What is ikigai and how can it transform your leadership and business for good?

When it comes to leadership styles, the corporate pendulum has swung back and forth at lightning speed over the past decade – partly driven by the transformative influence of technology. In the past, the authority-based leadership model prevailed, with senior executives commanding the loyalty of their employees, staying in office for lengthy periods, and often devoting limited time to the issues that mattered most to them. These days, this old leadership style has been superseded by a new, values-based model, where the focus is on building followership and belonging by listening – rather than just talking – applying learnings, and sharing.

Today’s employees – especially those at the younger end of the spectrum – have far higher expectations of their leaders: not only do they demand authenticity and accountability, but they believe that respect must be earned, rather than automatically accorded. Above all, they can smell a fake a mile off – and they’re not afraid to call out their leaders on the slightest hint of inauthenticity.

Our own research backs up the scale of this shift in expectations. We analyzed CEO departures from 200 companies over two five-year periods from 2011 to 2016, and from 2016 to 2021. The total amount of transitions remained relatively stable at 150 and 155, respectively, but the number of involuntary departures triggered by causes other than financial factors increased five-fold during the latter period. This suggests that CEOs are becoming increasingly vulnerable to being removed from office for issues such as turning a blind eye to toxic corporate culture or failing to address socially irresponsible behaviour among their employees.

Leaders are under increasing pressure to identify compelling ways to activate their corporate purpose and achieve the outcomes they want. In recent months, we’ve spoken a lot about “picking a pivot in purpose”. Rooted in Japanese culture, ikigai is a very similar concept, first emerging during Japan’s Heian period (794—1185). It has no direct equivalent in the Western world – at least not one that can be neatly captured in a single word. Derived from iki – meaning “alive” or “life” – and gai – meaning “benefit” or “worth”, ikigai was conceived as a way to help individuals achieve fulfilment by finding their purpose and reason for being in life. But leaders too can apply its principles on a much larger scale to benefit the organizations they run, by identifying the sweet spot at which their passions and talents converge with the things that the world needs and is prepared to pay for.

So, what can ikigai teach us about the way we run our organizations? Many companies are now homing on the idea of purpose, striving to define and communicate the reason for their existence. But fewer have translated that purpose into tangible action: this “purpose gap” is the disconnect between what organizations say, and how stakeholders believe they act.

For today’s leaders, deploying ikigai to maximum effect is about more than just keeping their job; it’s about doing their job. To achieve this, leaders need to empower and engage with people right across their companies, from the middle of the organization – which stands to lose the most from change – right down to individual employees, ensuring they feel seen, supported, and inspired.

And this approach doesn’t stop at employees: it extends to the product level too. For example, leaders who can reconfigure their global supply chains for greater circularity and sustainability around areas like climate-positive products and pricing will be well positioned to capitalize on the elasticity of sustainability, where people are prepared to stump up a premium for climate-positive products, foster deeper loyalty from stakeholders, including investors.

Ikigai is about doing what we love doing – doing it well – and focusing only on those things that we have the power to control. In our fragmented modern world, ikigai offers us a compelling way to break down the walls we’ve built to separate our personal values and the values that make our organizations tick, a way to find their purpose and translate it into meaningful action in a way that our stakeholders can see, feel, and understand.

Crucially, ikigai gives organizations the opportunity to take a step back, reflect, and reassess their true purpose, rather than pursuing progress at any price. Companies are living, growing organisms – and that purpose evolves as they develop. In order to thrive, they need balance and moderation – not the polarization, nativism, tribalism, and nationalism that divide our society today.

Leaders that can help their organizations to achieve this balance will be perfectly placed to tap into the sense of purpose and joy that give them their reason for being in the first place. And once they can successfully harness the energy of their people – the most renewable source of energy in the world – they stand to reap the enduring benefits that come from the power to keep them engaged, motivated, and above all, happy.