While leading has always posed challenges, forging a path today can seem especially difficult. The global pandemic and war in Europe have caused economic stress and upended established patterns in areas from globalization to ways of working. The climate crisis and growing social disparity are fueling divisions. As leaders confront a more complex world, they are expected to take a public stance on societal issues and to act as a stabilizing force, according to leading research on global trust levels.
Charting a way forward in this environment presents a generational opportunity for leaders and organizations to show conviction in advancing a thriving world.
We believe doing so requires an ability to anticipate shifts, be clear about the capabilities that create opportunities to act, and continuously innovate to build resilience and value. At Ontario Teachers’, three guiding principles—Prepare, Act, Innovate—underpin our approach.
A business wins or loses on the strength of its people and how it activates them.
Prepare for Shocks
The world of the next 10 years is likely to look very different from the last 30. Muddling through is really not an option. And while one can’t fully predict the future, it is important to be proactive to develop an informed view of how some trends may play out and the inherent risks and opportunities to your business. Businesses may choose different ways to build resilience and conviction, but there are a couple of things all leaders should consider.
First, have a purpose that reinforces your contribution beyond profits; today, societal leadership is business leadership, and this trend is only accelerating.
At Ontario Teachers’, our duty is to deliver retirement security to our members. We believe the best way to do that is to try to use our investing and broader activities to make a positive mark on the world. Our purpose is to “invest to shape a better future.”
Second, know what you are good at. Identifying and building on core strengths—sectoral expertise, in-depth regional knowledge, or, in our case, both of these and an active-management investment model—are increasingly important to ground priorities.
Act in a Way That Aligns with Your Purpose and Core Strengths
Systematically preparing for change and building conviction allow for decisive action at times when bold leadership is needed.
For example, our purpose and active management model give us conviction in our approach to the climate crisis. We believe we can be most effective by engaging with high emitters, rather than divesting and passing the problem to others without affecting change.
Our view has led us to consider investments that some may decline, but we are comfortable that we are pursuing a more direct path to decarbonization and net zero. We accept that not everyone agrees; but we have conviction that our approach will have the most positive impact.
Build the Capacity to Innovate
Conviction and agility are not mutually exclusive. If the past few years have shown us anything, it is how quickly business conditions can change.
For investors like us, investing in disruptive businesses is one solution. But innovating in today’s world also requires something broader: building the structural capacity to be agile. Research indicates that organizations with an explicit commitment to innovation have better financial results.
This is where talent plays a critical role. A business wins or loses on the strength of its people and how it activates them. Hire the best people you can, seeking to ensure you have a balance of views and experiences, which is why a focus on diversity, equity, and inclusion is so important.
Once you have assembled a strong team, create the conditions that will bring out the best in them. That includes investing in professional training and opportunities for progression and empowering your employees to challenge established thinking, to test, and to learn.
Businesses have no choice but to navigate a more complex world. But they can try to prepare for shocks, take bold informed choices, and capitalize on areas of change.