Leadership virtues for the ‘20s

The opportunity of interdependence

As individuals,  we are born into a state of dependence on our parents, we progress by developing our individuality and independence and during adulthood most realize that making our way in the world requires realizing our interdependence with others. 

In the business domain, we may think of companies as independent islands of economic activity whose main or only job is maximizing value extraction. In fact, companies follow the same developmental path as the people who work for them. Start ups are born fragile and dependent on patient nurture by founders and investors. If they find a successful business model,  they can then single-mindedly focus on scaling and value extraction. But if they succeed in becoming large and prominent, they are forced to focus more attention on their interdependence with other stakeholders and their license to operate. 

The same logic applies to whole economic systems - or indeed any complex adaptive system. The more mature and dense they become, the more interconnected and interdependent individual agents become. To survive in such a system, individual agents need to cultivate a sustainable relationship with the larger system in which they are imbedded. Interdependence can lead to unpredictable, emergent behaviors, causing outcomes to depart from individual intentions. In this case, the system has to be looked at as whole to be understood. Furthermore, such systems are not entirely controllable, requiring selective nudges or adaptation rather than rigid plans and structures. 

The economic system we have today exhibits high interdependency. In the last few years, many firms have started organizing into multi-business ecosystems where they can be both competitors and cooperators at the same time. The power of the individual nation state has become diminished in a highly interconnected global economy. Even economic “rivals” like China and America are deeply interdependent through finance and trade. At an even broader scale, the impacts of economic activity on larger social and ecological systems are now significant and immediate, in the form of social inequality, plastics pollution, biodiversity depletion and global warming. And the uncertainties resulting from this interdependency are magnified by a rapid technological change. 

What sort of leadership do we need to navigate such a world? In more stable times, in which each company could be considered as an economic island, the main functions of leadership were to generate and cascade plans based upon experience, to maximize benefit to the individual enterprise - and to optimize the enterprise to this end. Much attention has been devoted to identifying which leadership traits facilitate this. When agents can be viewed as independent, opportunity identification, value extraction and efficiency are prized. The perimeter of consideration is narrow and focused on company, customers and competitors. And the timeframe considered is relatively short. The mindset tends can be mainly instrumental: how can the companies ends be realized most efficiently.

For the interdependent, unpredictable times ahead, we might instead consider the required virtues of leadership. A virtue is a quality which is considered morally good – meaning one which promotes both individual and collective interest. In today’s interdependent world, collective interest is very much at the forefront. Since most management systems focus mainly on optimizing the individual profit machine, this requires a fundamental rethink of leadership.

It is informative to consider how humans have approached the concept of virtue as a means to managing social interdependence, across history. Some of the main virtue systems originated around globe, have been, in roughly chronological order:

• Taoist “3 treasures”: Compassion, Frugality and Humility
• Confucian 5 virtues: Benevolence, Righteousness, Propriety, Knowledge, Integrity
• Platonic “cardinal virtues”: Temperance, Prudence, Courage, Justice
• 12 Aristotelian virtues: Courage, Temperance, Liberality, Magnificence, Pride, Honor, Good Temper, Friendliness, Truthfulness, Wit, Friendship, Justice
• Buddhist “4 immeasurables”:  Benevolence, Compassion, Empathetic joy, Equanimity
• 26 virtues mentioned in the Bhagavad Gita  : Getting rid of Anger, Fortitude, Service with Love, Renunciation, Purity, Control over Senses, Tranquility, Friendliness, Collectivism, Avoiding Calumny, Non egoism, Self Study, Empathy, Austerity, Absence of Greed, Simplicity, Humbleness, Modesty, Unwavering
• Catholic “7 heavenly virtues”: Chastity, Temperance, Charity, Diligence, Patience, Kindness, and Humility

If we look across these different philosophies addressing how humans should cultivate and conduct themselves for social interdependence, a few common themes emerge. Many virtues call for moderation of self interest. Others propose humility in dealing with the broader world. Others invoke the need for empathy and understanding towards others. Yet others call for integrity and honesty in dealing with others. In contrast, most modern managerial philosophies deal mainly with local profit optimization, and address economic, social and ecological interdependence as an after thought, a constraint or a separate set of considerations.  

These virtues of interdependence arise quite naturally considering the relationship between individual agents and nested, complex, dynamic systems. To survive and thrive, an intelligent agent needs to realize that long term self interest may require moderation of short term self interest (temperance). They must know that they can not necessarily predict or control events according to their individual designs (humbleness). They must consider the interests of others alongside their self interest (empathy, collectivism). They must realize that their agency depends on trust and consent from others (integrity, honest). And to achieve these things, they need to broaden their radius of attention, and broaden the timescale of consideration.

The 2020s will test our ability to operationalize the thought that our self interest is not separate from our collective interest. In fact, our individual interest depends quite immediately and tangibly on our collective interest. As a systems thinker once said, if you cant first see about yourself as part of the problem, you cant be part of the solution. Technological innovation alone cannot address this imperative. AI can tell us what works, but it cannot point to the counter factual of what is right. The most effective leaders in the decade ahead will therefore be the ones who create, demonstrate and systematize the approaches required to manage interdependence and to do so under highly dynamic and uncertain circumstances. Like most initially intimidating challenges, I suspect that once we have seen sufficient innovation towards it, managing interdependence will begin to look more like an attractive opportunity, and eventually like common sense.