‘Thought Leadership’ and the diversity of opinion…


http://www.guardian.co.uk/business/2011/sep/02/us-authorities-sue-banks-subprime

In the papers this week, it has been reported that the US Federal Housing Finance Agency has put the process in place to sue 17 banks over the subprime mortgage crisis – a key element which arguably lead to the global recession, a term we are all now very acquainted with. It made me think about the topic above linked to our recent themed discussions on the connection between diversity and business strategy. We all have our opinions and theories on what actually lead to the global economic crisis, but I think there is something more endemic that ought to be pointed out…

Let’s re-look at the Toyota case discussed in our last posting: On the 11th of February, 2010, the Economist in an article entitled: ‘Toyota – Accelerating into trouble’, reported the woes of Toyota showing the failure of the Japanese Board to spot a mechanical fault with the new Toyota Prius’ run-away acceleration and braking system. The fault  lead to customer complaints and law suits that is reported to total approximately $5 billion, with Toyota having to recall approximately 8 million vehicles world wide. The overall market value loss totalled approximately $30 billion according to recent figures. In its overall evaluation of what might have gone wrong with Toyota, the Economist highlighted a cultural issue where leadership was based on “a rigid system of seniority and hierarchy” which prevented “new ideas” to questioning “the way things worked”.

The lessons learnt from the Toyota experience, I think, can be applied to assist understand what ‘suggestively’ facilitated the global economic crisis, the aim being to discover what ‘thought leadership’ actually means within this context. Indeed, what is core to both terms, ‘thought’ and ‘leadership’, and why is it important that to get leadership right?

Looked from an organisational viewpoint, thought is about thinking – creatively, leadership – a people-centred specific skill,  is about the ability to provide inspiration, vision and direction – to all staff. The two  terms are inextricably linked, one necessarily leading to the other, both facilitating innovation within the workplace resulting in a competitive and profitable business. 

We already know the stats: A survey of FTSE 100 companies suggests that only 10% of Directors are Women. The figure is the same for total BME representation in management positions across 22 sectors in the UK as confirmed by the Department for Business, Innovation and Skills. This is despite the fact that Women and BME’s account for 50% of the UK workforce. There is plenty of evidence that clearly suggests that organisations which foster diversity at the top have a competitive advantage over those which don’t, indeed, former Equalities Minister, Vera Baird states: “The economy that will succeed in the future is not one that’s blinkered by prejudice and marred by discrimination but one that draws on the talents of everybody”. This thinking is also confirmed in the Tyson Report (2003) on the Recruitment and Development of Non-Executive Directors: “Board diversity can…send a positive and motivating signal to customers, shareholders and employees, and can contribute to a better understanding by the company’s leadership of the diverse constituencies that affect its success.” Indeed, the CIPD suggests that had gender diversity been prevalent in the stock market, there could have been the distinct possibility that the economic crisis may either have been averted, or not have hit as hard as it did because of the approach to decision making that distinguishes the male and female sexes.

Whilst some may relegate this to mere questionable theory, I have often surfed websites of both public and private sector organisations and had a little peak at the head-pictures of board level memberships – which overwhelming tend to be white and male. How accurately do you think they depict diversity of opinion – a characteristic, I suggest, of thought leadership? For surely, any 21st century theory of thought leadership, particularly given acknowledged global demographic change, must recognise that it should derive and flow from diversity of opinion, a core ingredient of any viable business strategy embedded in the experiences, values, and ideas of its employees, who come from a range of rich backgrounds? There is therefore a binding connection between leadership and those it leads which assists us understand how thought leadership ought to be understood. That binding connection, I suggest, lies in the word inclusivity.

The core cultural issue Toyota had was that it thrived on a non-inclusive culture which discouraged the thoughts and ideas of other employees from positively challenging those at board level. As a family grown Japanese business, any challenge on the Toyota hierarchy was deemed as an act of disrespect on the traditional corporate culture. The Economist reported that, “…for years, Japanese bosses rebuffed the idea of appointing outside directors on the grounds that Toyota seemed to be getting on perfectly well without them”. So why change now? This is precisely the question.

In the 21st century world of business, any organisation hoping to increase its sustainability must develop a brand of thought leadership that is thoroughly reflective of its employees and customers in the global markets in order for it to remain sustainable. This, in a nutshell, is the economic business case for diversity. An organisation, they say, is no greater than its people. I take the phrase further and say that organisations are no greater than the diversity of thought it has within it, for therein lies its ‘intellectual capital’ – that ingredient that keeps it competitive streak ‘alive and kicking’.

Employees – or people of all ‘types’, backgrounds, experiences, skills, etc – represent the overall thought processes of an organisation that leadership need to tap into and gain support, in order to provide the inspiration to turn leadership vision into realities:

So when I think of thought leadership, I inevitably think of diverse opinion and how effectively it is promoted and used productively in businesses – toward individual and hence organisational advantage. The experience of Toyota exists to different degrees in the majority of our organisations, as does, by implication, the ‘ingredients’ of the ‘speculative theories’ surrounding the demise of stock market employees given the reported lack of gender inclusivity – as well as other ‘protected characteristics’. These lessons must not be dismissed at a whim. Rather they are lessons to be learnt which demonstrates what can happen when inclusivity of thought is not taken as the core principle of effective leadership.

1 Comment

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One response to “‘Thought Leadership’ and the diversity of opinion…

  1. karisburton

    Jude – what a fascinating read. The hierarchical nature of the management team that presided over the safety issues that faced Toyota were indeed “endemic” of the culture of the organisation. The idea of challenge is perceived as rudeness – something that is unacceptable in the sacred boardroom. Linking this to Diversity and the concept of greater access to talent and ideas that are “diverse” I would pose the following questions:

    1: Would a German quality engineer buried any bad news about the accelerator pedals?

    2: Would a Swedish management consultant practised avoidance when it came to highlighting the the inefficiencies of how bad news is passed up the chain?

    Egan referred to this cultural phenomena as the “MUM” effect – Keeping mum about undesirable messages.

    A great read Jude.

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