Skip to 0 minutes and 7 seconds In this part, I’ll talk to Jeroen Smit, Professor in Journalism Skills at the University of Groningen. The topic of our conversation is the importance of diversity in leadership. And the relation between diversity and complex and uncertain environments. Welcome, Jeroen. Thank you for the invitation. Could you please first explain the relation between leadership and the importance of diversity? It has to do with the topic complexity. We live in a very uncertain and complex world. Rapidly changing. And therefore you need leadership which is able to understand that complexity.
Skip to 0 minutes and 44 seconds And what I saw– I was in a position as an investigative journalist to figure out what went wrong with ABN AMRO and Ahold is that successful leaders, they tend to reduce the world in terms of what is true, what is not true to their own personal truth. And they hire people. They surround themselves with exactly the same type of persons to set– clones, more or less. And they create a one-dimensional way of the thinking about the environment the organisation has to work in. Which of course is very dangerous. Because if you reduce the complexity of the world to only one personal truth, well, then only small things have to change in this environment to create problems.
Skip to 1 minute and 24 seconds Because you cannot react upon those changes. So that’s the pitfall, then? What’s the pitfall? Well, the pitfall is that– it has to do with narcissism, to some extent. Overly confident. Self-centered. After success, you start to believe that you’re special. Then you win a prize. “Entrepreneur of the Year” or “Manager of the Year.” And then you start to get, well I thought of myself as being special, now it’s official, I am special. So you become arrogant. Narcissism, that’s a thing, too. And we all need narcissism, don’t understand me wrong. Because narcissism makes you feel confident and you have to take decisions. You need to be charismatic to some extent.
Skip to 2 minutes and 0 seconds But an overdose of narcissism– and Antoinette Rijsenbilt from University of Rotterdam, she did some interesting research there. She proved that if you have an overdose of narcissism, in the end, those leaders, they are willing to manipulate all sorts of things– to commit fraud– in order to get where they want to go. So the difficulty is that on the one hand, if I understand you correctly, you need to be confident. You need to be confident to be successful. Otherwise you cannot be successful here. And then how do you draw the borderline between the two?
Skip to 2 minutes and 32 seconds My guess would be that around four or five or six year, an average span of time– so after sixth year of being very successful and hiring the same sort of people around you– because this is, of course, dangerous. And you have to create diversity. That’s the point I’m trying to make. To make sure that, for example, if you are an ambitious CEO, you need next to you a very much control-focused CFO. But of course if you’re an ambitious CEO, you want to grow faster. You want to do takeovers. What you want is a CFO who is also ambitious and also wants to grow. Say, who talks the same language.
Skip to 3 minutes and 5 seconds But of course, that’s unhealthy because then you have two leaders pressing the same– trying to move faster. But would you go as far as to say that it is almost naturally that you create a lack of diversity? Because you naturally look for people that are similar to you? Of course. Because you define success by what you do. And then, of course, you relate that success to certain truth you’ve– and you hire people which follow you in the same line of thinking. What elements of diversity do you have in mind? Usually when I think about diversity, the first thing that comes to mind is difference between men and women. But I sense it is much broader than that– Of course.
Skip to 3 minutes and 48 seconds I agree with you. We have to be careful here, because you could have a perfectly diverse team with only men. The problem is that the men which are successful– and I’m just talking about Dutch businesses– they are all more or less the same. They are rational. They have a background in business school, economy, or law, or something technical. They define the world in a very rational way, being a marketplace where competition rules. It’s eat or be eaten. It’s live or die. And those men, they dominate the business.
Skip to 4 minutes and 25 seconds So if they would make more room, for example, for more empathic men– which are more focused on working together, on sharing, combining strength– you can have a perfectly diverse team with only men. But having said this, taking in the Dutch situation, we’ve been talking about the diversity now for decades in the Netherlands.
Skip to 4 minutes and 47 seconds From universities, more women graduate with better results. Also in business schools and study of economics. Still, if you look at the management board of Dutch listed companies, the management boards, only 2.6% or so is female. Which is weird. Which is strange. So I think we should focus first talking about diversity in trying to make more room for women.
Skip to 5 minutes and 15 seconds This lack of diversity that you refer to, has it always been like this? Has it developed? Is it related to, let’s say, the market thinking that penetrated the world in the 1980s? Or is it a very natural risk that’s inherent, almost, in leadership? In our culture, think leader, think man. We tend to think as a leader needs to take decisions. Where for example women, we expect women to be nice in the first place. So to combine those two qualities, for women to be firm and nice is very, very difficult. And of course you’re right there. I think that the definition of a marketplace where it is about winning or losing– this is the type– the competition, the fighting.
Skip to 6 minutes and 5 seconds It creates a certain leadership style. Isn’t there also is a tension between, on the one hand a leader– has to lead, has to give direction– and to engage people, and that they follow him? That’s the essence of leadership. Isn’t there tension with at the same time creating diversity? It also has to do with I think the simple notion that in the 20th century, leaders, they finished their education. They were well-connected in society. They were to some extent rich or successful. So there was this idea that, let’s follow the leader. Back in the ’50s, the ’60s, or the ’70s. But now we live in a different era, where most people are very well-educated and they have talents.
Skip to 6 minutes and 48 seconds So I think leadership is now much more about listening. I think a leader who truly believes that he knows better than the people he has to lead, he’s completely mad. Because the people he has to lead, they have qualities. And the only thing the leader has to do is listen to those qualities to make sure that those people are capable. Or giving them room to make their talents flourish. So listening, for example. I described you more or less the type of leader which is still dominant in Dutch businesses. Not so very emphatic, top-down, et cetera. They think listening is the same thing as keeping your mouth shut for five minutes. Which of course is not listening.
Skip to 7 minutes and 29 seconds Really listening to your colleagues– really listing what they have to say, what they see in the outside world– that’s a different quality. So I think we are in need. Also looking at the issues the world is facing concerning energy, climate, food, water, overpopulation, we have to move from this simple notion that’s all about competition and fighting over it. Winning or losing. We have to move to an economy where the leadership is defined by the capabilities of sharing, combining strength, combining qualities. So I think that we really need diversity in order to cope with this– Suppose that I’m a leader and I’m sensitive, I’m aware of this risk. And I’m a, let’s say, an old-style leader.
Skip to 8 minutes and 16 seconds That I’d like to pay attention to this risk and to create a diversity. What should I do? I’m a bit be pessimistic. I think those men, and of course they are– if you talk about they agree, you’re right, we should do something about diversity. We should hire women in the leadership of our company. We should focus more on this, et cetera, et cetera. But in the end, as I said, we’ve been talking about this for decades now. And only 2.6, 2.7% of the leaders in the management board of listed companies is female. So thinking about it and talking about, actually doing it, hiring– because this is what we’re talking about– you have to be capable of hiring the other person.
Skip to 8 minutes and 59 seconds Something you do not automatically connect with because he or she is different than you are. He or she has different qualities. If you are successful and you’ve defined your success as, well, it’s me– which they tend to do. Narcissism. It’s extremely difficult to hire next to you, somebody who’s different. So therefore I believe you need strong supervisory boards, for example. What’s the role of the supervisory board? Supervisory board should pay much more attention to the issue of diversity. And make sure that next to this ambitious CEO, there’s a control-freak CFO placed. Which will make sure that the CEO will be in place and will be kept in place. So I think supervisory boards, they play an important role.
Skip to 9 minutes and 40 seconds Aren’t we now shifting the problem, let’s say, from the CEO or the board itself, to the supervisory board? Because if you look at the supervisory boards, they need, probably, diversity themselves. Is that the case at the moment? This is a good point. If you look at the annual report of an average organisation, on page six you see a photograph of the managing board. You see six men in the same suits. Like us, today. Then on page 10, you see a photograph of the supervisory board. Again, you see six or eight men. The same suits, but only 15 years older. And then you understand there’s no diversity there, both in the management board as in the supervisory board. Hardly any diversity.
Skip to 10 minutes and 17 seconds So I’m an advocate. And with pain in my heart to some extent. But I believe diversity should be organised top-down. We need rules and regulations here. For a TV programme a couple years ago, I visited Norway, which was the first country which made mandatory, by law, 40% stake of women in supervisory boards. Only supervisory boards. 40% by law in 2008. Now we’ve seen this discussion in France, in Spain, and– this is, I think, big news– last week in Germany, it was decided that by 2016, large German organisations have to have 30% women in supervisory boards. So a quota. It hurts a bit, but I do believe that the only way to organise diversity is to organise it top-down.
Skip to 11 minutes and 6 seconds Is there proof that, let’s say more-diverse, organisations are in the longer term more successful? The research I’ve seen recently by McKinsey shows that diverse teams are much more successful middle-, long-term. Less diverse teams are more successful in the short term. Because they are focused on the short-term result. If you start a company, you don’t want too many people discussing, where are we heading for? At the beginning, short-term-focused, you need focus. All noses pointing in the same direction. But if you want middle-, long-term results– I think we should focus to middle- and long-term, because those issues I mentioned before are long-term issues– then you need diversity.
Skip to 11 minutes and 47 seconds Would you go as far as to say that the risk of not being diverse is not only, let’s say this narcissism, but also as an element of it that you focus too much on the short term and lose sight of the longer term? I think it’s irresponsible. And you’re very right about this. Those men, they like to fight. They like the competition. So for them, the price of the share from day to day, that’s the main focus. They focus on shareholder value. They focus on quarterly results. They focus on winning or losing. And I think this is irresponsible. If you are a good leader, you are responsible for the environment you operate in.
Skip to 12 minutes and 21 seconds And for a long term, you have to start thinking about, what world do I want my children to live in? And if you really focus on those issues, then you will realise that you need a completely different way of working. Much more focused on sharing and combining strength instead of competition and fighting each other over. In addition to the rules and regulations that you advocate, isn’t it also very important, let’s say that the stakeholders in the firm themselves, stress how important they think diversity is? And how important they think that focus on the longer term is? Can you be successful without also involving the stakeholders? Maybe this is a bit naive, but I’m a bit of an optimistic here.
Skip to 13 minutes and 6 seconds I think we slowly start to understand that what the world needs in order to be able to sustain another 3 billion consumers, from China and India, mainly. Which are capable of spending and consuming the way we do and the way we– we, the rich western part of the world, 1.5 billion– we consume the world already more rapid than the world actually can sustain. So there’s 3 billion joining us. So slowly but clearly it becomes transparent. And more and more people will realise that the way we’ve organised our economy, our society, is not sustainable. So we have to start focus on sharing. And this is inevitable. And I agree with you.
Skip to 13 minutes and 48 seconds The moment consumers make choices, that’s the clearest voice you can have. The moment the consumer decides, this is sustainable, I will make a choice for sustainable– And I’m ready to pay for it. And I’m ready to pay for it. Then that’s a very clear sign. Yes. Jeroen, thank you very much for this conversation. Thank you for the invitation, Lex.
Interview: Diversity in leadership (Jeroen Smit)
In this video Lex Hoogduin interviews Jeroen Smit about the importance of diversity in leadership and complex organisations. Jeroen Smit is professor in Journalism Skills and author of several books about (the failure of) management. What are the lessons to be learnt from these failures?
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