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Why is leadership important?

Written by on 24 September 2010

“Any one can hold the helm when the sea is calm”
Publilius Syrus (1st century BC)

Business spends a huge amount of time mitigating risk and uncertainty, however this can only be achieved to a point. There are a number of events that fall beyond the control of any single organisation. In recent times the world has witnessed an increasing amount of volatility. In 2008 the world financial markets reached breaking point with the international financial crisis. This started in the banking sector but quickly spread across the world’s largest corporate structures.

Time for action

At this point, our most influential leaders had the opportunity to take control, lead from the front and take decisive action, - but how many did? The corporate world appeared to be in a state of panic that led to decision paralysis. Perhaps we had been used to the sea being calm for a little too long!

Were our leaders up to the task?

The answer to this question must be looked at on an individual basis. Only organisations themselves can assess whether they respond decisively to the international crisis. However, the ability to respond to these kinds of events is the key difference between management and leadership.

Technical managers dominate the world

Many of our business organisations have been promoted through technical competence or through the narrowly defined success criteria of the financial markets. Is it now the time to ask whether these leaders are capable of meeting the increasingly uncertain world?

The world is becoming smaller

The advances in technology and social networks have facilitated an unprecedented knowledge exchange across the globe. The business environment is becoming increasingly dynamic, with shortened decision cycles and higher cost of failure. This trend is set to continue with more powerful and cheaper technologies facilitating an increasing number of global participants.

Increased complexity

As the global context becomes more dynamic, the issues that need to be resolved are more uncertain. With a greater number of participants, all with different stakeholder interests, the ability to arrive at a reasoned decision point that mitigates risk is becoming an increasingly unattainable end point. Organisational leadership will need to become comfortable with ambiguity and accept risk as part of their operational philosophy.

Context influences organisational design

The changing nature of the business environment is changing the nature of organisational design with many companies recognising they can no longer exist within an organisational perfect isolation with all core function being owned exclusively by the parent company. The blurring of organisational boundaries will have huge implications for organisational leadership in the future.

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