from the creation of customer value.

The problem with shareholder value is that if we use this as the ultimate definition of value, the actual purpose is internal to the company. Shareholders tend to think of themselves as an external party, like customers, but they’re not. They are owners and therefore they are part of the internal organisational system. That’s the tragedy of investors and stock markets. Investors look at companies as a source of financial revenue. But in reality, companies are sources of customer value. It all starts with creating customer value and then the rest follows. And that’s why shareholders should not be put first. It’s the customer you serve, even when you’re a shareholder. And before that, it’s the people who generate the customer value.

It’s difficult to develop sustainable leadership within an organisation that puts shareholder value on top of the list, before customer value.

Story 04

Patient Value

The Belgian Pharma Company UCB has taken as motto Inspired by Patients. Driven by Science. Everything they do starts with the question How can we create more value for people living with severe diseases? For that it’s necessary to listen to patients and their families and to work closely with healthcare professionals. If you read the vision and strategy on their website, there is not much about shareholder value. It’s all about creating value for patients.

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Story 05

A Company Without Shareholders

I started working for Securex in 2007. Securex is a company that delivers broad HR services. It has no shareholders. When I first started it was kind of difficult to understand how a company employing 1600 people could survive without a capital provider. The company has to build its own capital to be able to invest in the future. There are only two stakeholders: employees and customers.

The problem is that it’s not possible to attract external capital in the market. Every investment has to be financed by the organisation itself. A company without shareholders has to define its own ambitions. There is no shareholder breathing down your neck. The ambition comes from within. And the inspiration comes from the customer.

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Now let’s not be naïve. Companies that do not satisfy their shareholders will not survive. Investors will not put their money into a company that does not give a return on equity that is sufficiently high to cover the cost of capital, including the compensation for the risks. But shareholders increasingly understand that they depend on the people in the company generating results through customer value. People determine the sustainability of shareholder value. Financial analysts look more and more at intangibles like company culture, corporate social responsibility and other non-financial aspects of the organisation to assess its attractiveness as an investment. There’s enough research that proves that intangibles like culture and engagement yield economic