1. business and industrial

Creating
Enterprise
Leaders
in Asia
How Adopting Horizontal
Leadership Strategies Can
Drive High Performance
Supported By:
White Paper
CEB Corporate
Leadership Council™
Contents
Executive Summary
1
A Changing Business Environment
2
Competing in the Digital Age
2
Workforce Capability and Peer Interactions
3
Evolving Leader–Team Dynamics
3
Defining Enterprise Leadership
4
Key Findings: The Benefits of the Enterprise
Leadership Model
5
Key Findings: The Roadblocks to Building
Enterprise Leadership
6
Checklist: Creating Enterprise Leaders
7
Facing the Future
8
CREATING ENTERPRISE LEADERS IN ASIA
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Executive Summary
In the past, executives judged business unit leaders on whether they met the objectives
of their individual business units. Today, however, in a globalized business environment—
defined by geographic dispersion of teams and greater manager spans of control—leaders
are increasingly judged on their contributions to other business units and the organization
as a whole. They are judged on their abilities to be Enterprise Leaders. What was once a
vertical work environment is now more horizontal.
Since the advent of the digital marketplace, competition worldwide has increased
significantly, so Enterprise Leaders need to cooperate across geographies and silos to be
more responsive, more innovative, and more efficient.
Given the breadth and complexity of today’s business environment—both in Asia and
worldwide—enterprises must, as a matter of urgency, rethink their approaches to
leadership or risk falling behind their competition.
Enterprise Leaders
Leaders who effectively
meet their individual
objectives, contribute to and
leverage the performance
of other units or teams, and
lead others to do the same.
This white paper is derived from a recent CEB study on Enterprise Leadership in which we
interviewed and surveyed more than 4,000 leaders and nearly 200 heads of HR at over 300
organizations worldwide. Based on this study, we examined the leadership challenges and
opportunities of the twenty-first century, paying particular attention to those in Asia.
Our goal was to understand why some leaders are more effective than others and what
companies need to do to foster an environment in which effective leadership can blossom.
Based on the data collected, we developed a new leadership model that incorporates
individual and network-based leadership to drive true Enterprise Leadership and achieve
organization goals.
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A Changing Business Environment
Today, when competition in a globalized business environment is particularly fierce,
business leaders face a number of challenges and opportunities. Shifting demographics,
an increasingly global economy, and near-constant changes in technology are converging,
and often conflicting with each other, in today’s work environment. Ultimately, this
interaction is creating a completely different landscape—one that is substantially more
volatile, uncertain, and complex than before.1 To position their organizations for twentyfirst-century success, today’s leaders will need to apply a range of knowledge-based
competencies.2
Our global survey revealed
that only 27% of business
units currently feel they have
leaders who are equipped to
handle the future needs of
their enterprise.
But in a world that’s evolving at such a rapid pace, how can organizations ensure they
have the leaders in place to achieve their business goals? Of course, human resources (HR)
divisions of companies worldwide have traditionally enacted a number of policies to meet
this core need (e.g., encouraging leaders to demonstrate collaboration, promoting peer-topeer recognition and awards, updating organizational values).
However, our global survey revealed that only 27% of business units currently feel they
have leaders who are equipped to handle the future needs of their enterprise. “The world
is faster, more interconnected; I’m worried our leaders don’t know how to lead in that
environment,” was a typical response from a senior manager.
At the same time, almost one-third of HR leaders say they would replace members of their
senior leadership team with different leaders if given the opportunity.
Competing in the Digital Age
In Asia, the speed of change requires a new generation of regional leaders who can learn
quickly and act wisely—both now and in the future. After all, China, India, and the other
rising Asia economies are on an explosive growth trajectory despite the 2008–2009 global
financial crisis. The Association of Southeast Asian Nations (ASEAN), in particular, is
becoming a global economic force. Foreign direct investment (FDI) inflows into the region’s
five largest trading countries (referred to as the ASEAN-5: Singapore, Malaysia, Indonesia,
the Philippines, and Thailand) totalled US$128.4 billion in 2013, according to Bank of
America Merrill Lynch. In terms of both total foreign investment and year-over-year
growth, ASEAN countries outperformed even China that year, and analysts believe that
2014 numbers will tell a similar story.
At the same time, the dispersion of global companies across Asia—across new regions,
cultures, currencies, and economies—requires leaders to work with their teams differently.
For instance, global merger and acquisitions (M&A) activity has grown and is now worth
nearly US$1.5 trillion a year, as many large companies have taken (and continue to take)
advantage of large cash reserves and cheap financing. This trend has led to greater business
portfolio complexity, leaving many leaders ill equipped to address the new global business
paradigm.
Disruptive digital technologies (such as analytics, which allow companies and organizations
to discover insight on their operations and markets in near-real time) are transforming how
companies can market their products. These technologies have also led to direct customer
engagement, which did not exist even five years ago. New enterprise roles (e.g., chief digital
officer, chief marketing officer) have been created to meet this challenge head on, especially
in the field of social media, where Facebook, Twitter, and millions of blogs and websites
empower the end user like never before.
The complexities of this new environment require business leaders to be more agile,
accommodating, and progressive if they want their companies to stay competitive, seize
growth opportunities, and not get left behind. But despite all that’s at stake, many leaders
still fail to fully understand the shifts required of them to lead their companies effectively in
the digital age.
1
“Fit for the Future: Capitalising on Global Trends,” PricewaterhouseCoopers, 2014, http://www.pwc.com/gx/en/ceosurvey/2014/assets/pwc-17th-annual-global-ceo-survey-jan-2014.pdf.
2
“Exploring the Inner Circle: Insights from the Global C-suite Study,” IBM, 2013, http://www-935.ibm.com/services/us/
en/c-suite/csuitestudy2013/.
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Workforce Capability and Peer Interactions
Effective leadership is still the primary talent issue facing organizations worldwide:
companies seek leaders with global fluency and flexibility and with the ability to innovate
and inspire others to perform.
Of particular concern to HR leaders in Asia is workforce capability, which is shaping up to
be the top HR challenge for the region. The relatively quick emergence of new industries in
ASEAN has created a mismatch between the skills needed and those currently available.
Finding the right sort of talent is not the only problem. Many companies tend to hire local
leaders of newly established business units—leaders who have a deeper understanding of
a specific local market and its peculiarities. However, the creation of new roles has also led
to additional layers of leadership, meaning business unit leaders must now consult (and
receive approval from) more stakeholders before a project or initiative can proceed.
These changes often require a comprehensive reskilling of the HR function. Traditionally,
HR teams have been operational, but given the changed business environment, they need
to keep pace and align with business imperatives. If today’s professionals want to add value,
they must understand new practices, technologies, and workforce changes—in addition to
differences in culture, language, and regulations. Companies, therefore, must rethink how
they manage talent to ensure their current and future capability needs align with their
strategic objectives.
Companies are increasingly looking to accelerate the development of leaders who work
in their own distinct regions. Although Asia is often considered one region, it comprises,
of course, countries with distinct cultures and work processes that require a deep local
understanding. As such, organizations are recognizing that they must differentiate their
approaches based on regional and cultural distinctiveness. And to facilitate this change in
approach, they are, more often than not, prioritizing leadership programs that can more
intentionally identify and develop domestic leader development.
Evolving Leader–Team Dynamics
HR Budget Spent on
Leadership Investments
∆=6
Percentage
Point Increase
23%
of the HR
budget
spent
globally
31%
of the HR
budget
spent in
Asia
Despite increase leadership
investments, only 33% heads
of HR who were confident
that these investments led
to measurable results.
As spans of control widen and leaders have less time to devote to their team members,
teams must deliver their objectives without constant input from their leaders. Accordingly,
leaders must focus on building a team culture that enables staff members to seek guidance
and support from each other, rather than just from their leader.
Our global survey asked heads of HR to assess the ability of leaders in their organization to
be agile and work efficiently with others as well as the ability of the organization as a whole
to generate innovative ideas. In all three areas, respondents expressed little confidence in
their leaders, suggesting that organizations are looking for new types of leadership. Only
16% of heads of HR believe their leaders remove barriers to their teams’ performance, for
example, while just one-fourth believe their organization’s leadership would be able to
adapt to any significant shifts in business strategy.
At the same time, although most HR teams have adopted a variety of strategies to help
create leadership within their organizations (e.g., focusing on role modelling, competency
models, and training), many are failing to see a sufficient return on investment. In fact,
worldwide, only 33% are confident their leadership investments are paying off.
This lack of confidence is reflected in the high levels of investment in leadership that HR
teams currently feel they must make. When we asked heads of HR to estimate the
percentage of their HR budget spent on leadership investments, we found that the global
average was almost one-fourth the average budget (23%).
In Asia, the amount invested was even higher (31%), but despite this increase, the
proportion of heads of HR who were confident that these investments led to measurable
results was still only 33%.
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Defining Enterprise Leadership
In the new work environment, enterprises must rethink their approach to leadership. To be
successful, organizations must foster greater interaction between leaders and their teams
across the enterprise.
But mere interaction will not be enough. Our global survey found that the best leaders
today are those whom we’ve dubbed Enterprise Leaders: those who not only lead their
teams to high performance but also contribute to and leverage the performance of other
teams—and help their teams to do the same. Employing and developing Enterprise Leaders
leads to greater revenue and profit for the company as a whole.
Ultimately, to drive growth and achieve organizational goals, enterprises must develop
Enterprise Leaders at all levels.
For the purposes of our study, managers assessed leaders based on their ability to achieve
business unit objectives and contribute to enterprise-wide objectives. Likewise, leaders
assessed their teams based on their ability to achieve individual tasks and assignments
and contribute to and leverage contributions from the work of their peers across the
organization.
Our study’s key findings follow:
A Tale of Two Companies
Organization WITHOUT
Enterprise Leaders
Organization WITH
Enterprise Leaders
Conflicting Strategies
Leaders present strategies to maximize
business unit results, resulting in
conflicting strategies.
Strategic
Planning
Connected Strategies
Leaders present strategies that
incorporate strategic needs beyond their
business unit.
Cross-Functional Projects Ignored
Leaders deprioritize cross-functional
projects as side-of-the-desk work.
Strategy
Execution
Cross-Functional Coordination Prioritized
Leaders seek out cross-functional
partnerships.
Competition for Resources
Teams compete for and allocate resources
based on business unit objectives rather
than enterprise objectives.
Resource
Allocation
Strategic Alignment of Resources
Teams allocate resources to business unit
objectives that align with organizational
goals.
Talent
Planning
Talent Viewed as Corporate Asset
Leaders share opportunities to leverage
their own talent elsewhere and to develop
others’ talent.
Talent Hoarding
Leaders reluctantly discuss their top
talent and look out for talent to poach.
Source: CEB analysis.
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Key Findings: The Benefits of the
Enterprise Leadership Model
Our global survey revealed that across the board—in Asia and worldwide—true Enterprise
Leadership only occurs when leaders work across the whole enterprise; when, in other
words, they can demonstrate leadership on an individual and network level. To achieve
true Enterprise Leadership, today’s executives must take a holistic view of the business
operation and understand how the decisions they make for their individual units affect the
business as a whole.
The survey also pointed to a marked improvement in performance when leaders (in Asia
and elsewhere) performed at their optimal level. It found, for example, that Enterprise
Leaders’ teams:
Are 68% more innovative than individual leaders’ teams;
Are 21% more adaptable than individual leaders’ teams;
Have a 35% higher change in engagement growth year-over-year
than do individual leaders’ teams;
Have a 20% improvement in customer satisfaction growth yearover-year than do individual leaders’ teams; and
Improve their own business unit revenue growth by 12% and also
contribute 5% of revenue growth to other business units.
Cisco Systems: Leadership in the Clouds
Cisco Systems, a US-based multinational that designs, manufactures, and sells
networking equipment, operates in a complex and challenging business environment.
HR reexamined Cisco’s leadership model in 2007 and found an opportunity to better
match existing leadership capability to business needs.
More than 200 executive leaders participated in HR-facilitated conversations, which
led to the development of a new leadership model for the company’s business
strategy.
The new model promotes “clouds” of leadership capability throughout the
organization, rather than trying to optimize every individual leader’s capabilities. The
situation-specific approach allows Cisco to deploy and support the best leaders for
particular business, locale, or market/technology transitions.
The solution includes transparent assessments and development conversations, which
help leaders understand how their unique skill profiles fit into the capability mix
throughout the organization. Cisco then leverages leadership strengths across the
talent portfolio to ensure the right capability mix in different parts of the business.
By cascading the updated leadership model to all levels of the organization, Cisco has
provided a clear model of success for future leaders and has improved visibility across
multiple levels of talent.
The organization has ensured that, in addition to top-down expectations, it has
collected bottom-up and peer expectations. To keep the leadership model specific to
Cisco, the company benchmarked against
external research after synthesizing data
from its executives and business strategy.
Cisco’s research found that leadership needs varied considerably throughout the
business and that the diverse strengths of leaders provided a number of opportunities
for business growth. This discovery meant the company could begin investing in the
development of groups of leaders, not just in individual leadership development.
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Key Findings: The Roadblocks to Building
Enterprise Leadership
Traditionally, business leaders have focused solely on their teams and on what they and
their teams contribute to the enterprise, without considering the organization as a whole.
Although great leaders who approach their work this way might moderately improve
their individual business unit’s profit and revenue growth, a change of strategy is needed
in an interconnected environment. Here, the spread of information throughout the entire
enterprise is vital, as is contributing to and leveraging the work and capabilities of leaders
and teams throughout the organization. A siloed way of operating simply doesn’t suffice in
the new business landscape.
43% of leaders understood
how their work contributed
to that of their peers
or understood the
organization’s performance
as a whole. This percentage
was, however, higher than
the global average (35%).
66% of leaders believe they
wouldn’t have the control
they need to lead their units
and teams successfully if
they focused on the broader
organization instead.
37% of leaders aren’t
sure what is required to
perform as a collaborative
Enterprise Leader and how
they should contribute to
the organization beyond
contributing to their own
business unit.
As part of our global survey, we asked leaders how their work related to overall
organizational performance and what others needed from them to do their job. In Asia,
less than half the leaders surveyed (43%) understood how their work contributed to that of
their peers or understood the organization’s performance as a whole. This percentage was,
however, higher than the global average (35%).
Leaders, therefore, need to find ways to improve outcomes for the entire business, not just
for their own teams. To do this effectively, they need to overcome a number of roadblocks.
Although leaders understand the benefits of collaborating with their peers to improve the
broader organization, more often than not, they don’t do it. They don’t collaborate with
their peers because they think collaboration is not advantageous.
First, business unit leaders are concerned about control. As many as 66% of leaders believe
they wouldn’t have the control they need to lead their units and teams successfully if they
focused on the broader organization instead. Moreover, they think that collaboration
will lead to a greater lack of control and that they won’t be rewarded financially for
collaborating and giving up that control.
More than one-third of leaders (37%) isn’t sure what is required to perform as a
collaborative Enterprise Leader and how they should contribute to the organization beyond
contributing to their own business unit.
Likewise, leaders believe they will not be rewarded for expanding their focus beyond the
business unit. We asked survey participants if they believed they would be financially
rewarded for contributing to others’ performance. The proportion of leaders who believed
they would be rewarded was only 35%. In Asia, this figure was slightly higher (42%).
The percentage of leaders who think they would be financially rewarded for their
enterprise contributions is low, although most leaders have professional objectives to take
responsibility for overall network performance. In fact, in their performance reviews,
nearly all leaders could identify one or more objectives related to the issue of enterprise
contribution. In Asia, 99% of leaders reported they have at least one related network
performance objective.
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Checklist: Creating Enterprise Leaders
To achieve business goals, companies must establish Enterprise Leadership throughout the
organization, which means getting younger leaders up to speed more quickly, developing
leaders globally, and keeping senior leaders relevant and engaged for longer.
So how can HR units take action to drive this Enterprise Leadership initiative? We
identified three steps HR leaders can take to help build Enterprise Leaders within their
organization.
1. F
ocus training on leader mind-sets. First, instead of merely building new leadership
skills, HR units must shift leaders’ mind-sets about the amount and type of control
they need to be successful in the new work environment. Shifting leader mind-sets
has a bearing on training needs within organizations. HR strategies still focus on
role modelling, competency models, and skill-based training. Companies must invest
more in leadership training strategies that help leaders understand how to adapt their
management style to the new reality of having less control.
2. Design leader assessments to maximize transparency. Second, HR units should work
to increase transparency by communicating the relative strengths of leaders’ peers
and teams. This transparency will clarify whom leaders can go to for particular advice
and assistance and who would benefit from their expertise. Instead of just updating
universal competency models, close leaders’ information gaps so they know whom to
give support to and receive it from.
3. Redesign leader evaluations. Finally, to correct the misperception that leaders won’t
be rewarded for contributing to the broader organization, companies should update
their performance evaluation process. This new process should involve evaluating
leaders on the outcomes of their contributions to other areas, not just on their ability to
demonstrate collaborative behaviors.
General Electric Company: A New Leadership Mind-Set
General Electric Company (GE) recognized that a fundamental shift in the work
environment required a new leadership strategy and mind-set. To address this
shift, the company’s Experienced Leaders Challenge (ELC) convened GE’s tenured,
high-performing leaders and challenged them to address the barriers to achieving
successful Enterprise Leadership.
The process involved resetting leader assumptions through the following: selfdiscovery exercises, to encourage them to adopt an enterprise mind-set; small group
“teach-back” sessions, to translate elective experiences into specific, personally
relevant takeaways and next steps; and business simplification challenges, to ensure
leaders apply their learning in a way that supports the broader organizational
objective of increasing customer value through simplicity.
The challenge for leaders was to recognize the specific paradigms in their environment
and to apply appropriate strategies. The ELC focused on building a new mind-set as
opposed to giving leaders a new set of tools.
The work environment followed a fixed, commonly understood set of rules, known
as “Newtonian leader strategies,” which provided clear directives and standardized
processes and which cascaded information to teams through a focus on leader-owned
resources and priorities.
Executive coaching support across the identification, solution development, and
execution of business simplification challenges ensured high-impact opportunities
were created to improve business unit performance.
Simplification challenges also helped participants clarify their thought processes and
helped them develop effective leadership strategies.
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Facing the Future
Our survey indicated that for heads of HR in Asia, the three most important leadership
initiatives were building high-performing teams, changing leader behaviors, and
strengthening leadership skills.
As we have seen, building Enterprise Leadership requires that executives discuss their
future leadership needs and challenges with the heads of HR and boards of directors.
They should also identify the roadblocks preventing leaders from contributing to the
organization beyond their own business units.
But creating a new Enterprise Leadership environment in which leaders’ relationships with
their peers and teams are more complex and less predictable also has further implications
for heads of HR. In particular, they should consider the following questions:
Which of the
roadblocks is making
it difficult for our leaders to
behave like Enterprise
Leaders?
Am I accurately
communicating future
leadership needs and challenges
to the CEO and board of
directors?
How can we
support our leaders’
managers as they adjust
to the new leadership
environment?
About CEB
CEB is the leading member-based advisory
company. By combining the best practices
of thousands of member companies with our
advanced research methodologies and human
capital analytics, we equip senior leaders
and their teams with insight and actionable
solutions
to
transform
operations.
This
distinctive approach, pioneered by CEB, enables
executives to harness peer perspectives and
tap into breakthrough innovation without costly
consulting or reinvention. The CEB member
network includes more than 21,000 executives
and the majority of top companies globally.
Organizations that evolve in line with these trends will be competitive, productive, and
increase their presence in the market. Will yours be one of them?
About Human Capital Leadership Institute
(HCLI)
The Human Capital Leadership Institute
(HCLI) is an aggregator and neutral player
in the human capital ecosystem. HCLI offers
the unique ability to bring together multiple
perspectives and voices from business,
government, and academia, offering thought
leadership and insight on understanding Asia,
successfully doing business in Asia, and its
implications on leadership and human capital
strategies for Asia. Through its efforts, the
institute aims to develop global leaders with
a strong understanding of leading in Asia, as
well as to build Asian leaders with the ability
to lead on the global stage.
HCLI is a strategic alliance between the
Singapore Ministry of Manpower (MOM),
Singapore Economic Development Board (EDB),
and Singapore Management University (SMU).
For more information, please visit: www.hcli.org
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