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This morning at Davos:  Leadership in a crisis

I went to a fascinating panel this morning on leadership challenges of the crisis.  Here’s the official summary:

Crisis, Community and Leadership

Leadership qualities are necessary for dealing with issues such as the environment and conflict. However, only in times of crisis are leaders truly tested. Moderator William W. George, Professor, Management Practice, Harvard University, USA, asked a panel of political and business leaders what they considered to be the key qualities and personal values needed for taking the helm at national, regional and global levels.

For Benjamin Netanyahu, Leader of the Likud Party, Israel, there are three key components: 1) clear vision of the problem and solution; 2) sufficient political power to drive the vision; and 3) political courage. “Unless you have these three, it won’t happen,” he said. During his country’s previous financial crisis, Netanyahu did not perceive its problems as exogenous. Other countries such as Spain and Ireland were overtaking Israel in per capita incomes, so he sought to use the crisis to introduce structural changes. However, he also maintained that if one has a vision, one needs to communicate it to the electorate. He did this by explaining that a small man (a weak private sector) could not carry a large man (a swollen public sector). This enabled him to introduce reforms for controlling public spending and reviving business. However, he added, one needs to use the current crisis to emerge stronger. “I think it is perfectly possible to make Israel one of the 10 most competitive countries in the world,” he said.

David Cameron, Leader of the Conservative Party, United Kingdom, maintained that his country needs a “big dose of realism and a big dose of hope” to come out of the current crisis. However, for leadership to succeed, it requires frankness, candour and honesty. If people do not believe in you, they will not listen to you, he said. The British politician admitted that everyone had made mistakes, but what was now needed was to “wipe the slate clean.” What leaders need to be heard saying more often is “I got it wrong” or “I don’t know the answers.” Leaders in the United Kingdom need to focus more on the real problems at hand, namely to unblock the banking system. It is not just a matter of alleviating the recession, he said, but to produce an economy of confidence. “The real change will only come when people start investing again,” he said. In times of crisis, a strong and decisive leadership is needed, which is prepared to fail so that it can do “the right thing.”  It is not a matter of having one person at the helm, but being part of a team.

On the business side, James Dimon, Chairman and Chief Executive Officer, JPMorgan Chase & Co., USA, agreed that courage in leadership is crucial. He noted that one of the terrible things in corporate policy is that if someone makes a mistake, the person is held high for the blame. “Where is the CEO?”  he asked. People need to know that you trust them and that you are prepared to take the blame. “One of the most important things is to acknowledge what has happened.” Dimon added that we have been going through a crisis for a long time now, but change can be seen. Even though many have made mistakes, they are seeking ways of pulling through as part of a team and asking, “What can I do?”

Ana P. Botin, Member of the Board, Grupo Santander, Spain, suggested that we have all lived through tough times, but these are exceptional times. Botin maintained that bold leadership is vital, but that, to paraphrase Shakespeare, some people are born leaders, others achieve leadership, and others have it thrust upon them. Leadership in banking means the need to embrace risk. A second quality is confidence. It takes confidence to lead, she said, but also to listen. One clear thing, she noted, is that all the necessary information is never at one’s disposal. “This means being decisive without all the information at hand.”  Finally, Botin added, one needs to remain committed to one’s society and to one’s customers. “But it in order to remain committed, you have to be close to your customers.”

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