It is a comforting surprise that the world’s financial markets have so far avoided the existential threats faced by some industries due to the Covid-19 pandemic. Exchanges and post-trade infrastructure have not failed in their essential function of closing the business day’s activities and reporting the results fully to clients before opening for business again the following day.
In retrospect, business disruptions to financial infrastructure from terrorist attacks, civil unrest, public sector strikes and severe weather conditions in the recent past have a beneficial effect. Those experiences, together with regulations in many countries that require financial infrastructure to meet minimum business resilience standards, enable the industry to move to remote working quickly and seamlessly. The industry has passed the test.
Similarly, countries which have prior experience of containing highly contagious infections such as HIV/AIDS, the SARS outbreak in 2002-2004 and some Ebola outbreaks have benefitted from those experiences in dealing with the Covid-19 pandemic as a medical crisis. It shows that although each crisis is different, there are lessons which can be learnt that improve our ability to deal with what follows. It helps, when dealing with a crisis, to keep in mind that although what doesn’t kill strengthens, we cannot depend on good fortune to get us through.
The next crisis, perhaps a more deadly and contagious virus, or a major wide-area cyber attack, could strike more swiftly and with great systemic shock. Financial infrastructure requires staff with sufficiently deep and broad experience to diagnose and solve problems quickly. When a serious problem arises, all hands on deck must not only know what they need to do but also what other business functions are doing in parallel. Companies that have invested in frequent business continuity exercises involving all senior management would cope much better in a crisis than those that have not.
I once had the opportunity to chat with the commissioner of a large city’s fire brigade who had, on numerous occasions during his career, led firefighters in putting out devastating fires. What did he think was the most important quality of a leader? “Authenticity,” he replied.
If one has to choose a single definition of a leader, it would be that a leader has followers. Followers trust that the leader will guide and help them arrive at the place that they want to end up. In a time of crisis, as when firefighters put their own lives at risk, followers need to believe that the leader’s priority is accomplishing their collective objectives. It would be difficult to gain the trust of followers if they sense that the leader is serving his or her own interest and not leading them to a good place.
Authenticity may be paramount but it is not sufficient. Only with significant time working in a team can deep trust be developed in the leader.
It is also essential for a leader to have competence acquired through effort and over time. True, a leader cannot be expected to be expert at everything. But the key competences of a leader include the self-awareness to know what help is needed, the judgement to recruit the appropriate help, and in a crisis the ability to convey urgency and sense of speed. Incompetence destroys trust.
Leaders need a "third eye"
A leader occupies a revered position. The structure of most human social organisation is hierarchical and elitist: the leader is at the top of the pyramid. Leadership is not fundamentally different in a business. The top position is associated with success, power, impact, recognition, privilege and reward. It would do well for leaders to always note, and especially when managing a crisis, that such accoutrements are a consequence of their position, but their position is only as effective and as strong as their followers. A leader needs a third eye to see if anyone is following.
Some time ago, at an event to honour winners of the Women of the Future Awards, I sat next to a chief executive who had nominated a member of his team for the award. He told me that the nominee was among several interns from a business school’s MBA programme that had done a project at his company several years earlier. At the conclusion of the project, without the team’s knowledge at the time, one of the interns would be offered a job, equity in the company and the prospect of taking the company forward upon the exit of the company’s founding partners. The chief executive recounted how he picked the nominee. “She is normally very reserved. After the project had been going on for a while, at one of the review meetings I asked the team a difficult question. No one knew the answer straight away, and then I noticed that everyone had turned to look at her. That was the moment I knew she has the potential to be the company’s future leader.”
While we most often hear about CEOs and world leaders, it is heartening to remember that everyone could be a leader to some followers at some point in time.
The current crisis presents a great opportunity to study leadership in action. The nature of a global pandemic means that all world leaders are confronted with the same problem at the same time. Each leader deals with the crisis in a different manner. Personally, I draw three conclusions to date: Only the outcome counts. Trust in the leadership affects the outcome. In a crisis, charisma is of less practical use than experience and competence.