Getting REAL

Tuesday, 2 July 2013 00:00 -     - {{hitsCtrl.values.hits}}

By Cheranka Mendis How do business leaders, the rock stars of today with fame, fortune and power, get out of the grasp of the economic crisis from which the world is still recovering and move ahead to do the right thing? What is the right thing? In this day and age, what is the true meaning of leadership? CIMA Sri Lanka’s The Business Leaders Summit 2013 which kicked off yesterday is bound to find answers or possibly the best solution by the end of the conference today which will feature discussions by a diverse mix of renowned global business leaders who will challenge the existing dynamics and transfigure the meaning of leadership as we know it. Themed ‘Get REAL,’ with the REAL standing for Radical, Evolutionary, Authentic, Leadership, the summit will look at transforming corporate leaders into leaders of people rather than just business Inaugurated last evening at the Cinnamon Grand, the event was attended by a large mix of business and CIMA personnel and patronised by UNP Parliamentarian Rosy Senanayake as Chief Guest and University of Ruhuna Vice Chancellor Prof. Susirith Mendis as keynote speaker. Prof. Mendis, promising an outsider’s viewpoint into the topic, sandwiched his address with quotes from well-known economists and philosophers, presenting an interesting outlook for the audience. Quoting Scott Buchana in his book ‘Doctrine of Signatures: A Defence of Theory in Medicine,’ he posed the question: “Do business leaders have a record maximum of knowledge and minimum of understanding? Do they have art and wonder if they have science? Are we suffering from an intellectual imbalance of virtues?” Need for new thinking Noting that a new line of thinking is needed to look at the question objectively, Mendis also threw in another set of questions: “As business leaders are you willing to specify and justify standards by which you conduct and be judged by yourself and society? Can you make it the distinctive mark of your profession or vocation as business leaders?” Noting that such thoughts are applicable to the business world as well as other professions, he noted that to ‘Get REAL’ one need to reassess the world views and see what the real world is. “I believe we are kind of at crossroads,” he said. “Too often have I seen not only business leaders but other professionals insular and obscure, in a kind of sheltered self-assuredness in their personal and corporate comfort zones.” Noting that one must take stock of the current status of the world, Mendis recalled that in the past there was a systematic and unceasing clash between ideologies of capitalism and socialism, giving nations and people options to choose from. With the establishment of a uni-polar political world after the collapse of the Soviet Union, globalisation became the cliché of the new world order. A single superpower became dominant and people lost their ability make a choice. Learning from a crisis Seventeen years after the end of the Soviet Union, the 2008 global financial crisis shook the new world order. Considered the worse financial crisis since the Great Depression, the world is still to recover from its aftermath. This was an avoidable disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk according to conclusions drawn by the US Financial Crisis Inquiry Commission. Published in January 2011, Mendis listed four of the nine final conclusions of the report – (a) we conclude that the financial crisis was avoidable (b) we conclude dramatic failures of corporate governance and risk management at many systematically important financial institutions was the key cause (c) we conclude a combination of excessive borrowings, risk investments and lack of transparency put the financial system to crisis (d) we conclude that there was systematic breakdown in the accountability and ethics. Due to this, we are now living in sombre but interesting times. The centre of gravity of the world’s economies is slowly but surely shifting from the West towards the East. China and Indian are making strides in economical output that would have been unthinkable 10 years ago. According to reports, global economic outlook for 2013 remains highly uncertain. Economic growth in the US remains weak with high unemployment while the growth rates in emerging economies looks healthy in comparison. “When considering this, it is indeed time to get real,” he said. The question now is how you meet the new paradigm shift. “This must necessarily include a new socio-cultural sensitivity, new pragmatism and new psychological reorientation; as, for over 200 years, we have looked to the West for developmental inspiration.” To look eastwards once again, there is a need for a radical change in perspectives, attitudes and prejudices. The global economic crisis of 2007/2008 exposed not only the crisis in finance and economics but also brought in to question the whole principle of the market economy as well, Mendis acknowledged. As of November 2008, the US financial sector bailout by the US Government amounted to US$ 1.3 trillion while the European equivalent was US$ 2.8 trillion. “Importance of efficient regulatory governance of financial institutions by governments in ensuring economic stability has now been accepted. The mutual coexistence of the market and government is beneficial to society. Periodic global finance crises occur due to the ineffective regulatory governance and unethical business leadership presented.” He noted that governments now need to put in place proactive regulatory framework in order to control financial market exercise. A new economic order is now in the making. Task of future business leaders Business leaders of tomorrow have to shake off negative images that the duty of loyalty of the corporates lies with shareholders and not for the greater good of the country. While business leaders continue to be loyal to shareholders, they must do away with unconscionable profit. “The use of this phrase is mostly in the context of the corporate sector meaning unscrupulous, not in accordance with what is just and reasonable, excessive. Future business leaders must try and raise the present idiomatic use of this phrase from the English language. It will be a herculean task but a start has to be made to make the world a better place for most of humanity.” The economic crisis of 2007/2008 also exposed the irresponsibility of corporate leaders and their lack of social consciousness. CSR as a concept has not lived up to its promise, Mendis maintained, nothing that the laudable concept of CSR has gradually become an insincere expression of social reasonability and a cheap advertising gimmick. A radical view of CSR is needed, he said. “The need of the hour is for corporate leadership with true social consciousness unlike ‘green washing’ – a new term coming into the English language due to attempts made by some transnational companies to put on an eco friendly mask.” Mendis said: “The world will be a better place for all humanity if we build an overarching humanistic tradition and fundamental. The central count for such an endeavour is a concept of justice and equality. It means a complete departure from the current theories emanating from the western philosophical traditions.” Situation closer to home UNP Parliamentarian Rosy Senanayake noting the pivotal role of the Opposition in moulding the future of the country stated that the main concern at present was the lack of a cohesive and well-thought-out strategy to counter the current economic dilemma, which has resulted in an ever-widening gap between the rich and poor moving towards the 99% vs. 1% movement. Although the country boasts of a per capita income of US$ 2,836, notice must also be given to the ever-increasing national debt, she said. The economic bog-down, with age-old ideas and values that are holding back development as we try and make progress in the increasingly competitive world, must be discarded. “I strongly believe that if we are to move forward and radically change, there has to be a paradigm shift with regards to attitudes and mindsets,” Senanayake said. “We need to look outside the proverbial box in a sustainable, differentiative and global mindset. We need to adapt a smart measure outlook which will help us look beyond the manufacturing economy to one that uses high value skills of our people.” This will help the country evolve in to a knowledge economy through innovation, science and technology. Need for radical changes In doing this, there are several areas that need radical changes, she said, among which education takes precedence. “Despite verbal promises by those in power over the years we have seen no real progressive change in this sector. Only 53% of students sitting for O/Ls would pass it. 50% of those sitting for O/L would fail math.” The national curriculum is in disarray, and students are taught skills which are obsolete and not attuned to the need of the hour. With more and more parents sending children abroad to study, which isn’t necessarily a bad thing, the drain on the foreign reserve is huge as each child would cost up to US$ 40,000-60,000 per year. Quality training and skill development is also essential to prepare the workforce of tomorrow. “State assistance to study abroad is needed if we are to have well rounded individuals in vital positions in the future.” There also remains a key necessity to improve the economy in the area of national debt. “I don’t see a strategy to properly manage the debt of the country.” Priorities must change when it comes to budgeting and more of the resources should be reserved for key areas such as education and higher education, which only received 2.8% and 2.1% in the last budget, while health services received 7% from the Appropriation Bill. “The overriding concern is the debt situation which is ballooning out of control,” Senanayake reflected. “Austerity is an unpalatable word but we must look seriously at whimsical and self-serving projects that are predestined for doom. We must be able to take a bold step back and see the viability of such casual lavishness.” While she agreed that development of infrastructure is important, affordability at this point needs to be evaluated. To remedy the situation the country must be practical and look at how it can increase the inflow of money in to the country. Every avenue must be explored in this regard – be it transforming the traditional exports of tea, rubber, coconut to value added products, seeking new markets for garment industry by looking at emerging markets such as China and the East, and being more efficient in labour, etc. There is also a need to actively look at higher skill personnel for Middle Eastern and other markets, as 41% of migrant workers from Sri Lanka are domestic help. Discrimination of women must be addressed as female population holds place as the majority with 52% of the population being female and one out of four houses being headed by a woman. “If we can change the way we think and be positive and practical in our mindsets we will be able to overcome such challenges over time,” Senanayake said. To be a transpersonal leader CIMA Sri Lanka Board Chairman Reyaz Mihular, noting that the event was a fully-sold out success, listed four key traits needed for a person to become a transpersonal leader. The first step is to aim high, and have a grand vision. Even if people think you are mad or over-reaching when your ideas are initially expressed, you need to dream big, he said. “To be a REAL leader you must be a visionary. You must see the world in a way others don’t see it.” There also need to be self belief and a shared vision to be achieved. “The third point is that you need to exceed in your action. You need to get down and get your hands dirty.” The final factor needed is the success of failure. Mihular citing R.K.J. Karunanada, Sri Lanka athlete who took part in the Olympic marathon in 1968 as an example noted that to achieve success a leader need to endure – both harsh criticism and the applauses. “You also cannot achieve great things alone. Leadership is about doing things together; it is not an individual run.” Pix by Upul Abayasekera