EDITOR’S Note:

Participants from around the world were exposed to the latest management thinking and business trends at IMD’s Orchestrating Winning Performance held on November 16-20 in Singapore. Shanghai Daily reporter Wan Lixin gives a summary of some of the expert insights and views shared at the event.

Creating lasting and inclusive value

Didier Cossin
IMD Professor

How can a business thrive while enhancing the wealth of its stakeholders and the well-being of the societies over the long-term?

The question about stewardship arises as a result of rising societal expectations that business contribute to creation of lasting and more inclusive value.

Essentially stewardship means that those entrusted with wealth of any kind have an obligation to hand those assets on in better shape than when they inherited them.

Unfortunately, today many companies are more concerned with presenting a bright message to the public while in effect pursuing short-term benefits.

The latest example is the German carmaker Volkswagen, recently mired in the “diesel dupe” scandal.

Another example is Goldman Sachs, which now faces potential legal action from Greece over the complex financial deals (“swap”) in 2001 crisis. Goldman first put the swap in place in 2001. It immediately sought to hedge its risk to the Greek obligations by making side deals with other parties. In 2005, the entire swap was sold to the National Bank of Greece.

Last year, Goldman was again talking to the Greek government about a similar deal that would delay debt obligations.

Stewardship matters because it encourages leaders to shift mindset, to creatively engage their organizations and other societal actors, in order to enhance wealth creation for all over time.

My research suggests the critical importance of the narratives companies construct to communicate their purpose.

It is found that individuals who are motivated by higher order needs are more likely to act as stewards than those who rely on external rewards, though context matters too.

For example, in cultures that place greater relative value on institutional collectivism (that is, a sense of connection to society as a whole, rather than an affiliation with an in-group such as a family unit), individuals may be more likely to act as stewards.

Steward leaders deliver lasting, meaningful and inclusive impact.

There are many stories of business and national leaders whose personalities and legacies have come to typify stewardship.

For instance, Ratan Tata’s clear focus on business success provided India with a solid domestic industrial base over the course of his tenure (1991-2012), illustrating how impactful stewardship can be in an emerging market context.

In a similar case, Zhang Ruimin took Haier from a low-quality manufacturer in 1980s and transformed it into one of the world’s leading white goods manufacturers.

Such leaders have some common qualities.

They need to lead with impact, because they are transformational leaders who inspire their followers to excel and achieve superior performance through their charisma and inspiration.

Steward leaders safeguard their future and ensure that the organization and its stakeholders thrive over the long term.

Steward leaders also demonstrate a deep understanding of the organization’s broader social impact to bring about positive social change in spheres beyond the organization.

Digital transformation key to survival

Michael Wade
IMD professor

Martin McPhee
Senior Vice President, Cisco Consulting Services, Cisco

Wade: If knowledge was a 20th Century differentiator, in the 21st Century insight is the great differentiator. If you have the insight, you have the potential to survive and thrive.

McPhee: Those who still want to work in ways that worked in the past will lose their business.

Our studies show that digital disruptors threaten to displace some 40 percent of market leaders within the next three years, and drive many companies out of business altogether.

We then examined the three types of value that digital disruptors deliver — cost value, experience value and platform value — and the digital business models behind each of them.

We noted digital disruptors are most successful when they use these business models to blend these three forms of value to create offerings that are different from and better than those of incumbents.

Wade: Digitalization and what it needs to be done has driven the partnership between Cisco and IMD.

This partnership is to look at the common challenges of digital transformation.

It is digital because it is based on the foundation of technology. We have connected devices, social media, big data, analytics, cloud, etc, so the technology is the foundation, but the real challenge is the organizational change, the organizational transformation, the people, the process, structure, strategy, and engagement.

McPhee: It is a five year commitment and it comes back to the fundamental belief that if you take digital disruption and education together, then you provide a platform for sustainable business change.

Shop local: Asian leadership

Margaret Cording
IMD professor and Regional Director of Southeast Asia & Oceania

Almost every Western multinational company reports low Asian representation at the regional and global level.

This is often attributed to a lack of Asian leadership talent. Some call it the Asian Glass Ceiling.

It’s not that talent is not there. Asia seems to have very different views about talent.

They are quieter, non-assertive, and the West has yet to learn how to appreciate that quality and entertain unconscious bias about them.

Thus if the name of the CV sender is something that can be pronounced by the Westerners, it is more easily to make to the pipeline.

So the problem is not just about individuals, but about organizational changes and checks and balances, a problem IMD now is at work on.

We are in partnership with several leading MNCs in developing Asian leadership.

Education is at the heart of competitiveness

Auturo Bris
IMD Professor and Director of IMD World Competitiveness Center

The just published IMD World Talent Report 2015 assesses the ability of countries and regions to develop, attract and retain talent.

This year, the one message consistent with the findings last year is that education and talent is vital to competitiveness. In this report, with the exception of Canada and Singapore, the rest of the countries in the top ten are all European.

While Europe has its problems in private sectors, types of government, strategy and so on, there is strong appeal about its education.

Talent-competitive countries and regions show a balanced approach between their commitment to education, investment in the development of local talent, and their ability to attract overseas talent. By contrast, Asia seems to have huge potential in improving its education.

While Hong Kong and Singapore have medium-level education, the two share something that is very interesting: they are extremely attractive for talent. Thus they end up with extremely good talent pools, with Hong Kong ranking No.7 in terms of attracting and retaining talent, and Singapore ranking No.9 in the same measure.

The Chinese mainland ranks No.40 in overall talent ranking, suggesting its education is relatively weak. The relative low quality of life and pollution also detract from its appeal for overseas talent. Hence the need to strengthen its education so as to build its talent pool.