Academy of Management Today

The New Reality: Leaders Have Less Control, Need More Courage

By Jason Collins

For decades, the prevailing wisdom for business leaders was to stay out of politics. Neutrality was considered the safest, most responsible stance for corporate executives and board members to take. But today that approach is increasingly untenable. From the COIVID-19 pandemic to intensifying political polarization and controversy, leaders now find themselves at the center of public debates whether they choose to engage with them or not.

For leaders, silence is a statement, and political neutrality is no longer a viable option, according to Academy of Management Scholar Wendy Smith of the University of Delaware.

“It used to be that there were checks and balances in the U.S. government,” Smith said. “The market was separate from the state, or companies were separate from the government, and that is no longer the case.”

To survive and thrive in this era when economics and politics collide to sow chaos, Smith said that leaders should “talk about strategizing as a verb rather than having a strategy.” For Smith, this means considering “the conditions that we need to bring a team together to be agile and moving, even as we need to communicate out to our people some sense of security.”

Strategic decisions from supply-chain choices to remote, hybrid, or return-to-office work policies have become flashpoints in boardroom and C-suite conversations and political discourse. Leaders now must navigate complex social, economic, and political terrains, speak out on pressing issues, and align their actions with values that resonate with stakeholders—employees, shareholders, customers, and communities alike.

Companies’ leaders have had to deal with uncertainties for a long time, but Smith said many of their strategies and their organization’s systems are antiquated. According to Smith, nowadays leaders are learning that they need to “communicate to their people, optimize their processes, and cultivate openness in their conversations, but not pretend that there’s certainty of what the future will bring, because that’s just false hope.”

Smith acknowledged that leaders are faced with unique challenges in this current political landscape characterized by dissention, frustration, anger, and unpredictability, making it difficult to navigate socioeconomic volatility.

“One of the consequences of this highly polarized world is that leaders, because of the polarization, are being attacked for polarizing positions,” Smith said.

In this current era, leadership is less about having definitive answers and more about asking incisive questions, listening to a range of perspectives, evaluating various responses to difficult circumstances and controversial issues through an ethical lens, and having the courage of one’s convictions.

“We want leaders who are competent and courageous, not stepping away from that responsibility to take a stand and speak up for what’s right because it is so risky,” Smith said.

Author

  • Daniel Butcher is a writer and the Managing Editor of AOM Today at the Academy of Management (AOM). Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, as well as Crain Communications’s InvestmentNews and Crain’s Wealth, eFinancialCareers, and Arizent’s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor’s degree from the University of Colorado Boulder and his master’s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.

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