May the Force be with You: Ethical Leadership During Discontinuous Change

Remember Star Wars?

The world seemed so much simply back in 1977 when the movie was released. Here we are four decades later, during which time the world has experienced several recessions, the Soviets in Afghanistan, 1990-91 Gulf War, the Y2K scare, 9/11, the 2008 financial crisis and subsequent Great Recession, the Iraq war (post March 2003 U.S. invasion), NATO in Afghanistan, worries over climate change, environmental disasters, and the rise of such emerging economies as China, India, Turkey, Indonesia, Brazil, Taiwan, and South Korea. Plus much more.

The escalating complexities inherent in the global economy and the emergence of what appear to be sudden, unpredictable events are exerting more pressure and greater demands on corporate leadership, both in business and government. Discontinuous change, as a concept, comes from British management thought leader Charles Handy, who spoke about change arriving in sudden, unpredictable bursts.

As much as I understand what Handy was trying express, and in fact generally embrace this concept, I also believe that the notion of “unpredictable events” is debatable, since the signals of impending change–and doom–are often present. For example The Economist magazine warned repeatedly over many months on the imminent housing collapse that occurred in 2008 and 2009. However, people (the public and so-called experts who should have known better) were caught up in then Federal Reserve chief’s Alan Greenspan’s “irrational exuberance.”

Michael Lewis in his excellent book The Big Short provides an illuminating account of the roster of culprits who nearly brought down the world’s financial system. It was clearly predictable that the housing bubble would burst, producing some form of recession. What wasn’t completely predictable was the confluence of events which, in combination, produced an overwhelming load on the financial system.

What about 9/11? It was human incompetence and rivalry within the U.S. government’s intelligence and law enforcement agencies that was primarily responsible for ignoring the signals and information that was being collected leading up to the catastrophic day on September 11, 2001. What about Hurricane Katrina and the warnings about the levee system that were made years before it struck New Orleans?

Or how about the financial problems in the European Union, in particular Greece’s sordid financial mess? Back in the early nineties when a European currency was being established Italy had a debt-to-GDP ratio of 104%. Seen as sheer lunacy at the time, with expectations that Italy would default on its debt, that country’s ratio was 181% in 2016!

Let’s revisit for a moment the Deepwater Horizon oil spill on April 20, 2010. This oil spill in the Gulf of Mexico had been raging for a month when CBS 60 Minutes aired an interview with the rig’s chief electronics technician, who miraculously survived the explosion. He provided virtual conclusive proof that the disaster was BP-made. BP management overrode Trans Ocean’s management on its decision to ease off drilling to correct a problem, despite the oil rig belonging to Trans Ocean.

In a bizarre statement following the May 7 failed attempt to use a 40 foot-tall container dome to capture the oil spewing out of the ruptured well pipe, BP CEO Tony Hayward said: “There is an enormous of learning going on here, because we are doing it for real the first time.”

Following Tony Haywards’s logic, this means “learning” while the Gulf of Mexico and large tracts of the southern U.S. coastline were getting contaminated. “Learning” while wildlife habitat, fisheries and the economic way-of-life for hundreds of thousands of Americans got decimated. And “learning” while the estimated 5,000 barrels a day of escaping oil edged closer to Florida and the Atlantic Ocean. This “learning” experience has a pre-tax cost of an estimated $62 billion (2016).

For BP, profit before understanding the long-term consequences of rash decision-making created an environmental nightmare. Predictable? At the point of making the decision to proceed all steam ahead, BP management should have used common sense to understand the risk.

Preventable?

Absolutely.

There is not just no end to human greed but also no limit to the extent to which people stick their collective heads in the sand, pretending not to notice and ACCEPT the signals that are turning from blinking orange to red. World history is littered with foolish mistakes, which in most cases were entirely preventable.

The notion that people learn from their mistakes is a bogus concept. The errors we’ve just witnessed in the past few decades will be repeated again a few decades hence. Count on it. University business students in 2050 will read about the preventable financial collapse in 2008-09, just as their economy 40 years from now is exploited by greedy speculators.

For those in leadership positions in organizations–regardless of level, because to be a leader is NOT via appointment but by earning the trust of one’s followers–the uncertainties ahead make for exceedingly challenging times.

Leadership is a messy business. Trying to understand the forces of change and learning how to ride the wave (make that tsunami), instead of futilely resisting, will not just be a more productive exercise but also hugely less stressful. And by paying attention to emerging trends and by practicing ethical leadership behaviour both you and your organization will not only stay a step ahead of your competitors but you’ll be playing a stewardship role in how you interact with the environment and society.

The best preparation for tomorrow is doing your best today.
— H. Jackson Brown, Jr. (American author)

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