It's time for leaders to step up. The world faces a range of complex, global challenges: resource depletion, food security, global financial instability, demographic imbalance and climate change. Business can be part of the solution, but are our business leaders up to the job? Associate Professors Bernard McKenna, David Rooney and Dr Hannes Zacher consider wisdom as a prerequisite for leadership.
The world has never before been so crowded or so connected. This has enormous ramifications for how we live and how our economies operate. Critically, the problems we face are global, not local, or even national. They are hard to define, complex to manage and rely on cooperation and understanding with others to resolve. Few decisions can now be made without impact on others.
Take a look at the global financial structure.Swiss academic James Glattfelder studied the complex systems of ownership across the globe. With colleagues, he analysed the relationships between 43,000 transnational corporations, and identified a small group of companies, mainly banks, with disproportionate power over the global economy. Seventy-five per cent of key players, he found, are part of a highly interconnected core.
Such high levels of overlap mean that activities and decisions made by one company in the group can have a disproportionate and amplified impact on the others. In the case of financial meltdown, for example, it could contribute to contagion across companies, and across borders.
Environmental, demographic and social challenges put pressure on business leaders to look beyond the short-term and understand the impact of their decision making against a broader social and political landscape. “We are growing unsustainably,” says McKenna. “We are facing peak growth. We have seen peak oil, peak fishing, peak agriculture. We need leaders who have the courage to make decisions to ensure the sustainability of the planet.”
The consideration of how business is going to move forward against this complex landscape has given traction to the study of wisdom as a business imperative. After all, it is a knowledge economy, and critical thinking, judgement and, ultimately, wisdom must add value to the abundance of available data to create new kinds of value.
But wisdom, they say, is in the eye of the beholder, and, according to UQ Business School’s Associate Professor McKenna, “It’s one of those qualities like common sense that most people are likely to overestimate in themselves.”
David Rooney explains that business uses a number of tools, such as 360 degree surveys, and there are a variety of self-assessment questionnaires that capture categories such as intelligence. “But their simplicity can create problems.”
“The other way is messier but more informative,” Rooney explains. “You ask people to respond to a life question – maybe about an ethical issue or their progress through life. You then analyse the response for various aspects of wisdom. Rather than self-assessing, you are looking to see if the responses demonstrate a range of wisdom attributes, such as life knowledge, pragmatism and capacity to deal with variations in cultural values globally.”
Peter Buytaert is the head of Hong Kong-based Good Leaders Online (GLO), which connects good leaders to good companies. He believes wisdom can be assessed and is using a tool developed with the assistance of McKenna and Rooney, and Dr Zacher from UQ’s School of Psychology, to help in his business. The tool is a three-dimensional prism of three human faculties: rational capability, intuitive capacity and humane character.
“Rational capability refers to the fact wise managers are competent in reading and analysing data objectively and rationally to inform decision-making,” Mr Buytaert says. “Intuitive capacity relates to empathy and foresight, being humane links to our focus on the value of integrity and a leader’s interest in the common good.”
“Leadership today demands an increasing need to deal with complexity and change, and it’s our view that wise leaders have a heightened awareness on both the context and their capability in meeting the demands of the VUCA (volatile, unstable, complex, ambiguous) world,” he says.
Rooney and McKenna are also working with the Australian Institute of Management and have carried out projects with a number of executive coaches interested in developing the leadership capacity of their clients.
At the core of their work are the five attributes of wisdom. They believe wise leaders have:
- achieved equinimity, conduct themselves using an aesthetic, mindful way, act as skilled and ethical communicators, members of society and social activists;
- an openness to new ideas and experiences;
- a developed and practised predisposition to strive for excellence;
- an understanding of how and when to adapt to, or to alter, an environment, or to leave a toxic environment;
- empathetic and careful consideration and understanding of one’s own needs and those of others.
Evidence shows that there is a correlation between openness to experiences and levels of wisdom throughout a person’s lifecycle.
“The problem is that by the time we reach our mid-50s, people tend to become less open. They think they have worked life out, and shut down. They become less wise.” It’s not simply new experiences but reflecting on them that is an attribute of the wise. “This is where you develop wisdom,” says Bernard McKenna.
“Some people can be wise in some aspects of their lives but make unwise judgements at work,” Rooney adds. “Categorising someone as wise can be problematic.”
“When you think about the economic, social and ecological environment we are facing, nothing is getting simpler,” David Rooney says. “This is where you need wise leaders with the courage and the foresight to make decisions that play out for the best, for the long term. These are not always the easiest decisions to make.”