IBM Leadership

Leadership Must Evolve in an Interconnected World

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For the second consecutive time, FORTUNE magazine has named IBM as the #1 Global Company for Leaders. As part of our series on IBM Leadership, Bridget van Kralingen, General Manager, IBM North America, details how systems thinking can turn challenges into opportunities for globally connected social businesses.

Today’s environment of reduced budgets and resources is driving a scarcity mentality in organizations, which provides significant new challenges for leaders. The challenges deepen when combined with the growing complexity of today’s hyper-connected world, where people, places and things are linked and systems are driving more new data every two days than the world created from the beginning of time to 2003.

Such interconnectedness is creating a world of a so-called system of systems. By that I mean more than IT systems that manage banks or airline reservations, but also organizational, political and societal systems. And with the rapid adoption of social media, organizations are becoming collaborative systems without hierarchies.

In this environment, leaders need to adopt what MIT scientist and author Peter Senge calls systems thinking as the means to do more with less and to use connectivity and data for competitive advantage.

Systems thinking requires that leaders analyze and address their operations across several dimensions. For example, they must understand interdependencies of different systems and think broadly about their ecosystems and the value of open collaboration. A good example is how chocolate producer Mars Incorporated donated its preliminary findings on decoding the cocoa genome – extremely important data in finding new ways to protect the one-third of cocoa crops lost due to disease, pests, and drought – to the public domain. While privately held Mars could have kept the results for itself, the company made the decision to use the power of open public collaboration to save more crops.

Systems thinkers also must take a global approach to explore new ways to collaborate, tap into skills anywhere and serve clients everywhere. Consider U.S.-based Illumination Entertainment, a leading computer-generated imagery production company that faced labor costs of up to $250 million and a shortage of world-class artists here in the U.S. Illumination Entertainment tapped into the emerging talent pool of digital artists around the globe. Working virtually, it created a decentralized system to bring its film-making process to the talent. The results? Illumination Entertainment can produce films for approximately $75 million – a tremendous cost savings.

Systems thinking also includes harnessing the collaborative power of everyone in your organization via social networks. Mexico-based CEMEX, a global building products manufacturer, uses Lotus Connections as an internal social network enabling 20,000 of its employees, regardless of title, to collaborate on projects such as new product development and sustainability across 50 countries. As an emerging social business, CEMEX leaders understand the power of social collaboration for greater agility and innovation.

While we examine the challenges for leaders today and the importance of systems thinking, we also are reflecting on the lessons learned on cultivating a culture of leadership as IBM celebrates its Centennial this year. Our 100-year history has shown us that long-term success requires being ready to change everything except our core beliefs and values, which beget an enduring culture. This leadership mind-set helps organizations to continually evolve and is invaluable when an industry moves to the next thing.

Most recently, IBM’s emergence as a model for global integration has influenced our philosophy about the nature of leadership itself. Addressing the complex challenges faced by our clients requires providing innovative, customized solutions and delivering them quickly via resources from around the world. This is not something that can be scripted or prescribed from a playbook – it requires a high degree of flexibility, collaboration, coordination, accountability and engagement from everyone involved.

The importance of engaged employees is illustrated in a recent Gallup study in which the ratio to non-engaged employees at top organizations is nearly 10:1, while the ratio in average organizations is 2:1. Gallup also found that the cost of disengaged employees in the U.S. is more than $3 billion in lost productivity.

In summary, as the world grows more complex, a system of systems is providing new opportunities and challenges for leaders. Leadership for the long-term means being ready to change almost everything you have done before, but remain true to core values. And leaders must create an accountable, engaged, collaborative culture to build a future of sustained innovation and growth.

BOTTOM LINE: “Systems thinkers” take a global approach to collaborating, tapping into skills and serving clients. #ibmleaders

Read more about IBM Leadership:

Innovative Public-Private Partnerships Are Essential to Restoring U.S. Competitiveness by Bridget van Kralingen

Why IBM Is the Best Company for Leaders by Randy MacDonald, Senior Vice President, Human Resources

A Global View of Leadership Development by Stanley S. Litow, Vice President of Corporate Citizenship & Corporate Responsibility and President, IBM International Foundation

How Private-Public Partnerships Can Lead Through Innovation by Rod Adkins, Senior Vice President, Systems & Technology Group

Entrepreneurship Takes Homework, Not Hubris, by Sharon Nunes, Vice President, Government Industry Strategy & Solutions

A New Model to Cultivate Global Leaders by Tony Mwai, Country General Manager, East Africa

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