While the true effect of the coronavirus outbreak on business remains to be seen, early predictions from the EU Commission point towards a decline in economic activity of 7.5% in 2020.
This immediate downturn is inevitable as governments halt many business operations to contain the spread of the virus. But how the global economy will recover in the long-term is far less predictable.
A survey conducted for RSM, the leading middle market audit, tax, and consulting network, reveals the cultural changes European businesses must make to adapt to the ‘new normal.’ The data shows how leaving behind centralised innovation teams and empowering employees at all levels will be essential.
Paul Herring, Global Chief Innovation Officer, RSM International, comments:
“The coronavirus has already reshaped the business environment beyond recognition, and there likely won’t be a ‘return to normal.’ Across Europe and beyond, businesses must learn to adapt their business models to a world with more unpredictable supply chains, changing consumer habits, and greater state intervention. Innovation, and a willingness to leave the old way of doing things behind, will be vital for business survival – let alone growth.”
The survey’s findings encourage a shift from more autocratic approaches towards what is known as open leadership. This strategy focuses on developing relationships of trust and mutual respect across all departments and levels of seniority. In doing so, employees feel valued and, therefore, willing and able to make a greater contribution to an organisation’s success.
How centralised leadership stifles innovation
Traditional top-down command-and-control leadership gives a leader the sole authority to make decisions and instruct employees to follow accordingly. It’s an approach borne out of a need for control in factory environments around the period of the industrial revolution.
But times have changed, and in today’s age of technology, it can stifle innovation and creativity by ignoring the voices of the wider team. RSM International’s survey found that 48% of ideas created in European businesses are never explored by senior management. In the context of the pandemic, these could be the very ideas that help an organisation survive and thrive.
How open leadership can fuel business growth
Even with the EU’s planned stimulus package to rescue the economy, the near future is guaranteed to hold serious challenges for businesses across almost all industries. Those who embrace open leadership may stand the best chance of emerging out the other side in a strong position.
The same survey further found that businesses with a bottom-up culture successfully implement 28% more new ideas than those which rely on centralised innovation teams. They’re also more likely to let go of legacy ways of working (44% compared to 27%) and to see innovation drive their growth (53% compared to 37%).
RSM’s Paul Herring adds: “At a time of drastic change, it is more important than ever that all employees are driving innovation. In the race to adapt post-lockdown, the businesses which empower employees to experiment with their own solutions will have a significant competitive advantage over those who try to control creativity from the top.”
What are the guiding principles of open leadership?
Open leadership can be defined by an overarching set of values and behaviours. Starting with the former, open leaders believe every individual has something unique to contribute. They see in them the potential to grow and take on their own leadership responsibilities. An open leader’s job is to create an environment that can bring these beliefs to fruition.
They do this by exhibiting a common set of behaviours. Open leaders are transparent about their objectives and problems, sharing data and resources with the wider team to demonstrate how they can help. They give teammates the context and tools required to make their own decisions in pursuit of the same goals. And perhaps crucially, open leaders actively prefer working this way. They default to open.
Do you see the benefits of open leadership in your workplace?