A leadership landscape defined by complexity
Leadership has always evolved with context, but the shifts leaders are navigating today are deeper and faster than anything seen in years. Economic uncertainty, geopolitical volatility, digital acceleration (particularly artificial intelligence), cultural change and rising workforce expectations are placing sustained pressure on leaders. For many organisations, these forces now determine the difference between momentum and stalled progress, and are reshaping the leadership capabilities for 2026 that will matter most.
As Mehul Joshi, Senior Partner, SMG, notes, “The expectations of leaders are higher, the scrutiny is sharper and the time to adapt is shorter.” In this environment, trust, clarity and connection are becoming defining markers of leadership effectiveness.
The seven leadership capabilities for 2026. Why three stand out
SMG’s latest data from more than 1,500 coaching and mentoring assignments shows that while the core capabilities of great leadership remain relevant, how leaders demonstrate them has shifted. Supported by global research from Harvard Business Review and other leading institutions, SMG has identified seven critical capabilities for 2026, drawn from our Leadership Capability Framework and informed by five years of coaching data.
Among them, three stand out as the strongest predictors of leadership effectiveness and organisational resilience: strategic thinking, digital catalyst and empathy.
This Insights piece explores these three capabilities, drawing on the lived experiences of SMG coaches Robyn Stubbs, Charles Weiser and Amanda Bickerstaff, alongside framing insights from Mehul Joshi, who facilitated SMG’s recent Leadership in 2026 webinar.
Strategic thinking
Why strategic thinking rises in 2026
Strategic thinking consistently ranks among the top coaching themes, and its relevance continues to grow. Leaders operate in environments dominated by noise, competing priorities and uncertainty. Without the ability to pause, interpret and prioritise, they slip into reactive cycles that slow decisions and misdirect effort.
When strategic thinking is weak, organisations waste resources and miss opportunities.
Mehul sees this pressure most acutely with executive teams:
“In our work with executive teams, we see this playing out more acutely than ever before. Strategic thinking is about being on the ‘balcony’ rather than ‘on the dancefloor’. Yet the pace of change seems to be creating an ever-increasing gravitational pull to the dancefloor.”
Lifting above the noise
Robyn Stubbs captures the shift:
“Great leaders are able to lift their eyes to the horizon.”
Leaders must resist the pull toward constant firefighting. “Without a clear strategy,” Robyn notes, “it becomes almost impossible to ignore what is not important. Strategic thinking creates that laser-like focus on the main game.”
Strategic thinking requires focus and vigilance. As Robyn says:
“You cannot respond to every emerging trend in this environment. If you try, you lose perspective.”
It also builds trust. When leaders stay composed, teams feel grounded.
From firefighting to focus
Robyn’s experience in the property sector illustrates the impact of strategic focus. Goodman Group’s early recognition of shifting logistics trends positioned them for global leadership. They did not predict the future perfectly; they scanned widely, joined dots and committed to a long-term direction while others hesitated.
Strategic thinking enables leaders to see what matters early and act decisively, even as conditions remain dynamic.
Creating environments where ideas win
Strategic thinking is no longer a purely cognitive skill. It depends on the environment leaders create.
Charles Weiser emphasises this shift:
“Leaders need to be inquisitive and creative and create an environment where ideas win and lose, not people.”
Curiosity and psychological safety improve strategic insight. Leaders who model inquiry and openness gather better intelligence and make stronger decisions.
This theme is also explored in our work on high-performing executive teams, where constructive challenge and psychological safety are critical to the quality of decisions and collective performance.
Strategic thinking as a coachable capability
Mehul notes that strategic thinking grows through micro capabilities seen repeatedly in coaching:
- self awareness
- curiosity
- disciplined reflection
- pattern recognition
- challenging assumptions
- comfort with ambiguity
Leaders “addicted to doing” struggle unless they deliberately create thinking space. Strategic thinking is measurable and coachable, and it is increasingly central in senior appointments and succession decisions.
Coaching strengthens strategic thinking by:
- creating protected time to think
- surfacing blind spots
- challenging habitual responses
- strengthening systems thinking
- building deliberate strategic habits
In volatile environments, strategic thinking enables leaders to stay anchored and guide organisations toward long-term value.
Digital catalyst
Why digital catalyst capability matters
Digital capability is now a defining leadership requirement. Being a digital catalyst is not about technical skill. It is about enabling confidence, experimentation and adaptability across the organisation.
Charles Weiser articulates the shift:
“Technology is now the environment we lead in, not the department we delegate to.”
Changing the technology metabolism
Charles describes the transformation underway as changing the “technology metabolism” of the business. Teams must learn, test, and adapt faster.
He explains:
“That old linear model of researching, designing, building and analysing is disappearing. What we need now is test, learn, adapt, repeat. It is fluid, it is iterative, and it is deeply human.”
This requires leaders to guide people through uncertainty and help them build confidence with new tools and ways of working.
Creating conditions for experimentation
To be a digital catalyst, leaders must foster environments where experimentation is normal, and mistakes are part of progress.
Charles says it plainly:
“Success is failure. AI demands environments where people can fail fast and fail forward.”
Most organisations struggle with this. Perfectionism and fear of failure slow digital adoption. When leaders create psychological safety, learning accelerates.
Why digital transformations fail
Charles shared a cautionary example: an AI strategy that failed, not because of the technology, but because the organisation lacked cultural readiness. Trust was low. Teams did not feel safe to experiment.
This is the difference between leading AI and leading in AI. Leaders who treat AI purely as a technical initiative miss the human and cultural elements required for transformation.
As Charles notes:
“This is where most organisations go wrong. Businesses are leading AI, not leading in AI.”
The behaviours of a digital catalyst
For Mehul, digital catalyst capability depends on emotional intelligence, strategic sense-making, and the ability to mobilise teams through ambiguity. It is also coachable.
Robyn sees organisations adopting “wait and see” mindsets, even as employees experiment with tools independently. Leaders who step in early help their teams stay ahead of opportunity and risk.
Leaders strong in this capability:
- encourage curiosity
- normalise experimentation
- frame AI and data as tools for clarity
- create psychological safety
- reduce perfectionism
- model adaptability
- translate digital opportunity into commercial value
- build alignment across functions
- increase decision-making velocity
Digital catalyst capability complements strategic thinking and empathy. Strategic thinking identifies where technology creates value. Empathy builds trust during transformation. Together, they help leaders sustain progress through disruption.
As Charles summarises:
“AI is not the transformation. The transformation is in how leaders help people learn, adapt and evolve.”
Empathy
Empathy at the centre of modern leadership
Empathy has long been valued, but in 2026 it becomes a critical leadership capability. As workplaces navigate uncertainty and rising expectations, empathy strengthens trust, alignment and psychological safety. Importantly, the empathy required of leaders today is not the simplified, academic version people often assume. It is authentic empathy – the practical, disciplined capability to understand others, stay attuned to what is driving them and respond with intention.
Amanda Bickerstaff frames it clearly:
“Leadership ultimately is about human beings leading human beings.”
The hardest of the leadership skills
Empathy, authenticity and emotional intelligence are often labelled “soft skills”, but Amanda challenges this:
“In fact, they are the hardest skills to understand and to master.”
These capabilities require presence, attention and practice. They demand deep listening and genuine curiosity. Empathy accelerates execution by reducing friction and increasing clarity.
Empathy begins with self-awareness
Self-awareness sits at the centre of empathy.
As Amanda notes:
“Everything in the coaching arena starts with self-awareness.”
Coaches help leaders examine the beliefs and patterns that shape their impact. Through the coaching relationship, leaders gain immediate insight into how they connect and where they disconnect.
Amanda explains:
“My ability to notice what you do and how you do it in my presence means we have the permission to explore it.”
A behavioural shift: John’s story
Amanda’s work with a senior leader, referred to as John, shows how empathy develops. John was capable but difficult to connect with. His pursuit of perfection created distance.
Through coaching, he saw how his behaviour affected others and experimented with more present, open communication. Over time, he experienced a clear behavioural shift, noticed by him and by others.
At work, relationships strengthened. At home, conversations became warmer.
Empathy’s role in culture, trust and performance
Empathy is central to culture and psychological safety. Leaders must understand the needs and motivators of the people they lead. Empathy reduces uncertainty, calms anxiety and enables performance.
Mehul reinforces its commercial relevance: empathy strengthens decision-making, improves influence and reduces friction during transformation. It supports strategic clarity, digital adoption and organisational resilience.
As Amanda reflects:
“Leading human beings is the toughest job in business, and yet it can be incredibly rewarding.”
The capabilities that will matter most in 2026
Bringing strategic thinking, digital catalyst and empathy together
These three capabilities stand out because they help leaders respond to the pressures of 2026: complexity, speed, and the human impact of ongoing change. Strategic thinking provides clarity. Digital catalyst capability enables faster learning and adaptation. Empathy builds trust and psychological safety.
Together, they help leaders maintain momentum and guide organisations through ambiguity with confidence.
Where leaders can focus now
Leaders can strengthen these capabilities by:
- protecting thinking time to scan the environment and prioritise clearly
- building regular test-and-learn cycles
- talking openly about failure to reduce fear
- using short check-ins to understand how people are experiencing change
- bringing diverse perspectives into key decisions
- working with a coach or mentor to build self-awareness
These practices help leaders operate with clarity, adaptability, and connection in environments where the pace of change will accelerate.
SMG continues to work with leaders and teams across industries to develop these capabilities through coaching, mentoring and tailored leadership programs. The patterns we see in our work form the basis of these insights. Our Whitepaper on Leadership in 2026 will be published in January 2026.
Questions and answers about leadership capabilities in 2026
What capabilities will matter most for leaders in 2026?
Strategic thinking, digital catalyst capability and empathy stand out as the strongest predictors of leadership effectiveness and organisational resilience. Together, they help leaders navigate complexity, accelerate learning and build the trust required for change to succeed.
Why is strategic thinking so critical in this environment?
Leaders face increasing noise, competing pressures and faster cycles of disruption. Strategic thinking provides clarity and direction, helping leaders step back from firefighting, prioritise effectively and make decisions anchored in long-term value.
What does it mean to be a digital catalyst?
A digital catalyst shapes the cultural and behavioural conditions for learning, experimentation and adaptation. It is less about technical expertise and more about creating psychological safety, reducing perfectionism and enabling teams to test, learn and adjust at pace.
How is empathy defined in a leadership context?
Empathy goes beyond the simplified or academic meaning of the word. It is the disciplined capability to understand what drives people, stay attuned to their experience and respond with intention. Authentic empathy strengthens trust, reduces friction and enables performance under pressure.
How can leaders begin developing these capabilities?
Start with small, deliberate practices: protect thinking time, build test-and-learn rhythms, talk openly about failure, use short check-ins to understand how people are experiencing change, bring diverse perspectives into key decisions and work with a coach to build self awareness.
How do these capabilities reinforce one another?
Strategic thinking clarifies direction. Digital catalyst capability accelerates learning. Empathy builds the trust and psychological safety that allow teams to adjust, collaborate and stay engaged through uncertainty. Together, they help leaders maintain momentum and guide organisations with confidence.
