What makes a good leader in a crisis? In difficult times, what are the personal and intellectual characteristics that elevate the mere mortal to the position of a giant? When facing disaster, what is it in human nature that inflates some people and gives them the ability to take the right decisions when everyone else is losing the head?
Now, more than any time in the last generation, it is important to understand these deep personal traits. We — not just in Ireland, but worldwide — are now depending on a small number of individuals. Some have yet to emerge, others are in situ. This global crisis will make and ruin reputations. Why did Roosevelt, a popular but not particularly impressive man before he took office, see things clearly? Why did Churchill, again someone whose reputation was verging on the dangerously maverick, become the rock of stability that Britain needed in the War? Why did De Valera emerge preeminent here from a galaxy of revolutionary stars?
At a more commercial level here in Ireland, why did every bank chief executive get the market so badly wrong? And why did the Central Bank and the Regulator, as well as consecutive Ministers of Finance, preside over this financial madness — a mania which has brought us to the brink?
If asked now, whether it was reckless to keep lending to every person, no matter how risky, who knocked on your door, the bankers would all admit it and confess. If challenged by shareholders as to why they took monumental bets on Irish property and financed the wager in the wholesale money markets rather than from deposits, they’d all now say that that strategy was delinquent. But they did it and make no mistake, a major reason for this was personal enrichment. Now, before we become overly judgmental, let’s point out that getting rich is not a crime.
However, when you are in a position of leadership, personal enrichment cannot be the main driving force. There must be other qualities. A recent newsletter by the investment guru Jeremy Grantham focused on the issue of personal traits and leadership in trying to explain how we reached this crisis point. For anyone trying to understand it, Grantham is one of the most talented money managers in the financial world. He has an ability to gain altitude when others are middling around in the dirt. For those interested see www.gmo.com.
As always, Grantham sees the world differently and this month he is speculating on whether the character traits of our corporate leaders might have something to do with their inability to predict the future and see around quarters. The other night, with that in mind, I spoke to a number of Ireland’s financial and corporate titans at the Ernst and Young Entrepreneur of the Year awards. It struck me that the next generation of Irish leaders — both political and economic — might possess a very different suite of brain processes than the ones who got us into this mess. To use that very American term, Ireland’s next leaders might be “hardwired” differently.
While American terms might be a bit simplistic, their influence should not be underestimated because in the past 10 years, the penetration of American corporate thinking and fashions into Irish boardrooms has been almost complete. As we watch the last week of the run-up to the US election and we examine the type of individuals who might escort Ireland out of this mess, the “hardwiring” issue is a fascinating one.
In 1981, the neurobiologist Robert Sperry won the Nobel Prize for his discovery that we have two brains — a right side and a left side — that see and experience the world in very different ways. He also concluded that our world favours people whose left side of their brain dominates.
According to Sperry: “The main theme to emerge… is that there appear to be two modes of thinking, verbal and nonverbal, represented rather separately in left and right hemispheres respectively and that our education system, as well as science in general, tends to neglect the nonverbal form of intellect. What it comes down to is that modern society discriminates against the right hemisphere”.
So our leaders are most likely to be those whose left side of the brain dominates. These traits are decisiveness, hard work, focus, persuasiveness, analytical skills and political skills.
The great American chief executive is picked from people with these types of traits, as are Irish chief executives. These are the characteristics of people who business schools churn out every year and these are the personalities who do well. But they are not the type of people who think laterally.
nor are they patient, as patience — that most wonderful of virtues — has no place for left-brain-thinking people. These alpha chief executives are doers who are not paid to put their feet up and think about the world. They are there to solve problems and move on. For them, leadership and success is all about seizing opportunities and acting decisively. It is hardly surprising that none of them saw this crisis coming, because their brains do not work that way.
The type of people in the financial markets who saw the crisis unfolding were those for whom patience is a strong component of their personality. In many cases, their career doesn’t depend on making cash today, but is more concerned about avoiding mistakes by being too reckless. These right-brained people are typically more intuitive, and likely to contemplate historical events when it comes to analysis. As Grantham notes, they are more interested in outlier events and are curious about the whole picture, not just the individual jigsaw pieces. In many ways, they get there, but arrive slowly and circuitously to their conclusion.
However, even though the right-brained people were more likely to have foreseen the crash, it doesn’t follow that the right-brained people are the best ones to get us out of this mess. We still (and possibly urgently) need the lefties with their focus, decisiveness and linear minds, who when given the task will execute. Maybe we just need the more ponderous righties to advise them.
How might this be relevant in Ireland as we face a political and economic crisis? Obviously, in terms of the urgent restructuring of our banking system, the Minister for Finance might do well to stack the new bank boards with right-sided leaders who have perspective, while keeping some of the Alpha-male lefties to execute orders. Likewise, in terms of running this country, he needs the doers as well as the thinkers.
One thing is certain: the people who will lead Ireland out of this catastrophe are not the same people who got us into it. The sooner this is realised the better.