Irving Wladawsky-Berger

Values, Trust and Reputation in an Increasingly Complex World

Both present and future leaders expect the business environment to grow significantly more complex over time.  This is one of the main conclusions of two recent studies conducted by IBM, the 2010 Global CEO Study, and the companion student study, Inheriting a Complex World.  CEOs and senior government leaders - who I presume are mostly in their 50s and members of the Baby Boom Generation, - said that their primary challenge is figuring out how to operate in a world that is substantially more volatile, uncertain and complex.  The students, on the other hand - mostly Millennials in their 20s, - understand implicitly and intuitively that economies, societies and organizations are interconnected and interdependent.  They don’t even need a definition of complexity, since that is the only world they have ever known.

These two generations of leaders, - one at the top of their careers and the other about to start out on theirs, - are reacting to the changes all around them in distinctly different ways.  The Boomers keep replaying the ideological and cultural battles with which they grew up.  “What degree of government regulation is needed to help curtail the kinds of abuses that led to the ongoing global financial crisis?  Are self-regulated free markets always the best answer?  What does it mean to live in an increasingly multicultural society?  Should society accommodate to the different kinds of nuclear families all around us?

The Millennials are in a very different space.  They don’t need to keep defending market economies against communism, as this issue was settled with the fall of the Berlin Wall and the subsequent collapse of the Soviet Union, which happened when they were little or even before they were born.  They have generally grown up and are comfortable living in a much more diverse environment.  They have had openly gay and lesbian friends since high school.  Get a life is what I imagine they are thinking when they hear the tired ideological and cultural debates of the older generations.

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.

Trip to Shanghai

I was in Shanghai the first week in June to participate in IBM’s third global Smarter Cities Forum.  The first Smarter Cities forum was held in Berlin about a year ago, and the second was held in New York City this past October.

Around 800 government, business and academic leaders from 180 cities in 38 countries participated in the Shanghai Forum.  The two day agenda included a number of main-tent talks and panels, as well as six breakout sessions. 

As in New York, I helped organize and moderated the healthcare breakout session.  I will comment on the healthcare session in a future blog, but let me first offer some personal impressions on the overall Forum.

In his welcoming remarks, IBM Chairman and CEO Sam Palmisano explained the reason for hosting this forum in Shanghai and focusing on the unique challenges that face leaders in emerging markets:  “Forecasts out to 2020 say that 97 of the 100 fastest growing cities in the world are in growth markets.  Eight are in China, 11 are in India. . . . Every minute, 30 people move from a rural area of India to a city -  and that will continue through the year 2025.”

The Emergence of a “New Establishment”

Several events in the last few years - including the election of Barack Obama as US President, the rise of the Tea Party movement, and the SEC charges against Goldman Sachs - have convinced me that there is a profound changing of the order underway in US society.   We are seeing the emergence of what, for lack of a better term, I will call a New Establishment.

The existence of something like the establishment is a quaint kind of notion, seemingly a remnant from a far away time.  I put together my own definition, based on Wikipedia’s definition of the term: 

“The Establishment refers to the ruling group that defines the conventional social, political and economic principles of a society.  Its members do not just represent the centers of official power - though they are certainly part of it - but rather the whole matrix of official and social relations within which power is exercised.  Most stable communities of social animals, including humans, have such a visible or invisible ruling group.”

Over the centuries, members of the establishment have come from various centers of power in society, including the church, nobility, feudal lords, the upper classes, the military, politicians, industrialists, financiers and media figures.  In democratic countries, no one group can be said to rule the establishment, which typically represents different segments of society.  

Not all groups are equally represented, and some segments feel left out altogether.  To better appreciate the value people place in being part of the establishment, just consider the fierce social, political and at times armed battles that have been fought through the ages between the groups in control, and those on the outside trying to break in.