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Leadership Lessons In A Time Of Global Turbulence

Johanna Hising DiFabio,
Assistant Dean, Executive Degree Programs

This is a year when just stopping our heads from spinning for a day is an achievement to be celebrated. In the leadership realm, however, the weary have been afforded little rest. Yet, this is what leaders train for and how they define their careers. This is an opportunity to think about the management of organizations deeply, scientifically, humanely, holistically—and to find our way through an unprecedented set of crises that are testing our systems and challenging us to accomplish more than we ever have.

So, what better time for our faculty and alumni around the world who are on the front lines of decision-making to share their stories of challenge and opportunity, optimism and concern. In some cases, the lessons learned during years of study and practice have proven robust and provided the foundation of resilience and recovery. In others, the strategies may have been learned but not yet implemented. In all cases, we hear that people and ideas matter and that optimism, ingenuity, and a tireless pursuit of solutions will carry us through.

 

 

Acknowledge Uncertainty And Learn As You Go

Antoinette Schoar, Stewart C. Myers-Horn Family Professor of Finance and Entrepreneurship at MIT Sloan

“The foundation of successful leadership during turbulent times is trust—gaining it and granting it,” says Antoinette Schoar, the Stewart C. Myers-Horn Family Professor of Finance and Entrepreneurship at MIT Sloan. It sounds simple, but Schoar points out that this essential building block was not universally set in place by global leaders during the COVID-19 pandemic. “This crisis has introduced unprecedented levels of uncertainty into our lives, and we must be able to trust our leaders in order to find our collective way through it. Unfortunately, some leaders have done more to erode trust than to build it.”

The first step toward gaining trust during such turbulence is to admit the limits of your knowledge. “If you look around the world at governments that have been most effective in containing the virus, a key common denominator is humility,” says Schoar. In countries such as Germany, South Korea, and Japan, leaders quickly acknowledged that the list of unknowns about the virus was much longer than the list of knowns. They communicated the need for coordinated efforts and tradeoffs even as they admitted that they could not yet say exactly what those tradeoffs would be.”

As a result, Schoar notes, people in those countries were more likely to believe that evolving guidelines and restrictions were based on the latest and best understanding of the facts associated with the pandemic—and to follow the advice of their leaders. By contrast, countries that have performed poorly on compliance and containment are led by individuals who projected certainty early on at a time when there was no certainty. “The problem is that when those leaders had to backtrack or change course, people lost faith in the measures they were asked to adopt. At that point, coordinated responses became much more difficult and containment almost impossible,” she says.

Granting trust is as important as gaining it
Leaders of private organizations face the same challenge when it comes to gaining the trust of their workforces. The natural tendency is to say nothing until a new plan is in place, but even a brief lapse in communication during a crisis can erode trust. A CEO who acknowledges at the outset that it’s too soon to know who will return to work when and under what conditions, for example, has more credibility when tough decisions are implemented.

At the same time, Schoar believes company leaders must learn to demonstrate trust in their employees in new ways. “Before the pandemic, executives and managers tended to rely on inputs such as seeing how much time people spent in the office to assess performance. Longer hours were taken to mean greater productivity. That metric no longer exists when everyone is working from home.”

In its place, companies are looking at outputs to measure performance. “It takes a different mindset to rely on the products and solutions your employees are producing as the leading indicator of productivity,” Schoar says. “You must trust that your processes and your staff will deliver even when you’re not continually watching over them. And if someone can get the job done in their pajamas during the pandemic, why not continue with that approach after the crisis has abated?”

Not Making Choices Is Choosing

Retsef Levi, J. Spencer Standish (1945) Professor of Management at MIT Sloan and codirector of the Leaders for Global Operations (LGO) program

“The operations of most enterprises and organizations during normal times are designed to address many sources of uncertainty,” says Retsef Levi, the J. Spencer Standish (1945) Professor of Management at MIT Sloan and codirector of the Leaders for Global Operations (LGO) program. “Airlines, for example, have plans to address weather uncertainty, and hospitals are prepared to handle variable loads on their emergency departments.” Levi explains that operating schemes of enterprises across many industries and sectors such as retail, healthcare, transportation, construction, and energy all have underlying assumptions when it comes to which factors of uncertainty are likely to occur.

When organizations experience a shock to the system as in the current pandemic, however, many of those assumptions no longer hold. “This is what we call irregular operation (IROP) conditions,” Levi says. “Being ready to handle IROPs is critical to being resilient. ” He notes that the unprecedented nature of COVID-19 is upending operations with atypical breadth and speed. “This crisis is distinct among most IROP events because it is affecting the entire world simultaneously—including demand and supply. COVID-19 has turned the global supply chain for personal protective equipment (PPE)upside down, compromising many supply sources and, at the same time, dramatically increasing global demand.Everyone is affected in some way.”

The need for new playbooks
Successful leadership during this crisis requires three attributes that, in Levi’s view, most leaders lack today. “You must have the ability to execute and to understand operational execution at a considerable level of detail. Without that knowledge, you are at a disadvantage in trying to invent ways of operating and executing under new and fundamentally different operating conditions,” he says.

Closely related to the ability to execute is optimism, Levi believes. ”If you are not optimistic, you won’t be able to weather the storm and keep working until you find a new direction. You must be able to instill hope in people that these new challenges can be overcome. That’s why optimism and execution must go hand in hand. If you are not executing, the people you are trying to lead will lose hope no matter how much optimism you project.”

The choices we don’t want to make
The third element Levi sees as essential to leading during the pandemic is establishing a very clear set of priorities that enables people to understand the potential tradeoffs that must be considered. “For most of us,” he notes, “having to choose between privacy and public health, personal freedom and reasonable compliance, hunger and death, is unchartered territory. In Western cultures, we do not like to make such decisions. By not choosing, however, we have made our choices, and the probable outcomes are worse on multiple levels.”

The key, says Levi, is being able to make informed choices based on data. “I wish we could just start making sense,” says Levi. “When we seek and share and continue to gather good data, we can have much more productive conversations about the choices before us. With solid data, being good at execution and optimism is that much easier.”

On the leadership frontier, Levi sees the current crisis as a proof-of-concept for the MIT Sloan School of Management. “We are one of the few management schools that builds its curriculum around these three elements. Our mission is driven by an optimistic vision for human progress. We are all about execution and inventing new ways to operate in the world. And appreciating the value of good data is part of our MIT DNA. Now, it comes down to teamwork. It’s too soon to declare success in the effort to reopen MIT, but we won’t fail for lack of effort. Many people on dozens of teams have been working around the clock to make this happen. In my experience, great teams never give up and always find a way to win.”

Two Inflection Points, One Strategic Vision

 

Mark Anthony Thomas, SF ’14

Pittsburgh Regional Alliance (PRA) President Mark Anthony Thomas, SF ’14, was recruited as a disruptor. “I’ve always been a nontraditional person in my roles,” says Thomas, “and leading the PRA is no exception. My appointment in 2019 came with a clear understanding that I would not be taking a business-as-usual approach.” As PRA president, Thomas is responsible for creating, developing, and executing the area’s economic development strategy to drive job creation and business investment.

He spent his first four months on the job getting to know PRA’s 10-county territory. “I saw the suffering in the American economy up close and personal in our region,” Thomas recalls. “But I also saw that Pittsburgh has the key components of many of the world’s great cities—physical infrastructure, outstanding higher education, vibrant arts and cultural scene—plus an advantage that urban centers such as Boston, New York, and San Francisco don’t have. We’re affordable.”

New plan, newer delivery systems
Thomas’ strategic vision for the PRA debuted in late 2019, and the plan was to begin showcasing the rebranded Pittsburgh regional market to stakeholders and investors in early 2020. “We were ramping up just as COVID-19 hit the U.S., and in-person business activities were shutting down,” he says. “It was a tough blow because we now had to sell people on a place they couldn’t visit.”

The stay-at-home orders also constrained one of Thomas’ most effective tools—his charisma. “Meeting with people and sharing our story is one of my favorite parts of the job,” he says. The PRA team lost no time, however, in finding partners and tools to transform their outreach into virtual experiences. “I was pleasantly surprised to find that my connectivity with stakeholders actually increased,” says Thomas. “And our strategic vision is perfectly aligned with the needs heightened by this crisis. Plus, our partners are more motivated than ever to devote attention and resources to economic development.”

Turning two inflection points into lasting progress
Even as public and private sector leaders around the country grappled with the challenges and opportunities posed by the pandemic, the murder of George Floyd in Minneapolis on May 25, 2020 introduced a second seismic shift in public consciousness. “It was clear almost immediately that this was the moment for the country to recognize that African Americans want to reap the full benefits of American citizenship,” says Thomas. “As a person who has successfully navigated the labyrinth of obstacles designed to keep Black people from succeeding in America, I feel uniquely empowered to use my voice to push change.”

Thomas says that these two inflection points have triggered an acceleration of engagement at the local and regional levels. “In the Pittsburgh region, for example, expedited permitting processes and increased support for economically depressed communities are being discussed and implemented at a pace we never could have achieved through conventional advocacy. The challenge going forward will be to keep stakeholders focused on promoting the next ten years of progress once the street protests subside and public attention is drawn to other issues.”

Navigating Turbulence With Clarity Of Purpose

Percival Barretto Ko, SF ’11

“It’s natural to react to a crisis in a purely tactical manner,” says Astellas Pharma President Percival Barretto-Ko, SF ’11. “When you do, however, you risk losing the connection to your purpose, your story. By that I mean, what is the narrative thread of our company that carries us through periods of turmoil? If you have clarity of purpose, the same story line should serve you just as well in bad times as in good.”

Barretto-Ko became laser-focused on narrative continuity in early January 2020 when he first heard news of the global spread of the novel coronavirus. With more than 17,000 employees, Astellas Pharma has offices in nearly every corner of the world, so the implications put Barretto-Ko on red alert. Perceiving a potentially massive threat, he quickly assembled a crisis task force to assess the implications of various pandemic scenarios.

“My charge to the task force was to build our response on the three pillars that provide our clarity of purpose—patients, people, and performance,” says Barretto-Ko. “Astellas has always put the patient first. Then we do everything we can to support and celebrate our people in their efforts to fulfill that mandate. When you have a singular focus on the patient and the right people in place, performance naturally follows.”

Translating themes into tactics
Astellas’ priorities focused first on patient continuity. “We made sure  that our supply chain was robust and that patients continued to receive the medicines they need,” Barretto-Ko explains. “We also launched affordability measures so that financial hardship would not be a barrier to treatments.”

For its people, Astellas was one of the first pharma companies to pull its labor force from the field and out of harm’s way. In keeping with Barretto-Ko’s commitment to his staff, the company created a comprehensive benefits package that included mental health services, flexible working arrangements, even job-seeking assistance for employees’ family members laid off during the shutdown. “At the end of the day,” he says, “we knew that if we delivered on our values for our own people that they, in turn, would perform on behalf of our patients.”

Jumping the innovation curve
With these fundamentals well in hand, Barretto-Ko also has been contemplating his longer-term vision. “One of the enduring takeaways from my year in the MIT Sloan Fellows Program was to think creatively in the midst of a crisis. When you’re on the hamster wheel of day-to-day business, you tend to inch along an existing curve of innovation. Instability, on the other hand, can knock you off that curve and onto a new one that you might not have landed on for years—if ever. Innovation is at the heart of who we are at Astellas. It’s in our DNA. This new normal will undoubtedly provide us the opportunity to continually innovate while staying true to our narrative.”

Catching The Updraft Of A Global Pandemic

 

Sarah-Kennedy, SF ’11

Calocurb Ltd. CEO Sarah Kennedy, SF ’11, clearly understands how fortunate she and her company have been in the time of COVID-19. The enterprise she leads is a New Zealand-based, business-to-consumer wellness product manufacturer with high profiles in Australasia, China, and the U.S. “Understandably, the pandemic has heightened everyone’s attention to health,” says Kennedy. “Our product lines support that, and our connections with customers are all web-based, so much of our business has continued as usual.”

Which is not to say that Kennedy has ever taken her company’s enviable position for granted. A lifelong New Zealander, she learned early on that her ventures had to achieve a higher level of online engagement than the competition in order to succeed in the world’s most populous markets. “I’ve always worked remotely and relied heavily on digital tools,” she says. “That’s a given for any New Zealand-based global business. But we also implemented several new measures as soon as the country went into lockdown.”

For starters, Kennedy dropped her salary to zero for the month of March and sent everyone home except essential manufacturing staff. She also pulled back on advertising during the initial wave of emotional and cultural shock caused by the pandemic. Most important, she authorized financial benefits to her companies’ contractors that matched the subsidies being provided by the government, ensuring that the contractors received at least 80% of their previous wages for 12 weeks.

Big lessons from a tiny nation surrounded by water
Kennedy has spent much of her career pushing beyond the perceived boundaries of being from a small country that many of her American colleagues couldn’t identify on a map twenty years ago. “Our location forced us early on to adopt technologies and strategies—including distributed manufacturing—to overcome our geographic limitations,” she says. “When economic activity was being suspended around the world, our biggest challenge was a slow-down in global shipping. Fortunately, our three U.S. manufacturing plants were able to stay online and fulfill orders in a timely way.” Her country’s decade-long trading posture with China is also a benefit. “Selling in China is a well-worn path for New Zealand businesses,” says Kennedy. “We’re going through the regulatory process and don’t expect our expansion plans to be affected by the pandemic.”

While New Zealand’s geography and culture were advantageous when it came to containing the spread of COVID-19, Kennedy believes that the leadership style of Prime Minister Jacinda Ardern was pivotal. “New Zealanders were very accepting of the need for an early lockdown,” notes Kennedy. “Compliance with directives about masks, physical distancing, and business and travel restrictions was nearly universal. Our relatively small population and lack of land borders helped, of course. But I also think we’ve shown the world that swift, decisive action and clear, consistent communication are two of the most important attributes a leader can exhibit during a crisis such as COVID-19.”

Landing A Jumbo Jet In A Hurricane

Mikko Uusitalo, SF ’08

An aviation metaphor is particularly apt for the high-growth enterprise EDZCOM that Mikko Uusitalo, SF ’08, founded in 2014. The company—which operates the fastest high-performance private network systems in Finland for demanding environments such as energy plants, mining operations, and transportation hubs— counts Helsinki-Vantaa International Airport among its high-profile clients.

Uusitalo and his team labored for six years to bring their venture to a cruising altitude that would attract a buyer in the global telecommunications sector. EDZCOM was on a glide path to a successful exit in early 2020, just when the dark clouds and choppy air of the global pandemic appeared on the horizon.

Uusitalo admits that he found the moment when he had to send people home a bit terrifying. “I was very worried about losing visibility and control over the direction of our business at a crucial time in its development. Plus, we took a significant hit in revenue. The fact that the hit turned out to be temporary didn’t make it any less scary. We just didn’t know where things might be headed.” As a small, high-growth company, however, EDZCOM was fortunate to have the agility to protect its most important asset—people.

Drawing on a reservoir of trust
When Uusitalo caught his breath, he recognized that trust would be key to moving forward. “The prior six years had been all about choosing the right people and building the right teams,” he says. “Trusting them was much more than just a business necessity. It was an affirmation of what we’d all been working to build together since 2014. We embraced the risk and kept everyone working.”

Uusitalo’s trust was well placed. After an initial slowdown, EDZCOM was back to growing its customer base. That can-do spirit also attracted a buyer—an established company with deep pockets and big expansion plans, the perfect match for EDZCOM’s growth posture. “It turned out to be one of the best springs we’ve ever had, and the due diligence process went very well,” he says. “I never would have imagined we could exit so smoothly in the midst of all this turmoil.”

Lessons for the next phase of growth
One of the most important lessons Uusitalo plans to carry forward from the pandemic is the need for a more sophisticated business intelligence system. “We were lucky that the size and commitment of our workforce enabled us to stay on task in the midst of so much uncertainty,” he says. “But we have big plans to scale up in the next phase of EDZCOM’s existence, and we must be prepared to support our people in achieving their objectives in a more robust and sustainable fashion.”

Uusitalo and most of his team are happily back in the office now, a development he credits to quick and decisive action by Finnish leaders early in the COVID-19 outbreak. Under such extreme circumstances, he says, you hope that you will have the insight to make the right calls at the right times. That’s why he is dedicating time now to scenario planning for the next 24 to 36 months in Europe. “I have no crystal ball, but I do have an incredible global network thanks to MIT. Tapping into that is the best way I know of building a vision of what the future may be.”

 

 

Surfing The Waves Of Four Crises

If you ask Rocio Fonseca, SF ’14 , how she is tackling the present crisis, don’t be surprised if she retorts, “Which one?” Before the onset of the COVID-19 pandemic, Fonseca, Chief Innovation Officer of the Chilean Economic Development Agency (CORFO), was navigating three other nationwide challenges—severe economic inequality, social unrest, and the climate crisis. The stakes on each are high. Chile must rapidly innovate its way out of 200 years of institutional siloing or face even more serious economic, social, and public health and safety consequences.

Rocio Fonseca, SF ’14

“Leadership must be collaborative to tackle all these crises simultaneously,” says Fonseca. “No individual could master even one of these challenges during normal times and certainly not during a pandemic. That’s why we’ve tried to reduce each of these problems to its component parts and created multidisciplinary teams to address specific aspects of each. This approach allows us to work in parallel and greatly accelerate our activities.”

Building trust across multiple generations
Fonseca says that a big part of her job at present is helping people in small- and mid-sized enterprises (SMEs) understand the need for innovation. “A majority of Chilean SMEs believe that technological innovation is just for large corporations,” she says. “To make inroads, we must win the trust of multiple generations in family businesses and modest enterprises. And that requires a lot of personal engagement.”

CORFO is a public agency, and Fonseca is required to meet annual targets for her outreach efforts. “Before the pandemic, our typical in-person business roundtable or training course included approximately 50 enterprises, and our goal for the year was to connect with 800 companies,” she explains. “When the lockdown began, my boss offered to lower that requirement. Instead, we expanded our use of existing technologies and began connecting with regions of the country we’d never reached before. By the end of June, we’d engaged with more than 5,000 enterprises.”

The energizing effect of a positive vision
CORFO’s programs for SMEs are very practical and highly relevant to surviving the pandemic—creating an online presence, generating new sources of income, and reducing costs. “Once we establish a relationship,” says Fonseca, “we have the opportunity to impart a positive, longer-term vision for Chilean society. For many, it’s the first time they’ve ever heard about the circular economy or how greening their businesses will add overall value to the GDP.”

Fonseca’s annual budget includes roughly USD$60 million in grants to help SMEs go green and adopt innovative technologies. “Beyond the money, though, people are inspired by the fact that invention is a way of capitalizing on all our strengths and promoting the very best our country has to offer. They’re beginning to see these multiple crises in a new light—this is the biggest opportunity for transformation in Chilean history.”

 

Lessons From The Second Law Of Thermodynamics

Thad Allen, SF ’89

In the realm of crisis management, few leaders have as venerable a reputation as Thad Allen, SF ’89. Former Commandant of the United States Coast Guard, Allen has been summoned by the country’s leaders to tackle the most formidable challenges of their presidencies. Former President George W. Bush called on Allen to reboot the disastrous Hurricane Katrina recovery effort, and when the Deep Water Horizon oil spill defied containment, former President Barack Obama asked Allen to take the helm. In each case, he turned around the situation with stunning alacrity.

Today, as Senior Executive Advisor at Booz Allen Hamilton, Thad Allen’s legendary wisdom is still very much in demand. And it stands to reason he has definite ideas about the core requirements of leadership in the throes of a global pandemic. “It all boils down to the second law of thermodynamics,” he says. “The world is becoming more and more complex, more chaotic, more ambiguous. Globalization—on both a micro and macro level—is driving this. So is climate change, which is launching an increasing number of weather-related catastrophes—and, of course, technology, especially social media.”

But Allen makes it clear that we must run toward these challenges, embrace them, understand them, not put our heads down and wish for things to normalize. “Status quo is an oxymoron,” he says. “Every microsecond on earth, we are in a different world.” Catastrophes like hurricanes, nuclear fall-out, and pandemics don’t respect borders, he adds. “Oceans don’t know which coastline belongs to which country. Ebola and COVID-19 don’t stop at the border and wait for a visa. The world has evolved. Yes, globalization has opened up transmission paths for pandemics, but we’ve seen many benefits from globalization as well. When you look at an international crisis and try to solve it with a political point of view, you will inevitably get the wrong answer.”

Technology has advanced beyond us
Technology, Allen says, is also global, spilling across continents and time zones without heed of national boundaries—and it is expanding more rapidly than the legal frameworks and international laws that must govern it. “The sophistication of technology is accelerating and, with it, our inability as a society to adjust to it. Our governments, law enforcement agencies, and other legal entities are falling further and further behind while the consequences of that inadequacy become more critical.”

We’re a digital society, Allen adds, “but we don’t know how to be good digital citizens. It’s like when humans discovered fire and were burned by it. The internet has become an ungoverned jungle. The fact is, however, that you can’t remove yourself from the digital environment. That ship has sailed. We’ve democratized data, but it’s a power we don’t yet know how to manage.”

Not surprising, Allen is somewhat obsessed with “black swans”: rare, unpredictable events with severe consequences that were obvious in hindsight. “We need to increase our understanding of how to perceive and adapt to complex situations. Novel events like this pandemic will continually challenge us and our legal and political frameworks, many of which are no longer relevant in the 21st-century.”

He notes that smart decisions are based on the best available science, but the intrusion of politics means that scientific solutions have become proprietary. Sharing knowledge—or even vaccines—across borders is becoming a greater and greater challenge. “When we mix politics and crisis management,” Allen warns, “we fail at both.”

One of the lessons humanity needs to learn, Allen believes, is about collaboration. “What is the answer to turbulence? Quite simply: coproduction. No single person can solve the complex problems challenging the world today. It has become a matter of working together to create frameworks and coproduce outcomes. That’s the overarching paradigm in all the efforts I’ve been involved with. Figure out a value proposition, bring it to bear, and unify the efforts. The best crisis management is the product of team effort.”

 

 

The Time For Thinking Big Is Now

Célestin Monga, SF’95

As our work lives shrink to the size of laptop screens. As our personal lives contract to the size of a room, an apartment, or—if we’re lucky—a house and garden. Even as our minds are narrowed relentlessly to the immediate necessities of day-to-day life, Célestin Monga, SF ’95, says loud and clear that we should be thinking bigger and broader than ever. Monga, a visiting professor of public policy at the Harvard Kennedy School, former Managing Director at the United Nations, and former World Bank Senior Economic Advisor, believes that “the opportunity for leadership during a time of crisis starts with a new vision. We must think beyond what we see today and articulate what we want see a decade from now.”

Monga, who is Cameroonian, contends that it would take only a handful of well-situated world leaders to set audacious new goals for addressing global problems. “The worldwide challenges exposed or exacerbated by the pandemic—poverty, armed conflicts, disorderly migration, disease—simply do not respect political boundaries. We need just a handful of political leaders from rich countries to embrace new goals that transcend political posturing to catalyze new solutions. And we can make a strong case that this new covenant for global development will bring greater economic prosperity to everyone involved.”

Opportunities on the African continent
Two macroeconomic realities loom large in Monga’s thinking. First, the biggest problem for producers worldwide is a lack of global demand. “We simply don’t have enough consumers willing to spend money,” he says, “and that’s not a function of the pandemic. If rich countries directed a small portion of their capital, equipment, and expertise to African countries, the uptick in demand would far outweigh the upfront expense of thoughtful investments.”

Monga’s second point is that charity is a poor use of the excess capital sitting idle in the world’s richest countries in Europe, Asia, the Middle East, and North America. “We should be channeling these funds into profitable new ventures in Africa and other developing regions,” he contends. “We already have the institutional infrastructure—the World Bank, the African Development Bank, the UN Industrial Development Organization, and a good many NGOs—to identify trustworthy partners, ensure transparency, and guarantee returns to investors, be they private or public.”

Investments  in prosperity, stability, and peace
Monga lays out his case in greater detail in two recent articles for Project Syndicate (“Economic Policies to Combat COVID-19 in Africa” and “The Misguided War on Global Value Chains”) as well as in the African Development Bank’s 2019 policy research document “Creating Decent Jobs: Strategies, Policies, and Instruments.” Policies that help fight the pandemic, he argues, will also lay the groundwork for global economic recovery and a new vision of sustainable development and prosperity.

“The quality of leadership in most African countries is improving, and the demographics of the continent are forcing government officials to generate solutions to their societies’ problems. With the resources and expertise of richer countries and seal-of-approval guarantees from international organizations, the returns to investors would be substantial. And the broader benefits to the world of societal transformations across the African continent would be incalculable.”