In the last quarter of the twentieth century the stock market became increasingly short-term, causing corporate leaders to concentrate on quarterly earnings, often to the exclusion of long-term growth. In the past decade it all blew up, from the ethical scandals exposed by Enron and WorldCom to the Wall Street meltdown. As a result, people lost trust in business leaders to build sustainable institutions instead of serving themselves and short-term shareholders.
What happened? The hierarchical model simply doesn't work anymore. The craftsman-apprentice model has been replaced by learning organizations, filled with knowledge workers who don't respond to "top down" leadership. Seeking opportunities to lead, young people are unwilling to spend ten years waiting in line. Most important, people are searching for genuine satisfaction and meaning from their work, not just money. For example, Medtronic's 38,000 employees are motivated by the company's mission of "restoring people to full life and health."
In response to these changes, a new generation of leaders is reshaping the best-led global companies. Authentic leaders focused on customers are replacing hierarchical leaders that focus on serving short-term shareholders. Typical of these leaders is Unilever CEO Paul Polman, who recently told the Financial Times, "I don't work for the shareholder. I work for consumers and my customers."