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Which businesses can maintain a steady course towards profitability in a sea of rapidly increasing market complexity and volatility? Its not an easy question to answer, but management consulting firm, Hay Group, sought out these enigmatically successful companies through its 2013 Best Companies for Leadership (BCL) study. Now in its eighth year, the annual global study of over 2,200 organisations worldwide identifies which firms have the best leadership practices, and finds out what we can learn from them. This year, Procter & Gamble (P&G) reclaimed the number one spot it last held in 2005, and takes the top spot from General Electric (GE), the Best Company for five of the past seven years. It turns out that P&G, GE and other companies ranked highly, display one standout feature: a profound ability to maintain a balance between exploration, the ability to commit to innovation and new ventures, while simultaneously exploiting existing marketing strengths to achieve business excellence. This ability of firms management to both explore and exploit, a concept known as Ambidextrous Leadership, is crucial in ensuring the long-term sustainability of firms. To validate the level of ambidexterity of participating firms, their exploration and exploitation scores, derived from employee responses, were matched against the firms EBITD (Earnings Before Interest, Taxes and Depreciation) margin. The results showed that firms that best balanced exploitation and exploration have the highest EBITD margin, while organisations that gave little attention to exploration have much lower figures. These findings unearth a telling paradox: pursuing short-term financial performance actually results in reduced profitability. To ensure long-tem financial success, businesses need to invest in long-term sustainability. The Best Companies for Leadership recognise that many of the skills once required solely for senior leadership roles high levels of emotional intelligence, commitment to continuous learning, analytical thinking are now critical at every level of the organisation, says Ruth Malloy, global managing director of Hay Groups Leadership and Talent practice. To excel in todays highly complex and competitive business environment, the Best Companies are taking deliberate steps to develop and reward these competencies to enable their organisations to achieve operational excellence today, while driving innovation for tomorrow. Closer to home, Asian conglomerates Tata and Samsung have the best exploration and exploitation scores in the study. They also have
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