Practical utility
The belief in rationality as the most important management parameter for the economy, for leadership and for society is losing ground. The relatively new behavioral economics looks at completely different factors than ‘rational’ ones to explain people’s economic behaviour (Akerlof & Shiller, 2009). Akerlof and Shiller look at factors such as confidence, justice, fairness, illusion as well as stories and myths in an attempt to explain economic behaviour. In our context, it is also highly probable that in the Fourth Industrial Revolution, leaders will need to consider such psychological factors (Goleman, 2014). The Nobel laureate in economics Akerlof, and his co-author Shiller, regard human behaviour as more explanatory of what is happening in the economy than so-called rational explanations, which traditional economists deem as being more important. Our point in this regard is that people’s behaviour and attitudes, with regard to their confidence and commitment to an organization or system, will be something that leaders of the future will have to take into account. This is not because people are irrational, but because so-called animal spirits16 can also be understood, and in this way are also ‘rational’. Ever since Adam Smith wrote The Wealth of Nations in 1776, and up until today, traditional economists have ignored the human psyche (Akerlof & Shiller, 2009: 3). Overlooking the human psyche also characterizes the mainstream research in the field of leaders and leadership. By taking people’s behaviour regarding their commitment as a starting point in the context of leadership, the leader can take into account the importance of factors such as uncertainty, ambiguity and herd mentality when making decisions and exercising leadership.
The leadership context is the same whether one uses a rational logic or a more behavioural logic of the type associated with behavioural economics. At first glance, this may seem like a theoretical debate, which it may be, but here it has a very concrete and practical relevance. If a business leader has an educational background from a business college, which many business leaders often have, then the likelihood is the leader in question will mainly use a rational logic when making decisions. A perspective that has a social science focus, for instance with a background in sociology, psychology or anthropology, will attach greater importance to so-called human factors. As we have pointed out throughout this chapter, it is these factors that will become increasingly important at the beginning of the Fourth Industrial Revolution. Goleman (2014: 3-23) calls this ‘primal leadership,’ which he defines as follows: ‘Great leadership works through the emotions’ (Goleman, 2014: 3). In practice, this means that the leader’s mood and how he or she uses his or her voice in communication is crucial to outcomes. On the one hand, if the tone is optimistic, inclusive and inspiring, then the employees will be motivated. On the other hand, a negative tone will easily lead to opposition and conflict. A leader who is introverted, communicates poorly and uses the communication strategy one associates with ‘social eunuchs’ will tend to create a negative emotional mood. Social eunuchs will have problems motivating and engaging employees.
Skilled leaders emotionally engage people when they can demonstrate positive emotions, not through the use of rational logic. For instance, consider Martin Luther King’s speech: ‘I have a dream’, or John F. Kennedy’s ‘ask not what your country can do for you - ask what you can do for your country!’ Great leaders emotionally engage and motivate people by connecting to their emotions. The leadership competence that will be sought in the Fourth Industrial Revolution will be social competence, and especially emotional intelligence.
It is not only individuals who have emotions, groups can also have emotions, according to Caroline Bartel and Richard Saavedra (2000: 187-231). According to the two researchers, groups can develop a common emotional state, positive or negative, within two hours. It takes anywhere from two hours to a few weeks to synchronize the emotions so that a group reaches a common emotional state (Totterdell, 2000: 848-859). In the experiments, the two researchers examined the creation of emotional unity among groups, independent of context. The common emotional development was also independent of the problems and challenges that existed in the group. In addition to groups developing common emotional states, the leader’s emotional state infects his or her closest colleagues and eventually the entire organization (Gardner, 1995).
The leader’s emotional state and how he or she communicates this emotional state, spreads down through the organization and affects the performance of the entire system. The emotions that spread most quickly are the positive, warm and inclusive ones (Provine, 2000: 133). Leaders who communicate such positive emotions are more likely to hold on to competent employees as opposed to those who have a more negative or neutral emotional behaviour (George & Bettenhausen, 1990: 698-706). This research only supports what people know intuitively through popular phrases, such as ‘smile and the world smiles with you’. However, what is new is that research emphasizes that this also applies to organizations and that it applies to leaders at all levels. The emotional state of leaders and employees is important, because their emotional state will positively or negatively affect those around them and directly and indirectly affect results (Maulding Green & Leonard, 2019).
As the introduction of new technology results in a sharp increase in productivity, this will reduce the demand for labour. This will mean that those who remain in the organization will most probably have an even greater need than before for consistent positive emotional signals, because job insecurity will increase.
In the new technological framework of the workplace, leaders and employees will greatly benefit from having emotional self-understanding, as this will help them relate positively to others. For instance, having insight into why one expresses emotions in a particular way will enable one to modify emotional expressions in various situations, so that negative emotions linked to past experiences do not unduly affect situations in the present more than is necessary and desirable.
Knowing why one seeks appreciation will make it easier to control one’s emotional expressions (cf. Figure 3.3). If you show emotional openness in situations, you may benefit by this in two ways. First, there is less chance you will be emotionally hurt if you have nothing to hide. Second, the other person(s) will open up emotionally more easily if you show openness. We have referred to research mentioned previously that supports the importance of emotional optimism. Being emotionally optimistic can make it easier for a leader and his or her colleagues to positively influence other employees. Emotional self-insight, control, openness
Figure 3.11 Practical leadership competences in the Fourth Industrial Revolution
and optimism are conditions directed inwards towards one’s own feelings and emotions. In addition to these elements, empathy, understanding and being there for other(s) will affect the emotional contact between those involved. Empathy here means that one shows emotional understanding of the other person, whether this concerns customers, students, users etc.
In Figure 3.11, we have summarized and shown practical utility in relation to the question: what leadership competences will be in demand in the Fourth Industrial Revolution?
