Politicians in both the Remain and Leave camps could benefit if they looked more closely at how business leaders operate.
The Referendum was only the first step. Now, as we start to negotiate with the EU, it’s time to put lessons from CEOs into practice, argue Timothy Morris and Michael Smets, from Saïd Business School:
It was telling that the first official statements issued after the announcement of the Brexit vote were from the BDI, the Association of German Employers, and from other business groups in Germany and France. Businesses revealed themselves to be quicker thinking, more adaptable, and more strategic than the politicians – immediately starting to prepare the ground for positive negotiations and implying a vision for change.
It suggests that business will be the main driver of whatever happens in Europe over the next few years, especially as free trade will form the crux of the UK’s negotiations with the EU. It also raises questions about who will be the best people to conduct those negotiations. Business leaders may find themselves leading more than just business.
We look at the relevance of some of the key lessons that emerged from our study of 150 CEOs in The CEO Report.
In our S³ model for understanding change, speed is mapped against two other dimensions that concern CEOs – scope and significance. The Brexit decision sits firmly in the far top corner on the right. That means it is a change that is revolutionary, foundational in scope and affects us strategically.
These types of change have deep and wide-ranging significance and they are likely to be highly disruptive over a prolonged period, even if sometimes they don’t appear very dramatic. Leaders need to recognise when events that may often appear more localised are moving towards this sort of change; then they need to re-set their assumptions about the way they operate and their relations with the rest of the world. This is often uncomfortable and difficult – but necessary. Sometimes it means that a longer-term strategy is unlikely to be sustainable and therefore they need to re-visit plans regularly while establishing the core principles on which they seek to operate. Sometimes it means they need to be open to new ideas or ways of working – or business models – and draw on different views about the way the world is working. They also need to connect widely to other parties to learn about how they are thinking while not assuming that solutions will emerge quickly or easily. Post-Brexit, not having a Plan B, or even a Plan A, means that there is a lot of catching up to do.
There is another lesson here too, about listening. CEOs emphasised how much the world had changed in terms of the range of stakeholders with differing values and interests. They made the point that the challenge for leaders was not simply to prioritise one stakeholder over another in dealing with issues but to recognise the legitimacy of different voices and then to factor that into decision-making – to accept that they were dealing not with right and wrong but with right and right.
During the Referendum campaigning, for example, the Remain camp concentrated throughout on a rational, economic argument. They did not change this, even when polls showed that people were focused on a different type of argument and were left cold by the rational economic points. This was because the Remainers thought that in the end people would be risk-averse. But they failed to understand that many Brexit voters were either unconvinced by economic arguments or had personally discounted them because they did not perceive they were gaining from EU membership, or they felt that control trumped economics. CEOs talk of the importance of listening when communicating; of being challenged robustly when making decisions and of recognising that different stakeholders today have very different views of the world which they need to take into account – hence, balancing right and right.
The CEOs we interviewed all stressed the importance of authenticity in leadership, and worried about how they could remain authentic while also adapting to a constantly changing environment.
Authenticity may play out differently for politicians compared with CEOs, because we expect different things of political leaders and acknowledge that the political game is somewhat different from running an organisation. Nonetheless, both the build-up to the Brexit vote and its aftermath have revealed some major authenticity challenges on the part of political leaders.
Boris Johnson is the most obvious example of a politician who has been perceived to be inauthentic, because of his motivation in joining the Leave campaign. Paradoxically, he is also very popular with sections of the public precisely because he does not play by the normal ‘rules of the game’: that is, he developed an authenticity by being different. While he was still able to draw on his popularity and endearingly bumbling persona while campaigning, he made enemies within his own party and across the wider European political establishment. As someone who has been given a demanding and politically tricky role as Foreign Secretary by the new Prime Minister, he now has to manage or re-invent his authenticity and develop a different sort of political persona. He has authenticity ‘work’ to do. Our research suggests that this is best done by aligning personal purpose unambiguously with the wider purpose of the Government of which he is a member, as it is communicated by the new Prime Minister. It is possible that the way Johnson will reinvent himself is by reference to his sense of history and his strong links to the wider world, particularly China and India, which he developed as Mayor of London. Ironically, the new job plays to the more serious scholarly-diplomat side of his life which his buffoonery disguises, and therefore he should find it easy to be authentic in that role.
Nigel Farage, on the other hand, was authentic – and effective because of it. His resignation as UKIP party leader after the Brexit vote was entirely consistent with his position: he had achieved his objective. If he wishes to stay in political life as more than a one-issue politician he is likely to have to adapt personally and find a somewhat different form of authenticity linked to an organisation which is relevant to the post-Brexit political world.
The important lesson from our research on CEOs is how they stress that you have to align your personal sense of purpose with a wider purpose. That wider purpose has to have a thread of continuity but may also be adapted to new circumstances. Hence, individual politicians now also have to adapt personally to a post-Brexit world and to show that their personal purpose is consistent with it.
Reflecting on what CEOs said about the importance of connecting personal and organisational purpose to affirm authenticity, one other UK political leader who may learn from CEOs is the Labour Party leader (at the time of writing), Jeremy Corbyn. Some might argue that he has got himself caught in an authenticity trap. His personal purpose is not in doubt, but is seen by many of his Parliamentary colleagues as being that of a long-term idealist and ‘opposer’ of the establishment and his own party. He is therefore thought by them to be inappropriate as a leader, in spite of his evident authenticity – indeed, this is a strong source of his support from many ordinary members. One might conclude that he is not seen as prime ministerial material precisely because his personal authenticity does not connect with that of his party; alternatively, one could say that the Labour Party has become so fragmented that it remains difficult for any one individual to make a clear link between personal authenticity and that of the wider political party.
As the UK moves forward in negotiating a new relationship with the EU, these issues are going to be increasingly important. As we have said, the world of political leaders is different from that of CEOs, but they can learn from each other in surprising ways.
Timothy Morris, Professor of Management Studies and Michael Smets, Associate Professor in Management and Organisation Studies