McKinsey research identifies how leaders, even in the most demanding circumstances, are able to inspire, engage, and mobilize others. This reviews the five capabilities of “centered leadership” with best practice scenarios:

If you feel that your organization is under stress, you are not alone.  More than half of the CEOs McKinsey researched over the past year have said that their organization must fundamentally rethink its business model.

In 2008, they conducted interviews with more than 140 leaders, and analysis yielded a set of five capabilities that generate high levels of professional performance and life satisfaction – a set of capabilities as “centered leadership.”  Now additional interviews and quantitative research has validated the model’s applicability to leaders in demanding circumstances across different regions, cultures, and seniority levels.

A global survey shows that leaders who master just one of these skills are twice as likely as those who have mastered none to feel that they can lead through change. Leaders who have mastered all five capabilities are more than 4 times as likely to feel they can lead through change, and 20 times as likely to say they are satisfied with their performance as leaders and their lives in general.

The five capabilities are at the heart of “centered leadership” are:

  1. Meaning: finding meaning in work,
  2. Positive Framing: Converting fear or stress into opportunity,
  3. Connecting: Leveraging connections and community,
  4. Engaging: Acting in the face of risk, and
  5. Managing Energy: Sustaining the energy that is the life force of change.
 Meaning: Leaders who infuse their  work with a sense of meaning  convey energy and enthusiasm because the goal is important to them personally, they are actively enjoying its pursuit, and their work plays to their strengths. Of all the characteristics of centered leadership, meaning has the most significant impact on work and life satisfaction.  The contribution to life satisfaction is five times more powerful than that of any other characteristic.

Sharing meaning to inspire colleagues requires leaders to become great storytellers, touching hearts as well as minds. These skills are particularly applicable for executives leading through major transitions, since it takes strong personal motivation to overcome the discomfort and fear that accompany change and to inspire greater achievement.

Avon Products CEO Andrea Jung found the company, a close-knit community, faltering  and she had to streamline. She  rejected the more efficient approach of delegating to managers the responsibility for communicating the restructuring and traveled the world to offer her teams a vision for restoring growth and to share the difficult decisions that would be required. Employees felt that Andrea treated them with honesty and humanity, and, by instilling greater resilience throughout the organization, Avon rebuilt its community and resumed growth within 18 months.

Positive framing:  75% of the respondents who were good at positive framing (having an optimistic outlook) thought they had the right skills to lead change, while only 15 % of those who weren’t thought so. When faced with too much stress, the brain reacts with a  “fight, flight, or freeze” instinct that equips us to react but not to come up with creative solutions. Such fear and negativity can spread and become the cultural norm.

When Steve Sadove took over Clairol, in 1991, the company was suffering a significant decline in sales volume. Steve approached the person who did all the creative development  and asked “Why don’t we do anything creative?” He started showing Steve all of this wonderful work that he’d done. Unfortunately, in a culture of fear, nobody was asking for it. Part of his role as a leader was to create an environment that would allow innovation and creativity and make it OK to fail.

Steve found ways to stimulate creativity, such as exploring opposing points of view in discussions with colleagues. Over time, he convinced others that speaking up was encouraged, and helped colleagues reframe the way they reacted to dissent, forging a less defensive and ultimately more innovative culture. The result: they  introduced a winning hair care brand, Herbal Essences, and ushered in a golden period of growth for Clairol.

Connecting: With communications traveling at warp speed, simple hierarchical cascades—from the CEO down until the chain breaks—are becoming less effective for leaders as they need to manage complex webs of connections that aren’t suited to traditional, linear communication styles. The volume of communication in such networks are also overwhelming. However,  this environment can also allows more people to contribute, generating not only wisdom and a wealth of ideas but also immeasurable commitment.

Terry Lundgren after joining Neiman Marcus ,as president and CEO in 1998 was one of the first non–Marcus family members with that title for any extended period of time, and was  greeted with widespread skepticism.  So Terry held a town hall meeting in the library across the street. He invited anybody who wanted to come. The first time, only about 30 people showed up, but he used the time mostly to listen and respond very directly. He kept holding meetings, noting that “it really moved the needle quickly in terms of getting things done in that company.” By the time Terry left, the twice-a-year meetings filled a 1,200-seat auditorium.

Today, Terry leads Macy’s, connecting in many ways, from scheduling a monthly breakfast with new managers to forming relationships with peers.  For corporate connectivity, he regrouped Macy’s stores into 69 districts, each tasked with creating “My Macy’s” for its customer base. Comparable-store sales are up, reversing a negative trend. Efforts to connect managers more closely to one another and to customers, through enhanced information sharing and product offerings tailored to local needs, help explain the company’s trajectory.

Engaging: Of survey respondents who indicated they were poor at engaging—with risk, with fear, and even with opportunity—only 13 percent thought they had the skills to lead change. Leaders who are good at acknowledging and countering these emotions can help their people summon the courage to act and thus unleash tremendous potential. But encouraging others to take risks is difficult given the responsibility CEOs feel for the performance of the entire organization.

Doug Stern, CEO of United Media, helps his people evaluate risks and build their confidence about confronting the unknown. He follows an explicit process anytime he’s facing a new, risky project:

  • ask the team to imagine every bad scenario, even the most remotely possible—the “darkest nightmares;”
  • giveeveryone a chance to describe those scenarios in detail and then to “peer into the darkness” together;
  • devise a detailed plan for countering each nightmare, rehearsing the best collective response to each issue.

Once fears have surfaced and been dealt with, the team has a protocol in place for every worst possible scenario and a set of next steps to implement.

Managing energy: Too often, a change effort starts with big vision statements and detailed initiatives, only to see energy peter out. On the other hand, when work escalates maniacally through a culture of “relentless enthusiasm,” is equally problematic, because leaders find it hard to sustain energy and commitment within the organization.

That is, unless they systemically restore their own energy and create the conditions to serve as role models for others to do the same. McKinsey’s  research shows that sustaining and restoring energy is something leaders often fall short on.

Jurek Gruhn, president of Novo Nordisk US, can attest was diagnosed with Type 1 diabetes.  “My first reaction was, ‘You may have Type 1 diabetes, but you could also have a lot of other diseases that are much worse. I basically took on my disease as a task.” Jurek realized that one key to living a normal life with the disease is to embrace life, at work and at home. “A healthy lifestyle is important.  And now I feel healthier because I have also changed my lifestyle: I eat breakfast now every day, I exercise much more, and I started rock-climbing on a regular basis.” Everything improved—his physical condition, mental focus, emotional satisfaction, and spirit. 

Centered leadership starts with a highly personal decision. One executive who recently chose to to pursue it said: “Our senior team is always talking about changing the organization, changing the mind-sets and behavior of everyone. Now I see that transformation is not about that. It starts with me and my willingness and ability to transform myself. Only then will others transform.”

Snap Principle of Centered Leadership:
Energize, engage, connect, and instill meaning and positive frameworks that encourage personal creativity.