Business Publications

Document Type

Working Paper

Publication Date

2010

Abstract

Recent books and articles have analyzed the causes of the global financial and economic crisis of 2007-09. Yet little attention has been paid to the quality of leadership in organizations that were at the epicentre of the storm, were victims of it, avoided it or even prospered from it. In the summer of 2009 a multi-disciplinary group of Ivey faculty decided to look at the leadership dimensions of the recent financial and economic crisis. We started by writing a working paper that laid out our preliminary views. We then engaged more than 300 business, public sector and not-for-profit leaders in small and large groups, as individuals and collectives, to get their reaction to this paper and, more generally, to discuss the role that organizational leadership played before, during and after the crisis. We examined leadership not just in the financial sector but also in many other public and private sector organizations that were affected by the crisis. In a sense, we were putting leadership on trial. Our aim in doing this was not to identify and assign blame. Rather, we examined leadership during this critical period in recent history to learn what we could, and use the learning to improve the practice of leadership today and the development of next generation leaders. As we analyzed the role of leadership in this crisis we were faced with one major question: “Would better leadership have made a difference?” Our answer is unequivocal: “Yes!” We recognize that many people could argue it is unfair to criticize leaders whose decisions were based on their knowledge of the situation at the time and which only eventually, with the aid of 20/20 hindsight, proved bad. We respect this view but we disagree with it. Some business and public sector leaders predicted better than others the bursting of the housing bubble and financial markets turmoil, positioned their organizations to avoid problems, and coped with them skillfully. Their organizations were not badly damaged by the crisis and some even prospered. Some governments and regulatory agencies’ control and monitoring systems were superior to those in the U.S., the U.K., Ireland, Spain, Iceland and other countries that had to bail out their banks and other industries. Our evidence supports the conclusion that these companies, these agencies, these governments and these countries had better leadership. Good leadership mattered then and good leadership will matter in the future. We are presenting our conclusions about what good leadership involves in the form of a public statement of principles—a manifesto that addresses what good leaders do, who they are, and how they can be developed in organizations.

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