Ethical behaviours will be essential
The scale of the next financial downturn could surpass all that have gone before. No-one could have predicted the financial impact of Covid-19. Getting beyond this current situation will require tenacity and courage from everyone. Business leaders will have a significant part to play in our economic recovery and we will them to act responsibly and ethically to get through the turbulent times ahead.
The cause of this downturn is very different to the last downturn. In 2008 it was caused by greed. Greed on a scale never been seen before, fuelled by unethical corporate behaviours.
I was chatting to a senior executive in the banking sector in November 2008 and his comment was ‘you are damned if you do and damned if you don’t. He was referring to the dumbing down of the lending structures that had allowed unprecedented sub-prime borrowing.
The banking business model prior to that time had been stable with robust structures and norms which produced sensible lending offers. In 2008 however, those structures had been eroded partly because of the complex, dynamic, unpredictable and competitive marketplace, but mainly because the people in the decision-making stratosphere made the wrong decisions for the wrong reasons.
Making the right decisions in the future will require the appropriate use of business acumen coupled to ethical reasoning. How will leaders make the right choices? A good start point will be for them to be inclusive, consultative, collaborative and use shared leadership as part of the decision-making process.
Shared leadership is becoming the norm in the enlightened board room. It is a simple practice where the first principle is that no one individual can know all the answers to all the challenges the current business environment can throw at them.
In shared leadership mode the decision stays with the leader but the decision will be informed by the use of brain count. That is to say, using other people’s brains to assist in the decision. This is not the same as head count which is using the same people to assist. Head count is how many boards operate, in other words the same (sometimes ill informed) people are used to inform the decision.
The effective business leader will need to use brain count in an authentic way and make sure he or she gets the right people to the table and therefore has the right information to inform decisions. This will require a deep awareness of people’s strengths and abilities and of their values. Values are really important if we are to pursue ethical solutions.
Leaders will need to balance business results against ethics and reputation and create a value proposition that truly has the customer and wider society at the core. Ethical behaviours will be under scrutiny and businesses will fail or flourish depending on how they behave in the immediate future. There is no place for personal greed if we are to recover as quickly as possible.
Besides GREED isn’t all it is cracked up to be:
A successful retired executive was stood at the end of a jetty waiting for his private launch to take him back to his luxury yacht anchored offshore. A middle-aged man was sat at the end of the jetty fishing. ‘Caught any’ said the businessman. ‘Only one’ said the fisherman. ‘Doesn’t surprise me’ said the businessman ‘you’ve only got one rod; you should use two rods and you would maybe catch two at a time. The fisherman nodded. The businessman continued ‘On second thoughts you should get a boat with a bunch of rods and you would catch loads of fish which you could sell. How about that?’ The fisherman nodded.’ Wait a minute’ continued the businessman,’ If you worked hard at it like I did with my business you could own a fleet of fishing boats with other people doing all the work while you secured the deals to sell the fish locally.
Better still if you made the right business choices and partnerships you could buy your own cannery and distribute both fresh and processed fish local and overseas setting up a global network. If you got the supply chain right, you could make millions of dollars. The fisherman nodded and slowly re-cast his rod.
‘It would be hard work but with a bit of luck you could retire early, as I did’ said the businessman. ‘Just think you would be able to do anything you wanted to do!
‘That would be truly amazing’ said the fisherman. ‘Truly amazing indeed, said the businessman, it would enable you to do anything you want every day for the rest of your life, go on tell me, what would you do? asked the businessman. ‘Go fishing’ said the fisherman.