I was really struck by the language Mark Carney used at the press conference for the quarterly inflation report in August. He said the banking industry had become disconnected from society in a way that was significantly reducing its effectiveness. He further reflected that the focus needed to be on the real economy, what it does for businesses making investment and what it ultimately means for jobs in the economy. For me the most telling phrase was the following: “the current loss of focus means finance that only talks to itself and deals with each other that becomes socially useless”.
Often in our leadership work we notice that boards, teams and individuals “turn in on themselves” and lose their external stakeholder focus when there is crisis, significant change or dysfunctionality. If these organisations were human beings, it is as if someone is curling up into a ball because they do not have the strength or capacity to think about anything else other than their self-preservation. The other thing that happens in a chaotic system is the human instinctive response to “look after number one and to hedge your bets” because you feel personally vulnerable.
Neither of these attitudes or behaviours is particularly conducive to organisational effectiveness and certainly does not benefit the very stakeholders the organisation is there to serve. The banking sector has of course been through crisis after crisis for many years now (albeit some of it self-imposed) and so in a way it is not surprising to see that it has largely focused its energy on repairing and reinventing itself rather than on the world outside of it.
However all that we know to be true about what makes effective boards and senior leadership teams relies on the ability to connect the inside world of an organisation or sector with the outside world and in particular with the current and emerging needs of its stakeholders. That’s why our methodology for working with senior teams and boards takes them through a diagnostic which asks them to think about who their stakeholders are and to what extent they are meeting and anticipating their requirements.
Still we see examples of boards focusing on their internal processes and way of working and perhaps reflecting less on the wider system they operate in. However there are signs that “the human being” is starting to uncurl and we are starting to see more organisations reach out and make those wider connections. Where this happens, and an organisation’s vision, strategy, people, processes, systems, communication, technology and behaviours are aligned with all of its stakeholders, organisations are in flow. Where organisations are in flow, the world outside is seen as an extension of it and is reflected within it, thereby eliminating the risk of becoming “socially useless”.
For more information, please contact Judith Nicol.