City Magazine 2014
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  1. Learning to lead
City Magazine 2014

Learning to lead

In the wake of the 2008 financial crisis, leaders and leadership in the business world came under greater scrutiny than ever before. Jeremy Hazlehurst explores how innovative approaches to education at Cass Business School are equipping today’s leaders for a dramatically different landscape.

Cass Exec AcademicsArguably the most extraordinary moment in the whole of the financial crisis that exploded five years ago came in the House of Commons Select Committee of 10th February 2009. MPs asked Sir Tom McKillip and Fred Goodwin, the former chairman and CEO of The Royal Bank of Scotland, and the leaders of HBOS, Andy Hornby and Lord Stevenson, whether they - the men who had presided over the collapse of both banks - had any formal banking qualifications. Between them, they did not have a single such qualification. Given their seniority, the revelation prompted incredulity among politicians and the wider public. This moment, perhaps more than any other, cemented the idea that the crisis was caused by a failure of leadership.

Almost all business disasters can be traced to a leadership problem. When BP spilled billions of gallons of oil into the Gulf of Mexico, Chief Executive Tony Heyward got the blame, and the sack. When it transpired that Enron was crooked, CEO Jeff Skilling and founder Kenneth Lay were found to be responsible. Windows' recent poor performance has been blamed on boss Steve Ballmer and over at Apple all eyes are on CEO Tim Cook. Can he fill Steve Jobs' shoes?

When things go wrong people rarely blame a firm's culture, or the shareholders' unreasonable expectations. They blame the leader. And when things go right, they put the credit squarely on the shoulder of the leader. Leadership matters and it's no surprise that it is central to research and education at Cass Business School and other institutions around the world. But how have the lessons of the 2008 crisis affected leadership education?

Leadership matters and it's no surprise that it is central to research and education at Cass Business School and other institutions around the world. But how have the lessons of the 2008 crisis affected leadership education?

How can business schools do their bit to make sure this generation of leaders avoids the disasters of the past? Can they become part of the solution and not part of the problem?

Part of the problem?

Post-2008, many argued that business schools, in placing too much emphasis on the importance of making money for shareholders, bore a share of the blame for the financial crisis. Such an emphasis, the argument followed, had led business leaders to abandon their scruples in the headlong pursuit of profit, encouraging them to ignore the messy realities of the world in favour of the bottom line. Articles in the Harvard Business Review, the New York Times and The Times shone an unprecedented spotlight on the role and mission of business schools.

Values and culture

The first way to look at these questions is to look at the type of leadership that is taught. According to Professor Cliff Oswick, Head of the Faculty of Management and Deputy Dean of Cass Business School, leadership education has changed in two main ways. "First, there is more values-based leadership, which is about authentic leadership; understanding what's right and wrong and doing the right thing," he says. He adds that this has "a strong ethical strand to it and aims to set strong ethical lines and ensure the leader adheres to those values."

The second change is that people are thinking more deeply about the notion of leadership and how it should be undertaken. There is a move away from the idea of "great leaders" and "rockstar CEOs." Those charismatic leaders who make all the decisions are hard to challenge.

Cass Business School is focusing on "leadership rather than leaders," says Oswick. Different types of decisions might be best made in different ways. If a budget needs to be cut, the boss might have to do that alone. But when it comes to allocating resources, everyone can, and should, be involved. "So it's a shared responsibility, rather than a single responsibility," Oswick says.

"Engaging a broader range of stakeholders means higher-quality decisions. We are seeing a move towards more democratic and participative forms of leadership," he adds. Novelties such as internal crowdsourcing are taking off in some industries and hierarchies are being replaced by networks. In future the best leaders might well "fly under the radar, because they are not looking for attention. They are engaged with the business," says Oswick.

This raises another interesting line of enquiry: are leaders actually all that important? And were they ever as important as the hype suggested? Professor Bobby Banerjee, Professor of Management at Cass, says that "the more we talk about individual wrong-doer s or do-gooders, the more we obscure what was systematically wrong" during the years leading up to the financial crisis, meaning among other things "the short-termism and the obsession with growth at any cost." He adds that the whole idea of the leader is a Western one. There is, he says, a "guru mentality" around the usually white, usually male CEO that is almost cultish and the dominant business culture tends to ignore complex things like a firm's philosophy, its management structure, the demands of shareholders or even whether its products are any good. Instead, there is a tendency to simply attribute credit or blame to the figurehead at the top, no matter what the truth.

Leaders are less important than the cultures they work in, goes this line of enquiry and many of the failed leaders who emerged during the crisis were at the head of macho organisations with a leadership style that was both autocratic and hands-off, meaning they would tell people what to do, then pay little attention to what they subsequently did.

All of this means that some business schools have not produced managers, but rather people who can use models. There is a need to ensure that leaders understand the ethical dimension of their jobs, which is one reason why Banerjee and others were asked to set up the ETHOS Centre for Responsible Enterprise at Cass, whose aim is to encourage "responsibility, sustainability and good governance" among business leaders.

Delivering innovation

The second way to address the question of how leadership education has changed is to ask how the courses are actually being delivered. If business schools are to educate effective 21st century leaders, they have a responsibility to ensure that the education is to hand when it is most needed, which is why at Cass Business School, executive education is increasingly being delivered in a "blended" way, with a mix of face-to-face, on-site courses, and remote, technology-enhanced learning.

This allows busy professionals who might not be able to spend time thoughtfully working their way through a long course to still dip into business education when they need to, allowing them to stay up-to-date with best practice and new thinking.

JoEllyn Prouty (CEO of Executive Education at Cass Business School) comments;

Executives benefit from moving to a blended format 

"But the trick is to find the right approach for the right experience and the right outcome at the right time." But that is not the same for everybody. "The willingness to do things virtually drops the further you go up the hierarchy in the organisational chart," Prouty McLaren points out.

So what can be done remotely, and what is best done face-to-face? "Enterprise activities and preparatory work are typically acceptable for online activity; while relationship building and discussions tend to be reserved for face-to-face,' says Prouty McLaren. "However, if organisations are more technically savvy, they can use new learning platforms to facilitate discussions and the socialisation of content virtually."

Blended approaches, says Prouty McLaren, are most in demand from "talent development-driven organisations." She goes on: "They know intuitively that development is one of the most critical talent magnets an employer has. The more they can offer great learning and development to the entire organisation, the better their employer brand will be and the better their talent will be aligned."

Leadership has always been one of the most important fields of education and research in business and the failures of recent years have spurred new recognition of the critical role that business schools play. Understanding the nature, promise and limitations of leadership is critical, but research is just part of the solution. As the Cass experience shows, innovative approaches to learning, which allow busy leaders to access knowledge and benefit from academic expertise, is equally key, if tomorrow's leaders are to be a better-rounded and more thoughtful group of men and women.