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The six signature traitsof inclusive leadershipThriving in a diverse new world

Deloitte’s Human Capital professionals leverage research, analytics, and industry insights to help design andexecute the HR, talent, leadership, organization, and change programs that enable business performancethrough people performance. Visit the Human Capital area of www.deloitte.com to learn more.

About the authorsBernadette Dillon is a client director in Human Capital consulting at Deloitte, where she specializes in diversity and inclusion. A chartered accountant by background, she has worked with a rangeof organizations, both locally and internationally, with respect to diversity and inclusion strategydevelopment, inclusive leadership assessment and development, analytics and diagnostics, andinclusive culture change. Dillon has co-authored a number of publications relating to diversity andinclusion, and is currently based in the United Kingdom.Juliet Bourke is a partner in Human Capital consulting at Deloitte, where she leads the AustralianDiversity and Inclusion practice and co-leads the Australian Leadership practice. She has over 20years’ experience in human capital and is an internationally recognized author and speaker ondiversity and inclusion, cultural change, and leadership. Bourke has authored many publications ondiversity and inclusion, most recently publishing Which two heads are better than one? How diverseteams create breakthrough ideas and make robust decisions, which examines decision making, diversity of thinking, biases, and behaviors.

The six signature traits of inclusive leadershipContentsIntroduction: A new leadership capability 1A diverse new world: Markets, customers, ideas, and talent 4The six signature traits of an inclusive leader 7What can organizations do? 19Appendix: Research methodology 21Endnotes 23Contacts 25Acknowledgements 26iv

Thriving in a diverse new worldIntroduction: A newleadership capabilityWHAT will it take to be a great leader inthe future? In five years, ten years, evenfifteen years?Say those numbers slightly differently—2020, 2025, or 2030—and your imagination takes you somewhere else entirely. Tothe realm of science fiction in which booksand films paint vivid pictures of a future thatlooks vastly different from that which we knowtoday. There is the devastated world and itsdystopian societies, the artificial world withsynthetic humans, and myriads of other worldsscattered throughout foreign galaxies.In these books and films, there’s always aquest, and there’s always a hero. Smart andstrong, they carry the weight of the world ontheir shoulders. They have a sidekick, if lucky,but rarely are the leader and the sidekickequals, and they almost never operate as ateam. The decisions these leaders make—theactions they take—culminate in the restorationof humanity.What’s curious is that this iconic image ofthe heroic leader remains constant despite thevastly changed environment. It seems we caneasily imagine different future contexts, butwhen it comes to thinking about leadershipdifferently, we are on a repeating loop. It makesfor great entertainment, but it is not the stuffof reality. Yes, the context will change—it ischanging already—and this will demand adaptation by those playing a leading role.So what is this different context? In a volatile and complex world, predicting the futurewith precision is a risky business. We can besure, however, about four global mega-trendsthat are reshaping the environment and influencing business priorities:1First, diversity of markets: Demand is shifting to emerging markets. With their growingmiddle class, these new markets represent thesingle biggest growth opportunity in the portfolio of many companies around the world.Second, diversity of customers: Customerdemographics and attitudes are changing.Empowered through technology and withgreater choice, an increasingly diverse customer base expects better personalization ofproducts and services.Third, diversity of ideas: Digital technology, hyper-connectivity, and deregulation aredisrupting business value chains and the natureof consumption and competition. Few wouldargue against the need for rapid innovation.Fourth, diversity of talent: Shifts in ageprofiles, education, and migration flows, alongwith expectations of equality of opportunity and work/life balance, are all impactingemployee populations.Diversity of markets, customers, ideas,and talent: These simultaneous shifts are thenew context. For leaders who have perfectedtheir craft in a more homogenous environment, rapid adjustment is in order. Of course,1

The six signature traits of inclusive leadershipFigure 1. The six signature traits of an inclusive leaderCognizanceCuriosityBecause bias is a leader’sAchilles' heelBecause different ideas andexperiences enable growthThe sixsignaturetraitsCourageBecause talking aboutimperfections involvespersonal risk-takingCulturalintelligenceBecause not everyonesees the world throughthe same cultural frameCommitmentCollaborationBecause staying thecourse is hardBecause a diverse-thinking team isgreater than the sum of its partsGraphic: Deloitte University Press DUPress.com2

Thriving in a diverse new worldthe core aspects of leadership, such as settingdirection and influencing others, are timeless,but we see a new capability that is vital to theway leadership is executed. We call this inclusive leadership, and our research has identifiedsix traits that characterize an inclusive mindset and inclusive behavior.This report is intended to help leaders thinkabout how traditional notions of leadershipmust change.2 We are not suggesting a wholesale replacement of previous leadership theory.Elements of inclusive leadership are echoedin transformational, servant, and authenticleadership, for example, and these concepts arecarried forward. However, we have amplifiedand built on these known attributes to definea powerful new capability uniquely adaptedto a diverse environment. Understandingand being adept at inclusive leadership willhelp leaders thrive in their increasinglydiverse environment.This report is structured in three parts.First, we briefly describe the four shiftselevating the importance of inclusive leadership—the “Why care?” aspect of the discussion. In the second part, we have identified thesix signature traits of an inclusive leader (figure1). In doing so, we have mined our experiences with more than 1,000 global leaders,deep-diving into the views of 15 leaders andsubject matter experts, and surveying over1,500 employees on their perceptions of inclusion. We have also built on existing thoughtleadership and applied research and drawnon work with our inclusive leadership assessment tool—on which our six-part frameworkis based—which has proved both reliable andvalid in pilot testing.3 Sensing that inclusiveleadership is a new capability, we have beenexamining this space since 2011, rather thanrelying solely on pre-existing leadership assessments and databases, with their historic biases.We conclude with some suggested strategies tohelp organizations cultivate inclusive capabilities across their leadership population.3

The six signature traits of inclusive leadershipA diverse new world: Markets,customers, ideas, and talentFOUR global mega-trends are creating abusiness context that is far less homogenous and much more diverse than has historically been the case. These interrelated shifts areinfluencing business priorities, and reshapingthe capabilities required of leaders to succeedin the future.Diversity of marketsThe growth in emerging market economies may have slowed—and big challengesabound—but the long-term potentialremains significant.4By 2025, the world’s middle-class population is expected to reach 3.2 billion, up from1.8 billion in 2009, with the majority of thisgrowth coming from Asia, Africa, and LatinAmerica.5 As income levels rise, so does consumer demand. This growing population nowrepresents the single biggest growth opportunity in the portfolio of many companiesaround the world.6Reaching these consumers profitably, however, is anything but straightforward.7 Marketsare characterized by significant cultural, political, and economic differences. Tension existsbetween local adaptation and internationalscale. Home-grown players can provide stiffcompetition and strong local talent is scarce.Indeed, in a 2015 survey of 362 executives, just10 percent believed that they have the full suiteof capabilities needed to win offshore.84So what does this mean for those withglobal ambitions? While there is no singleformula for success, research shows that havingpeople with a more global mindset and capability is critical.9 John Lewis, Jr., global chiefdiversity officer of The Coca-Cola Company,agrees: “Right now, our fastest-growingmarkets around the world are sub-SaharanAfrica, India, and China. How we win in thesemarkets is as much a matter of how we embedourselves in these cultures [as any other factor]. The question I put to our business leadersis: Even if we get all the tactics and logisticsright, can we win if we don’t get the people partright?”10Diversity of customersCustomers have always been able to votewith their feet. Today, this power is evengreater. Empowered through their digitaldevices and with more choice, customersexpect greater personalization and a voice inshaping the products and services they consume.11 Facing millions of individual expectations and experiences across an increasinglydiverse customer base, the challenge for companies is to deliver individualized insights anda personal touch with the efficiencies of scale.To remain competitive in this environment,organizations have realized, customer centricity is paramount. Customer promises arebeing written into vision statements, operating

Thriving in a diverse new worldmodels are being redesigned to ensure thatcustomers are at the heart of the business, andthe role of the “chief customer officer” has beencreated and elevated to the executive team.But more than just changing systems andstructures, organizations are increasinglyfocusing on cultivating more customer-centricmindsets and capabilities. The new buzzwordsof “empathy” and “connectedness”—conceptsthat underpin popular methods such as designthinking—are taking hold as organizationsstrive to better understand customers’ worldsand future needs. And while developmentprograms of the past may have focused ontraditional customer-facing roles, a leader-ledapproach is increasingly being adopted.Telstra has embarked on a journey to orientthe entire organization around the customer,including the way leaders are developed.“Leaders are central to the connected strategy,”says Rob Brown, director of customer advocacy.12 “They are the linchpin that sets the paceand culture of our organization. If leaders don’tunderstand how we need to think differently,if they don’t get that we need to connect withcustomers’ needs to understand what theywant and how best to simplify things for them,then it’s hard, if not impossible, for the teamsto get it.”Diversity of ideasOrganizations must “innovate or die,” extolsBill Gates.13 A bold statement, but we need notlook far to see its validity. Seemingly overnight, digital disruption has reshaped wholeindustries and iconic brands and brought forthnew players.For most leaders, it’s an imperative that’swell understood. In a 2014 survey of 1,500executives, three-quarters said that innovationwas among their company’s top three priorities.14 Despite this, 83 percent perceived theircompanies’ innovation capabilities to be average (70 percent) or weak (13 percent).15So what sets apart breakthrough innovators from the rest? The survey found that,compared with others, “breakthrough” innovators “cast a wide net for ideas.”16 In therace for new ideas, diversity of thinking isgaining prominence as a strategy to protectagainst groupthink and generate breakthroughinsights. However, while many agree intellectually that collective intelligence enhances groupperformance, few understand how to consistently achieve it with any degree of specificity.17In this context, a leader’s understanding ofhow diversity of thinking works will be criticalto success. As François Hudon, an executiveat Bank of Montreal, states: “For leaders, it’smaking sure you have little risk of being blindsided by something that a diverse team wouldhave known about and would have identifiedas an opportunity or a risk. I think it bringsfar greater confidence to the decision makingwhen you know you are being supported bypeople who have far more diverse points ofview.”Diversity of talentDiversity of talent is at risk of beingovershadowed by other shifts. This is becausedemographic change has a slow-burn effect onworkplace profiles. And, of course, diversity oftalent is not a new topic. Anti-discriminationlaws and the “war for talent” have seen organizations pay attention to historically marginalized groups for some time. Leaders underplaythis shift at their peril.Changes in population age profiles, education, and migration flows, along with expectations of equality of opportunity and work/lifebalance, are all deeply impacting employeepopulations. More than ever, future successwill depend on a leader’s ability to optimize adiverse talent pool.By way of example, the world’s populationis aging rapidly. In 2050, those aged 65 andover are predicted to reach 22 percent of theglobal population, up from 10 percent today,18with implications for workforce participation.Against that backdrop, the expansion of highereducation is creating a group of highly mobile,5

The six signature traits of inclusive leadershipeducated workers.19 By 2030, China will havemore graduates than the entire US workforce,and India will produce four times as manygraduates as the United States by 2020.20 TheMillennials, too, are coming of age. This generation will comprise 50 percent of the globalworkforce by 2020.21 With hi