Tony Blair, the Chilcot Enquiry and the Dilemmas of Charismatic Leadership

January 30, 2010

When former Prime Minister Tony Blair arrived to give evidence to the Chilcot enquiry [January 29th 2010] he was greeted by a crowd of several hundred protesters. The placards read “Bliar” and the chants were “Tony Blair: War Criminal”

The Chilcot Enquiry was established to enquire what lessons could be learned from the invasion of Iraq. Tony Blair, as Prime Minister at the time, was always assumed to be the key witness. He arrived early, by a back entrance, to avoid confrontation with demonstators.

Tony Blair is regarded as a modern example of a charismatic leader. The plotting and his eventual overthrow have echoes of the fate of another Charismatic figure, Margaret Thatcher, two decades earlier.

WE use the term to refer to today’s leaders in all walks of life. It was origianlly brilliantly analysed by Weber, as a pre-modern form of leadership through which radical shifts in institutions are achieved. eber consdiered that charisma was less effective than a more rational mode of leadership in modern industrial societies. He examined the persuasive powers of a leader, and the assumptions of followerss of special, supernatural or magical gifts which provide the leader with legitimacy. The influence process appeals to ethical and emotional needs, rather than self-interested and rational considerations.

In the textbook Dilemmas of Leadership, there is a chapter on The Magic of Charisma. It outlines an all- too-often ignored ‘dark side’ of charisma, in its early and more modern form (‘new charisma’) of transformational leadership. ‘New charisma … is associated with follower empowerment. Such a view has to explain the processes of leaders who show little concern for empowerment… [and] poses particular problems to the new leadership position of moral rectitude and ethical values.’

The Magic of The Charismatic Leader

The build-up to Mr Blair’s appearance at the Chilcot enquiry suggested that commentators still were in thrall to the magic of the charismatic personality. The presumption in the media was that Mr Blair would be able to weave his spell, and would escape relatively unscathed, however deeply the matter was explored.

The calculus of risk

The early questioning probed how Government strategy had arrived at a decision to enter into a war with Iraq. Tony Blair made it clear that there was one critical event which changed strategy, and why. This was the attack on the World Trade Center in New York on September 11th, (the so-called 9/11 attack). Mr Blair told the enquiry that at that time, the prevailing strategy of containment of the Iraq regime was already becoming weaker, but 9/11 changed the ‘calculus of risk’ of persisting with the strategy. Put another way, the calculus of risk may be interpreted as attempts to deal with dilemmas of leadership. Conditions are ambiguous, requiring trade-offs, maybe compromises. For example, the need to act swiftly against a perceived and serious threat will be hindered by concerns for reaching consensus among allies. Gaining support is weighed against belief in one’s own position. Considerations of the legality of desired actions may be considered to be preventing thos actions and risking moral obligations.

One vivid example of the leadership dilemmas given by Tony Blair was the problem of obtaining better information from key witnesses (regarding claims of Saddam’s secret weapons of mass destructions). Obtaining the information was highly likely to put the witnesses and their families in mortal danger.

Seeing the big picture

At one point in the proceedings, Tony Blair indicated that he had a consistent way of seeing ‘one big problem’ of The Middle East, The Israeli-Palestine conflict, and Saddam’s regime. Such holding fast to the big picture’ is useful, perhaps necessary, for a visionary (charismatic?) leader to be able to dismiss reasoned objections to aspects of the grand plan.

He concluded six hours of questioning in similar vein, appealing to the public to take the long view, and focus on what might have been achieved in 2020 rather than the details of how the war was prosecuted. He believed his actions were taken in good faith in the interests of a just war.

Outside the hall, the protesters continued their demonstration.

Lessons to be learned

The enquiry is seeking to establish what lessons could be learned from the invasion of Iraq. It is a question which can be modified for students of leadership. What lessons can be learned about the leadership style of Tony Blair and prevailing notions of charismatic leadership? Why had the anger of the protesters been heaped on the head of one man? Are there lessons for leaders in business in other walks of life?

Congratulations to Professor Petra

January 24, 2010

Petra de Weerd-Nederhof was inaugurated as Professor of Organisation Studies and Innovation at the University of Twente on 28th January 2010. Her inaugural address was entitled “Organising Innovation is an act of Balancing”

Leaders We Deserve adds its congratulations and best wishes to Petra for her contributions towards consolidating the international networks of scholars and practitioners engaged in the leadership of creative and innovative efforts.

The celebratory video was prepared by Tudor Rickards and Susan Moger, of Manchester Business School, founding editors of Creativity and Innovation Management journal. Petra and her colleague Olaf Fisscher at the University of Twente took over the journal in 2001, with a team from the School of Management and Governance at Twente.

Cadbury Kraft takeover: More than meets the eye

January 20, 2010

Global Issue analysed by Susan Moger and Tudor Rickards

Updated: The integration of Cadbury into the Kraft Empire continues. Vince Cable, the highly respected financial figure imported from the Liberal Democrats, had made this one of his first interventions since the election to the Coalition Government, calling for a review of takeover practices.

Irene Rosenfeld made her first visit to her newly-acquired asset in October 2010.

The visit of Kraft CEO to Cadbury’s main Bournville cite in Birmingham, England continued the integration of Cadbury into the Kraft empire. The chief executive of Kraft Foods has not ruled out further Cadbury plant closures beyond the two years the firm is already committed to. Irene Rosenfeld said she was unable to offer further commitments after a visit to Birmingham’s Bournville factory. But she said it would remain “the heart and soul” of its chocolate business. Ms Rosenfeld had recently come second in Forbes magazine’s annual rankings of the world’s most powerful women, beaten only by US first lady Michelle Obama.

Asked what she was expecting with the merging of the companies, a net loss or gain in jobs, Ms Rosenfeld said: “I think it’s hard to say. It will vary area to area… We certainly understand that Bournville will remain at the heart and soul of our chocolate business and we are delighted about that. I think the key for us, though, this is a global business. We need to ensure that we are competitive on a global basis. As we bring together the combined company and we can share best practices we have the opportunity then to take the business to a new place.”

When it was suggested she was not able to make more of a commitment than at least two years, she said: “That’s correct.”

According to the Telegraph at the time of the takeover ,

The issues the review will look at include the “50pc plus one” minimum voting requirement for takeovers to go ahead; whether voting rights should be withheld from shares bought during an offer period; whether the 1pc disclosure threshold for dealings and positions in target companies should be reduced; and whether inducement fees and other deal protection arrangements should be restricted.

The review was launched by Business Secretary Vince Cable who said: “We welcome foreign investors but we want all shareholders to be empowered.” Last week [May 2010] the Panel took the rare step of publicly criticising Kraft over its acquisition of Cadbury. Its objections focused on assurances from Kraft that it would reverse Cadbury’s planned closure of its Somerdale factory. A week after winning the battle to buy Cadbury, Kraft reversed its position on Somerdale. The Takeover Panel concluded the US company should never have made its assurances on the Somerdale plant. It also criticised Lazard, Kraft’s adviser on the deal, saying the investment bank had “failed to discharge fully its responsibilities”. The Takeover Panel said it would take comments on the review of the code up to July 27.

An ealier post noted:

So the mighty Kraft finally hunted down its prey and swallowed up poor little Cadburys. Howls of protest from the UK. Nostalgia and affection for the taste of Diary Milk swept the land. One caller to a (BBC Five Live) phone-in said Cadburys was her favourite chocolate but that she would never buy any again.

In the wake of the takeover, LWD sought out an expert on Corporate Reputation for his views. Professor Gary Davies of Manchester Business School came up with several points that had been overlooked by other commentators in assessing the likely winners and losers of the takeover. He also added a more surprising comment based on his research into Corporate Reputation …

Students of Leadership

There are lessons to be learned from the Cadburys Kraft story from several perspectives. With the benefits of hindsight we might wish to consider what might have been done differently by the main parties involved. For the politically-minded, what ideas might be worth submitting to the Takeover Panel? How well do you think Irene and Vince Cable are operating?

Dilemmas of Leadership: Book Review

January 18, 2010

The text Dilemmas of Leadership is in use on various leadership development programmes. But what are dilemmas? How will knowledge of dilemmas help a leader in the current economic circumstances?

Tudor Rickards, January 18th 2010

The 2006 edition of Dilemmas of Leadership suggested early in its first chapter that

The term [Dilemma] originally referred to a philosophical position that defeats logical attempts to resolve it. One of two outcomes has to be accepted, yet each contradicts previously held beliefs and their logical consequences. The early philosophers talked of being on the horns of a dilemma – where the choice is to be impaled by one or the other horn of an angry bull. Other powerful metaphors also illustrate what dilemma is like: ‘It’s being between a rock and a hard place’; ‘it’s a choice between the devil and the deep blue sea’; or ‘sailing too close to the rocks or the whirlpool’ (Scylla and Charybdis were terms used in mythology).

The essence of a dilemma is that there is no satisfactory choice that suggests itself on the evidence available. This is a position leaders find themselves in, all too often .. There is incomplete information about the consequences of the decisions. .. uncertainties are obviously worse when the decision addresses outcomes of strategic decisions at some time in the future. It can be seen that all leaders face dilemmas.

Since the book was written, the economic world has been shaken to its foundations. It is timely to rexamine the central concept of leadership dilemmas in light of changed circumstances.

Dilemmas and Discovery Learning

The authors suggest that any leader will benefit from developing skills at dealing with dilemmas through ‘map reading, map testing and map making’. By this, they mean examining belief systems for deeply held assumptions and then critically testing these assumptions so that the decision is made through a shift in perspective. There is a hint (p13) that the process has aspects of the work of Thomas Kuhn, who popularized the idea of a paradigm-switch when a belief system radically changes.

Chapters 2-9 examine leadership issues, each with its concealed dilemmas. Theis approach provides a way of structuring the major themes in the vast literature leadership. They can be illustrated by considering the materials in chapters 2 and 3.

There is a long-standing debate on whether leaders are born or made. In chapter 2 we see how this can be better understood as a dilemma arising because of two different theoretical beliefs, one assuming that leaders have special fixed traits, and the other believing that leadership excellence can be ‘made’ or developed. In chapter 3, leaders of project teams are shown to be facing the dilemma of setting clear guidelines under conditions which can never be completely clear of uncertainties (or ambiguities).

The approach has the benefit of demonstrating practical experience and theoretical ‘maps’ are valuable partners for leadership development.

Dilemmas for Today’s Leadership Challenges

Some of the dilemmas are immediately relevant to today’s leadership challenges. Chapter 9 poses the uncomfortable dilemma of ethical leadership. Can an ethical leader operate competitively? This question has taken on new significance in what might be called the post-Enron climate of business. Another dilemma, from Chapter 6, is stated as trust and the limits of rationality. We have written recently in this blog of the attention being paid to the irrational behaviours contributing to economic bubbles, and the failure of leadership to calm things down.

Do dilemmas matter?

A knowledge of dilemmas seems an arcane factor in a search for improved leadership performance. On the other hand, the book does a service in indicating that that leadership is a concept to which theory is still unavailable to provide universal answers. Rather, the authors argue, each leader needs to examine each challenge to develop a ‘conversation with the situation’ (p19) out of which improved understanding and actions may emerge.

Bubbles, Banks and Animal Spirits

January 11, 2010

In a recent edition, The Economist newspaper warns of the dangers of banking bubbles, fuelled by governmental stimulus around the world. Where should investors turn for advice?

The Economist [Jan 9th 2010] makes its case powerfully:

“In 2008 falling markets caused a vicious circle of debt defaults and fire sales …The Market rebound was necessary to stabilise economies [in 2009] but now there is a danger that bubbles are being created.”

The metaphor of a financial bubble describes a situation which markets show signs of growth, with ‘all signals go’ to encourage further investment and speculation. Some unexpected shock such as a radical innovation (railways, the internet) promises rewards for fast-movers. Credit becomes available for acquiring assets. But warning voices are unheeded, as investors become caught in a frenzy of activity. But the financial dynamics are inevitably followed by a very sudden implosion as the bubble bursts.

There are some principles worth keeping in mind. Almost everyone offering advice has a belief system or map. The better we study of ‘test’ the map, the more we can feel confident and draw conclusions.

The Invisible Hand and Animal Spirits

Since 2008, there has been a growing awareness of the limitations of the so-called Neo-Classical economics associated since the 1980s with Milton Friedman, and taken up in the USA and The United Kingdom under Ronald Reagan and Margaret Thatcher respectively. There has been a rediscovery of elements of John Maynard Keynes and in particular the notion that human behaviour is not simply guided by Adam Smith’s Invisible hand of the market but also by animal spirits which lead individual investors into a collective panic.

A recent book on behavioural economics suggested

The current crisis .. was caused precisely by changing confidence, temptations, envy, resentment, and illusions—and especially by changing stories about the nature of the economy. These intangibles were the reason why people paid small fortunes for houses in cornfields; why others financed those purchases; why the Dow Jones average peaked above 14,000 and a little more than a year later fell below 7,500; why Bear Stearns was only (and barely) saved by a Federal Reserve bailout, and why later in the year Lehman Brothers collapsed outright; why a large fraction of the world’s banks are underfunded; and why, as we write, some of them are still tottering on the brink.

The warning from the Economist was that “The longer the world keeps its interest rates close to zero, the greater the danger that bubbles will appear – most likely in commodities, and in emerging markets, where growth keeps investors optimistic and currency pegs import loose monetary policy”. Unsurprisingly, this is a matter of interest and debate in China at present:

BEIJING (Commodity Online): Is the Chinese economy caught on the verge of a bubble? That is the heated discussion these days among global analysts, investing pundits, hedge fund managers and economic experts.

Noted global hedge fund manager Jim Chanos says China is in a bubble that will burst soon. He says there are some serious problems with Chinese disbursement of bank lending. Chanos says that China’s economy is overheated and thus will burst badly. According to him the Chinese economy is being over-stimulated by its stimulus program of $586 billion dollars. Most of this money is going into speculation and overproduction of goods that China will not be able to sell.

But global commodities investing guru Jim Rogers has blasted Chanos for what he has said on China. Rogers, who has been passionately investing in China for the last few years, says that China is not in a bubble as Chanos has predicted. Rogers, who shifted his residence to Singapore two years back as he felt that Asian countries like China have huge investment potential, says that Chinese economy is on strong and sound foundations. Rogers points out that Chanos may not know the fundamentals of the Chinese economy and the basics of ‘bubbles. [Rogers has] lambasted Roubini’s lack of fundamentals on gold and said that the yellow metal was set to cross $2,000 per ounce in the next decade.

Faced with such conflicting advice, if a commodities investment company were evaluating its portfolio in Asian markets in the next year, what sort of research investigation should it consider commissioning?

Global Events and Hand-clapping

January 8, 2010

What’s a nursery-rhyme got to do with global events? Plenty. This little song has received nearly 20,000,000 hits on its YouTube platform. And that’s a pretty global event, and some exposure

How did I become one of the 20 million consumers of the YouTube video? Through that phenomenon of discovery by surfing around. In other words mostly by accident while looking for something else. One day we will have a better idea of how images and words impel people to ‘pass it on’. At the moment it passes for a mysterious force known as viral marketing, which operates thanks to the Internet

On Winning the Toss: A Surprising Explanation of an Old Cricketing Conundrum

January 5, 2010

When Andrew Strauss, captain of England, recently won the toss in the third of a four match series against South Africa, he made a decision which could well influence the outcome of the series. I decided to look more deeply into the factors which a captain has to take into account in deciding whether to bat first. I came up with a surprising conclusion.

‘Every schoolboy knows’ that to win the toss at Cricket confers an advantage. On benign days the opposition will then probably have the worse of a deteriorating wicket later in the game. The Captain sould elect to bat first. But what if conditions are tricky – poorish light, cool, and with high humidity that helps the cricket ball swing mysteriously in flight? The dilemma is plain. Should the captain elect to bowl first. Strauss decided to bowl.

His decision was applauded at the time by the coterie of former captains available to comment on such occasions. Then, a determined innings by the team’s most determined batsman, Jacques Kallis, swung things back in favour of South Africa.

“If you are so clever what would you have done?”

I muttered that Strauss was a good batsman but not a deep-thinking strategist. “If you are so clever what would you have done? The Captain can’t theorise, he’s got to make a decision.” Susan’s question (as so often) forced me out of mutter-mode into thinking-mode. I assumed it would not take long to sort out this little problem. I was wrong. My initial thoughts were that the probabilities could be converted into a version of game theory. This would give some indication of when it might be better to bat first after winning the toss.

Several lengthy periods of thought later, I knew beyond reasonable doubt the extent of my ignorance. That is to say, I did not know how to reach the ‘bat or field’ decision. But the implication went further. I was also pretty sure than no-one else knew the answer either. The decision into the class of indeterminate ones for reason of complexity of factors and lack of adequate information.

The shocking implication and a Leadership Dilemma

The shocking implication of this finding is that a captain who knows the right thing to do on winning the toss, is suffering from a common leadership delusion. It is not a case of ‘knowing more than can be told’, but more a case of believing more than can be known’. The dilemma arises if a Captain feels he loses credibility if he appears to be less than certain of what he is doing. The conclusion applies to more diffident captains like Andrew Strauss, who often appears to recognise the inponderables of leadership. It also applies to the massed ranks of the pundits, be they fearless former England Captains or back-page scribblers.

For the moment take it from me, the uncertainties are of the kind which led Herbert Simon to coin the term ‘satisficing’ for a process through which a decision-maker simplifies the complexities in a situation in order to reach a decision. It may well be the case that someone has done a little analysis of the statistics of winning the toss and electing to field. If so, the results are a carefully guarded secret.

So what should a Captain do on winning the toss?

But Susan’s follow-up remark also hit home. The Captain has to do something in double-quick time. Strauss had had a brief period to anticipate conditions before the toss, and then a few moments to confirm a decision on winning it. Incidentally, he then had less than a minute to justify a decision that can not be arrived at completely by a rational analysis.

Based on this line of reasoning, my considered answer to Susan’s question is as follows: Now that I know my decision is not much better than tossing a coin I would stick with statistics more often than I might otherwise have done. And that means batting first is an advantage. If conditions appeared to favour the bowlers first, I’d think more carefully about it.

I would probably consult, but if I did so it would be with the knowledge that bowlers and batsmen alike would prefer their team to bowl first in tricky conditions, if only for self-interested reasons.

All this would not tell me whether I should bowl, but if I decided to do so, at least the decision to field would then be based on consultation, rather than my trying to maintain face as the captain knows best, and has made the decision on grounds of superior judgement.

Robert Benmosche: New leader, old leadership style?

January 3, 2010

Robert Benmosche was appointed as a tough guy to do a tough job at AIG. Is such a job ‘situationally’ right for such a leadership style? To address the question, we have to take a fresh look at an old leadership theory

According to The Financial Times

Robert Benmosche has the toughest task in corporate America – keeping AIG afloat while finding some $80bn (£50bn, €56bn) to repay US taxpayers and free the insurer from government ownership. Since taking over in August , Mr Benmosche has clashed with government officials over executives’ pay, threatened to resign and halted the “fire sale of the century” – a plan to sell large chunks of the once-mighty insurer that had been blessed by the federal authorities after they first bailed out AIG in September [2008]. Mr Benmosche believes that his aggressive management style has helped stop the rot at a company that was heading for liquidation and was being lambasted by politicians for paying bonuses with federal money. He predicts it will take at least two years for AIG to sell businesses and earn enough profits to repay the government and persuade it to sell its 80 per cent stake. The authorities are not as confident. Tim Geithner, the US Treasury Secretary, recently told Congress he did not believe the government [would] be fully refunded for its largesse towards AIG. The Government Accountability Office has estimated that taxpayers will end up losing more than $30bn on the insurer.

The recent crises in financial institutions have revealed that many were led by charismatic and dominant individuals whose style in hindsight was often associated with narcissism and worse psychological characteristics. [Mandrill Management, as it has been called in earlier blogs]. There is much to be said for a direct and forceful style in times of crisis. Mr Benmosche has a chance to provide a more positive exemplar for such a style. We will follow the case carefully.

Robert Benmosche’s background

Born: 1944, Brooklyn, New York
Education: New York Military Academy; BA in Mathematics, Alfred University, NY
Career: Truck driver for Coca-Cola; two years as a lieutenant in the US Army Signal Corps. ; In 1966 worked in technology at consultancy Arthur D. Little
before joining Chase in 1979; Between 1982 and 1995 he was at Paine Webber, the brokerage house, working variously in marketing, finance, operations, human resources and sales; Moved to MetLife in 1995 as its chief executive, before retiring
in 2006. Appointed CEO of AIG in August 2009 after the corporate upheaval of the credit crunch. Hobbies: “I need to find the time to go beyond learning wine-making and jogging.”

A Note on Situational Leadership

Students of leadership will still come across the venerable theory of situational leadership. The textbook Dilemmas of Leadership traces the concept to an influential article in Harvard Business Review from the late 1950s, reprinted as a classic 25 years later. Prior to the 1950s, trait theorists had assumed there was a ‘one right way to lead organizations. By the 1950s, the older trait theories were being replaced by theories which suggested there was still a ‘one right way’, by that the ‘way’ would be influenced by context. Contingency theories have a family resemblance to situational theories. They don’t take contrasting positions. Any confusion is due more to historical differences. Contingency theories came from broader studies iof organization; situational leadership as its label implies has been limited within leadership studies, and subject to ‘appropriation’ by consultant-academics such as Hersey and Blanchard.

Situational Leadership was a movement away from earlier full-blown trait theories of ‘what leaders are’ (fixed traits) to ‘what leaders do’. There is no simple way through the ‘contingency/situational’ jungle. Rickards and Clark (Dilemmas of Leadership) suggest that any leadership theory can be studied for exploring the dilemmas which any leader has to deal with. For example, situational leadership suggests that a leader who adapts to situations may produce anxieties and lack of trust and confidence in others regarding his or her ‘authenticity’. This is a dilemma of trust in seeking the appropriate behaviours to exercise leadership influence or control.