The need for creative leadership. What is it and why is it important?

The need for creative leadership has different layers and cannot be pinned down to just competitive advantage for as Dan Palotta argues in Harvard Business Review “…the best creativity […] comes from a desire to contribute to the lives of others, either by introducing something new that improves the quality of their lives or by showing people that something thought to be impossible is in fact possible. When you change people’s perceptions about what can be accomplished or achieved, you contribute to their humanity in the richest possible way. You give them hope for the future…”.

Are we living in a world in need of hope? Or have we just landed in an unpredictable marketplace where anything could happen? From where is the need for this breed of leadership coming? After having worked with over hundreds of creative leaders from around the globe in our Executive Creative Leadership program, we believe there are three main layers that contribute to this need:

The world is changing

Business is changing

People are changing

Leaders need to navigate a complex and uncertain world.

We live with a speed of change that the world has never seen. Revolutions in digitalization, connectivity and information sharing are generating trends such as the sharing economy, new marketing, the internet of things and big data that enable new modes of value-generation. Many fields such as neuroscience and biotechnology are gathering momentum and could produce changes that we cannot foresee. What inspires awe – both of fear and admiration – is that most of these trends are only at the beginning. They are still in their baby shoes. We don’t know how or how much they will still change, only that they will change.

The ubiquitous connectivity will make changes volatile. Simple systems hardly exist anymore, and most everything has complex causality and what we do see is often ambiguous. It takes a special kind of leadership to maintain our bearings in these situations and to choose actions without knowing in advance if they will work. It requires a certain combination of skills and mindsets to lead the creation of value without having a rulebook to follow. Call it creative leadership. It bears resemblance to an artist’s way of thinking: being very alive and aware and willing to fail many times to discover what does really work.

The threat of creative destruction.

There are many issues at stake, and company survival is just the most immediate one. The BBC reported that life expectancy of companies is now barely one-fifth of what it was: 15 years today, compared to 67 years in the early 1900s. Think of Eastman Kodak, for instance. In 1999, it was one of the oldest, strongest and most successful multinationals in the world, with a listed market value of US$200 billion. Just 12 years later, this figure stood at US$180 million – a loss in value of 99%. In January 2012, Kodak filed for bankruptcy protection in the United States District Court.

We see this trend across industries. In the brick-and-mortar world, entering the hotel business would mean investing millions and millions in real estate, training staff and marketing. Now in the Internet era, companies like Booking.com and Airbnb manage to overhaul the industry and leave incumbents behind within the time span of only years.

The point here is not that new companies arise. The point is that companies stuck in the belief that they can just keep on doing their business the way they always have, may wake up one morning completely out of business. They need to wake up now, to look at the world differently, to think and act differently.

This means that it’s more difficult to come up with the right strategy that takes a company from A to B, it even means that it’s often not clear what B should be.

Unfortunately, most leaders are trained in devising strategies that bring them from A to B via a complicated but clear path. They are not trained to come up with an approach when B can change all the time because of competitive actions or changing landscapes. This shows a need for creative leadership that is capable of dancing with complexity and ambiguity while creating options and making adjustments along the way.

The challenge is that most business leaders are trained in linear thinking, in devising strategies that will grow their business through increasing efficiency or acquiring new companies. They are not trained to come up with radical ideas that reshape their industries, ideas that might cannibalize and overhaul their own product portfolio and build complete new businesses. In other words, these companies need a change of thinking, creative leadership that can make an organization act like the startups that would otherwise overtake them and nurture this startup type culture even in a large company structure.

Stakeholders don’t accept a single-minded focus on just people, just planet or just profit.

For a long time, we lived in a world where there was a clear divide between for-profit companies and NGOs. The companies tried to maximize shareholder value and had little incentive to focus on the needs of their community or the trail they left on the planet. The NGOs, on the other hand, tried to help these same communities and mitigate the negative effects of our species on the planet, with little concern for running a profitable business because they were supported by governments and philanthropists.

Both these camps cannot hold their stand because – for one – their stakeholders are not accepting it. On the one hand, we see large-scale societal issues like global warming; the failures in the financial system and the remaining divide in wealth between and within countries. These trends have given rise to employees, customers and communities demanding companies to operate more responsibly. On the other hand, driven by the financial crisis and the resulting budget cuts, we see a decrease in the spend from governments, companies, and philanthropists on cultural entities, good causes, and NGOs in general.

This means that both types of organizations need to reinvent themselves. And creative leadership is needed to come up with solutions to change their organizations and to find business models that encompass multiple bottom-line elements.

Inspiration and purpose are what people demand in their job and role. Just because we’re in an economic downturn doesn’t mean the talent war is over. While there may be a surplus of potential employees, it remains a challenge to recruit the really good ones that will make a difference. This talent has their demands: they don’t want to work anonymously for someone they don’t know; alternatively, just being a well-known name is not enough. Specifically, the younger generation (Gen Y) is not motivated by the status of working for a large multinational with a long history, a great reputation and a well-filled pension plan. Nor are these people solely motivated by a large paycheck. The most amazing employees want to be inspired by leaders with a clear passion and purpose. This means that in order to attract the right talent, creative leadership will need to have a compelling vision for their company, incorporating a triple bottom line.

William McDonough and Michael Braungart give a great example of creative leadership in their book Upcycle where they tell of the situation in villages near Ranthambore National Park in India, just six hours south of Delhi. Local farmers were going into the park to cut trees for firewood and sending their cows in to graze. The national park is a rare tiger habitat, and the receding trees eventually meant the tigers ran into cattle. This, in turn, led to the farmers looking the other way when poachers came to kill the tigers for their pelts. The initial approach to this complex problem by the park’s steward had been putting up fences, but villagers cut holes when they needed firewood, meaning that ultimately nothing had changed.

When the steward’s son, Dr. Govardhan Singh Rathore, took over, he exhibited pure creative leadership. He looked for a solution that was as interconnected as the problem, and that addressed the real needs of the parties involved. He first set up a health clinic to improve conditions locally and build goodwill. He then helped the villagers breed cows that produced more milk with less feed, thereby requiring less vegetation. He suggested to the farmers to gather cow manure and transform it into fuel and fertilizer using biogas. Initially, the biogas plants were free to the villagers but now more than 600 villagers buy them themselves and operate in the area. Rathore planted trees to replace the cut down ones and paid villagers to keep their assigned trees alive. He offered the poachers free education for their children if they stopped poaching and gave them camels to create income from milk and transportation.

Often there is no clear right and wrong and many problems have no clear-cut single solution. Our world seems to be filling up with these kinds of problems and therefore the need for creative leadership that is capable of dancing with complexity and ambiguity is higher than ever.