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The demographic evolution that has been taking place in America, and elsewhere, over the past several years has had an irrevocable impact on the types of leaders needed to move businesses forward successfully. But, there is a significant gap between the types of leaders needed and those currently at the helm of most organizations.
Most recently, the economic climate in the United States caused many organizations to move into survival mode, shifting their attention away from initiatives that could capture the voices and reap the innovation of their diverse workforces. As the economy shows signs of improvement, some organizations have come back to the realization that, without engaged employees whose efforts can yield engaged customers, bottom lines won’t budge.
So what it will take for a business leader to succeed in the 21st century is vastly different than what it took to succeed in the past. For leaders to ensure that businesses compete effectively in an increasingly diverse global economy, they must now be firmly focused on business initiatives that will result in more engaged employees and, in turn, more engaged and loyal customers.
Let’s look at the number of massive shifts that have led us to this point.
THEN: Past Performance Predicted Future Success
In the past, successful companies were brick and mortar enterprises with clear brand identities centered around a specific product or service. They established their prowess and held rigidly to the people, markets and processes who had created their success. They were confident—even cocky—in the belief that the successes of the past would lead to continued success in the future. “If it’s not broke, why fix it?,” was their mantra. Unfortunately, the fundamental belief in consumers staying the same or staying loyal, which was the mainstay of corporate behemoths like Kodak, TWA, E.F. Hutton, General Foods and others, proved to be flawed.
NOW: Companies Must Continually Innovate
Today, even the most stalwart companies and their leaders are vulnerable. The Borders and Blockbusters of the world have learned the hard way that they cannot rest on their laurels. Quite the contrary. Innovative companies like Netflix and Salesforce have demonstrated that even the “big guys” can be knocked from their perch. Today’s successful leaders know that they must continually innovate, not only in products and services but also in the texture and dynamics of the workplace. They know that they must be agile and able to shift course as environmental and consumer demands shift. They know that they must have multiple methods of generating and incorporating input from a wide range of audiences to fuel future innovation. They also now see younger consumers looking at the brand as larger than a product or service—it’s about the organization’s social impact too.
THEN: It Was About Counting People
Over the last half century, we have seen increasing gains in workplace diversity starting with President Kennedy’s signing of Executive Order 10925 in 1961, when we first saw the term “affirmative action.” That was more than 50 years ago, and it led to the passage of the Civil Rights Act in 1964.
Meanwhile, organizations that embraced “diversity” seemed to focus on hiring women and people of color or focused on event-based training initiatives—a “dip and done” approach. Over time, these good intentions to create a more ethnically and racially diverse workforce began to focus on “getting representation” and educating people about differences. This has been a numbers game that, in many cases, lacked clear business linkage. Corporate America has been spinning its wheels for decades, attempting to influence change by focusing on the numbers and it hasn’t worked because leaders failed to connect these efforts to the organization’s business objectives.
NOW: It’s About Including People
Becoming an inclusive leader is not about counting—it’s about including. While many of us have learned that counting people, alone, doesn’t work, we’ve also learned that including people does. It doesn’t matter how many pink, purple or green people you have on staff if leadership is not capturing the insights, input and innovations of those people. Inclusion is the new business imperative. Inclusion is what will lead to real business growth on a global scale.
Inclusive leaders know that their success depends on the input of people. They know that it is critical to ensure that all of their employees have a voice. Many great ideas can emerge from the mailroom as well as the boardroom!
THEN: It Was About Command and Control
In the old business model, leaders told people what to do. They set the rules and they held people accountable to those rules. They had all of the answers—or so they thought. The best workers were those who showed up, did their jobs and went home. After 30 years they received a gold watch for their compliance. It was a top-down world where everybody knew their place and few dared to challenge the often oppressive status quo. But that was then.
NOW: It’s About Engagement
Today’s leaders—the good ones, the inclusive ones—recognize that their employees represent valuable capital, not because of their “horsepower,” but because of their “brain power.” Effective leaders know that their organizations can benefit by capturing the hearts and minds of their employees by seeking their input, listening and recognizing that it’s not just the people at the top who create value. Good ideas come from everywhere! And those good ideas drive bottom-line results.
THEN: Seniority Ruled
The world of command and control was generally inhabited by the tenured members of the organization: leaders who had earned their stripes through years of work and had reached an age of seniority and presumed wisdom. They held positions of authority and were revered (generally) by newcomers to their organizations—the young, inexperienced ranks whose youth put them at a decided disadvantage in terms of the perceived value of their intellectual contributions. But that was then.
NOW: Gen Y Presents Significant Opportunity
In the 21st century everyone is a knowledge worker—especially
Gen Y. Employees aren’t valued as much for their years of service as they are for their brains. And, in a competitive global economy, success means capitalizing on the ingenuity of diverse brain power!
Unfortunately, just as the demand for intellectual capital is exploding, employers are faced with an imminent exodus of knowledge. As Baby Boomers begin to leave the workforce, who will be poised to take their place? Gen Y. This cohort represents the vast bulk of highly relevant and employable available knowledge “talent.” Ignore them at your peril.
Gen Y comprises more than 27 percent of the American population and nearly 25 percent of the American workforce today. These individuals will comprise more than 75 percent of the global workforce by 2025 and are already having a disproportionate influence on the workplace. Gen Y is different. They have more comfort with technology; no confidence that loyalty to a corporate culture will pay off for them, as it did not for their parents; greater comfort and familiarity with different ethnic groups since 46 percent of Gen Y are multicultural; limited patience with the status quo, much like Boomers who wanted to change the world; and a driving need to be included and participate.
Fail to include this cohort and the results could be highly detrimental to your organization. In 2013, a survey conducted by Beyond.com found that more than 60 percent of Millennials are leaving the companies they work for in less than three years [1] . Why? The greatest reason given is “cultural fit.” The message to leaders: be inclusive.
THEN: Business Was Local
In days gone by, people did business locally. They shopped at the corner store. They ate at “mom and pop” restaurants. In the 1960s, if you asked 100 people from around the world where cars were made, they’d likely say “the United States.” We were a US-centric economy.
As transportation and technology connected the world and made it “smaller,” companies began to sell their goods and services to broader markets—often global markets. But back then, what they sold globally looked very much like what they sold locally and it worked at the time. Years ago, American companies like McDonald’s created products that catered to American appetites and the rest of the world literally ate them up. That was then.
NOW: Business is Global
Today, while there is certainly still a demand for American culture and American products, developing countries also want to consume goods and services that reflect their own local tastes. The increased ability of domestic companies to give them just that means America’s monopoly on consumers is a thing of the past. Global businesses now require leaders who are culturally aware and culturally agile.
Technology, of course, has fueled the global economy. It is no longer necessary for organizations to be physical, bricks and mortar entities or to exist within clearly defined geographic boundaries. Organizations can be virtual. Companies can be headquartered in relatively small locales yet still operate globally. They can literally do business from anywhere—and so can their customers. Successful organizations in the global economy are those that best understand these customers, in all of their rich diversity.
THEN: Your Employees and Your Customers Looked Like You
Take a look at company photos from days gone by and you’re likely to be struck by the sameness of the individuals in these photos. This was, of course, the impetus for an eventual focus on the need for diversity—the recognition that organizations were hampered by their sameness, by the lack of females and people of color. That led to the numbers game that we called “diversity initiatives”—the focus on attracting more women and people of color. It wasn’t a bad approach; it just didn’t go far enough or focus on what mattered most—inclusion as a driver for business. But, that was then.
NOW: They Don’t Look Like You Anymore!
Today, the best companies are comprised of a wide range of people inside (employees) and outside (customers). America’s traditional “majority” is becoming the “minority.” The most recent Census Bureau data indicates that, for the first time, the majority of Americans under the age of one are minorities. Today, 35 of the top 50 metros in the U.S. are majority minorities for kids five and under. In eight of these metros, it’s greater than 75 percent. They don’t look like you anymore, because there is no you. Instead, there is a rapidly growing amalgam of we—a society populated by diverse individuals based on a wide range of characteristics including sex, age, race, ethnicity, religion, and sexual orientation. How do we get our arms around these changing demographics? It starts by cultivating inclusive leaders who can take their organizations successfully into the increasingly diverse and volatile 21st century.
These significant changes have created an entirely different leadership challenge for businesses today. It is an environment that is marked by the need to ensure that the voices of both employees and customers are valued and heard.