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If you've been
following business lately, you've probably noticed
a pattern developing.
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Companies are investing heavily in AI
while still trying to prove the returns. Some are restructuring workforces around
new technologies.
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At the same time, shifting tariffs and
supply chain risks are forcing leaders to
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rethink long-standing operating
assumptions. But beneath those headlines, it's a
quieter challenge inside of organizations.
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As complexity rises, leadership stops
being about reacting to events and starts becoming about creating clarity, trust,
decision, discipline across a company.
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Why is this all happening and what is the
impact? Pleasure to be joined today by Nancy
Rothbard, who is Deputy Dean and Professor
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of Management at the Wharton School, and
Co-Academic Director of Wharton's new
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Owner/President and CEO Program. Nancy, always fun to talk to you. How are you? I'm great, Dan.
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It's terrific to see you. This is obviously a very unique time that
we're talking about right now.
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And for leaders, it seems like they always
are dealing with some level of change.
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So from what you're
seeing right now, what's different about leading
in this day and time?
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Dan, I think that as you say, leaders have
always needed to deal with change. But what's different now is that the pace
of change has really accelerated
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dramatically. Leaders today need a clear
framework and practical tools to navigate ongoing uncertainty
and disruption effectively.
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In fact, one of a leader's most important
responsibilities is helping employees
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process change in a way that keeps them
grounded and focused. Without that kind of a guidance,
this rapid change can create anxiety and
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distraction, which pulls
people into the chaos rather than keeping
the organization on track.
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So how a leader interprets,
responds to, and channels change is absolutely critical
to an organization's success.
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In periods of constant disruption like
this, it can be really hard to step back,
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to reconnect to a clear
sense of purpose, and to find a consistent
direction going forward.
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Leaders are often caught in the relentless
pressure of the present and creating space
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to pause, to reflect, to plan for the
future. That becomes more essential than ever.
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So in a fast-changing environment,
why do organizations sometimes slow down instead of speed up?
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It's a great question. In founder-centric organizations,
what happens a lot of times is that people
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look to the top for reassurance and
direction. And while that can be a strength early on,
continued direct involvement by the
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founder in the
organization, as it grows, can unintentionally slow
decision-making and execution.
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And this can be the case in
non-founder-centric organizations as well. The kinds of guidance that people look for
from the top becomes even more important
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when that change seems to be creating
chaos all around. And what happens a lot of times is that
leaders can inadvertently become
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bottlenecks when they struggle to delegate
or let go. And when we're going through change,
a lot of times it seems like the
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decision-making is more important than
ever. And so it becomes even harder to let go.
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And it creates this vicious
cycle where decisions begin to revert back to them even
when that's not the intent.
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And so it's critical for leaders to
recognize where that's happening and build
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leadership teams that are
empowered to act confidently without constantly needing guidance
or approval from the top leader.
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And so when leaders get too involved in
the details or too in the weeds, they can ironically undermine their own
effectiveness.
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And what's hard about
that is that in the short term, the leader's direct involvement
can be really helpful.
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It can feel really efficient. It can feel like you're doing the right
thing.
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But over time, it
hinders the organization's ability to grow and slows
the overall momentum.
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And I have to say, I've seen this
firsthand, both in the organizations that I've worked with throughout the years,
but also I grew up in a family business
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and I saw this firsthand in my family
business. We hired professional management to really
help to spread the load and to delegate
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authority and to really grow as an
organization. And what I ironically saw was that
employees were constantly bypassing that
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professional management team and going
directly to the family. And unfortunately, the family,
my family, kept responding to them rather
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than redirecting them back to professional
management. And you know, we talked about that a
lot and how that was efficient in
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the short term but maybe not
so effective in the long term. And that kind of behavior sometimes
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really-- trading off the short term
for the long term feels like it's the right
thing to do in the moment and
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especially when you feel a
lot of pressure around change. But it can prevent building the long-term
leadership capacity of the organization.
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And it's an instinct that we have to
really fight against because it seems wrong to us in the moment, but it's right
for the long term.
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So what then are some of the habits that
leaders need to have to keep strategy steady, especially in days like these when
the headlines are certainly not steady?
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Well, one of the habits, as I just talked
about, is making sure you delegate, right, and not just trying to make all the
decisions yourself.
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The second is, I think, really thinking
strategically and carefully about the emotional tone that
you're setting for your
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organization, especially
in uncertain times. The example a leader sets, what a leader
is modeling through their words,
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their demeanor, their reactions really
matter tremendously. You know, I do a lot of work and research
and consulting and work with leaders on
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emotional intelligence and emotional
contagion. And what the research finds is emotions
spread rapidly in groups.
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So if you are feeling panicked as a
leader, you will communicate that inadvertently, even if
you're not saying it. They're
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going to be reading it in
how you are reacting to things. And so your emotion regulation,
your ability to really stay calm and
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focused in the face of uncertainty is a
tremendous leadership skill. And it becomes even more important in
times of volatility and change.
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The leaders who can manage their own
emotions and their own reactions to things end up creating a very stable environment
for others, even in the midst.
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It's sort of the eye in the storm,
if you will. When they can remain calm and steady and
foc-- that also allows both them and other
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people in the organization to focus on the
long-term strategy. It helps the organization to stay aligned
to the goals.
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It helps people to stay productive. And in contrast, when leaders appear
reactive or overwhelmed by the headlines,
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by the winds of change, those kinds of
emotions, that panic ripples outward, amplifying the anxiety and distracting
from strategic priorities.
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And that can really critically undermine
the progress of the organization. Because employees tend to mirror what they
see, the cues they see from leadership,
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the signals that the leaders send
intentionally or unintentionally. And frankly, I think it's the unintentional
signals that end up having a big impact.
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Because we-- most of us are conscious of
the intentional things that we're sending.
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And we're careful to regulate those. It's the unconscious things that really
have the biggest impact because we're not
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paying as much attention to them. And we have to practice
that ability to regulate
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those unintentional
emotional signals and cues. And so the focus needs to move from making
every decision to designing and
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structuring an environment
and a culture where strong leaders and decisions will
consistently emerge and get made.
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And so at scale, what happens is decision
making becomes a team activity. A team sport, if you will.
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Judgment is no longer
centered in the one individual, but becomes distributed
across a leadership team.
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And what research shows is that teams
often produce higher quality decisions because teams
rigorously evaluate the
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alternatives and
thoughtfully debate trade-offs. And when that happens, you end up spotting
the problems more effectively.
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And so teams often make better decisions
than individuals alone. The other piece that I'd say is as
companies grow and as that delegation
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happens and as the teams become the locus
of decision making, productive disagreement becomes essential to that
process.
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Healthy debate, conflict about the way
that the task gets done or what elements shape the decision, helps to sharpen
thinking, reduces the blind spots.
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But it's only when that productive
disagreement is structured effectively when it is debate rather than dislike.
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And so there's a really
important distinction in the literature on task conflict
versus relationship conflict.
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Task conflict is disagreement
about ideas, about strategies, or the data that can improve
decision making quality.
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Relationship conflict,
by contrast, is about personal friction or
ego-driven disputes.
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And that kind of conflict or disagreement
undermines trust and performance. So there's a critical distinction that you
have to make as a leader.
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And you need to keep task conflict from
devolving into relationship conflict. You don't want that to happen.
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Well, so you mentioned working with
founders and CEOs, including in Wharton's
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Owner/President/CEO Program. These are people
that are trying to build companies that don't
depend on them every day.
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So how do leaders balance
staying involved with the development of the next
generation of leadership?
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Absolutely. In the OPC program, we focus on how
leaders intentionally shape and influence
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the decision making
environment and how they can think about creating
strong succession plans.
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One of the things that leaders really need
to focus on is succession planning, both in terms of sourcing talent--
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in my current role as Deputy Dean of the
Wharton School, I actually-- I think about this a lot.
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I think about myself in some ways as an
internal executive search firm. I'm constantly looking for talent.
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I'm constantly on the lookout for great
people, identifying that talent, finding them early, putting them into the
right positions, nurturing that talent,
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putting them into the right
positions and roles that can stretch their capabilities that can
allow them to learn and grow.
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And sometimes that path is linear. And other times it requires helping
somebody see the opportunities and parts
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of the organization that they might not
have considered and giving them an opportunity or a role somewhere
that they hadn't--
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that's not a linear, straight shot. But the goal is to align
their strengths and passions
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with what the organization
needs as it grows. And so this internal executive search
firm, for any leader, what you need to be
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doing is spotting talent, nurturing that
talent and growing it. And importantly, what
you need to do is to
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be thinking about that
for yourself as well. And that can be one of the hardest aspects
of this because there's an identity threat.
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You know, a lot of leaders, a lot of
founders, you know, they have-- their identity is very tied
up with the amazing things
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that they have done to grow
and build their organizations.
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And that becomes really
hard to let go.
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It becomes uncomfortable.
When you're-- especially when you're deeply tied into
the business.
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But without creating that space,
the next generation of talent, whether it be within a family or whether
it be within, you know, the next layer of
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leadership in a corporate
environment, that next generation needs to be able
to spread their wings and grow.
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And it requires strategic attention. It requires vigilance from the leader. It's absolutely critical
for building a strong
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organization where you
create a lasting legacy. And you want to do it in a way that's
orderly, not in a way that is urgent.
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So ultimately, the leaders who
successfully scale are able to shift from being that indispensable operator to being
thoughtful architects
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of the talent and culture. They become the people who are able to
develop and guide others to strengthen the
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organization's resilience
and ensure its success extends beyond their
day-to-day oversight.
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Nancy, great to talk with you again. Thanks very much for your time today. Thanks so much.
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Nancy Rothbard, Deputy Dean,
Professor of Management and Co-Academic Director of the new
Wharton Owner/President/CEO Program.
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And for those who are
interested in taking part in the program, you can find
out more at WhartonOPC.com.