Critical Issues in Business: 21st Century Leadership

Leadership is one of the central elements not only in business but in the society as a whole. Its contribution to the formation of cultural, political, economic, and other aspects of our life is hard to overestimate. The concept has a variety of definitions; the most commonly used one interprets it as a process of social influence that makes it possible to coordinate and maximize efforts. The central topic is what combination of qualities, professional and personal skills, situations, styles, and other parameters make a successful leader (Hanna & Latchem 2013).

The major purpose of the study at hand is to provide a holistic view of the 21st century leadership as compared to classical leadership and trace the causes of changes to leadership competences. The research is relevant due to the fact that the modern workplace is changing rapidly and every business is looking for innovative solutions that would help it survive in a highly competitive and challenging economic environment and create a competitive edge.

The key topics of market research are now devoted to approaches that allow boosting organisational performance, increase job satisfaction and productivity, and encourage personal and professional growth of employees (Han 2014). Practical application of leadership theories is the major reasons the issue of innovative leadership requires more profound investigation.

Predicted Key Competencies for the 21st Century Leadership

On the basis of the literature review performed, the following list of competences was composed that unites both the old the new skills indicated in various studies:

  1. Serving the organisation and its people: In the age of information and technologies, all people regardless of their status in the society or in a particular company are in relationship with others. A service mentality of a leader implies that he/she serves his/her employees just like they serve the organisation. O’Connell (2014) claims that servant leadership is a leadership philosophy that is now gaining immense popularity since, unlike traditional leadership that generally relies on the exercise of power by the one at the top, it stresses the importance of other people’s needs. The leader must be able to share power with employees. This way, leaders unlock ingenuity in everyone and make them feel more committed and inspired (Sheppard, Sarros & Santora 2013).
  2. Cultivating courage and personal responsibility: Effective leadership (both traditional and innovative) starts from understanding that a leader is the one who is responsible for everyone in the company and who is to make sacrifice in the event of failure. Although there are still organizations that use the scapegoat approach (pinning the blame to one of its employees), the progressive leadership has stepped away from it. It is one of the major responsibilities of a good leader to be able to accept the whole burden and show dignity (O’Connell 2014).
  3. Focusing on customers’ experience: The increasing competitiveness of the business world makes it inevitable for leaders to advance values of their potential customers to be able to create a potent difference. That is why the leader must be able to predict changing customer needs. The challenge is that live the society of oversaturation, which implies that customers have such a wide variety of options that their loyalty is unprecedentedly hard to achieve. The only possible way to win people’s minds is focusing on their needs, not on the company’s profit (Sheppard, Sarros & Santora 2013).
  4. Aiming high: Han (2014) states that the times of modest strivings and lack of ambition are far behind. Nowadays, mediocrity has no chances to survive, which makes ‘best in the world’ the only sustainable and effective business approach. An effective leader understands that thinking globally is the key motivation factors for employees. This is the competence that allowed Steve Jobs creates a technological giant. It is crucial to make employees feel that they are a part of a big dream that will be materialized by their efforts and strivings (Smith 2013).
  5. Creating a stimulation ecosystem: Sheppard, Sarros and Santora (2013) claim that it is essential to create incentives that would make everyone in the company motivated, including the leader himself/herself. Inspiration may be found even in traditional values of the company if they are viewed from the right perspective. Smith (2013) adds that it has been proven by plenty of business researchers that money actually loses their inspiration power as soon as employees are satisfied with their position and salary. When they are, non-financial incentives are much more effective.
  6. Fostering cultural diversity and intercultural exchange. Since the 21st century brought about globalisation of business, it is now crucial for a leader to manage multinational teams. This requires good language skills and knowledge of cultural differences. Smith (2013) dwells upon globalisaition as the key driving force of the modern business, which implies that leaders who fail to achieve a favorable environment for intercultural cooperation are likely to be left behind. The future of the business in project teams including members from all over the world.

Comparison to Classical Leadership Capabilities

There are a lot of things that the modern leadership borrows from the previous centuries. Traditional approaches used to look upon leaders from a trait perspective, which implies that an effective leader possesses certain qualities that make him stand out. It concerned even certain features of physical appearance. Hanna and Latchem (2013) state that although this theory is no longer applicable, the innovative leadership still borrows from it. The point is that leaders continue to rely on personal charisma, communicative skills, resolution, courage, and other traits that are hard to be taught.

Behavioral theory also left its trance on the modern leadership. Cascio and Boudreau (2016) discuss that the theory was so extensive that it could become obsolete. It transformed and improved but the basic notions remained the same. Smith (2013) adds that already in the 20th business people realized that certain behavior patterns could allow leader to combine their care for production and profit with care for people. This is the central concern of the innovative leadership of today.

Another model bearing similarities with the modern approach is contingency theory since it understands leadership as employee-motivating and task-oriented. Northouse (2015) states that it was one of the first theories that included relationships with employees as an integral variable. Furthermore, it suggested switching between task and relationship orientation depending on the situation. Flexibility is one of the key competences of the present-day leader as well.

Finally, transformational theory shares a lot with the new vision. It emphasises the importance of change as one of the major driving forces of the organization. Northouse draws a parallel with an effective 21st century leader, who also must be able to transform the working experience by fostering continuous improvement.

Yet, despite some similarities, the differences between the classical and the modern approach are numerous:

Table 2. Classical vs. Innovative Leadership.

Point of comparison Classical leadership Innovative leadership
Power The traditional capability of a leader to make employees obey to his/her authority no matter what decisions he/she makes. Power is often based on longevity, which means that the longer the leader stays in the company, the more power he/she has (Goetsch & Davis 2014). The 21stcentury leaders understand that power in reinforced in a team, in which equal participation and collaborative decision-making is encouraged (Han 2014).
Information In classical leadership, the leader is the one who owns information as the key source of power and influence. Information is not typically shared with employees (Han 2014). Nowadays, information is shared with everyone in the organisation as this allows finding solutions to any problems and increases transparency (O’Connell 2014).
Ideas generation Traditionally, leaders only occasionally give other an opportunity to suggest ideas for improvement while the final word still rests with them. All decisions are communicated from the top down the hierarchy and are not discussed or questioned. Some important decisions are kept secret from employees (Smith 2013). Everyone has a right to voice suggestions and brainstorming is used as the major technique that allows generating bright insights (Goetsch & Davis 2014).
Problem solving Problems are solved in a board room and are not discussed with employees. Sometimes, scapegoats are found to pin the blame to them (Smith 2013). Innovative leaders brainstorm problems with employees and come up with a collaborative solution. In case of failure, the leader takes the blame (Han 2014).
Resource allocation Classical way of allocating resources is reactive, which means that resources are provided only when the leader decides that it is necessary. The analysis and decision making takes a lot of time and paralises projects (Goetsch & Davis 2014). Innovative leadership relies on trust; as a result resource allocation is proactive. This allows teams to do their job without interruptions as they have everything to do it efficiently (O’Connell 2014).
Rules and responsibilities Traditional organisation has a number of rules and regulations. Therefore, leaders often act as supervisors ensuring that the rules are obeyed. Furthermore, these regulations are reviewed rather infrequently, which makes a lot of the obsolete and illogical (Northouse 2015). Responsibilities are shared and the leader is a part of a team following the same rules as others. Generally, regulations are not binding and are introduced to facilitate the working process instead of complicating it (Smith 2013).
Resolving issues Root causes of problems are not eliminated. Instead of that, leaders deal with consequences (Northouse 2015). Root causes are found and eliminated to prevent the same situations in future (Smith 2013).
Performance Annual reviews are used by leaders to assess performance. This creates a substantial gap between the actual action and its assessment (Goetsch & Davis 2014). Leaders perform regular estimations of the current working process to be able to introduce corrections when they are still relevant. Feedback is provided immediately, without delays (O’Connell 2014).

Underlying Causes of Changes

Researchers propose different variants concerning the causes standing behind the changes to leadership competences. The most frequently cites ones include:

  1. Demographic changes have contributes a lot to the change. Social and demographic changes that are caused by financial, ecological, economic, and a number of other factors account for the fact that traditional approaches are no longer applicable for an innovative organization. Modern leaders have to take into account such realities to make sure that their business will prosper in this or that region. It is now impossible to disregard the potential of the developing countries (Smith 2013).
  2. Increased competition has proven to be one of the decisive factors. The company’s performance is now largely determined the ability of its leader to face aggressive policies of the competitors. If for the 20th century leaders it was still possible to monopolize the market, the present-day situation is such that every new entrant potentially threats the industry giants. Han (2014) states that it was one of the major reasons leadership practices had to be reconsidered. The changing market forced leaders to develop new strategies enabling them to win a competitive edge.
  3. The 21st century created all conditions for developing relationships, establishing connections, and promoting cooperation. Under these circumstances, preserving the conservative understanding of leadership with the image of the leader as an elite information holder, became next to impossible. Goetsch and Davis (2014) discuss how the image of the leader changed throughout a century and come to the conclusion that the power distance has decreased dramatically. Rejecting the hierarchic structure automatically meant developing totally new leadership policies.
  4. Strategic thinking promoted in the new-age business environment urged market researcher to develop strategies for every business aspect and participant. As a result, they came up not only with a new leadership strategy but also with a leadership development strategy. This made it possible for leaders to review their skills, behaviour patterns, and competences and learn to be leaders from scratch. (Sheppard, Sarros & Santora 2013).
  5. The markets of the 21st century are oversaturated. This implies that to achieve success and successfully compete with industry giants requires a lot of effort, resources, and motivation. Innovation and creativity set as the key priorities of business pre-conditioned the emergence of a new type of leader who is able not only to control but also to take part in the creative process. Furthermore, Cascio and Boudreau (2016) claim that this condition led to the need of devising new ways to affect the potential consumer’s choice and shifted the focus to the image of the leader who could no longer stay in shadow as his/her personal appeal now acts as one of the key factors.
  6. Globalisation, according to researchers, increased the complexity of leadership due to “the acceleration in growth of emerging and transitional economies; the creation of vast networks of interconnectedness – technologically, socially, and economically (Sheppard, Sarros & Santora 2013, p. 267).” As it has already been mentioned, the potential of the developing markets it now impossible to neglect. Improved global connections made it possible to offer services and products being thousands km away, which means that the leader must be able to encounter global competition.
  7. Being technologically savvy is the major requirement of a new age, which is another reason leaders had to step away from their classical methods of regulations and control and learn to become more advanced. It is now typical of firms to switch from traditional practices in favor of automation and lean principles. Leaders need technical competences not only to facilitate their job but also because they must be able to opt for the most progressive technologies offered in the market (O’Connell 2014).
  8. The image of a new leader was and is promoted by mass media and is connected with success, democracy, power, and positive outlook. Many leaders had to adapt to correspond to the new understanding of a successful businessman. Smith (2013) states that the image of the leader motivates not only employees but also consumers. The image of the modern successful man is associated with a happy family, health life style, youth, creativity, and personal charm. The times when leader could afford never showing their faces to the public have passed.


The 21st century, with its globalisation, technological progress, fast-paced business environment, and tendency to cooperation, presented a lot of challenges to leaders, whose role has become more flexible but at the same time more responsible (Hanna & Latchem 2013). All researcher of the topic agree that they now make the key difference between failure and success. However, the major weakness of most studies is that leaders are still perceived as unique people possessing a number of certain qualities. It is now high time we saw them as motivators, team builders, managers, and partners. Employees are no longer viewed as subordinates (O’Connell 2014).

Power distance has become much shorter, which implies that leaders step away from tight control, commanding, and supervising (Smith 2013). They collaborate with employees, reinforce communication, support, creativity, positive state of mind, and motivation. Leadership models and theories should not be detached from real business practice. Leaders should receive guidelines that can be implemented and are likely to allow creating a competitive edge (Goetsch & Davis 2014).

Reference List

Cascio, WF & Boudreau, JW 2016, ‘The search for global competence: from international HR to talent management’, Journal of World Business, vol. 51, no. 1, pp. 103-114.

Goetsch, DL & Davis, SB 2014, Quality management for organizational excellence, Pearson, Upper Saddle River.

Han, H 2014, How organizations develop activists: civic associations and leadership in the 21st century, Oxford University Press, Oxford.

Hanna, D & Latchem, C 2013, Leadership for 21st century learning: global perspectives from international experts, Routledge, London.

Northouse, PG 2015, Leadership: theory and practice, Sage Publications, Thousand Oaks.

O’Connell, PK 2014, ‘A simplified framework for 21st century leader development’, The Leadership Quarterly, vol. 25, no. 2, pp. 183-203.

Sheppard, JA, Sarros, JC & Santora, JC 2013, ‘Twenty-first century leadership: international imperatives’, Management Decision, vol. 51, no. 2, pp. 267-280.

Smith, MH 2013, The natural advantage of nations: business opportunities, innovation and governance in the 21st century, Earthscan, London.

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