How does one lead a whole city?

Leeds City Chief Executive Tom Riordan explains to us in our Leadership Video Series Interview (video link), the challenges and complexities of leading a whole city.

Tom affirms that, in contrast with a business or organisation, a city doesn’t have one singular linear relationship in an specific industry or sector. It relies on a complex set of actors and actresses working together to achieve its objectives.

Leadership in this context should be more about selling than telling. Tom believes that some of the differences between leadership and management are overrated as most of the top roles in any organisation will involve both. Leadership is about setting direction, setting strategy, and the culture of the place.

He also describes how Leeds can become the best city to live in the UK and what that entails in practical terms. It starts by determining what is ‘best’ and how that sits with our identity as a city. According to Tom, it’s a permissive vision which eventually will allow us to become the best we can be without trying to mimic London or any other city in the world.

On the Northern Powerhouse, Tom strongly advocates we can be greater and more relevant if we all work together with other regions such as Manchester, Newcastle, Liverpool and Sheffield to improve the quality of living and services as well as attracting more foreign investments from China, the US and other parts in levels we haven’t seen yet. We should each focus on our strengths knowing that the whole is stronger than the individual parts.

“Leeds is also a child friendly city. We have one of the best children social care in the country.”

“One in seven people in Leeds are students and we need to be able to capitalise on this aspect working close to our universities, using the alumni network and our world-class expertise to get more businesses starting in the city and enabling those already here to become more innovative.”

“We want to have a strong economy but also we want to be a compassionate city.”

“Don’t wait to lead, you can lead in your own way, you can be an advocate for those who don’t have a voice”

– Tom Riordan.

(Watch the full video by clicking on the image below or the link above)

Substantial vs. Processual Reality

Robert Chia deliving his guest lecture

Professor Robert Chia delivered a fantastic guest lecture at Leeds Business School for the Centre for Governance, Leadership and Global Responsibility on 21^st April 2016, talking about how to achieve sustainable excellence indirectly through practical wisdom of self-cultivation. His inspiring and thought-provoking lecture is based on process thinking in business and management that he has promoted since the 1990s. With his influential
publications he is recognised as a leading figure in this area. In recent years, we have seen more and more people joining the process camp, and eventually a ‘process turn’ in organisation studies has taken shape and process thinking has gathered a momentum in business and management studies. This can be evidenced by the publication of the special issue of Academy of Management Journal in 2013 which concentrates on process studies of change in organisation and management, as well as several other heavy hits of process studies in Academy of Management Review, Organization Science, Organization Studies, and Human Relations, all top level journals.

Cat vs. Lion

Professor Chia took us through the different realities we may encounter and apprehend: the substantial reality versus the process reality. The substantial reality is what we all have experienced by our senses: what we see, hear and feel; and also by the way of our thinking: reasoning, abstracting and generalising. This reality is what empiricists, positivists and some realists have constructed for us by so-called ‘hard facts’ and data. The reality is shown as independently existing ‘out there’, objective, entitative, and relatively stable. Change occurs only as a thing moving from one point to another pushed by external forces. The ‘thing’ itself is fixed and unchangeable: what the ancient Greek philosopher Parmenides called ‘being’.

The processual reality, on the other hand, is what is behind and beneath the substantial reality that we may not realise by our senses, but may encounter it by intuition and speculation. It suggests that any reality at the bottom is process rather than substance. What does this mean? In the physical world, Einstein told us in his famous formula E = mc²    that mass is equivalent to, and interchangeable with, energy. Energy is a form of processes. It means that any physical substance is composed of processual energy. In other words, the essence of substance is process. Process implies constant changes, emergence and evolution: what Heraclitus, the teacher of Parmenides, called ‘becoming’. Substance is but a cluster of processes, a relatively stabilised pattern of waves in the sea of underlying processes. Therefore, substance is subordinated to process and subject to change. The same applies to the social world: social realities are fundamentally processual rather than substantial because of unfixable and changeable human minds, social relations and situational interactions. For example, a firm is traditionally regarded as a business entity. Entity means that it is solid with a fixed boundary. But in process thinking, the firm is only a bundle of relationships, more precisely, a nexus of interrelationships, where the boundary is blurred rather than clear-cut.

The substantial versus processual reality has significant implications for our understanding of the social world in general and business and management in particular. Conventionally, the reality we comprehend and understand is substantial, represented by abstract theories and models and various technical instruments. Eventually we have become living in a theoretically and ideologically constructed world through the instrument of representations, what I called the ‘representational reality’. In 2013 I was invited for a keynote presentation at a BAM workshop in London organised by the Leadership and Corporate Governance Special Interest Groups. I made a distinction between the ‘representational reality’ and the ‘living reality’. The representational reality is partial and superficial at best and fictitious and illusory at worst. If we always deal with the representational reality and ignore or neglect the underlying living reality, there will be huge consequences from that.

At the BAM workshop, I used the example of the Mid-Staffs Scandal to explain the phenomenon of ‘dual realities’ and its consequences. It was later revealed that between 2005 and 2008 up to 1200 patients died needlessly at the Stafford Hospital and the mortality rates in the emergency care were 27-45% higher than expected, all due to the appalling care at the hospital. But during the same period, the Mid Staffordshire General Hospital NHS Trust was advanced to the Foundation Trust status, and all external monitoring and screening agencies and bodies concluded that the Trust was largely compliant with the applicable standards and no systemic failings were found. What’s going on with that huge gap then? The Trust conducted routine procedures and process of governance and went through the NHS Annual Rating System containing 146 indicators. They did a ‘serious’ self-regulated box-ticking exercise which indicated very good performance every year. This was the reality with which the Trust’s governance and management team was required and happy to deal. It was represented by the rating systems and routine procedures—what the Francis Report in 2013 called the ‘theoretical system’. What they neglected or ignored was such a true reality in contrast: the low morale and poor performance of the staff members, poor leadership and communications, healthcare professionals excluded from decision-makings, and patients and relatives excluded in the participation of patients care.

This case demonstrates that when the representational reality and the living reality are diverted significantly, the result is often grievous. The 2008 financial crisis also indicates this. For instance, RBS passed the 2007 ARROW risk assessment and its governance process conformed well to the standards (FSA, 2011). But it failed completely only a year later with £45.5bn rescue fund by taxpayers. It is not difficult to find this kind of disassociated realties around us everywhere.

The processual thinking fundamentally challenges our conventional modes of thinking in business and management and requires us to rethink often taken-for-granted assumptions and beliefs. It particularly asks leaders and management teams to live beyond the representational reality and dive into the living reality to see what is going on there: the lived experiences, encounters and perceptions of employees, customers and other key stakeholders. The living reality is fluid, dynamic, complex and inter-relational, often unpresentable by our abstract theories and models.

William Sun

Deputy Director of the Centre for Governance, Leadership and Global Responsibility

Old Boots – Wisdom in Business

Robert Chia

In my last blog I referred to Professor Robert Chia, the eminent critical management scholar who works on phronetic leadership and the like. Long story short, how do we practice wisdom?

It was a real pleasure to welcome Robert to the Centre last night. Robert gave us a review of his thinking, focusing on three things which challenge all boards, and for that matter all business schools.

First, the thinking of many business schools swallows the idea that truth can be represented in theories or models. This is the idea that we can capture truth in a theory or a model. Having captured the truth we then apply this to practice. Second, and part of that application, we set goals, targets, KPIs and the like. These are important but they are also very risky. Third, we confuse excellence and success. This is a critical challenge to governance in every sector and I will provide more space for this, and the second point, in subsequent blogs.

So what about representation of truth/reality? Chia’s point chimes in with both Ghoshal (2005) and Khurana (2010) in their challenge of business schools. Part of the challenge is that business schools peddle a faux scientific view of academic disciplines. It is faux because most of so called ‘theories’ are nothing of the sort. Take the agency theory of governance. Once you examine this you find a threadbare coat of assumptions which have no basis, and which, for the most part, were not critically tested. At its heart is the assumption that the agent, the CEO, is motivated by their own ends, in particular by money, and thus has to be controlled by the board. The incoherence of even this part of the ‘theory’ is dazzling.

First, it has a set of psychological assumptions: that there is only one criterion of worth, money; that motivation is based in this worth; that leaders are dominated by self-interest. Evidence, i.e. systematic reflection on the thinking and practice of leaders, suggests that little of this reflects ‘truth’. Moreover, the truth it reflects is incoherent, viz. leadership is based in trust but by definition we cannot trust our leader, and thus must control her through the board. Second, if we mistake representations for the truth, the temptation is to ‘apply’ that truth to practice. This means, in fact, trying to shoehorn truth into the old boot of theory. The pain! Of course, as Ghoshal (2005) has reminded us this is nothing like theory. We cannot be surprised that many students in business schools do not know what they or we mean by theory! If you are an academic test this out. Go around your next class and ask students what theory is. Better still ask your colleagues what theory is.

Rather than expostulate further on theory I commend to you the cracking debate in the latest edition of the British Journal of Sociology about theory http://onlinelibrary.wiley.com/doi/10.1111/bjos.2016.67.issue-1/issuetoc

       Writers there are responding to Richard Swedberg’s argument that we should be focusing on theorizing, not theory per se. Theorizing I take to be the practice of making sense of what we or others do. Swedberg’s ( http://onlinelibrary.wiley.com/doi/10.1111/1468-4446.12187_5/epdf) point is that this is an ongoing process and students need to take responsibility for making their own sense, in relation, of course, to other narratives (theories, if you want), of what they do and what they want to do, of who they are and what they want to become.

Agency theory, of course, stills clings on tenaciously, though with much more opposition. So what has been the reason for its dominance? Part of this is that too many have bought into the idea that it is ‘scientific’. An aspect of the definition of that is that it avoids ‘normativity’, and with that, any attempt to impose values. But agency ‘theory’ is shot through with value assumptions, and lurking behind these are a series of other ‘theories’ about freedom and about the leader as individualistic, dominant, and, wait for it….., all knowing. Hence, the so called ‘agency problem’; roughly, the CEO knows everything about the business and the board much less, so how are we going to cope with that? Interestingly in recent governance crises (see the VW scandal) the CEO precisely said, ‘but I cannot be expected to know everything’. Other CEOs have intentionally cultivated ignorance as part of a strategy of ambiguity (Martin 2013).

Ignorance, in fact, is relative and the most effective way of maximising knowledge is through dispersed leadership, not through hanging on to the hoary old ghost of the great leader (cf. Robinson and Smith 2014).

We really need to grow up, and realize that any attempt to make sense of the world involves values: psychological/relational, moral, social, political, and intellectual. Any attempt at theory which squeezes these out, and the critical dialogue that goes with them, resides in cloud cuckoo land. Go back to Aristophanes http://www.fullbooks.com/The-Birds1.html to see how daft that is.

In the next blog I will look at some of the implications of this for pedagogy.

Simon Robinson (@leading360)

Director, Centre for Governance, Leadership and Global Responsibility

Ghoshal (2005) ‘Bad management theories and destroying good management practices’, Academy of Management Learning and Education, Vol 4, no 1, 75-91.

R. Khurana (2010) From Higher Aims to Hired Hands (Princeton: Princeton Univeristy Press).

 I.Martin (2013) Making It Happen: Fred Goodwin, RBS and the men who blew up the British economy (London: Simon and Schuster).

 S. Robinson and J. Smith (2014) Co-Charismatic Leadership (Oxford: Peter Lang).

 

 

Wisdom in Business, by Professor Robert Chia

Robert Chia

The Centre for Governance, Leadership and Global Responsibility is looking forward to the visit of Prof Robert Chia on Thursday 21st April for the last in the CGLGR Guest Lecture Series for the 2015/16 academic year.

Refreshments will be served from 5.30pm with the lecture commencing at 6.00pm and finishing at 7.00pm. The event is free, but please register your interest here.

Robert is an expert in critical management, which I take to mean the field of asking awkward questions about leadership and management. This is a massively important part of business studies partly because business schools are in the habit of precisely avoiding awkward questions. ‘Come to us and we will provide you with all you need to know about business – success will follow’ is the libretto to an aria which all too easily fails to ask what knowledge, practice, or related skills are, or even what the parameters of success might be.

Chia argues that leadership and management in practice need to cultivate the awkward questions, and it is startling how often we do not. Take for instance the Arthur Andersen email that went around their offices sometime before their downfall, asking members of the firm to check their emails to see if there was a ‘smoking gun’ therein.  No awkward questions followed. A follow up email clarified what was meant by ‘smoking gun’, and one might think of several awkward questions that this might prompt. None came back.

Chia suggests that we should be looking to develop the kind of virtues that enable questions to be articulated. At the heart of this is something about phronesis or practical wisdom- the capacity to reflect on the good and consider how we embody it in our practices. Once you do that then you are looking beyond narrow targets and simple strategies and into questions about the significance of what you are doing and what everybody else is doing. And all it needs is a simple question to get that going. So why is it so hard to ask questions in the workaday work place?

Why in the ordinary workplace do we need to be courageous to ask a question? Steven Caton explores this well (2010), in relation to the extraordinary workplace of Abu Ghraib.

Two things come to mind. First, to ask a question you need to be conscious of dissonance or some uncertainty. This means that you have to be conscious of what you are up to and the social environment in which you operate. This is why my four year old grandson is so good at asking questions; he is always on the look-out. Here, searching for answers trumps the dead hand of power, which tells you what you should be looking for. Second, it is precisely the dead hand of power which doesn’t want questions, and even characterises questions as ‘eccentric’. Hence, to speak questions to power needs courage.

Aristotle and Aquinas both saw consciousness and courage as central to the exercise of the virtues with wisdom at the centre. This is where Robert comes in on April 21st. Please do register and join us for an interesting presentation followed by stimulating Q&A – register here !

Simon Robinson

Director of the Centre for Governance, Leadership and Global Responsibility

Follow us on Twitter @leading360 

 

Integrated Reporting – A South African Perspective

The Centre for Governance, Leadership and Global Responsibility were delighted to welcome Pieter Conradie and Rene Swart, both from the University of Pretoria, South Africa, to Leeds Beckett University on 27^th January, to hear their insights into Integrated Reporting.

Pieter Conradie

Pieter Conradie is the Programme Director: Integrated Reporting, within the university’s Albert Luthuli Centre for Responsible Leadership, and has previously worked as an accountant, auditor and management consultant in a variety of public and private sector organisations. Rene Swart is a Senior Research: Integrated Reporting, within the same centre, and has a legal background. Both play an active role in promoting Integrated Reporting, with Pieter being involved in a committee to provide a discussion paper to the International Integrated Reporting Council (IIRC) regarding the assurance of Integrated Reports, while Rene is about to embark on a PhD to look at investor perspectives of Integrated Reporting.

Rene provided her insights into the Integrated Reporting education programme at the University of Pretoria, which was of interested to those attending from the Integrated Reporting Steering Group, as they about to embark on setting up a master’s degree module on Integrated Reporting. Rene discussed how their module, which involved students documenting weekly personal journals, had been well received by students and had challenged, and in many way changed, the way they viewed the world.

Pieter presented his insights into current and futures trends in Integrated Reporting, based on a systematic review of 175 academic and non-academic publications in the field of Integrated Reporting. Pieter highlighted some interesting issues which will certainly be of use to those in our Integrated Reporting Steering Group who are currently active in research in that area. In particular, he highlighted the importance of theory to perform empirical work, where he identified that of  the 28 papers found in ‘high quality’ journals, more than half were without theory.

Organisational level Integrated Reporting

Pieter also identified a focus on high level top down research, which creates little understanding of implementation on organisational level, and therefore calls for greater emphasis on individual and sector work to better understand Integrated Reporting implementation and for more research into specific industries, as well as a greater focus on assurance and investor perceptions. This was reassuring to hear, as the Integrated Reporting Steering Group has several researchers focusing on addressing many of these areas.

Pieter and Rene continue their promotion of Integrated reporting in the UK by hosting, in association with the British High Commission of Pretoria, UK Values Alliance, Old Mutual and ICAEW, a roundtable discussion in London to critically interrogate the concept of value within the context of Integrated Reporting and to experience and discuss the application of the values-based approach with thought leaders and multinational companies.

by Fiona Robertson

Fiona is a chartered accountant and a member of the ICAS corporate reporting committee. She is also a part time lecturer at Leeds Beckett University and is currently conducting a PhD focused on Integrated Reporting.  She has just concluded interviewing 15 UK organisations regarding their experiences with Integrated Reporting. @FionaRob1211