Jack Welch was CEO of GE for 20 years. In a changing world, is he still the model for leadership?[/caption]
When discussing the challenges facing business leaders it seems almost de rigeur nowadays to talk about the level of change organisations are facing.
The challenge to equip leaders to build the future in these uncertain times is certainly daunting, with seismic geopolitical shifts (in this context the Trump administration seems to be the gift that keeps on giving), disruptive technological change (how many of us even fully understand the implications of bitcoin, blockchain and whatever new technology will be unleashed on us next) and even severe climate and weather events.
The very ubiquitous nature of these challenges may however inure us to their real potential as both a threat and an opportunity to affect a true paradigm shift in how we view leadership, a classic case of an issue being undervalued through overuse.
Richard Boyatzis studied how leaders influence those around them and how that effected their lives and careers[/caption]
Dr Colm Foster is Director of Executive Education at the Irish Management Institute. He has acted as a leadership development consultant to organisations in the US, Asia and Ireland, particularly specialising in Emotional Intelligence.
The next 
IMI: Based on your current work - if you only had 6 words of advice to give a business - what would they be?
EM: Succeed Globally with a Culture Map
IMI: What does this mean?
EM: Today, whether we work with colleagues in Dusseldorf or Dubai, Brasilia or Beijing, New York or New Delhi, we are all part of a global network (real or virtual, physical or electronic) where success requires navigating through wildly different cultural realities. Unless we know how to decode other cultures and avoid easy-to-fall-into cultural traps, we are easy prey to misunderstanding, needless conflict, and ultimate failure.
Yet most managers have little understanding of how local culture impacts global interaction. Even those who are culturally informed, travel extensively, and have lived abroad often have few strategies for dealing with the cross-cultural complexity that affects their team's day-to-day effectiveness.
To help people improve their ability to decode the cultural differences impacting their work and to enhance their effectiveness in dealing with these differences, I have built on the work of many in my field to develop a tool called the Culture Map. It is made up of eight scales representing the management behaviours where cultural gaps are most common.
The eight scales are based on decades of academic research into culture from multiple perspectives. To this foundation I have added my own work, which has been validated by extensive interviews with thousands of executives who have confirmed or corrected my findings. The scales are:
- Communicating: explicit vs. implicit
- Evaluating: direct criticism vs. indirect criticism
- Leading: egalitarian vs. hierarchical
- Deciding: consensual vs. top down
- Trusting: task vs. relationship
- Disagreeing: confrontational vs. avoidance
- Scheduling: linear-time vs. flexible-time
- Persuading: applications-first vs. principles-first
Frances Ruane served as Director of the ESRI from 2006 to 2015. She previously taught in the Dept of Economics at TCD, and earlier in her career she work at Queens University in Canada and at the Central Bank of Ireland and the IDA. In Ireland, her current activities include chair of the Interdepartmental Group on Making Work Pay for People with Disabilities at the Department of Social Welfare, membership of the Public Interest Committee of KPMG, and an Honorary Professor in the Department of Economics at Trinity College, where she contributes to the MSc in Economic Policy Studies. She is also a Research Affiliate at the ESRI and a member of the Royal Irish Academy.
IMI: Based on your current work – if you only had 6 words of advice to give a business – what would they be?
FR: Look positively beyond the immediate.
IMI: What does this mean? FR: After a period of rapid growth, the global financial crisis meant that Irish businesses had to concentrate on handling immediate challenges. They managed that disruption well and this contributed to the strength of Ireland’s recovery. But the focus on the immediate has left many businesses with legacy issues (debt burdens, under-investment in innovation, poor staff morale). And now businesses need to prepare for the medium term when we discover what is really meant by ‘Brexit means Brexit’. Forward looking businesses leaders need now to ask: what could Brexit mean for my market and company? Where am I exposed to risk and how can I mitigate it? [post_title] => "Look positively beyond the immediate" Six Word Wisdom from Frances Ruane [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => look-positively-beyond-immediate-six-word-wisdom-frances-ruane [to_ping] => [pinged] => [post_modified] => 2020-05-11 19:52:32 [post_modified_gmt] => 2020-05-11 19:52:32 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.imi.ie/?p=16052 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )
Cormac Lucey
Cormac Lucey is an IMI associate on the IMI Diploma in Business Finance.
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Is the sky the limit or will you be blocked by bias clouds
At one point of the 1973 movie Magnum Force, Inspector Harry Callahan (played by Clint Eastwood) uttered the line “A good man always knows his limitations…”
It is important that investors should know their limitations too. Behavioural finance is the study of the influence of psychology on the behaviour of investors. It finds that investors are not always rational, suffer from systemic biases and are limited in their rational self-control.
The first step to combatting these, often unconscious, biases is to be aware of them. What then are the key behavioural errors that can dog our decisions? The following errors were identified recently by Joe Wiggins, a fund manager with Aberdeen Standard Investments:
Myopic Loss Aversion – We are more sensitive to losses than gains, and overly influenced by short-term considerations. Often investors check their portfolios frequently, even if they are operating with a long-term investment horizon. Making frequent investment decisions can worsen your investment results. A 2015 study by the Central Bank of Ireland found that 75 per cent of retail CFD clients who invested in CFDs during 2013 and 2014 made a loss.
Integration – We seek to conform to group behaviour and prevailing norms. Like a limping wildebeest at the back of a herd in the Serengeti, we want to keep pace with the herd for fear of being picked off. The problem is that, in investment markets, the herd is more often wrong than right. That’s why Warren Buffett said that it is wise to be “Fearful when others are greedy and greedy when others are fearful.”
Recency – We overweight the importance of recent events. In 2006, one had to look back over a decade and half to observe a year-on-year in Irish residential property prices. Accordingly, most market participants grievously underestimated the possibility of a serious property bear market. Today memories of the property crash are fresh in peoples’ minds and many are fearful of another residential property crash. But that is quite unlikely, with rent yields considerably above mortgage rates.
Risk Perception – We are poor at assessing risks and gauging probabilities. We allow the emotional hope of investment gains override logic in assessing risks. At the height of the residential property price bubble, houses in some parts of Dublin (e.g. Howth, Dalkey, Blackrock) were selling for more than 100 times the annual rental income those properties could command. But many investors were more fearful of missing out on continued gains from property market than they were by the dismal long-term return prospects those valuations suggested.
(Photo source)
Overconfidence – We over-estimate our own abilities. Not only is the recorded investment performance of retail investors poor but so too is the record of professional fund managers. The empirical evidence strongly suggests that the vast majority of investors would be better off buying low-cost funds that track market indices. Yet millions of us persist with the belief/hope/illusion that we can do better managing our funds ourselves.
Results – We focus on outcomes when assessing the quality of our decisions. Even as the Irish property market got more and more overvalued between the years 2004 and 2007and risks (e.g. rising interest rates) continued to mount, investors largely stuck with it because they were enjoying positive outcomes.
Stories – We are often persuaded by captivating stories. If you get the chance, make sure to watch Alex Gibney’s excellent documentary about the rise and fall of Elizabeth Holmes and Theranos “The Inventor: Out for Blood in Silicon Valley”. It depicts the rise and fall of a woman and her company that were propelled forward by several captivating stories: replacing injections with thumbpricks for taking blood samples; replacing an expensive blood-testing duopoly with access controlled by clinicians with cheap tests that individuals could order; having a female entrepreneur enjoy the same success as Apple’s Steve Jobs. But it was all a fraud.
In making financial decisions, it’s a case of forewarned being forearmed: the more we are aware of our limitations, the better we can avoid them.
Cormac Lucey is an IMI associate on the IMI Diploma in Business Finance. Cormac is also a Financial Services Consultant and Contractor who has previously worked with PricewaterhouseCoopers, Rabobank Frankfurt and the Department of Justice.
