Three Lessons from Brexit for Business Leaders
The situation in
Britain mirrors an even thornier leadership crisis affecting the business
world.
The outcome of the Brexit referendum
surprised the entire world. Although advance polls suggested a close contest,
it was difficult to imagine that, when it came down to it, the British public
would defy the urging of both major political parties and more than 40 years of
integration within Europe. When David Cameron announced he would step down as
British Prime Minister, there was no longer any doubt that 23 June was not only
about the European Union — it was also a referendum on the leaders in London.
Too late, both Labour and Conservatives discovered how out of touch they had
become with British voters.
I believe a similar crisis of leadership
exists in the business world today. Interestingly, McKinsey research informs us
that 70 percent of strategic change efforts fail to meet
their targets, a figure that corresponds almost exactly to the percentage
of employees who are disengaged at work.
Just as most of the referendum voters rejected Cameron’s invocations of
economic prosperity, so today’s employees aren’t seeing what the strategic
plans of senior leaders have to do with them. Cameron’s failure holds three
important lessons in particular for managers and senior leaders.
Facts aren’t enough
As the Remain proponents nurse their wounds,
many have complained that the Leave voters were driven by emotions, not cool
heads. If their emotions had not been manipulated by Boris Johnson, Michael
Gove, and the other chief Leave proponents, the rock-solid arguments of Remain
would have won the day.
In fact, Cameron’s “cool, calm and collected”
rhetorical style — relying on logic and numbers rather than emotional
engagement — mirrored a mistake business leaders commonly make. The dominant
mental models of “professionalism” exclude emotion, particularly negative
emotion, from the repertoire of accepted behaviours. The political scene in
buttoned-up Britain may be especially susceptible to this.
To already sceptical ears, facts by
themselves sound manufactured. People care less about facts per se than
the implications of these facts to their well-being. For example, an oil price
decline (a fact) can benefit some business sectors (air transport) and hurt
others (oil exploration). The long-term net impact on people’s personal
well-being is unclear. Implications of facts can thus be equivocal and
interpreted in divergent ways, as debates on global warming or foreign
immigration have shown.
Indeed, both sides of the Brexit debate
offered various facts to support their arguments. The pile-up of competing
promises and predictions left the public confused at best, cynical at worst.
The Leave campaign won over non-Londoners by speaking to the anxiety and pain
of people who felt left behind by globalisation. In the end, it didn’t matter
to voters that both Johnson and Cameron attended elite Eton College; what
counted was that Johnson’s statements resonated with their own grievances and
anti-establishment sentiments.
It does no good to deny that humans are
emotional as well as rational. A campaign that elicits both emotional
engagement and intellectual understanding has a huge advantage over one that
appeals mainly to rationality.
Promotion and
prevention
Much of the Remain campaign hinged on
predictions of economic disaster should Britain leave the EU—in other words,
fear. However, Johnson and Gove were able to neutralise these warnings,
dismissing them as “scaremongering” while touting the economic benefits to be
reaped by a Britain unshackled from Europe. Some have speculated that Leave
tapped into a widely held, latent nostalgia for the days of Empire, when
Britain’s global economic dominance went all but unchallenged.
According to a 2001 study, human motivation can be oriented toward
prevention, i.e. the avoidance of danger, or promotion, i.e. accomplishing
development and growth. An argument (such as Remain) centred on motivating
people through prevention (fear) will appear weak next to one that uses both
prevention and promotion (eliciting hope and pride) to convince. Cameron should
have put much more emphasis on the brighter future in store if Britain stuck
with the EU.
The lack of positive reinforcement on the
Remain side may have contributed to the widespread perception that Cameron and
Labour leader Jeremy Corbyn were half-hearted in their support of the EU.
Relying on fear mainly — like many dictators do — is seldom a sustainable
tactic to convince people of anything, even your own sincerity.
Respectful
authenticity
I have written elsewhere about the importance of respectful authenticity —
alignment between thought, action and feelings — as key enabler of emotional
capital to inspire collective action. Leaders advocating change programmes must
speak from a place of heartfelt conviction rather than obligation. The
appearance of anything less only exacerbates mistrust.
Cameron and Corbyn, as I said above, were
often portrayed in the media as double-dealers masking their ambivalence about
the European Union out of careerist convenience. The Prime Minister’s
credibility was dealt a crushing blow, for example, when reporters unearthed
old columns he had written for his local paper containing fierce criticisms of
Brussels policies. Cameron’s apparent double-talk made the Leave leaders come
off all the more consistent and unhypocritical by comparison.
Credibility and authenticity are closely
linked, and people are quite sensitive to the slightest suggestion of
hypocrisy. Make sure both your communication and the people you select as chief
communicators are consistent and genuinely committed. The medium is as
important as the message.
Next steps for
Hillary
These three lessons could also apply to the
embattled political mainstream in many advanced democracies. Hillary Clinton is
no doubt scouring the situation in Britain for insights that might help her
quell Donald Trump’s Leave-style populist uprising.
Meanwhile, the business world has an even thornier
leadership crisis to address. Unlike politicians, business leaders must wage
their campaigns in an undemocratic environment rife with backdoor intrigue.
Many employees hide their true beliefs and feelings out of fear of their
superiors, saying things to please their bosses while doing other things
instead (see my recent research on the demise of Nokia). Dissent often reaches leaders’ ears
only when it is too late. To avoid going the way of David
Cameron, business leaders must become attentive to what isn’t being said
around them. Too much good news is always a potential red flag.
Quy Huy is
Professor of Strategic Management at INSEAD. He is also Programme Director of
the Strategy
Execution Programme, part of INSEAD’s suite of Executive
Development Programmes.
Read more at http://knowledge.insead.edu/blog/insead-blog/three-lessons-from-brexit-for-business-leaders-4783?utm_source=INSEAD+Knowledge&utm_campaign=1385bebf49-7_July_mailer7_7_2016&utm_medium=email&utm_term=0_e079141ebb-1385bebf49-249840429#S2KIQs6mEh5eJhS8.99
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