How to Manage and Lead in Uncertain Times ©
© Professor Chris Rowley.
Complygate, October 2021
Building on last month’s commentary on the impact of the Covid-19 global pandemic on the world of work, this month I look at why the uncertainty within events such as this makes them so difficult to manage and also why management’s responses to the same uncertainty varies globally.
We can look at this area in terms of the UK’s traditional excellence and global competitiveness in financial services and now the growing area of fintech given its importance for practitioners and policy makers due to the sector’s jobs, exports and tax revenues, especially to many economies with declining manufacturing sectors. This topic also feeds into part of the post-Brexit ‘global Britain’ agenda as well given many of the competitors to the UK are Asian.
Competitiveness of Financial Services Globally
Here the on-going series of reports produced as The Global Financial Centres Index is of use. The top 10 ranked centres include London at 2 with the Asian cities of Hong Kong at 3, Singapore at 4, Shanghai at 6 and Beijing at 8. Other Chinese centres are Shenzhen at 16, Guangzhou at 32, Chengdu at 37 and Qingdao at 38.
Alongside the main index, fintech is also analysed. Again, Chinese centres feature strongly, reflecting a focus on technology development. Interestingly, most Chinese centres rank higher for fintech than in the main index. Thus, in the top 10 Shanghai at 2 is above London at 3, with Beijing at 5, Shenzhen at 7 and Hong Kong at 8. Beyond this are the Chinese cities of Guangzhou at 13 and Qingdao at 26.
While we can debate the methodologies used, exact rankings and factors selected, of even more interest is what might be behind them as a grasp of this would aid not only leaders and mangers but also policy makers going forwards. Here there are twin factors that dove-tail in terms of views and perspectives on uncertainty and leadership. I will deal with each in turn.
The first factor is uncertainty, which varies in several ways. First, in terms of the certainty of what we know. This can be seen in the famous speech by Donald Rumsfeld (former US Secretary of State) in 1992 who noted that there are not only ‘known knowns’, the things that we know that we know and ‘known unknowns’, the things that we know we do not know, but also ‘unknown unknowns’, the things that we do not know we do not know. Given this, decision-making environments can be seen as located on a spectrum of level of ambiguity and chances of making a ‘bad’ decision under a trio of different conditions. At one extreme there is the nirvana of decision-making certainty, knowing the consequences of every choice. At the other extreme is uncertainty, where the probabilities of various outcomes are not known. In the middle is risk, where the probabilities of various outcomes are known. This is, we would hope, the decision making of the professional gambler.
Second, the uncertainty itself varies in several dimensions. Firstly, by ‘scale’, going from small to large. Secondly, by ‘velocity/speed’, moving from low to high. Thirdly, by ‘fluctuation’, with unclear patterns of evolution.
Third, people also vary in their acceptance and comfortableness with levels of uncertainty, risk and what is known. Why might this be? One explanation is culture. Here we can use the famous late, great Geert Hofstede. He distinguished six dimensions of culture, each on a spectrum from low to high, with countries mapped out on them (Hofstede and Minkov, 2010). ‘Uncertainty Avoidance’ was one such dimension. By this is meant people being more comfortable with ambiguity, with exemplar countries such as China, US and UK given, through to ambiguity creating anxiety, such as for people in Japan and France. This varied acceptance of uncertainty may have some explanatory power concerning the rise in Asia, especially China, of fintech given the huge uncertainties around it as a business and future. Of course, there are also institutional factors in explanations too, but they are beyond this short piece.
Furthermore, this point is even more important in cross-cultural settings and international teams in terms of what is taken for granted about uncertainty. This has key implications for leaders, managers, staff and policy makers in the fintech arena. In particular it requires fintech leaders that are effective. By this I mean their thoughts and actions can be seen in a ‘3Cs’ framework (Rowley and Ulrich, 2018). These are, first, ‘Context’, the philosophical views that shape norms and patterns in countries; second, ‘Culture’, the company’s unique culture and practices; and third, ‘Competence’, their personal style, traits and predispositions.
An integral component of the later ‘C’ is ‘skills’. This is not only technical skills, whose importance lessens as managers ascend fintech hierarchies, but also human skills and especially conceptual skills, which become ever more important the higher the management position in the organisation (Katz, 1955). Such conceptual skills are the mental ability to analyze and diagnose complex situations and which in turn requires critical thinking. This ‘squares the circle’ as fintech leaders need such skills and recognise the importance of differences in not only levels of uncertainty, but also of people’s comfortableness in operating within it. Asia can the face an ever brighter fintech future.
Uncertainty is an elastic concept and also people’s and business responses to it vary enormously globally. Leaders should not be naïvely seen as simply ‘born not made’ as trait theory contains too many holes. Rather, leaders are ‘made not born’, with definable, learnable skills. Putting these twin factors of uncertainty and leadership together helps explain why some countries, including the UK and US, but also China, are at the forefront of financial services and especially fintech.
Finally, in the bigger picture, this sort of perspective has radical implications for the government’s ‘global Britain’ ambitions with its focus on a wider, Asian world and innovative, hi-tech fields, which by very definition contain huge amounts of uncertainty. Leaders and businesses need to recognise this topic, especially in their dealings with internationally.
The Global Financial Centres Index, 30, September 2021.
Hofstede, G. and Minkov, M. (2010) ‘Long-/short term orientation: new perspectives’, Asia Pacific Business Review, 16 (4).
Katz, R. (1955) ‘Skills of an effective administrator’, Harvard Business Review, 33.
Rowley, C. and Ulrich, D. (2018) Leadership in the Asia Pacific. Routledge.