Growing Up in a Complex World

Several weeks ago IBM released its 2010 Global CEO Study.  This is IBM’s fourth and largest CEO study since 2004, based on more than 1,500 face-to-face interviews with CEOs and senior public leaders from more than 60 countries.

I wrote about the CEO study in this recent blog.  The primary challenge emerging out of the CEO conversations was complexity - the fact that CEOs now operate in a world that is substantially more volatile, uncertain and complex.  They feel that incremental changes are no longer sufficient because the world is operating in fundamentally different ways.  The study concluded that Standout organizations - those that have been able to deliver good business results despite the recent economic downturn - feel much more prepared to capitalize on complexity by focusing on three key areas:  embodying creative leadership, reinventing customer relationships and operational dexterity.

On June 14, IBM released a companion to the CEO study, this time focusing on the views of young people, members of what is often referred to as the Millennial Generation or Generation Y.  Inheriting a Complex World: Future Leaders Envision Sharing the Planet invited graduate and undergraduate students to participate in a Web-based survey between October 2009 and January 2010.  More than 3,600 responses were received from students in more than 40 countries.  They were pretty evenly split between undergraduates and graduate students, as well as between emerging and mature markets.  More than two thirds were between 20 and 25 years old.

Many of the student questions were the same as those in the CEO study.  This made it easier to look for commonalities and differences between these two generations - one at the top of their careers, the other about to start out on theirs.  A lot has been written about the Millennials, who have grown up surrounded by the Internet and digital technologies, who have never known a world that is not flat, and for whom the Cold War and the Civil Rights Movement are just chapters in their history books, - a markedly different environment from that of the Baby Boom Generation to which most participants in the CEO study belong.
     
“Our analysis confirmed that students’ perceptions have been profoundly shaped in unexpected ways by the globalizing, flat, digital and interconnected world of their earliest years,” is the overarching conclusion of the study.  “We found that students have much in common with CEOs in terms of their outlook on the new economic environment and how organizations should respond.  But we also discerned a new ethos about the roles of public and private organizations.  Owing perhaps to the challenges of today’s economic environment, students revealed distinctive viewpoints on the issues of complexity, information and decision-making.  Beliefs about globalization and sustainability were even more defining.  We found students were much more concerned with these issues than CEOs, and most importantly, saw them as inherently connected.”

These students have no nostalgia for a simpler era, because they never knew one.  They grew up in a complex world.  They intuitively understand the tenets of globalization.  Advanced economies are now viewed as mature and slow growing, and many formerly underdeveloped economies are now the exciting, emerging, high growth markets. 
 
“Their experience of information and media was different as well. More than 90 percent of the students we surveyed were born after 1980, so for them, games, music, mail and data have almost always been digital.  They came of age in a world of interconnections, even hyperconnections.  To find information for school reports, they learned to follow links instead of directions from librarians.  They used Facebook instead of phone books to connect with friends – and friends of friends.”

“This generation of students doesn’t need to be told what a network is.  They understand implicitly and intuitively that economies, societies, governments and organizations are made up of interconnecting networks.  Once viewed as discrete and independent, it is clear now that these spheres - both manmade and natural - connect in a myriad of ways. We may not have even needed to define complexity: they seemed so familiar with the term for an interconnected, multifaceted environment.”

Sixty percent of CEOs viewed the new economic environment as significantly more complex than before.  For students, 69 percent felt that the economic environment was significantly more complex.  MBA students and students with five or more years work experience saw even greater complexity, 77 percent and 73 percent respectively, perhaps reflecting that the more young people are exposed to the real world of business, the more they realize how complex it actually is.

But, not surprisingly given that they have grown up with complexity all around them, students saw significantly less uncertainty and volatility in the economic environment than CEOs.  They were confident that information and analysis would help them better deal with the increasingly complex environments in which we live.   

“When we looked just at those students who had the greatest expectation of accelerating complexity, we found they put much more emphasis on the analytic and predictive capabilities of information.  They were 50 percent more likely to expect significant impact from increased information than peers who did not have that same expectation. And they were 22 percent more likely to believe organizations should focus on insight and intelligence in order to understand a more complex world and act on new opportunities. Students clearly expected that the abundance of information available today could be put to better use; that it could be analyzed for patterns and predictive insights so leaders can anticipate and do a better job of shaping future events.  Many were optimistic that lessons learned from the recent economic downturn could be used to avoid crises in the future.”

Students and CEOs differed the most in their attitudes toward globalization and environmental and societal sustainability.  Based on their comments, it was clear that students view globalization and sustainability as intertwined themes.  They believe that a global citizen has responsibilities to others in the world, and that an emphasis on sustainability makes one better appreciate the impact of globalization. 

“Students’ views were stronger than CEOs on every one of the ten questions relating to these topics, and, as their comments made clear, called for bold and immediate action.  They spoke about a new relationship among societies and business, economies and governments, and the need for a new definition of ‘value’ on what they see as a shared planet.”

When asked for the top three factors that will impact organizations, 23 percent of CEOs mentioned globalization and 21 percent environmental issues, ranking them number 6 and 7 among their top issues. For students, globalization was the highest ranked issue, voted on by 55 percent.   Environmental issues were voted on by 42 percent of students and ranked fourth. 

Their strong views on globalization and sustainability were further validated by additional questions.  Forty-eight percent of students, compared to 31 percent of CEOs, felt that organizations should optimize their operations for globalization as the best opportunity to create new value.  And by a wide margin - 69 percent compared to 21 percent for CEOs - students felt that global competition for natural resources like energy, water and metals would have major organizational consequences.

These different generational attitudes toward globalization and sustainability will have wide implications for business.  “We found that students believe globalization is more than an approach to business growth or organizational structure.  Rather, emerging markets will shape their own future directions.  The next generation of leaders will face challenges in providing business value under today’s global conditions: natural resources are finite and unmet social needs are especially acute in emerging markets.” Increasingly, organizations will have to adopt a more environmental and socially acceptable way of doing business to attract top talent and perhaps even to survive the fierce competition around the world.

There are also big implications for leadership.  “Overall, creativity was the leadership quality most frequently selected by both groups. Students and CEOs alike viewed creative leadership in terms of disrupting the status quo and taking bold rather than incremental steps . . . Beyond this commonality, there were strong differences that were entirely consistent with students’ values about sharing the earth.  Among the nine leadership traits CEOs and students could choose from, students placed a higher emphasis on only two leadership qualities - global thinking and a focus on sustainability.   Students were 46 percent more likely than CEOs to view global thinking as a top leadership quality.  And they were 35 percent more likely to include sustainability in the top three.”

The student study also asked open-ended questions like, “What will you do differently in your career compared to previous generations?”  The students generally expressed commitment to the responsibilities of global citizenship and doing business around the world.  “To meet this commitment, they said they needed to understand and respond to diverse cultures and local needs, whether economic, environmental or social.”

There is little question that when it comes to globalization and sustainability, there is a generation gap between the students and both business and universities.  Few universities have stepped up to educate students in the wider meaning of sustainability, to reflect not just environmental concerns but also the economic, social and cultural implications.  Doing so requires that students learn how to think critically and creatively, just as much as they learn discrete skills like accounting, marketing, differential equations or data mining.  They need to learn to approach problems from different perspectives, so they are better able to come up with innovative solutions to the kinds of complex technical, business and organizational problems they will encounter throughout their careers.  They need a more holistic education, rather than the siloed academic programs that they are generally offered, especially in the more applied disciplines like business and engineering.

Companies need to be very sensitive to the increased expectations in corporate social responsibility of this new generation.  Many senior executives, already overwhelmed with the increased complexities, global competition and short-term financial pressures all around them, may wish to dismiss the concerns expressed by the students as just naive, youthful idealism.  For business, this could be a costly strategic mistake.

Those companies that are able to tap into the talent and energy of these Millennials will find them a great source of creativity and innovation.  The views they bring to the business are likely to be similar to those of the clients, employees and government officials that they will increasingly deal with around the world.  I am thus convinced that aligning the interests of the company with those of the wider society, including globalization and sustainability, will prove to have been the right overall strategy for the organization.

Comments

[Brian Carter]

hi this article is very informative.. i enjoyed reading it. its very interesting.

[Rich Grenhart, Psy.D.]

These results certainly suggest a glimpse at where Generation Y is taking society. The alignment of companies' interests with those of the wider society will predictably be inhibited by the demand for quarterly revenue results, the "short-term financial pressures" that continue to generate and maintain corporate myopia. Until and unless Generation Y shareholders press companies otherwise, short-term profitability will likely continue as the primary guiding corporate principle in contemporary capitalistic systems.

[Varsha Pavitra]

Interesting read, thanks.