Business leadership in a global company has very specific challenges. In new markets, particularly new international markets, there is an overriding imperative to form strategic alliances and partnerships. Whether due to the need to gain distribution in a foreign environment, to gain lower cost production through scale, or to navigate the regulatory environment of foreign countries; the ability to build alliances and business partnerships is a key to successful business leadership in new markets.
A second imperative relates to company structure and organisational dynamics. It is not sufficient, and indeed it might even be counter-productive, to simply mirror the head office structure in new or emerging markets. The most successful businesses in new markets are flexible and responsive. The lack of critical mass and the geographic dispersion of operations require a high degree of ambiguity in terms of roles and reporting lines. In this situation, it is critical that there are effective links between the new, evolving business and head office. Inevitably, this requires constant communication and a lot of travel.
Finally, business leadership in the context of an internationalising company creates special demands in terms of communicating the corporation's shared values and strategy. The successful business leader has an almost evangelical role. He or she must infuse the local management team with the corporation's vision and culture otherwise the company will never be institutionalised in the local market and, long term, will probably fail. [Refer to The Focus Online interview with with Cor Boonstra of Royal Philips Electronics, "If I had to do it again I would be more aggressive"]
Functional leadership is typically defined in terms of the specific functional skills an individual brings to a business situation. In the context of a globalising company specific functional skills are often critical and relate to the challenges facing the business, such as in the areas of marketing, manufacturing or logistics.
But over and above the specific functional requirements of a particular situation, deep skills in a functional area of relevance are critical because they give the global manager credibility. The executive brings something to the party. He or she has neither simply been 'parked' by the corporation nor are they passing through as part of a career development plan. This is most relevant in situations where there has been high turnover of expatriate managers who, often due to the short tenure of their appointment, have not had a positive or lasting impact on local operations.
One way that functional leadership is demonstrated very tangibly in the context of global companies is in the individual's ability to leverage the corporate network. Is he, or she, plugged in? Can the leader get his or hands on the necessary information from head office? Can the leader get decisions made quickly and efficiently?
Successful functional leadership also requires the individual to maintain a functional edge. It is imperative that the leader does not become isolated from best practice. This is especially true of executives leading operations in isolated situations such as parts of China. The successful global executive must continue to invest in the development of his or her functional area of competence, even when based in remote locations.
Team leadership is the first of the two 'soft' competencies that we believe sets successful global business leaders apart from other managers. Global markets are typically characterised by rapid change and a high degree of uncertainty. Typically, the dominant culture of the working environment is alien to that of the business leader and the organisation's operations can cover a large and diverse geography.
Keeping the team focussed and motivated in such an environment creates particular team leadership challenges for the manager of an internationalising business. Mentoring, coaching, motivating, and even day-to-day communication, can be difficult in an environment where cultural norms, symbols and values are all fundamentally different to those of the leader.
Leading change is particularly challenging in new and emerging markets. The political, regulatory and business landscape can change quickly and without warning, as has been the case in South East Asia in recent years. In China, for example the Government will often change the regulatory environment, seemingly on a whim, creating dramatically new competitive dynamics overnight. The ability to communicate a consistent vision, and inspire the troops to action in such an environment, requires a special kind of leadership. [Refer to The Focus Online article "The power of diversity" by Fritz Frohlich of Akzo Nobel]
Personal leadership is the other 'soft' competency that defines successful managers, particularly in the context of internationalising companies. This, perhaps more than the other competencies, sets successful global managers apart from their domestic counterparts. We often forget how much we rely on our home environment for support and structure. Our family life, sports clubs or religious affiliations, all provide rhythm and context for our business activities.
Business leaders in the international context often lack these supports and accordingly require a level of personal leadership well beyond what is typically needed in a domestic environment. For the executive who is constantly travelling, living in hotels, regularly crossing time zones and doing business over meals and late evenings, it is challenging to maintain energy and balance. It takes discipline, focus and maturity.
Another aspect of personal leadership that is specific to working in foreign environments relates to cultural identity. If an executive is to be successful working in another culture he or she must demonstrate a deep respect for, and sensitivity to, cultural differences. This does not mean however that successful managers 'go native'. To the contrary, if the individual is to be truly respected by the local team, he or she must also remain grounded in his or her own culture and national identity. Finding this balance is a defining characteristic of the most successful global managers.
A further aspect of personal leadership of successful global managers is the ability to continue to manage their own personal growth and career development. This is an imperative, particularly for executives working for extended periods at locations a long way from head office. Keeping networks alive and fresh, staying on the corporate radar screen, and maintaining one's edge when working at the coalface of international business is extremely difficult.
Team leadership and personal leadership are linked through an overarching competence Professor Daniel Goleman, the Rutgers academic, calls Emotional Intelligence. This is an old concept that was recently revisited and popularised by Goleman with the publication of his international best seller by the same title. Goleman argues persuasively that emotional intelligence is a much better predictor of success in all the arenas of life than IQ by itself.
Emotional intelligence, according to Goleman, is made up of five elements. Three of these involve personal elements: self-awareness, self-regulation and motivation. Two of the elements are social: empathy and social skills. From the experience of Egon Zehnder International, these are the same personality characteristics that are also critical for effective team leadership and personal leadership. In other words, individuals who are emotionally intelligent are much more likely to exhibit these critical business leadership competencies. [Refer to The Focus Online article; Emotional intelligence in mergers and acquisitions by Daniel Goleman]
Competency in business leadership, functional leadership, team leadership and personal leadership are all key elements of a successful business leader's skill set. The requirement for well-developed competencies in team leadership and personal leadership, however, is particularly important in the international context.
Too few organisations really provide their executives with the right framework to assess their individual abilities or have adequate mechanisms to provide frank and honest feedback and developmental support. That is why Egon Zehnder International has developed its Management Appraisal practice. The focus of this practice is the individual assessment of executives based on a structured interview and exhaustive 360 degree references. The output, which involves detailed personal feedback, is focussed on identifying developmental opportunities based on each executive's personal career aspirations and the needs of the organisation [Refer to The Focus Online article; The value of impartial views by Dr Hansjorg Franzius of Siemens AG]
Executives who aspire to business leadership positions, particularly in globalising companies, must take a hard headed look at their level of competence in each of these areas and proactively address their individual developmental opportunities. This might involve seeking the support of a mentor or coach, seeking job change or completing an executive program. There are many developmental options but, self-awareness, through structured and regular feedback, and proactive career planning, are the first steps.
Damien O'Brien is a partner with Egon Zehnder International who spent a number of years leading the firm's China practice. He is now based in Sydney and is a member of Egon Zehnder International's executive committee