Wharton@Work

February 2021 | 

Long-Term Leadership: Pursuing Agility

Long-Term Leadership: Pursuing Agility

It’s easy to stay focused on the external forces disrupting your business, especially when they involve a catastrophe on a global scale. But that narrow view can prevent you from correcting existing internal weaknesses that the pandemic exposed — weaknesses such as supply chains that were just one disruption away from failing.

As Gad Allon, Wharton professor of operations, information and decisions, explains, companies spent years invested in efficiency above all else. “They outsourced as much as possible, moved operations off shore, and cut costs in other ways. These three are very powerful in making you more efficient and creating higher returns in the short term, but there can be a price to pay. And it was already being exposed before 2020.”

After many years of investing in efficiency, forces including global instability, higher tariffs, and more restrictions made it clear that there was a trade-off between being lean and being resilient. It was a pain point, but for many firms the pain wasn’t great enough to create change. Allon, who leads the Business Essentials for Executives program, says now firms are realizing they need to rethink their approach to their supply chain and operations, for example, and develop strategies that maximize short-term returns without trading off the future.

“The difficulty is there is no magic wand,” he says. “Tools like lean manufacturing aren’t enough. Becoming more agile and managing for the long term means a change in thinking at every level of the organization, which requires leadership from those with a solid, end-to-end understanding of the organization.”

Building an Integrated Perspective

That understanding is the goal of Business Essentials for Executives. Over five days, it builds general management capacity by exploring all business functions, including how they make decisions and what their issues and challenges are. “Unless you truly know them,” say Allon, “you may have what looks like a perfect solution, but it won’t succeed because it clashes with the goals or incentives of other parts of the organization.”

Experts in finance and accounting, strategy, marketing, talent management, and operations provide the latest knowledge of each function. But as Allon notes, general management requires an enterprise-wide perspective that brings them together. To that end, he holds daily “integration sessions” that examine, for example, how finance views marketing decisions and how operations affects HR.

He says these sessions in the live virtual format of the program provide a different way of interacting with participants. “In the classroom, we ask a question and then hear one response at a time as people raise their hand. Online, we can ask that question, give participants two minutes to think about it, then have them type their response in the chat box. Everyone gets to see and engage with all of the responses. This gives us a more diverse set of opinions and another potential layer of interaction.”

Agility Is a Leadership Issue

The holistic, end-to-end mindset is at the core of balancing the need for agility and resilience with short-term efficiency. “Agility is a leadership issue,” says Allon. “Many organizations consider it further down, assigning it lower in the chain of command. But whenever there is a clash between the two, leadership has to step in and not only create a solution but get others to buy in and execute.”

That ability is where the program steps in. Effective leadership is more than a sum of its parts. Knowledge is critical, but so, says Allon, are skills like persuasion and communication. “Getting other people to think about more than just their next promotion or the next quarter, to make the right decisions for the organization when there is a clash between resiliency and efficiency, requires persuasion. Incentives and negotiation are not always possible — and they’re not necessarily how you want to get buy-in. The goal is to get people to make the right decisions not because they negotiated with you or because they’re getting a bonus, but because they believe in it.”