Leading in turbulent times

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Friday, 09 July 2010 10:00

Effective leaders use times of crisis to drive the correct changes

South Africa, like other countries, has experienced many turbulent times; one of the most significant of which was the period from 1990 to 1994 and during its transition to democracy. At the global level, the world is emerging from a global financial and economic crisis that threatened to mirror the Great Depression. In each case, the country and the global economy have pulled through, and hopefully have learnt important lessons from those experiences.

What has struck me about both periods of turbulence is the importance of effective leadership in averting a worsening of the crisis. Crisis creates an opportunity to act, and the space or flexibility to undertake actions that may be impossible to undertake under normal circumstances. Effective leaders use this opportunity to drive the correct changes.

Let me set out my underlying theses about leadership right at the outset. The first is that leadership does matter, particularly in times of turbulence; and the second is that leaders are not necessarily born, but rather that leadership is a combination of nature, environment and nurturing.

In my view, leaders are people who over time – and through the development of particular behaviours, values and practices in the various situations to which they have been exposed – have acquired a package or compendium of skills which makes them effective leaders.

In addition, there are certain attributes that are important foundations for good leadership such as integrity, fairness, effective communication and empathy.

Effective leaders also are people who are adaptable, and who can utilise their skills in different configurations, depending on the situation. They are able to learn from past experience, observe the current situation and envision how it may unfold, given the application of various approaches to it.

Leadership does matter. An important factor in how effectively societies meet their socio-economic and political challenges is leadership.

There are many definitions of leadership. However, there are some common terms that emerge in these definitions such as vision, adaptability, empathy, consensus-building and goal orientation.

According to Brady and Spence (5: 2010), in a political context, effective leadership involves seizing opportunities created by the political economy dynamics to institute change in strategy, structure and direction. They indicate that opportunity can be created by crisis.

The advent of democracy posited many challenges for South Africa. With the country thought to be on the verge of exploding and/or potentially facing “Armageddon”, we were able to defy the odds and pull ourselves together.

More recently, South Africa faced renewed challenges arising from the global economic and financial crisis, and was able to survive it with far less of a negative impact on it than other countries did, particularly the advanced countries. This does cause one to ask what role leadership has played in the country’s ability to weather these storms, and what lessons can be learnt by tomorrow’s leaders in this regard.

The transition of South Africa into a democracy often is referred to metaphorically as a miracle because of the relatively peaceful manner in which it occurred, despite the doomsday scenarios prevailing in some quarters at that time.

I looked up the word “miracle” in the dictionary to get its precise meaning. According to the dictionary, a miracle is an event that appears unexplainable by the laws of nature and so is held to be in origin an act of God; alternatively, a miracle is a person or thing or event that excites admiring awe.

South Africa’s transition to democracy was certainly a miracle, to the extent that it is an event that excited admiring awe; however, it was not an unexplainable event. This so-called miracle was, in fact, the result of conscious decisions and choices made by our leaders, who by their actions, inspired their compatriots to follow their lead.

Former President Nelson Mandela made a conscious decision and choice to enter into a negotiated settlement with the apartheid regime, despite having suffered decades of injustice at its hands.

Similarly, Mr FW de Klerk made a conscious decision and choice to abandon the system of apartheid at the risk of being called a traitor and being disowned by his own.

I am certain both men, at some point, must have contemplated the possibility of failure, but mustered the courage to transcend that fear and pursue a course they knew was just and fair.

Societies and organisations are shaped by our decisions and actions as individuals and as a collective. Leadership is about having the vision of how you can make a difference through your actions and inspiring others to follow that vision.

That sense of vision and inspiration is the first gift that former presidents Mandela and De Klerk gave us in those turbulent times in the transition to democracy. These leaders seized the opportunity created by the crisis that the country was facing at that time (i.e. the political economy dynamics) and the abounding goodwill to chart a new direction for the country.

However, these two leaders did not stop at vision and inspiration – they acted upon it, galvanising their followers and energising the country to translate that vision into reality.

Those were difficult times. The threat of violence loomed large; the country was divided deeply along racial lines; there was widespread mistrust among the parties involved in negotiating the country’s future – South Africa was on a knife’s edge and could have tottered into chaos at any point.

I believe it was this grave danger that we were facing in the eye which focused the minds and energies of many South African men and women to follow the call to action. Our leaders at that time acted as a catalyst to turn a crisis into an opportunity to create a “coherent and shared understanding” of the future (Brady and Spence; 2010).

Many other leaders were born during this time. What I experienced and observed during that turbulence was how many ordinary men and women of all walks of life willingly took on leadership roles in the multiple processes in which the country was involved as part of the nation-building process.

Probably not all these people had thought of themselves as having the ability to lead or being leaders. Nonetheless, like Mandela and De Klerk, they exhibited the features of effective leadership identified by Brady and Spence, namely the ability to seize the opportunity to turn a crisis into something positive, acting as a catalyst, and building social capital through integrity and inclusive processes.

These men and women spent many long hours in the multiparty process discussing, debating and crafting a framework for a new society. It was a time of great danger, but also of great enthusiasm and determination, characterised by a can-do attitude.

It was a time characterised by the harnessing of South Africa’s best talent. Every political party found among its ranks the best brains in the various fields, its best negotiators and its best leaders. Every leader, big and small, perhaps – faced by the need for survival and/or the need to influence the future of the country, or other reasons – recognised that a leader is only as good as the people with whom he/she surrounds themselves. Through their inclusive approach and a commitment to a better life for all South Africans, they were able to build credibility and a foundation for consensus-building.

As many leadership researchers confirm, including Brady and Spence, inclusivity builds trust and credibility. These are intangible capital that enables a leader to ameliorate conflict and build coherence.

Leaders who made a difference in that time were those who were willing to step out of their comfort zone and use their position and access to resources to play a catalytic role.

In the business sector, an organisation called the Consultative Business Movement (CBM) created a forum to bring together members of the business sector, civil society and political parties in a safe space, on a Chatham House Rule basis, to discuss what a new constitutional framework might look like.

There were no sacred cows in these discussions. It took great courage, integrity and vision by business leaders such as the late Clive Menell to embark upon this undertaking.

The leaders of the CBM had mastered other important leadership traits – understanding the art of communication and the power of information.

Having produced reports arising from their discussions, they crisscrossed the country, communicating their findings to all the political parties and leaders and never tired of spreading their message, despite the difficulties they encountered and the reluctance of some of the political leaders to listen to them.

Through this process, no one could claim that they did not know what the options were for a new constitutional dispensation and what the implications of the various options were.

Indeed, the work done under the leadership of the CBM influenced the outcome of our constitutional dispensation in significant ways.

Leadership is the capacity to be proactive, to have a vision of what needs to be done to achieve a better state of being; to influence others to buy into that vision and harness the necessary resources and energy to achieve it. Leadership occurs at all levels of society and parts of organisations.

As I have indicated above, many leaders were born through our nation-building process,
indicating clearly that you do not have to be the CEO or president to play an effective leadership role in society. Our lives are multifaceted, and therefore, life does present us each with the opportunity to play a leadership role by being proactive and taking action instead of waiting for someone else to tell us what to do or to do the job.

South Africa has been blessed with many icons who have displayed remarkable leadership qualities and skills. These leaders have been characterised by their ability to rise to the occasion when necessity required them to.

They displayed, in their leadership authenticity, spirituality and selflessness.

Authenticity, in this case, refers to an ongoing personal commitment to openness, questioning, honesty and goodwill.

According to Michie and Gooty (2005:3), authenticity implies that one acts in accord with the true self, expressing oneself in ways that are consistent with one’s inner values. Thus, authentic leaders strive to maintain a seamless link between espoused values, behaviours and their actions; and are concerned with the welfare of the other, and “doing what is right and fair for all stakeholders” (Ibid:4) because of their fundamental belief in the dignity of every human being.

Equally, they strive to keep personalised power and self-aggrandisement in check (Ibid).

Spiritual leadership, as authors such as Benefiel (2005) explain, refers to the type of leadership where the leader and the organisation understand that the process of leadership is more about one’s own personal transformation than about what material gain one can reap. In this instance, leadership is about being able to transform the attitudes and behaviours of those one leads and to align and reconcile personal goals with those of the collective – as Former President Mandela taught us and similarly great leaders such as Mahatma Ghandi, who said that to be a change agent, “We must be the change we want to be.”

Going into the future, South Africa requires leaders who are entrepreneurs of identity.

As the society consolidates, it is essential to have leaders who can enable us to form the appropriate social identities. By appropriate, I mean those in line with the principles of democracy, the rule of law human rights, and our Bill of Rights. We require entrepreneurs of identity who can develop a suitable model of identity that links our social reality, social identity and collective action.

Our understanding of our social reality shapes how we categorise ourselves. This, in turn, determines the goals we want to achieve individually and as a collective. It also guides the means by which we seek to achieve those goals.

So, for example, if our understanding of our social reality is that the source of our economic woes is foreigners taking our jobs, we will categorise them as the enemy; and based on that, determine that in order to achieve a better life, we must attack them and drive them out of our communities.

At present, we are experiencing other forms of unconstructive formations of social identity. Given our history, this is a significant challenge that requires a self-awareness of where one is relative to the vision of where the country is headed.

The points I have made above, about leadership in the context of the crisis faced by South Africa in its transition period, have been repeated in the recent global financial and economic crisis.

The world’s leading economies, through the G20 Forum – a forum comprising the countries that account for 85% of the world’s gross domestic product, and are considered to be systemically significant in the regions from which they emanate – seized the opportunity created by the “political economy of the crisis” to call for an overhaul of the global financial regulatory framework; the rapid transformation of international financial institutions (particularly the International Monetary Fund and World Bank); and the formulation of a Framework for Sustainable and Balanced Growth.

The key lessons on leadership that have been learnt from the global financial and economic crisis through the actions of the G20 are the following: Apart from acting as a catalyst, the G20 countries focused their minds on identifying and understanding challenges that were confronting the world in order to be able to craft the appropriate actions.

Second, having understood the challenges, a leader must have the courage to act. In times of turbulence, it is essential to think out of the box, as the problems one confronts may never have been encountered before, or at least they may not manifest themselves in the same manner as they might have occurred before.

Jean-Claude Trichet, the president of the European Central Bank, in reflecting on the lessons to be learnt from the crisis and how central banks should approach it, advised his colleagues to exercise “credible alertness”. That is, they must be focused on the problem or the task at hand and stand ready to act – and act promptly – if required.

They must show the flexibility and willingness to adapt to changing conditions because as experience had shown, the world can change very quickly and in unexpected ways.

They must exercise steady-handedness in their interventions. He emphasised that steady-handedness is not to be mistaken with lethargy, incapacity or unwillingness to act.

A further point I would like to make about the lessons from the recent global economic and financial crisis is that it is important to know your history so that you can see tell-tale signs before the crisis hits. Business cycles are part of economic history, and so this is not the first financial crisis the world has encountered.

While crises may manifest themselves differently, economic downturns associated with financial market phenomena often have been preceded by moral hazard and the miss-pricing of risk – whether manifested by, for example, asset bubbles or currency mismatches.

The many lessons learnt from the Great Depression were applied during the recent crisis to avert further catastrophe. This was in the form of swift, co-ordinated and – where necessary – unconventional policy action by central banks and national treasuries, aimed at stabilising financial markets and stimulating their economies. The latter was a display of building consensus among the major economies, particularly through the G20 Forum.

This would not have been possible had the sense of inclusiveness (i.e. the shift away from the G7 to include emerging markets) not been achieved through the creation of the G20 and its informal consensus-driven approach to addressing problems, which was a tradition even before the advent of the crisis.

Going forward, the premium placed on consensus is exemplified by the agreement among the G20 countries to not withdraw fiscal and monetary stimuli prematurely, while acknowledging that the unevenness with which the economic recovery is occurring between advanced and emerging markets may mean that the timing of the withdrawal of stimulus packages may vary from country to country.

In light of this, G20 countries have agreed to a process aimed at achieving a common understanding of the monetary, fiscal and financial regulatory policies they each are following, the possible spill-over effects of these, and how to address the negative implications of those effects.

The road that lies ahead for the G20 is a difficult one, and the success of the forum will be determined by the role its leaders – at the different levels at which they are located – play in the interest of a more sustainable and balanced growth path for the global economy.

In conclusion, I would like to re-emphasise what is perhaps the obvious, and that is that leadership does count. In light thereof, people placed in positions of leadership cannot take the import of their responsibility lightly. Effective leadership can make the difference between creating a new society or economy, or driving them down the precipice.

Leaders are not deterred by crisis; they seize the opportunity and scope that it provides to act to change conditions fundamentally. In doing so, they can be effective if guided by noble goals, integrity, honesty and acting in the interest of creating a better society.

Dr Renosi Mokate

Deputy Governor: South African Reserve Bank at the “Leadership” Tomorrow’s Leaders Convention 2010

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