The Future of Leadership

The Future of Leadership The Future April 2010 Abu Dhabi Chicago Kuala Lumpur New Delhi Stuttgart Amsterdam Cologne Lisbon New Jersey Sydney Athens Copenhagen London New York Taipei Atlanta Dallas Los Angeles Oslo Tokyo Auckland Detroit Madrid Paris Toronto Bangkok Dubai Melbourne Philadelphia Vienna Barcelona Düsseldorf Mexico City Prague Warsaw Beijing Frankfurt Miami Rome Washington Berlin Hamburg Milan San Francisco Zurich The Future of Leadership Boston Helsinki Minneapolis Santiago Brussels Hong Kong Monterrey São Paulo Budapest Houston Moscow Seoul Conversations with Leaders about Their Challenges and Opportunities Buenos Aires Istanbul Mumbai Shanghai Canberra Jakarta Munich Singapore Casablanca Kiev Nagoya Stockholm bcg.com The Boston Consulting Group (BCG) is a global manage- ment consulting firm and the world’s leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep in- sight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable compet- itive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 69 offices in 40 countries. For more information, please visit www.bcg.com. The Future of Leadership Conversations with Leaders about Their Challenges and Opportunities Grant Freeland Kimberly Powell Rolf Bixner Andrew Dyer April 2010 bcg.com © The Boston Consulting Group, Inc. 2010. All rights reserved. For information or permission to reprint, please contact BCG at: E-mail: [email protected] Fax: +1 617 850 3901, attention BCG/Permissions Mail: BCG/Permissions The Boston Consulting Group, Inc. One Beacon Street Boston, MA 02108 USA Contents INTRODUCTION Lessons from the Leaders 4 It Takes a Village 5 A Tale of Two Cities 6 Cross-Fertilization 7 INTERVIEWS James M. Cornelius, Chairman and chief executive officer, Bristol-Myers Squibb 8 Jeff M. Fettig, Chairman and chief executive officer, Whirlpool Corporation 12 Jürgen Hambrecht, Chairman of the board of executive directors, BASF 17 Alan Joyce, Chief executive officer, Qantas Airways 21 Uday Kotak, Executive vice-chairman, managing director, and principal founder, Kotak Mahindra Group 25 Liu Jiren, Chairman and chief executive officer, Neusoft Corporation 28 Indra K. Nooyi, Chairman and chief executive officer, PepsiCo 32 Deepak S. Parekh, Chairman, Housing Development Finance Corporation 36 Alessandro Profumo, Chief executive officer, UniCredit Group 39 NOTE TO THE READER Acknowledgments 42 For Further Contact 42 T F L INTRODUCTION Introduction n developed markets, the Great Recession shred- same in good times and bad and in changing environ- ded income statements, shuttered factories, and ments.”1 trimmed workforces. While its eff ects were less se- vere in developing markets, the downturn still sent The nine leaders we interviewed serve in a wide range of shock waves through China, India, and other industries and both developed and developing markets. Iemerging economies. Despite the relatively small sample, key themes nonethe- less emerged: Chief executives in China and India are For several months spanning 2008 and 2009, the global concerned about accountability, communication, motiva- economic system was teetering on the edge. Employees tion, and talent development. So are their peers in the everywhere were looking to their leaders to make sense West. Furthermore, even though leaders in diff erent in- of the chaos. Leadership was then—and remains—a huge dustries may require unique knowledge, all the inter- challenge, even for companies relatively unscathed by viewees share common leadership qualities. economic turmoil. Today, employees continue to seek guidance from their leaders, who must fi nd time to reas- The developed and developing markets, of course, dif- sure their people while trying to establish a pole position fer—and leaders need to tend to those diff erences. Lead- for the future. ers of companies in developed markets, for example, will likely need to chase growth in places such as China and Over the past six months, as the economy has started India. Conversely, leaders of companies located in those to stabilize, we have talked to leaders from around the emerging markets will need to defend their local busi- world about leadership in order to understand how they nesses against Western assault. led through the Great Recession and whether they see leadership roles and styles changing. (The Future of Lead- Strategies for leadership succession also diff er widely, de- ership, a companion content suite at the Web site pending on the age of the company. The leaders we spoke www.leadership.bcg.com features videos of fi ve of our with in developing markets are running young compa- interviews with senior leaders.) nies, while the leaders in developed markets oversee es- tablished institutions. The Chinese and Indian leaders Lessons from the Leaders worry about leaving a permanent legacy. They want to create the next Microso , not the next Netscape. Leaders are stuck in the middle of a rapidly changing world: Government intervention and protectionism are These corporate leaders navigate in economies where rising; employee engagement and trust are declining. So government involvement, uncertainty, and volatility are did the leaders we interviewed tell us that they feel the ways of life. As Jeff M. Fettig, Whirlpool Corporation’s need to change their style and way of leading? chairman and CEO, puts it: “I used to tell our Brazilian Not really. James M. Cornelius, Bristol-Myers Squibb’s 1. Cornelius will retire as CEO on May 4, 2010; he will remain chair- chairman and CEO, explains that “good leadership is the man of the company. T B C G employees that some day, as the country emerges as While the leaders from developed markets set direction a market, it will become more like the United States or from the center during the crisis, they also emphasized Europe. The reality is that the rest of the world is becom- the need for the middle and front lines of the organiza- ing more like Brazil.” tions to act on their own and adapt, as necessary, to the volatile environment. This was—and continues to be—a The demands of the job are clearly greater than ever. tricky balancing act. Indra K. Nooyi, PepsiCo’s chairman and CEO, explains, “Aspiring CEOs have to understand that The desire for decisive action and clear they are signing up for a lot more than There will always be responsibility and responsiveness is just as CEOs did in the 1970s, 1980s, 1990s, and apparent among CEOs of companies in differences of opinions even four or fi ve years ago.” developing markets, even though their about opportunities, businesses have not been thrown into tur- It Takes a Village but as a leader you moil over the past 18 months. Of course, these CEOs have lived in the crucible of The nine chief executives we interviewed need to make a choice. risk since they started their companies. As head up organizations in industries as Uday Kotak, the executive vice-chairman, diverse as banking, pharmaceuticals, consumer goods, managing director, and principal founder of Kotak Ma- and outsourcing. Some of their companies, such as BASF, hindra Group, says, “The ability to seize opportunity is a chemical company, and Whirlpool, a consumer dura- critical. But there”s a thin line between conviction and bles company, operate in industries hit hard by the reces- foolhardiness.” sion. Other companies were much less aff ected. The companies are headquartered around the globe, from Milan, Liu Jiren, who started his career as a computer science Italy, to Shenyang, China. But despite these diff erent start- professor and is now Neuso Corporation’s chairman ing points, the executives share common views on sev- and CEO, also recognizes the need to be decisive in the eral leadership challenges. They worry about instilling face of confl icting choices. “There will always be diff er- decisiveness and accountability into their organizations ences of opinions about opportunities, but as a leader and getting the most out of their people. These are the you need to make a choice,” he says. At the same time, common strands in leadership DNA. Liu wants his managers to have the confi dence and conviction to act on their own. “If people are allowed to Decisiveness and Accountability. Two qualities were in make their own decisions, if they have an obligation and high demand during the Great Recession: decisiveness accountability, then they will become smarter,” he says. and accountability. Jürgen Hambrecht, BASF’s chairman of the board of executive directors, talks about the need People, Talent, and Culture. People drive performance. “to act on the spot, decisively, and in a structured way.” This has always been a recognized truth in service industries such as investment banking, but it has become ac- Alan Joyce, Qantas’s CEO, echoes the sentiment: “In cri- cepted wisdom in manufacturing and other asset-inten- ses, you need to make quick and rapid decisions without sive businesses as well. As Hans-Paul Bürkner, president perfect information. You need to make a decision and and CEO of The Boston Consulting Group, says, “All com- then correct it, if necessary.” panies are people businesses. Whether you are a manu- facturer, a pharmaceutical company, or a consulting fi rm, Whirlpool’s Fettig brings the picture into greater focus: it is people who make the diff erence.” “For us, the fi rst step was to institute greater control. By narrowing our focus, relying on the right metrics, and do- All the leaders emphasized the need to tap into the res- ing a good job communicating with our top 800 leaders, ervoir of creativity and energy that engaged employees we have been able to focus on the things we can control.

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