Corrs Partner and Chief Executive John Denton gave a speech to the Alumni, Staff and Students at Melbourne University at their Cross Faculty Collisions Leadership Dinner held on 28 July 2016.
John discussed the effects of global uncertainty on leadership and considered what we must do to establish a new approach to leadership in current times.
Here are his notes:
Thank you for inviting me to talk to you.
This evening, I want to consider the effects of global uncertainty on leadership and discuss what we must do to establish a new approach to leadership for our times.
Because right now leadership has an identity crisis. Not just in Australia, but around the world.
Are our leaders losing their way?
First let me posit three contentions as to why I see a challenge.
There has been an erosion of trust in established institutions and traditional sources of confidence.
According to the Edelman Global Trust Index, anecdotal evidence now has greater currency than empirical data.
People are more likely to believe what they heard on the train into work or down the pub than accept empirically proven analysis from traditional institutions.
The Brexiters ignored the Bank of England and HM Treasury: even though those very institutions proved to be right.
Consequently, this lack of trust and reluctance to accept fact based argument makes it challenging to lead - based on the traditional well of good will and trust that leaders traditionally relied on.
Has that ‘well of good will’ been drained dry?
Our leaders are proving incapable of developing a burning ambition, goal or describing a better future for which people are prepared to sacrifice now in order to achieve something better later.
Henry Kissinger recently observed that the deepest challenge confronting the EU was not its management but the failure to describe its ultimate goals.
While the original founders of the European project understood the ambition of the project – avoiding a repeat of the divisions that had seen millions die in European wars – subsequent leaders have failed to develop a bold and ambitious vision for the 21st century.
A vision in which citizens could believe and make sacrifices to achieve.
You can’t convince citizens to give something up now if you can’t articulate the benefits this sacrifice will engender and have citizens believe you when you say it.
The third element compromising leadership that we must consider are the consequences of growing inequality in developed economies.
While global inequality has decreased on average across the globe, it has increased in developed economies.
For example, our middle class has seen stagnant or negative growth in its disposable income for many years: In Australia, for 17 consecutive quarters.
It strains patience. Does this help explain why citizens are so grumpy?
And let’s be clear. Citizens do not expect absolute equality.
They accept that there are some who will do better or who are born into a better circumstance.
What they cannot accept is inequality born of rigged rules. And that’s what they felt after the GFC. When they surveyed the wreckage and who was living in it and who bore the consequences.
They felt that the system was stacked against them and they can’t win no matter what they do.
And disappointment in one’s own circumstance can often lead to resentment.
Citizens are grumpy and resentful. You can see it in the polls.
And you can see it in the increased speed with which governments are despatched.
This is another dimension to the leadership challenge we confront.
So these are my three contentions as to why the leadership challenge we face now is unusual and calls out for a different kind of response.
But we can’t think about our response in isolation.
So let’s put this in a broader context.
The world is more dynamic; boundaries are shifting everywhere:
In government and politics.
In industry and commerce.
Even in the way we identify ourselves. No longer just by race, religion, gender or class but by social concerns and affiliations. We are who we want to be.
We talk about uncertain times but what we are talking about is the unusual co-incidence of geo-political, economic and policy uncertainties.
Geo-political risk volatility has doubled since 9/11. For example:Economic risk is still bouncing around since GFC – for example: The global down turn in trade and investment and rise in unemployment.
The rise of ISIS, collapse of Syria
The emergence of forced migration as a risk
Quandary of a post USSR Russia as a threat.
There is extraordinary policy volatility: the closed borders once open are now closing again and there is rising opposition to the ideal of open economies.
Globalisation: what drove us together is now driving us apart.
Of course, change and volatility are perennial challenges - but political parties can no longer count on the automatic class based and traditional based support they once did. They are reacting and being pulled left and right.
The Federal Election earlier this month and indeed others over the last few years are testament to this.
And traditional business models are being torn up as digital continues to disrupt commerce and incumbent organisations and entities. At the same time, and, as I mentioned earlier, society has become distrusting of existing institutions.
A pretty bleak picture, I am sure. And you are about to eat your main course: sorry!
But we should never wallow in the pornography of pessimism. It is not axiomatic that we are on the verge of collapse. There is no need to panic: … not yet anyway!
You are part of the answer. What is often seen as your greatest weakness – your inexperience: may actually be our greatest opportunity in this new world.
What do I mean by that?
There is actually great power in your inexperience.
There is great power in your naivety.
Naivety often allows one to ask the simple questions; the ones more experienced leaders are too nervous to ask.
You cannot and will not just accept the status quo.
We must ask the questions no one else asks.
We must demonstrate the ability to think in a new way – exploring, problem solving, being curious – challenging perceived wisdom.
And recognising, as many of you do, that we are societies before we are economies, would be a good place to start!
So how do we take forward leadership in this context and bearing in mind my three leadership contentions:
a breakdown of trust;
a failure to describe a credible burning ambition for us all; and
a general resentment that the inequality experienced is the result of rigged rules.
Essentially, leadership in this era will come down to listening to citizens and creating a global understanding of their concerns, their worries and, importantly, their desires and goals.
It then requires the ability to frame a future built on that understanding and a way to achieve it.
This is not easy.
And it requires the creation of a new citizens’ bargain. The shaping of a future that is informed by citizens and not dictated to them.
These are challenging times. They could become dangerous times if we do not act.
And More than just political leadership is required.
Because Politicians have to earn the right to lead again.
Civic leaders and business leaders must step up and help. It can be done.
But business must also start to define its purposes in a meaningful way. We must focus more on our social license to operate to build our capacity and right to lead.
The world has shown it can do it. For example: G20 saved the global economy in London in 2009; and most recently the creation of the 17 United Nations sustainable development goals – only last year showed we are still capable of working together to articulate a better future
And in Australia, for example, we still have many shared and positive values:
commitment to hard work; and
generosity to others.
These are our foundations. And we also have ‘built endowments’ like:
our public institutions; and
the rule of law.
We must ensure the spirit of modernity flows through them all. They must be revitalised to be relevant to our times.
We also have a robust and powerful citizenship. We have to learn how to use it!
We must see these elements as critical to building a leadership for the future.
And we must work harder for social inclusion across Australia.
There may well be compromises required to earn again the right reform.
The challenge I throw out to you to discuss tonight is:
Can we identify the trade-offs needed to earn that right?
Can we determine the values that inspire you? That will inspire your leadership? Can you answer that question?
Maybe it is time for me to pause and listen to you.
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