The Slovenia Times

To embrace ambiguity and complexity, leaders have to look at the yin and the yang of issues and challenges



Among the top-line findings in the area of Self Leadership, the study suggests that "leaders are missing their rear-view mirror: only 10 percent consciously reflect on their experience". It sounds contradictory, for leadership, experience is one of the most important criteria?

Indeed. Reflection is low, but if you look to the report it also says that 44 percent would look at insights from the past that could be a source of knowledge today. Now, if we are talking about wise leadership with regard to this aspect, there are two points that I like to stress: one is that leadership needs managerial experience and wisdom, but only 10 percent of the interviewed leaders consciously reflect on this, and the second is mindfulness about your ability to have a broader perspective. So, 44 percent admitted that they have insights from the past, but only 10 percent really refer to the second component which is really being mindful and self-reflective about that experience. It is not just what you did, it is why you did it and I think the why is lacking - only 10 percent of leaders, according to the study, know why they did something, the majority end up with what they did.

What are the reasons that more than half of leaders, according to the study, lack mindfulness and why?

Business is about making decisions about the future and the pressure is enormous these days. With globalisation, competition comes from all angles, they are pushed by shareholders, stakeholders, etc. and people, in general, are more action-oriented then self-reflective about the issues. Consequently, leaders take action before they think it through. You forget why you are doing it because your function as the CEO is so big when looking at the ROI (return on investment), that you do not necessary reflect on the strategic issues. The stockmarkets do not necessarily treasure the long-term and the big picture, which is about mindfulness, but nurtures short-term profit. Our study highlights that it is not the short or long-term - it is about finding the attitude or decision-making process that looks at both the short and long-term. We have operations and strategy, we have stakeholders including shareholders, and it therefore crucial for wise leaders to embrace ambiguity and complexity, to look from the yin and yang at the issues and challenges.

As mentioned, the study encourages leaders to be wise, to take "more holistic decisions with more sustainable outcomes". If we look at the business or institutional sector, there are policies with certain goals and in business particularly, the timing. How should leaders maintain their decision-making health?

Smart leaders are those that make less biased decisions, are innovative, creative and make money for shareholders in the short-term. Wise leaders add something which is related to the social, ethical and governance issues. If you look to the investment banks, more and more use this criteria to determine whether a company makes money for ROI or also considers the broader perspective of the consequences they create as an organisation. Larry Fink, the CEO of BlackRock, an organisation that invests trillions of dollars - made very clear that responsible investments are crucial. You cannot have a company that makes money and ignores its social or ecological impact. We basically define wisdom as bringing ESG - Environmental, Social and Governance into the financial aspects of any organisation. Smart means "I just want to make money and if the law allows me to make plastic, I do not care". Wise means: "How to make money based on degradable plastic"?

According to the study, more than 50 percent of leaders are failing to systematically involve the right people in decisions. Are the corporate governance system and the ownership structure the main bottlenecks - particularly in the case of state-owned companies?

Every country has a history and Slovenia obviously has a history. Any state-owned enterprise usually has a functional objective, which is not the same as the objective of a multinational corporation, which is mainly the creation of shareholder value which is translated into long-term profit. I was an adviser to a national carrier airline and when we told the board that they could reduce staff by 10 percent because they were not doing what they were supposed to do and it was a cost, the answer was: "We are a state enterprise and our objective is not just making money but also to create employment". That is a social aspect which has a long-term application and is a case of a wise decision. However, every state-owned company has a history and often also a political appointment, and so it is not always about looking at a pure organisational objective and the efficiency of using resources in the most appropriate manner. If we look at corporate governance in the US and UK, the Anglo-Saxon environment, they have dispersed ownership and nobody really controls them, which is very different from Slovenia, Europe or Asia where there is concentrated ownership; family business and state-owned enterprises, which have profound consequences on how you govern the company board.

According to Harvard Business Review "The best performing CEOs in the world 2017", Pablo Isla of Inditex (Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Uterqüe, Zara Home) is rated as the best. His preferred management style is to walk around rather than hold formal meetings, in part to maintain an entrepreneurial, small-company culture in such a large business. How do you see this winning leader's approach?

He said that motivating people in generating a sense of spirit inside a company is an essential part of any CEO's role and highlights "...we need to appeal to our employees in terms of emotions to help create an environment where they can innovate and I need to learn to be more emotional and less rational." He raised the sense that we need to embrace the why people do things. 70 percent of Inditex is Zara and A Coruña in Galicia where the company was founded and historically was the place where people met and made clothing for the aristocracy in Spain. There a lot of history in the region where they still make clothes and today, if you are looking to competition, Zara still makes 25 percent or more of the clothes within Spain and that explains the whole philosophy. They have a very flat organisation and they have made an enormous investment in technology. By being a leader who walks around, Mr Isla sees that the social impact and the ethical issues are really an important part because his employees are part of his family - it is a family business. They tend to look at the long-term, however the only issue I have is about their tax-planning, tax evasion. This is why ESG is crucial in all of its aspects.


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