Leadership Mindsets for the New Economy

“Organizations need to completely rethink what they are about and what it means to lead. It’s not about one person or even those residing at the top anymore. In today’s world, everyone has to adopt a leadership mindset. We have to think of ourselves as members of a leadership community.”

— Patty McCord, former chief talent officer, Netflix

Are you able to change the culture of your organization? It’s possible, perhaps, if you can articulate what your culture is or if you are a CEO or C-suite executive. But let me ask a different question: Are you able to set a new tone and mindset for how your team, your project members, or your function work together and with others, both inside and outside your organization? The answer, in this case, is most likely to be a resounding yes.

For the past seven years, I have asked these two questions to thousands of managers and leaders from around the world in my executive education classes at MIT Sloan School of Management. With the first question, few raise their hands — even when the group comprises senior leaders. But when I ask about their capacity to set a new tone or mindset in their organizations, virtually everyone feels it’s within their scope and mandate, and the hands fly up in the air.

Why not bring about culture change by challenging leaders to adopt a new mindset that shows tangible progress toward achieving what is perceived by most to be the more elusive goal? What would that look like in practice? Suppose you are the leader of the retail division of a 170-year-old bank with a deeply risk-averse culture. The following passage, based on a real-life example, illustrates how to challenge your leadership to adopt a new mindset:

“We’re losing business to our upstart competitors. Our customers think we are too slow and unimaginative. I think we can do much, much better. If I have been clipping your wings, then that’s on me, and I want you to tell us at the leadership-team level what we can do to change how we operate. Let’s start changing how we’ve been working with our customers and clients. Enhancing customer value has been central to our core purpose for a long time. Let’s rededicate ourselves to that mission. Let’s find new, creative solutions to solving our customers’ challenges together this year in every facet of our retail operations. I promise — no blame game or adverse consequences for experiments that don’t make it. Then let’s share those learnings, successes, and failures, first across retail and then across the entire bank. I need your help, but I know we can make this happen together.”

This statement embodies the leadership mindsets that are driving the new economy: leaders who passionately state that they are a community of leaders dedicated to being customer obsessed, purpose-driven, highly networked, and curiosity-driven.

For the past year I have been serving as guest editor for MIT Sloan Management Review’s collaborative research project, The Future of Leadership in the Digital Economy, in partnership with Cognizant. We surveyed more than 4,000 managers and executives from more than 120 countries and conducted interviews with dozens of C-level executives, with the objective of understanding how a changing world and a changing world of work is influencing what it means to be a great leader. One of the most striking findings from this ongoing research initiative is that both the survey respondents and those interviewed believe that their leaders lack the mindset needed to bring about the strategic and cultural changes required to lead in the new economy. In fact, only 12% strongly agreed their leaders were prepared to move their organizations forward. Interestingly, very few interviewees talked about the need for deep culture change, perhaps for reasons similar to the example provided earlier: Affecting large-scale culture change is perceived as above most people’s pay grades. Rather, virtually all of them stressed the importance of adopting new mindsets and behaviors, as well as the importance of finding approaches that would reinforce and embed these mindsets and behaviors as the new hallmarks of leadership. But what new mindsets do leaders need to adopt?

Four Leadership Mindsets Driving the New Economy

Mindsets are mental maps that reflect and guide how people behave in organizations. They signal how people operate and what they are about. So, what leadership mindsets did respondents and interviewees feel were critical to winning in the digital economy? After analyzing our survey data and conducting a sentiment and heat map analysis of the interviews we conducted, we identified four: producers, investors, connectors, and explorers.

Producers. The producers’ mindset combines an obsession for producing customer value with a focus on analytics, digital savviness, execution, and outcomes. Producers use analytics to accelerate innovation that addresses shifts in customer preferences and improves customer and user experiences.

Brian Halligan, cofounder and CEO of HubSpot, explains the producers’ mindset:

“When I was in business school at MIT Sloan, the mantra was that your product needed to be 10 times better than the competition’s. That made sense then, but today the new mantra is that your customers’ customer experience needs to be 10 times better. Companies need to examine every touch point they have with customers and operationalize ways to make all of them delightful.”

Investors. Leaders with an investors’ mindset pursue an organizational purpose beyond increasing shareholder returns. They are dedicated to growth, but in a sustainable fashion. They care about the communities in which they operate and the welfare and continuous development of their employees. They invest in enhancing the value of their customers rather than viewing them as streams of revenue.

Susan Sobbott, former CEO and president of American Express Global Commercial Services, expresses what having an investors’ mentality means to her:

“One of the things I struggled with when I talked about our goals for the organization was this notion of aligning purpose, principles, and profits. Based on corporate imperatives, I found myself talking about achieving a 15% growth rate or a 20% reduction in costs. To be honest, even I wasn’t motivated by that. So I began talking about how we could change the lives of millions of customers, and how those customers could change their communities and the economy, through our work together as a team. It was like turning on a switch. We started to see motivation and teamwork grow significantly because we had a higher purpose. That purpose led us to the numbers. The growth was an outcome rather than an intent.”

Connectors. Leaders with a connectors’ mindset understand that mastering relationships and networks is the new currency that drives organizational effectiveness in the new economy. Connectors get this at their core. It’s how they operate. They regularly bring together diverse stakeholders from both inside the company and with ecosystem partners. Connectors understand the power of creating a sense of community and belonging, so important in today’s fast-paced, breakneck-speed world where it’s easy to lose the human touch.

Here’s how Lori Beer, global CIO of JPMorgan Chase, explains why having a connectors’ mindset is so important:

“As the corporate world becomes more virtual and business models more digital, the key determinant of sustainable success is less about the power of a company’s algorithms than it is about the efficacy of the relationships we forge.”

Explorers. Leaders with an explorers’ mindset are curious and creative, and operate well in the fog of ambiguity. They engage in continuous experimentation and learn by listening to many varied voices. Strong indications of an explorers’ mindset include establishing behavioral norms that tolerate and indeed encourage risk-taking and even failure, reverse mentoring, and a deep curiosity about how new forces are shaping the competitive environment.

Dan Shapero, vice president of global solutions at LinkedIn, explains what having an explorers’ mindset means to him:

“I don’t know where curiosity comes from, but if you could bottle it, I’d buy it. It’s so valuable, when things are changing so quickly, to have people on your team who are trying every day to better understand the world around them.”

In the new economy, leaders who set a tone with these new mindsets signal that they aspire to reimagine what effective leadership should be. They are less fixated on the image of leader-as-hero than they are on building an amazing community of leaders at every level in their organizations. By doing so, they drive home the narrative that building a collective leadership capability is the strongest route to competitive advantage in today’s fast-paced world.