Towards Trustworthy and Responsible Leadership

Article originally published on Horasis.

On March 18, 2021, Horasis held its second digital Extraordinary Meeting, under the theme Rebuilding Trust. Thanks to the incredible work of Dr. Frank-Jürgen Richter, founder and chairman of Horasis, 1100 of the most senior members of the Visions Community – including several heads of governments and key ministers – offered the opportunity to shape the world’s agenda.

I was honored to be able to join an incredible panel, chaired by Metin Guvener with fellow-panelists such as Fahim Naim, Morgan Parnis, and Gary Shapiro, to discuss a vital theme for today’s societies: trustworthy and responsible leadership.

Many nations have noted reduced trust in the ability of political leaders to address the challenges crucial to our daily lives and our future. Cynicism about political leaders is running high, particularly when new pressures arising from globalization are making the involvement of government more important than ever. So how do we install trustworthy and responsible leaders with the inspiration and power to crack the issues that our nations need to solve?

I am pleased to share my contribution to the panel as well as the full session in the video below.

Metin: What is your personal experience and vision of leadership within the transforming world of families, business, politics, and communities locally and internationally?

Manuela: I have spent the past 20 years mostly in financial services, banking, media, and wealth management in Milan, London, and Zurich. Today I’m a consultant to the private and public sector on narratives and strategies around macroeconomic trends, social change, and digital transformation.

I’d like to briefly look back at previous generations. In the aftermath of the Second World War, my grandfather saw his country, Italy, transformed from an agriculture-based economy seriously affected by the world wars, into one of the most advanced and industrialized nations in the world, a leading G7 country. He went from losing two of his baby sisters to the Spanish flu to being able to thoroughly vaccinate his two daughters from birth. From his father’s horses to owning two good cars.

That generation had a very important skill. They had learnt to adapt to any life circumstance, they adapted to change, they trusted competence and institutions, they also had no option. Instead, what we see today at organizations or governments, or among citizens, is often a lack of trust and resistance to change. Experts measure this attitude in AQ, adaptability quotient, and our current generations are not scoring very high.

One reason for this, especially in recent years, can be found in the way information is shared, communicated, and consumed.

During the financial crisis of 2007-2008, I was working in London, the heart of the European crisis at the time.

The financial crisis didn’t merely have disastrous economic consequences, it also negatively impacted the public’s trust in the financial world, in corporations, and in governments, tarnishing their reputation and, as many believe, leading to the strong winds of populism we’ve seen in the past few years.

What went wrong? And what is still going wrong in today’s crisis?

The ability that was most tragically and dramatically lacking during the 2008 crisis – and is still somewhat lacking – was the ability to communicate specifically of industry and governments; to communicate the nature of the problem, what was at stake in terms of risks, and thus why, in America alone, it was necessary to spend $700 billion of taxpayers’ money to solve the problem.

In the light of digital transformation, current information and communication models must be adapted to meet the growing needs of a public – citizens, professionals, politicians, and academia – that has access to ever-increasing amounts of information, and often of fake news, but regularly little clarity and perspective on numerous issues.

In my view, trustworthy and responsible leadership is tied to strategic communication, and is vital for industry and governments. Not only does it have to convey goals, intentions and strategies to stakeholders and society, but it also needs to educate the general public.

Responsible leaders are unbiased thought-leaders to the extent possible on certain topics and must work to reduce fake news and speculation: governments and the industry have a moral duty to provide context and clarity by working together and keeping communication channels open with all stakeholders, including the media and influencers, to create mutual trust.

In the next 10 years, our democracies and the world at large have plenty at stake. It is a decade in which we will set and achieve crucial goals.

A new and strong model of responsible leadership, along with talent and excellence, will help to deal with the most urgent issues, in order to generate new waves of more sustainable and fair growth, capitalizing on essential emotional intelligence and people’s adaptability.

Metin: Mentorship has an important role in everybody’s life, and I know it is particularly close to your heart – can you please elaborate on how it has featured in your life both as mentee and mentor?

Manuela: Mentorship taught me both who I wanted to be and who I absolutely did not want to become. I had both examples of successful, emphatic mentors who were great leaders with a high EQ, and examples of arrogance. As a mentor myself, I have tried to use honesty and transparency as a baseline to show empathy, to tailor my awareness and understanding of situations based on how my mentee was experiencing them.

Mentorship has transformed me in the sense that it helped to see clearly what type of leaders are de facto able to have a positive impact on people, on society, and on our democracies, and those that were extremely damaging. In this sense, it has shaped my understanding of the bigger picture and the importance of what we call “soft skills”, which are the skills that are at the foundation of our societies, our governments, businesses, and that will get us through the next decade.

The popular press focuses on charisma as the mark of leadership, but history is full of charismatic leaders who attracted lots of followers and then led them in manipulative ways. 

Metin: Books played a deep and foundational role in your early life as a reader and for some of you, in later life as a writer – what book would you like to share with us today?

Manuela: As a writer myself, I get incredible inspiration from what I read. I have two recommendations, on very different themes.

 - “Quiet, the power of introverts”

By Susan Cain. The book raises awareness on how modern Western culture misunderstands and undervalues the traits and capabilities of introverted people, leading to “a colossal waste of talent, energy and happiness”.

In Western cultures, extroversion dominates and introversion is viewed as inferior. The book outlines the advantages and disadvantages of each temperament, citing research in biology, psychology, neuroscience, and evolution to demonstrate that introversion is common and normal, noting that many of humankind’s most creative individuals and distinguished leaders were introverts. Cain urges changes at the workplace, in schools, and in parenting.

- “The Entrepreneurial State: debunking public vs. private sector myths”

By Mariana Mazzucato, Professor of Economics of Innovation & Public Value at UCL. The book talks about the role of governments as drivers of excellence and innovation and describes the role of the public sector as a “top-choice investor” in the history of technological change. There is a plethora of examples of such, often in the US: just think about the favorable setting in which Apple itself was born and has become the colossus we know today.

In Italy, an important example in this sense is the Center for Convergent Technologies of Genoa, created by the Ministry of Finance 25 years ago. A great, high-class research center that has attracted and continues to attract foreigners and Italians, including returning expats.

Today, a comparable example may be the Human Technopole of Milan, the new Italian research institute for life sciences, created by the Italian government in synergy with the private sector, with the aim to become a leading European center of research, attracting national and international talent.

Metin: Having worked with a vast array of clients who have benefited from your strategic advice, vision, value, and voice, can you please explain your driving value proposition to organizations who want to transform their leadership in a trustworthy and responsible manner?

Manuela: I tailor business strategies and narratives at the intersection of macroeconomic trends, social change, and digital transformation, raising awareness and engagement for organizations, governments, and societies on their impact.

My key impact on organizations is helping them build trust as social capital. The social, economic, and environmental challenges of this decade require new approaches to leadership and responsibility. I support them in framing this need, creating the narrative and engagement, and supporting the latter with ad hoc strategies.

Some argue that those in authority positions within an organizational pyramid are the leaders of the organization, and that all that is needed to lead is for the followers to respect the authority of the position. This conception worked in the past, but works less and less in today’s organizations. We are seeing the decline of authority and the rise of trust as an organizing principle. To be effective today, strategic leaders need to combine trust with expertise and emotional quotient.

The definition of trust provided by the OECD Guidelines is “a person’s belief that another person or institution will act consistently with their expectations of positive behavior”. Trust matters for the well-being of people and the country where they live: there is strong evidence on its role in supporting social and economic relations. Trust between individuals and trust in institutions determine economic growth, social cohesion, and well-being. These are crucial components for policy reforms and the sustainability of political systems as well as industry.

Metin: What do you think is a characteristic that great leaders share, and conversely, a habit to avoid so you don’t become a leader who is not expressing full potential?

Great leaders leverage emotion and intuition, showing compassion, humbleness, and openness. They listen and empower, promoting common goals by inspiring a shared vision of sustainable prosperity. Moreover, they make digitalization and innovation truly happen, they innovate responsibly through emerging technology, they capitalize on expertise, intellect, and insight, and they are the first ones to embrace continuous learning and knowledge exchange.

A habit to avoid? I’ll quote Tomas Chamorro-Premuzic and pick the most dangerous: toxic charisma.

In times of multimedia politics, leadership is commonly downgraded to just another form of entertainment, and charisma seems a must to keep the audience engaged. However, the short-term benefits of charisma are often neutralized by its long-term consequences.

- Charisma dilutes judgment: There are only three ways to influence others: force, reason, or charm. Force and reason are rational, charm is not. Charm is based on emotional manipulation and, as such, it has the ability to trump any rational assessment and bias our views. 

- Charisma is addictive and research proves that it fosters collective narcissism. Especially in the era of social media.

 Experts recommend upgrading to a more rational and uncontaminated leadership model by:

1. Selecting leaders using scientifically validated assessment tools, instead of relying on “chemistry” or intuition. For example, narcissists tend to perform well in interviews, and confidence display is often mistaken for competence.

2. Fine-tuning politicians’ media exposure and airtime, which often make charismatic candidates look more competent than they actually are. This has nothing to do with limiting freedom of speech, but rather with tweaking and fact-checking content to provide factual and educational narratives.

3. Finding the hidden talent, avoiding the charisma trap. There is a universal management paradox whereby the people most likely to climb the organizational ladder do so because (rather than in spite) of character traits that impair their performance as leaders. This has been causing a considerable amount of damage at different levels and in all environments, we simply cannot afford it any longer.

Manuela Andaloro

(info@smartbizhub.com)

Financial crises: when communication and the economy let you down

It was the summer of 2007 and I was reading a copy of the Financial Times. My interest was combined with apprehension and expectancy.

Interest in the reactions of the world’s financial leaders; apprehension about what was to be the start of one of the biggest ever economic and financial crises; expectancy with regard to the major players in the western world: how would they announce what was going on? Which signals, which strategies (as much in relation to business as communications) would be implemented by governments, the financial world and the press to counter the imminent impact and consequent media, economic and financial carnage?

I didn’t know it at the time, but I was reading the first chapters of a disaster that had been on the cards for some time.

Ben Bernanke, the then chairman of the Federal Reserve, the US central bank, confirmed that the subprime mortgage crisis would be contained. Bush was giving out confused signals and the world was witnessing a gargantuan but clumsy effort to save the American financial system from collapse.

Europe looked on with growing apprehension. Not long after, its own economy would find itself in the middle of one of the worst recessions since 1930, with GDP forecasts of minus 4% in two years, the sharpest contraction in the history of the European Union.

“In the UK, the Northern Rock bank was forced to apply to the Bank of England for an emergency loan and ended up being nationalised to protect its solvency (and the deposits of its customers). Those panicking customers queuing up outside branches of the bank hoping to withdraw their savings became one of the lasting images associated with the financial crisis in Europe.

September 15, 2008, the day the 150-year-old Lehman Brothers declared bankruptcy. (CNBC)

In America, in the summer of 2008, the investment bank Lehman Brothers went into receivership (Chapter 11) after 150 years of business and following the credit crunch caused by the largest mortgage bubble in the history of the world economy. The mortgage institutions Fannie Mae and Freddie Mac, and the insurance company AIG, were saved by the government the week before, with tens of billions of public dollars.

Collapsing share prices, bankruptcies, mergers and restructurings caused the loss of millions of jobs, and a severe loss of confidence in the system, triggering a fundamental change in the banking sector. They also highlighted serious errors, shortcomings and gaps in the Western world’s information and communication system, which had failed.” (source: Laura Prina Cerai, Senior Investment Advisor, Altrafin AG).

The pre-Brexit beating European financial heart.

Throughout all this, during the summer leading up to the credit crunch, I accepted a role in the financial sector in London, taking the opportunity to learn all about the developing dynamics from the then beating European financial heart. This experience lasted over four years and was extremely instructive, strong and positive from many points of view.

Much can be said about those years in relation to governments, banks, the financial sector, the general public and the world of journalism.

A lot can also be said about the failure of the communication models of the time and the political and business dynamics still in place today.

Psychology and thought-leadership.

(Credits: frames from the film “The big short”)

Strategic communication is vital for industry and governments. It has to aim to convey not only their goals, intentions and strategies to stakeholders and society, but also to educate the general public. Acting as unbiased thought-leaders to the extent possible on certain topics and movements and working to reduce false information, fake news, speculation: governments and industry have a moral duty to provide context and clarity. By working together and keeping communication channels open with the media and with influencers, creating information channels of mutual trust.

The financial crisis didn’t just have disastrous economic consequences, it also negatively impacted the public's faith in the financial world, tarnishing its reputation, and in the media.

(Credits: frames from the film “The big short”)

Many critics at the time wondered whether financial journalists had done enough to dig down to the roots of the impending crisis beforehand, and at the same time, whether they had perhaps contributed to increasing public mistrust and anger. What went wrong?

Recently, in an interview given on the 10th anniversary of the peak of the crisis, Bill Emmott, editor of The Economist from 1993 to 2006, confirmed in a subsequent interview with the panel "Follow the money: how the crash of 2008 changed journalism worldwide”:

“The press had given alarm signals, but those signals were drowned by the media, which had increasingly turned into cheerleaders of the boom. In other words, they had strongly believed, as former IMF chief economist Ken Rogoff commented, "This time it will be different", deluding himself. And, unfortunately, the press is always part of this process. So I think the press was partly but not solely responsible for the crisis. It was part of the atmosphere of the times.” (ref. Journalism Festival)

The ability that was most tragically and dramatically lacking during the 2008 crisis was the ability to communicate - specifically, communicate the nature of the problem, what was at stake in terms of risks, and so why, in America alone, it was necessary to spend $700 billion of taxpayers' money to solve the problem.

Franklin D. Roosevelt

Franklin Roosevelt, among few others, had been a genius of public psychology. He knew when and how to use the presidential media. His first 100 days of government were dotted with the release of timely updates to his exultant public, explanations of what he was doing and why, in clear, simple and collaborative terms. Do today's historians still debate the importance of Roosevelt, a saint, a skilled communicator or a manipulator? A combination of all this? The impact of the man that history remembers as a " Great Communicator " still has effects on America today.

And today?

The lack of strategic communication experts, and the often little understood need to create clear, open and trustworthy communication channels between the public, stakeholders, experts and the media, seems to be increasingly evident as one of the causes of the current crises in governments and industry.

From lack of trust to fake news to populism.

How else can we explain why, after the pro Brexit vote, the two most popular questions on Google UK were "What is Brexit" and "What is the EU"? How can we explain the failure of a "European Union" that passes through culture, passports, and the joining of forces? How can we explain informative speculation, the success of certain populist campaigns and fake news? The damage to the reputation of certain companies and the image of entire sectors?

How can current information and communication models be adapted to meet the growing needs of a public - citizens, professionals, politicians and academia - that has access to ever increasing amounts of information and of stimuli but little light, clarity and perspective on many issues?

Genuine EQ and AQ for increased agile awareness.

In the light of digital transformation, the communication models that will be more easily adaptable and implemented on a large scale will be based on social skills and emotional intelligence. We will be increasingly open to what experts call "AQ", adaptability quotient, which will allow us to understand scenarios and dynamics, and will make the most successful leaders masters of communication and relations, allowing them to better understand the public, engaging its involvement and, in some cases, even complicity.

In this context, stability will increasingly lose importance, being replaced by leverage on agility. Today's business world requires communication models that are increasingly shifting from a top-down approach to one which fluctuates between top-to-bottom and bottom-to-top. Motivated, talented, highly communicative, high EQ and AQ individuals in key positions in companies are now essential to the new face of business.

Modern businesses are increasingly globalised and they drive change through different platforms. This is a key aspect from various points of view, not least that of reputation management, a factor largely neglected by the major financial and governmental players during the last financial crisis.

It will no longer be possible to implement global and efficient communication systems using conventional communication methods, and they will require careful planning.

Reputation management is an essential part of business. Everything a company says, does, or neglects to do contributes to its reputation and brand equity. We must always remember that an essential component is listening and that communication is not a one-way process, but a multi-directional one, remembering that listening to all stakeholders, including the media, is key to all-round strategic communication, from branding to reputational impact.

After all, as the famous executive consultant and author Peter Drucker says, the most important thing in communication is hearing what isn’t said.

Manuela Andaloro

(info@smartbizhub.com)

 (As published in Focus ON’s cover story, article by Manuela Andaloro for Focus ON, 29th October 2018, download article in Italian here)