Australian Banking Royal Commission — The leadership imperative
The banking royal commission was a big story in Australia this year and likely to have major repercussions to the banking industry and regulations here in Australia and across the globe. After seven rounds of grueling public hearings over 68 days, with more than 130 witnesses and review of over 10,000 public submissions, the Australian banking royal commission has made an impressive 76 recommendations. The government has agreed to ‘act’ on all the recommendations. Even if the government whole-heartedly agrees to fully implement all the recommendations will that fix the woes of our financial system and sustain it?
The answer is most likely, NO.
A lot of things have gone right for so far. The royal commission has done a commendable job of collecting a significant amount of evidence given time restrictions. The findings are comprehensive enough to support all 76 recommendations. The ‘Shock and Orr’ performance has won over the public. The commissioner’s refusal to shake hands with treasurer speaks volumes on the independence it has tried to maintain from the government and associated lobby groups. Of course, there may be questions on whether the recommendations are far-reaching enough. There are no radically new proposals to alter the existing structure of the system and lack of criminal indictment of the actors involved.
In the end there is a sense that recommendations are reasonably well balanced to achieve the intended outcome.
So, what’s the problem?
This is a once in a lifetime opportunity to get it right and fix the system for future generations. The intended outcome is ultimately about achieving higher order values such as trust, honesty, and conscience in our financial system and broadly our society. The problem lies in the brand of leadership required to achieve this.
Over the years the leadership has been drifting without a firm anchor and finds itself in the shallow and murky waters of constantly growing individualism and thirst to achieve material pleasures. The brand of leadership required to achieve profitability is quite different from the brand of leadership required to fully appreciate socio-economic implications while at it. Just look at Trump. Leadership today has evolved to suite achieve our material needs rather than helping to set and maintaining higher standards of living. Today’s leadership is scientific and rigorous. It has many types, even more, attributes and enough details to make us believe we understand it.
Leadership appears to be more about ‘exhibiting’ the qualities of a leader rather than ‘being’ one.
Leadership is an enduring quality and there is no science to this. If I may indulge, this idea of applying a scientific approach to a non-scientific problem appears to have come from Rene Descartes — the father of ‘modern philosophy and science’.
Descartes postulated that the human body is like a well-made clock implying that you understand the parts you understand the whole. This was a very powerful idea as it simplified everything, in some cases rather simplistically, without preserving the original meaning.
We now know that the human body doesn’t obey the well-made clock theory but the application of this ‘scientific’ idea has led to a siloed classification of the study of medicine and hence more specialists. Ask anyone who visits two or more specialist doctors and will tell you the horrible side effects as body and medicines interact in complex ways.
Describing this brand of leadership is a bit like describing how to ride a bicycle. You can write a list of instructions to ride a bike but actual riding itself is more than that — a piece of wisdom from my 8-year-old. It is true, your body does something amazing to keep you ‘upright’ and ‘balanced’ while you pedal, apply brakes, turn handles, etc. Great leaders are rare but we all have examples of these leaders. The ones who have brought the best in you and you have thoroughly enjoyed working with but can’t exactly pinpoint how or why. It is because describing this brand of leadership is beyond the reach of any language and impossible to learn from theories.
‘The whole is bigger than sum of its parts’ — Aristotle. It is definitely true when it comes to leadership.
Why is this important now?
A well-balanced, intuitive and ethical leadership has always been important but even more so now as we try to transform our financial system. Implementing 76 recommendations methodically with legislation and legal frameworks will not be sufficient to achieve the desired higher order outcomes such as trust, honesty, and conscience. This is what Hayne probably meant when he lamented on lack of proper application of existing legislative and legal frameworks.
The question is do we have the right leadership at the federal, state, regulator and enterprise levels to take up this challenge? My personal opinion is that we are not promoting this brand of leadership yet. The focus is still on specialized leadership to achieve specific objectives and we are all feeling the horrible side effects. This probably explains the plight of our politics, our sports and more broadly our society. We cannot afford to lose sight of the ‘whole’ while we work on specifics. We need firm principles and values based anchor to harmonize and balance all forces acting on our structural systems. It is hard to emphasize the fragility and precariousness of this balance and so is the importance of leadership required to safeguard it.
When a system fails we are all in it together and we are accountable. May be something to ponder about when we vote or promote our next leader.
This story was originally published on LinkedIn.