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Introduction: Making a Difference in Our Complex Times

Jack stopped staring at the latest launch date estimate and put his head in his hands. For the first time he could recall, he felt like a failure. Worse, he couldn't figure out why. He'd been so confident when promoted to general manager of a division at the global medical device company where he'd worked for the past six years. But the playbook he'd used in his previous positions wasn't working.

Charged with integrating artificial intelligence into the division's products, he'd assembled a small team of trusted lieutenants to formulate a strategy. He then went to each group in the division to explain the strategy and make sure they understood their role in delivering it. Sure, there were some naysayers, but he'd expected that. It was a bold move. He had plenty of data to back up his plan, so he'd pushed ahead. After all, when the division hit its revenue numbers, everyone would benefit.

Eighteen months in, he was exhausted. He felt like he was doing all the work, making all the decisions, and getting involved in addressing every little issue. Even so, he was missing delivery dates due to data quality, and he'd recently lost some key employees, including the person responsible for the machine learning model. The CEO was impatient and frustrated. Jack had never been in this situation before. He didn't know what to do.

The End of Leadership as We Know It

In coaching and consulting with hundreds of leaders, we keep hearing versions of the same story: the practices and frameworks they learned in business school or from mentors no longer work. Many leaders are frustrated and anxious, wondering why they can't get their organizations to respond and execute as they once did. Their strategic plans keep getting upended by unforeseen circumstances. They conduct detailed analyses, build consensus, and execute accordingly, only to be disappointed by the results. In surveys, a third of these executives say they're extremely burnt out.1

This train wreck has been coming for a while. During the second half of the 20th century, big companies developed impressive structures and policies to meet a fundamental challenge: scaling up operations while controlling costs and developing marketable products. Technology was improving, but slowly and incrementally enough that most companies could take for granted the stability of their environment.

Since then, the ground has shifted. Digital technologies now enable almost instantaneous exchange of information, capital, goods, and even talent, creating a business landscape dramatically more connected than even a decade ago. Companies have used this connectivity to create new business models, from peer-to-peer (Airbnb) and streaming (Netflix) to cloud computing (Amazon Web Services) and cryptocurrency (Bitcoin). Yet such tight interconnectedness also leads to feedback loops and ripple effects that challenge traditional management.

No longer can leaders confidently determine cause and effect or predict the impact of any single change. Threats and opportunities emerge suddenly from anywhere and everywhere. Executives keep applying their tried-and-true models developed for stable environments and wonder why their efforts now fall short.

These trends have intensified in recent years, especially with the COVID-19 pandemic, pushing many leaders to a breaking point. Business thinkers have offered remedies, urging techniques such as acting more coach-like, establishing objectives and key results (OKRs), applying Agile methodologies, and adopting open-source principles. These are all good ideas, but they haven't enabled most leaders to lead effectively. Their organizations remain slow to react to outside changes, leaving them vulnerable to disruption or worse.

A big part of the problem is that leaders often don't know which of the proposed techniques to use, how to combine them, or the best way to adapt them to their own unique circumstances. It's been fashionable, for instance, to adopt OKRs to align team members on objectives, measure progress, and promote dialogue around what's working and what it isn't. We've seen OKRs work well in many organizations, but only if leaders fully integrate them into organizational life and couple them with other practices. Otherwise, the technique becomes one more quick fix that falls short. Peter Jacob, chief information officer at ING Bank, said it well: "What you can't do-and that is what I see many people do in other companies-is start to cherry pick from the different building blocks. For example, some people formally embrace the agile way of working but do not let go of their existing organizational structure and governance. That defeats the whole purpose and only creates more frustration."2

Leaders need assistance at a foundational level. To succeed in volatile times, they must first understand why their traditional approach-with its top-down hierarchy, annual planning cycle, and cascading execution-no longer works. With an understanding of what's broken, leaders are better equipped to address root causes. They can select the appropriate adaptive leadership practices, combine them to create positive feedback loops, and apply them in the real-world context of their own organization.

Leaders who take this comprehensive approach have indeed moved their organizations forward and increased resilience against unanticipated market shifts. They've responded quickly to threats and opportunities, retained talent, and positioned their organizations for future success-not by telling colleagues what to do, as Jack tried, but by equipping and orchestrating them in making things happen. Instead of doing the work themselves or trying to compel their workforce to change, effective leaders act as a catalyst and connector, getting people to initiate change themselves at the ground level in response to emerging developments. Everyone finally feels effective and part of a winning team.

Our Baffling Business Landscape

We can forgive leaders who grew up in the 20th century for wondering what has hit them. A simple example conveys the seeming randomness of today's business environment.

In 2020, the cereal giant Kellogg's hit an impasse with workers at its Battle Creek, Michigan, factory. Fourteen hundred workers went on strike, and the conflict dragged on for months. Then in November 2021, over 500 miles away, Sean Wiggs got involved.

Wiggs was just a student, a junior at North Carolina A&T State University. But he learned from Reddit's popular r/Antiwork board that the company had hired replacement workers. Furious, he fought back by writing a software program that inundated Kellogg's recruiting site with fake job applications. The program, dubbed KellogBot, turbocharged Antiwork's spam campaign. A video of Wiggs went viral. His and others' social media efforts appear to have helped encourage the company to offer concessions to workers and end the strike.3

Whether you are inspired or outraged by Wiggs's actions, the story points to the interconnectedness of today's economy and society. Companies face cascade effects and unintended consequences that prevent reliable forecasting because the system's parts interact in unanticipated ways. It's much harder to chart cause and effect, because the complexity goes beyond our analytical abilities. It's also harder to place bets, because what worked in the past may not work in the future. As a result, new opportunities and threats seemingly appear out of nowhere.

That's why executives who try to lead in ways designed for more stable environments find their traditional approach ineffective. Markets shift before their initial response fully plays out, leaving leaders struggling to formulate a new response. In the words of our friend and business agility expert Andy Czuchry, "Change becomes churn." Businesses are disrupted by the next wave of change, and exhausted by the prospect of having to react yet again. Many do not survive this cycle. Long-established operating margins have become volatile. Employees are burned out, due to unmanageable workloads and unreasonable time pressure. Even many of the largest, most established companies expect to be replaced.

At its core, executives' struggles result from a mismatch between traditional leadership practices designed for a command-and-control operating model, and our new fast-paced, interconnected reality. When the environment moves slowly or at a stable rate of change, a few people at the top of the hierarchy can decide on strategy up front, translate it into a set of objectives or priorities, cascade these down organizational silos for employees to execute, and then measure results and reward performance at year's end. They can discern cause and effect, and confidently plan for the future.

But today's environment is much faster paced and more interconnected. In 1930, for example, the half-life of an engineering degree was 35 years (i.e., the amount of time that elapsed before half of the knowledge a student learned over the course of their studies was superseded). Modern estimates suggest the half-life is now as low as two-and-a-half years: less time than it takes to earn the degree.4 At the same time, international trade, travel, and telecommunications have all...