“I’ve seen the future brother, it is murder.” – Leonard Cohen
If I read about vuca (volatile, uncertain, complex, ambiguous) environments one more time I’m going to be ill. God knows, I have probably referred to vuca a few times in past columns. Yet what I am really, truly sick of, even more so than vuca, are the shallow diagnoses of the challenges organisations face, and the promise of why leadership programme x or leadership theory y is the silver bullet.
I have never been more certain of anything in my life – THERE ARE NO SILVER BULLETS. We are literally facing an emerging world with new challenges that have never been faced before. We will need to build new capacities and abilities on the broadest scale in the shortest time in history to successfully adapt. There is a way forward – but it won’t be treading the well-worn paths of history. It will be beating a new path, holding in mind all we have learned from the paths previously travelled. This month’s article explores what a new leadership path may look like and implications for actuaries and risk management.
BRIEF HISTORY OF LEADERSHIP DEVELOPMENT
From the armed forces and the new industrial assembly lines emerged the theories of Authoritative Leadership and natural born leaders. Through the 1970s and 1980s, with accelerating change and increasing expectations of leaders as role models and motivators, notions of Situational Leadership, Transformational Leadership and Values Based Leadership emerged.
In the last two decades, leadership notions have continued to evolve towards deeper and broader levels of leadership necessary to deal with emerging complexity, and a more humane way of leading people. This has spawned theories such as Authentic Leadership, Servant Leadership, Distributed Leadership and Adaptive Leadership.
Why is it that the notion of leadership continues to change so significantly and why there is so little agreement as to what leadership is? To answer that, I believe we need to explore what are the core attributes of leadership, regardless of what school of leadership you subscribe to. There are three major leadership themes consistent across the varying definitions: (1) adapting effectively to the current environment, (2) getting the most out of people and (3) shaping and catalysing an ideal future.
Because each of these three themes is constantly evolving, so is the nature of leadership. As the complexity of our world deepens, the possible array of solutions widens, depending on a country’s overall stage of development, the diversity of generations, industry structures and the globalisation of work. This means a contemporary leadership approach needs to be able to deal with unprecedented diversity, and adapt according to the immediate and ever changing context.
CONTEMPORARY NOTIONS OF LEADERSHIP
Through the work of major contributors, including Suzanne Cook-Greuter, Bill Torbet and Robert Kegan, what has emerged on the last decade is a model of leadership maturity and organisational maturity. Their research suggests that we go through various stages of development, with a different concept and enactment of leadership at each stage of maturity.
Where this notion of leadership is vastly different to its predecessors is that it acknowledges that there is no silver bullet, and that the answer to what is leadership necessarily changes over time, and that each of the prevailing theories is appropriate in certain contexts for certain stages of maturity.
To understand how organisational maturity evolves, the following Model 1 describes two key functions of culture:
- how we work together; and
- what is the organisation’s focus, what is truly important here?
This gives rise to four key development stages (along the diagonal) – with transitional stages on each side of the diagonal. Each stage of later maturity includes and incorporates the healthy aspects of previous stages.
For example, in a collaborative growth culture it is still important to have compliance mechanisms to identify emerging issues.
At each new stage we develop ever- expanding timeframes, perspectives and awareness of systems. Examples include taking a multi-stakeholder perspective and sensing aspects of culture, and its role in a system, that were previously invisible. Each new stage begins to emerge when the previous stage is no longer useful in a persons or society’s life.
A description of the first three of these stages is as follows:
Compliant dependence – It is important to get things done correctly and in compliance with policies and expectations. Power is very much designated by position of authority in the organisation, and it is often perceived as inappropriate to question the chain of command. While the response to a new organisational direction would be positive, people would look to the leadership to tell them what to do.
The kind of leadership practiced and expected is Authorative, with control tightly held in hands of the senior team. Transition occurs when people tire of conformity and lack of independence or responsibility.
Achievement – It is important to achieve the desired results and to set a clear two to three year strategy for delivering to owner expectations. Authority is delegated to level of capability, and people are encouraged to be responsible and pro-active. If results are at risk, the organisation is quick to adapt, and ‘do what it takes’ to get back on track. The kind of leadership is driving and accountable. People are given more independence, though held to account if they don’t deliver. Transition begins when people tire of the ‘deliver at all costs’ mentality that can leave them feeling like resources rather than humans.
Collaborative growth – Designing products and solutions for the longer-term social good is a core part of the organisation’s purpose.
Much attention is focused on how people work together to solve complex problems that can’t be solved in isolated groups.
The notion that ‘everyone is a leader’ resonates strongly, and the senior leaders in the organisation actively encourage both autonomy and team work.
Emphasis shifts from singularly focused on owner as stakeholder, to employees, suppliers, customers and distributors also being key stakeholders.
Leadership is highly encouraging of inclusion and diversity, seeking multiple perspectives.
Transition begins as people tire of excessive consultation and a sense of not getting things done, or not creating desired change in the world.
APPLICATIONS OF MATURITY MODELS
At early stages of maturity, an education system will typically focus on technical expertise and compliance with [professional codes). As the education system and the profession matures, the system typically shifts to a more achievement oriented, market focused education system. The focus in recent years on communication, leadership and business acumen, with longer-term emphasis on control cycle, suggests the actuarial education system is steadily transitioning in that direction. challenge at the nest stage of development may be collaborative education across different professional bodies, potentially bringing together tools and methodologies from different areas.
Enterprise Risk Management
In the same way that organisations go through various stages of maturity, the risk aspects of an organisation’s culture also follows a particular pathway. In the paper submitted to the May 2013 Actuaries Summit (http://www.actuaries.asn.au/Library/Events/SUM/2013/Sum2013PaperAndrew%20Brown%20 Sean%20McGing.pdf), McGing and myself set out a rubric describing stages of risk maturity2.
Being able to assess the current level of risk maturity and the aspirational risk culture, helps to identify a pathway forward, a series of steps that will help catalyse shift towards that ideal. This aids practitioners in identifying interventions that the organisation is ready to undertake.
The leadership and organisations required to adapt to our changing world will continue to emerge and evolve. While there is no silver bullet, no cast-in-stone ‘correct’ model of leadership or organisational functioning, taking a maturity approach can ensure that leadership continues to adapt to the current organisation maturity and aspirations.
1 The organisational maturity model is co-created by Alison Cameron of the Leadership Retreat and by Andrew Brown. If you would like a copy of the upcoming paper they are publishing on research and findings in this area, please email Andrew on email@example.com.
2 McGing and Brown are extending their research through developing a risk maturity survey and face-to-face interviews with Chief Risk Officers from across financial services. They will be presenting their findings at the upcoming Financial Services Forum (Risk Culture Leadership, measurement and management). http://www.actuaries.asn.au/library/events/ FSF/2014/mcgingbrownriskCulture.pdf
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