www.LEADERSHIPFROMBELOW.com 7 Reasons Why the Credit Crisis calls for Leadership from Below Trond Arne Undheim, Ph.D. & Author Slideshare Credit Crisis in 30 Slides Contest 24 October 2008 he opinions expressed here are the author’s only and do not necessarily represent those of his employers past or present
So, a few Wall Street investment banks such as Lehman Brothers, the world’s largest insurer and 18th biggest company in the world, AIG, Alan Greenspan, Northern Rock, the largest mortgage and private savings provider in the UK, HBOS, and the country of Iceland are history. By history, I of course mean that they are gone. Well, not literally. By gone I mean that they do not exist in our minds, in financial districts, and pockets like they did before. However, they are all still physically there, so all is not lost. But we have all gone from subprime mortgage crisis to credit crunch to credit crisis to full meltdown. How did this happen? What now for leadership? Surely, we should not look for it among our leaders?
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1. 7 Reasons Why the Credit Crisis calls for Leadership from
Below Trond Arne Undheim, Ph.D. & Author Slideshare Credit
Crisis in 30 Slides Contest 24 October 2008 The opinions expressed
here are the authors only and do not necessarily represent those of
his employers past or present.
2. Why are we discussing this?
Investment bank Lehman Brothers, the worlds largest insurer
AIG, Alan Greenspan, Northern Rock, the largest mortgage provider
in the UK, HBOS, and the country of Iceland are history.
By history, I of course mean that they are gone. Well, not
literally. By gone I mean that they do not exist in our minds, in
financial districts, and pockets like they did before.
What now for leadership? Surely, we should not look for it
among our leaders?
3. Find the guilty party!
4. 1. From blame to trust
Individual investment decisions and the globalization of risk
contributedbut.
Credit crisis is essentially leadership crisis.
5. but what is trust?
Credit is only given when there is trust. Trust is an
intangible bond between actors in a market.
While all market actors contribute to the overall trust of the
market itself, leaders have traditionally been thought of as
responsible if havoc occurs. Thus, we have seen calls for
executives to resign and for Heads of State to act. But are they?
And does that create trust?
6. Trust is a game!
Trust, unfortunately is a game, too. Trust is a gamble, a
calculated risk.
You cannot always know. So, while blame might be a necessary
exercise, it will not solve the trust issue.
Trusting less will not solve it either. Neither will risking
less.
But the understanding of what trust is, will.
7. 2. From trust in the market to trust in people
In reality, the credit crisis happened because we the market
consumers financial actors - everyone put our trust in the idea
that there was something abstract, rational, even holy called the
market, an invisible hand that pushed everything forward. We woke
up to discover it was only us.
8. People architect markets
According to a New York Times article yesterday even Alan
Greenspan has conceded to the House Committee on Oversight and
Government Reform that he has misunderstood the way markets work.
In reality, markets are always built by people. In The Architecture
of Markets, brilliant UC Berkeley sociologist Neil Fliegstein made
that point already in 2001:
markets are social constructions that require
extensive institutional support.
9. Products cannot be trusted
People create trust. Products are the results of that trust,
but they cannot themselves be trusted. You can only trust a product
from people you trust.
The credit crisis happened because too many trusted the
products, trends, graphs, institutions, and technologies that were
sustaining the growth cycle. Nobody stopped to ask: who is behind
this, can I trust him or her?
10. 3. From power to responsibility
The credit crisis is a crisis of power. We can no longer trust
the powers we did before. We read stories of people who walk down
to their bank and scream at their personal banker for being
incompetent. They vent long pent up anger at the system that made
them feel powerless, weak, insignificant and incompetent. Instead,
we want responsibility.
11. Responsibility is power
We want corporate bonuses to be cut in banks who have received
rescue packages. Not because we envy bankers per se. We do, but
that is another question. No, the bonus is paid out within a
rationale of power as opposed to a rationale of responsibility.
With power comes great responsibility, the adage goes. Now we can
say with resonance, sanctioned by the State, which represents us
all: with responsibility comes power.
12. 4. From top-down to bottom-up
The traditional top-down leadership model is based on the
Weberian notion of legal-rational authority, power vested in people
who possess positions of power irrespective of that persons
personal qualities.
Weber also wrote about two other types of power, the
charismatic and the traditional, where the quick examples would be
Hitler and the Pope. Charismatic power is sustained by a
convincing, overwhelmingly vibrant personality.
13. Bottom-up legitimate power
Leaving aside coercion, which Weber snuffed at, since it had no
legitimacy in his eyes, what Weber from his 18th century
perspective was unable to conceive of is a fourth source of power,
which I in my eponymous management book from 2008 call leadership
from below.
Where does its legitimacy come from? From the very
relationships that sustain it.
14. 5. From networking to Zen
Rather than network power in the sense of who you know in a
powerful position or who can recommend you or your actions,
leadership from below is not manipulative.
It actually emanates from the social bond that is created
between individuals who work together.
Japanese philosophy, more specifically the scholar Kitaro
Nishida, speaks of this force as Ba, an indigenous word for shared
social space, which can only happen between trusting people.
15. Technologies belong to people
The contemporary market actor also seems to trust things,
techniques, and trends. The problem with this kind of extension is
that it introduces an element of unpredictability. Yes,
technologies have effects of their own, but mostly the effects that
people want it to have.
Technologies have built-in designs that act like compulsory
manuscripts. You cannot avoid them if you want to use them.
16. Zen means balance
The popular term for spiritual balance among alternatively
minded westerners is Zen.
You can not manipulate networks to create Zen. Balance fosters
balance. There is give and take.
17. 6. From clubs to the piazza
Governments now have significant ownership in banks, this can
actually be fruitful.
It will serve to re-focus peoples attention on what a market
is, and how trust can, should and should not be created.
Large, unhampered markets cannot continue to allow the exchange
of complex club goods. If they do, they fail.
18. The piazza is free for all
Leadership From Below is the perspective that, no matter where
you come from, what you bring to the table must always be judged by
the people present.
The situation is what counts. Past and future is not relevant
to leadership carried out in present.
Whatever problem presents itself must have a solution there and
then.
Power of now is stronger than power of later.
19. The piazza has stakeholders
The now must be accessible to all. We cannot bury important
financial decisions in financial lingo.
Simplicity is king. Time to resurrect the Italian piazza where
things are openly discussed.
As Neil Fliegstein writes about markets and firms, shareholders
are not the only stakeholders.
20. 7. From positions to attitude
While not necessarily implying that powerful leaders cannot
practice bottom-up leadership, Leadership From Below introduces a
certain modesty. You can never be sure to be the leader. The group
will always make up their own mind.
You may enter a situation with a good chance to influence
others. But if you dont, you cannot blame a weak negotiating
position.
Positions are created, and need to be sustained every time. Its
all in the attitude. Spin that!
21. Find new leaders
22. Leaders are everywhere
My two-year old knows a thing or two about best practice
Gets what she wants.
Builds relationships.
Shows no fear.
23. My Daughters principles
Be persistent.
Build an unbreakable bond.
Make your way the natural way.
Push your point, but move on.
See yourself as an equal.
24. Three Things Count
The Internet generation.
Scandinavian equity.
Asian philosophy.
25. The Internet Generation
Navigate hierarchies and networks.
Take charge of technology.
Shape their surroundings.
Your peer-to-peer attitude defies hierarchy.
26. Scandinavian Equity
Maintain work-life balance.
Master mobility.
Respect others.
Your choice is to be on top but have a life.
27. Asian Philosophy
Tap into Ki presence.
Lead by Ba shared understanding.
Be grounded martial art of management.
You dont have to be Asian to use Asian principles.