In September 2015, the auto industry fell into moral murky waters again. Auto giant Volkswagen (VW) had been caught cutting sharp corners that would cost the company nearly $40 billion in fines and damages. From General Motors' defective ignition-switch fiasco to Toyota's sticky gas pedals, scandals in the automotive space, though technical, had trappings of deficient leadership and VW was no different.
The US Environmental Protection Agency (EPA) accused VW of installing "defeat" software in over 11 million diesel-powered cars, allowing the vehicles to cheat on EPA emissions tests. Although these automobiles performed well during testing, their real-world Nitrogen Oxide emissions were 40 times higher than US standards permitted; with 500,000 of the 11 million software-equipped cars roaming the United States which ranged from 2009 through to 2015 models. The ensuing scandal, dubbed dieselgate, sent the auto giant into a tailspin. With its brand in tatters, blame flew left, right and centre. Company officials were caught lying and VW's Chief Martin Winterkorn resigned amid survival-threatening fines.
Eight years later, the aftershocks remain. In June this year, Rupert Stadler, former Audi Chief, became the first VW board member to be sentenced for fraud related to dieselgate. While the company is slowly limping away from its troubled past, the effects still run deep. Its new leadership is transitioning into zero-emission vehicles and enshrining ethical practices across its workforce. In hindsight, dieselgate is believed to be the final stroke in a series of executive power tussles, a rigid corporate culture and management issues that severely affected the company's governance and decision-making.
What this means for project organisations
In June 2023, McKinsey and Partners published its state of the organisations survey containing conversations with CEOs and their teams. The findings identified 10 essential shifts organisations are grappling with today. Sitting dominantly on that list is the lack of "leadership that is self-aware and inspiring." Only 25% of respondents said their organisations' leaders are "engaged, passionate and inspire employees to the best possible extent." It reads in part, "leaders these days are focused on short-term responses to crisis, but they also need to think longer term and cultivate fit-for-purpose behaviours." They need to be able to lead themselves, they need to be able to lead a team of peers in the C-suite, and they need to have the leadership skills and mindset required to lead at scale, coordinating and inspiring networks of teams. "That requires leaders to build a keen awareness of themselves and the operating environment around them."
The study showed that, with only a handful of companies taking a holistic approach to leadership, staff members want their leadership to exude attributes such as "role modelling (focusing on building respect and considering the ethical consequences of decisions), inspiring others (presenting a compelling vision of the future and inspiring optimism about its implementation) and developing people (spending time teaching, mentoring, and listening to individual needs and concerns)."
The crucial face of successful modern-day leadership
This kind of leadership bears six elements, a 2023 survey by McKinsey revealed. They include:
- Role modelling: being a role model, focusing on building respect and considering ethical consequences of decisions.
- Inspiring others: presenting a compelling vision of the future and inspiring optimism about its implementation.
- Developing people: spending time teaching, mentoring, and listening to individual needs and concerns.
- Setting expectations: defining responsibilities clearly and rewarding achievement of targets.
- Fostering team discussions: building an atmosphere where everyone is encouraged to participate in decision-making.
- Communicating efficiently: communicating in a convincing and charismatic way.
According to the study, these qualities stem from building enough self-awareness to lead yourself, lead others, and lead at scale.
A closer look into being a leader
Beyond deliverables, the most effective leadership styles are those that encourage "well-being, connection and authenticity in the workplace." However, only one-quarter of respondents in the survey perceived their leaders as inspirational and fit for purpose. The study described fit-for-purpose leaders as "engaged, passionate and inspire employees to the best possible extent.” This is not hard to believe because exuding such qualities requires the courage and humility to embark on what the study called a "leader self-journey." Very few possess this.
The overtly hierarchical command structures in pre-dieselgate Volkswagen ensured the presence of "yes men" at the expense of true collaboration. The modern-day leader is not one who direly wants to be obeyed, even if such obedience comes at an unnecessary cost. Rather, it is one who orchestrates a culture and practice that empowers networks of teams and encourages transparency, collaboration and inclusiveness across the organisation.
Leaders who can spark such change must be willing to disrupt "rigid organisational silos and introduce open, transparent, collaborative networks." Greater emphasis must be on teams as against one-man shows, on establishing "psychologically safe conditions" where all team members can contribute to their full potential.
Leading at scale
Anyone with limited exposure can wing leading a small team. But leading at scale is arguably the ultimate test of leadership acumen. According to the McKinsey study, leading at scale involves executing work differently and redesigning how value is created. For execution, organisations must promote an environment where teams work on multiple initiatives in parallel with the goal of discovery. Here, "the leader's perspective changes from that of a controller who operates through detailed analysis and planning to that of a coach who operates through short cycles of quick decision making, experimentation and learning."
In redesigning value creation, the leader's thinking must transition beyond being a manager who simply ensures profits for shareholders, to a visionary who can recruit the hearts and minds of people to "deliver impact and value to all stakeholders through a compelling purpose." The McKinsey study showed that employees at purpose-driven companies are four times more engaged at work. This in itself is a formidable competitive advantage.
Leading teams and leading at scale begins with self-leadership. There is no circumventing that. Leaders who will win big in today’s project organisations are those who transition from mere management thinking to role models who inspire others, develop their people, set the right expectations, foster teamwork and communicate organisational goals in a way that creates buy-in from all stakeholders.