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The Power of Relationships

Meet "Lukas", CEO of a multinational fashion conglomerate

If you were to encounter Lukas socially, he would not strike you as a leader in the heroic mold: He is quiet, even withdrawn. You would note a preoccupied figure, a mixture of precise engineer and courtly gentleman, speaking politely but intensely to a colleague—and never guess that he was the CEO of a multinational fashion conglomerate worth tens of billions of dollars.

“Crowds sap my energy,” he confesses. An anomaly, one might think, in the fashion trade, a field so associated with events and showmanship. But appearances are deceptive: In conversation, one soon comprehends that Lukas is both personally warmer and more deliberate than he might at first seem. He has an old-world charm and easy humor, but gets quickly to the point. His razor-sharp mind is trained on commercial opportunity, and his pragmatism is based on decades of experience. In his more than forty years at the same firm in multiple capacities, he’s worked his way from the ground up, learning and building.

Why, then, would such an impressive figure have felt “unprepared” when he first took on the mantle of CEO?

Coming out from behind the desk

Stepping into the CEO role meant walking into a whirlwind of new and substantial stressors. As an introvert, Lukas was always happiest in his own predictable, self-contained world, making calculations and deductions and communicating his decisions down the chain of command. His was a way of doing business perfectly suited to a retiring personal style—and to a vanishing era.

But it is no longer enough for a CEO to rely on their own experience, or to rely on facts or analyses presented to them. The environment has become very much more complex, and to build opinions and make sound decisions, today’s leaders need new skills—including those that require them to come out from behind their desks. Lukas illustrates a familiar pattern in CEOs of the old school: Growing up through the ranks in one company, they’ve built their support internally, without necessarily interacting deeply with stakeholders beyond the organization, or even beyond their own department—particularly in an enormous corporation like the one Lukas leads. Very rapidly, he has had to acquaint himself with a vast, complex network, cultivating fresh relationships with consumers, suppliers, regulators, advocacy groups, and his own Board.

“Coming into the role, I felt disconnected from many essential players—people that in my previous roles I never dealt with directly,” Lukas told us. “One of my pressing tasks was to reach out and engage—and for someone like me, that’s stressful! Before, I’d always seen myself more as the solo pilot of the ship.”

Other factors took him even further beyond his comfort zone. He was under extreme pressure from investors to shed certain underperforming divisions. Externally, the broader fashion industry was facing scrutiny of its record on labor rights and environmental issues. All these competing claims and conflicts seemed designed to overwhelm Lukas; they required a whole new skill set in conflict resolution and interpersonal engagement—and, it sometimes seemed, the time and energy of a dozen CEOs. Lukas was ill-prepared for the maelstrom. “I’m just one man!” he remembers exclaiming to himself one morning at his desk, the urgent emails piling up.

Distributing leadership: everyone a CEO

One of Lukas’s first decisive acts in his new role was to identify the fashion company’s key brands, and reconfigure them as separate business units, while getting rid of less productive divisions. His breakthrough, which we were privileged to witness in a session with him, was deciding to expand the responsibility for leadership beyond himself, to the broader collective. In this spirit, he boldly entrusted the leader of each division of the company with a CEO role in their domain.

Taking his hands off the tiller in this way was not easy for Lukas, but it was revelatory. It opened his eyes to a different, more distributed way of leadership—one that demanded less leading from the front, more trust, and the building of relationships across hierarchical levels. It has unleashed a series of creative and strategic ideas that had been suffocating in corporate bureaucracy. All the while, he maintained active lines of communication, and worked to create an enabling environment. Investing in leadership programs for his executives, he encouraged them to join other companies’ Boards as a way to broaden their perspective and build their networks of peer CEOs. “I’ve realized that I’m there to empower others,” Lukas told us recently. “As I stretch myself, I must inspire everyone else to stretch too. But I first need to create the space for them.”

In our discussions, we’ve seen Lukas expand the concept of distributed leadership still further, beyond the executive to every person in the company. This more egalitarian approach has the added advantage of empowering employees, even the most junior, to speak their minds freely about issues that leadership needs to hear. Lukas encourages people to express divergent opinions in the workplace—even very difficult or emotive ones. “A broader range of experiences only makes us stronger,” he has said.

Like ripples in a pond from a thrown stone, this relational approach has led Lukas to reconsider the dynamics of his company’s connections to external parties, too. Instead of sometimes difficult entities to be managed, he has come to regard stakeholders as gateways to opportunity; and his own firm as one node in a much larger, interdependent ecosystem of suppliers, staff, consumers, government and regulators, all bound together by vital relationships. He now actively seeks out new partnerships, including alliances across organizations, and with fellow CEOs.

Prioritizing ethics and profits

Lukas became CEO at a time when human-rights and environmental NGOs were becoming ever more vocal, powerful and close to home in their critiques of the fashion industry, in some cases stepping right into the boardroom in the form of activist investors. Always a thoughtful man with a strong ethical core, Lukas knew that businesses would have to confront these pressing issues. With his developing understanding of relational leadership, he was able to expand his vision of collective responsibility and interdependence to encompass social-justice concerns—and tackle them productively. “I’ve learned how to convert corrosive tension into creative tension,” he says.

Pragmatic considerations, however, are never forgotten. At no time does Lukas lose sight of the CEO’s fundamental task of steering the business on a financially sound course, generating value for shareholders. Balancing principle and pragmatism, Lukas finds ways to integrate these interests and trade-offs. It is Lukas’s connection to his consumer base that has guided him to focus on one particular social imperative: gender equality. The majority of the fashion industry’s customers are female; paying attention to gender issues makes good business as well as ethical sense. This is also significant because so many women are employed in the global fashion industry, especially at the frontline. With the COVID-19 pandemic, millions of workers face loss of income—primarily young women.

“Decisions made in my office impact the lives of women worldwide,” Lukas says soberly. “It’s a huge responsibility.” Closer to home, Lukas is also deeply concerned with gender parity within the firm, which employs many women but fewer in the upper ranks and on the Board. It is his avowed intention to increase representation at all levels.

At Egon Zehnder, we have seen how successful CEOs willingly embrace a place of discomfort. Today’s business leaders cannot be afraid to ask the difficult questions that the shifting global context demands—of their organizations, and themselves. In Lukas’s case, his challenge was to reach out and connect himself to the broader collective. He has done this unflinchingly, progressively expanding his circles of engagement—first to managerial colleagues, then to all levels of the organization, from there to external stakeholders, and finally to the urgent issues of the planet. In doing so, he has created a new culture, where authentic connection is encouraged at all levels, helping the company maintain its leading place in a competitive and ever-changing industry.
 


 

< "Jan": Perform and Transform

"Beth": Reconnecting with our Humanity

 

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