Many companies will also need to find structures and processes, both formal and informal, that challenge thinking and retain productive dissent. The leadership team form will be left intact, but its potential will be tapped in new ways. Teams will be populated with more diverse personalities, whose challenge will be to work together to set some new directions and renew moral leadership while paying closer attention to day-to-day execution.
These leadership team members will have to learn to recognize the power of the unknowable. We have found out the hard way that conceptual financial models, which seemed for a time to provide a new means of rapid growth, can actually obscure the underlying realities of the economic system. We now have some catching up to do as we recognize the failure of these models to comprehend and control the complexity and interdependence of our world. Leaders in financial services might do better if they understood that we human beings are all limited, that our best course is to accept that we are intrinsically prone to get things wrong, that we need to keep our wits about us, and that to succeed in the arcane world of finance, we need most of all to stay grounded in day-to-day reality.
We must promote leaders for whom doubt and uncertainty are simply a part of the human condition, not the enemy of action or a sign of weakness. They must tolerate questioning and doubt within their own organizations, and apply it productively themselves. We must make it an organizational habit to regularly challenge even what seems to be most obviously true, to remain open to different types of data, especially including direct experiential and “feet on the street” observations. I wonder what would have happened if the boards of the banks had visited the neighborhoods whose homes they were financing.
The makeup and management of executive teams may have to change. The evidence is clear that the most productive teams contain diverse people. Teams composed of people from a range of backgrounds, including prosaic ones, outperform teams composed entirely of the so-called best and brightest, for example. The dynamics of team interaction often make it hard to preserve diversity, even though it is diversity that makes the team productive. The bright guys want to hire more bright guys, for example. Moreover, in a typical leadership team, the variety of personality types tends to make the team itself short-lived. People who want to get things done (and there are a lot of them in business) drive out those who want to stop and debate or who value perspective and understanding as much as action. As those latter individuals go, so goes the ability to challenge. And those who shrink from conflict or believe that only harmonious teams can be effective will also disapprove of the kind of open dissent that encourages better leadership and decision making. That is a different definition of productive teamwork than has been applied in the past.
If people recognize this, we should see improvements in the organization and management of executive teams and boards. In composing teams, boards will tend to favor a diversity of characteristics, and they should guard against the drift toward homogenization. Further, power and control will be separated more actively and structurally. There may be a segregated, internal governance structure in some organizations — beyond the CEO’s control, but reaching down into the company — whose role will be to audit and hold to account those with primary decision-making authority. Rather than accepting conventional wisdom and existing policies, they will need to look for disconfirming facts and contrary evidence.