The Leading Partnership News

The crisis in trust – and why it matters

posted 30 Aug 2020, 21:14 by Michelle Stewart   [ updated 30 Aug 2020, 21:18 by Philip Pogson ]

Why trust matters
It is almost impossible for a society, community, business, or family to function without a degree of trust. Trust literally makes the world go around. It is a valuable commodity. No leader or corporation wants to be considered untrustworthy.  Even the most brutal dictator craves the title of ‘trusted leader’ - some even project themselves as a caring father or mother figure, trading on the trust invested in the parental role.

Politicians, CEOs, and others in positions of authority also strive to be seen as worthy of trust, as do professionals from doctors and lawyer to nurses, teachers, and social workers.  Trust is an asset in a great deal of contexts.  Yet many would claim that the world, and in particular, the West, is suffering a crisis of trust. A couple of years ago, United Nations’ Secretary-General António Guterres opened the General Assembly with the statement that “our world is suffering from a bad case of ‘Trust Deficit Disorder.’” Writer Indranil Ghosh noted in January 2020 that the Edelman Trust Barometer, an annual study of the level of trust in institutions across 28 countries, shows the erosion of faith in the ‘system’ going back several years. The 2020 Edelman report shows low confidence in government and media, with business and NGOs fairing slightly better. Popularist politicians play on the trust-wariness of voters, often blatantly questioning the reliability of everything from vaccination to the ‘mainstream media’.

In Australia, Royal Commissions into banking, sexual abuse of children, aged care, at risk youth in detention and disability act so as to accelerate and/or confirm the growing lack of trust citizens have in government, the media, institutions such as churches and charities, and even science. Only a few decades ago science was seen as being able to solve virtually all human ills. Now its very competence, reliability and objectivity is regularly questioned.

The emotional impact caused by loss of trust in individuals, professions or institutions distracts from a deeper exploration of the nature of trust. A more robust understanding of what trust actually is may assist us as individuals and communities to develop the capacity to obtain and maintain the kind of trust appropriate to the context, rather than lamenting a loss of trust after the event.  Interestingly, the English word trust derives from the Old Norse traust which meant ‘strong.’  Thus, even the history of the word underlines the view that trustworthiness is a valuable attribute.  

In a 2004 Harvard Business Review article, author Saj-nicole A. Joni developed the idea three different kinds of trust: expertise trust, structural trust and personal or character trust. These concepts are elaborated below.

Personal trust
According to Joni, personal trust is the most widely understood notion of trust. We all pretty much get it. To be considered personally trustworthy is a measure of the faith others have in our fundamental character traits. Things such as honesty, reliability, and integrity.  We may initially grant personal trust based on intuition, but we must see our trust reflected in an individual’s ongoing trustworthy behaviour. For example, we might trust a friend, relative or business associate not to gossip, to act honestly or not to take advantage of their position of power. However, if a that individual breaks trust, the damage to the relationship can be irreparable.

Expertise-based trust
Expertise trust is perhaps the most objective trust category, yet one that is under attack in the 2020s.  Expertise trust refers to the capacity of individuals and institutions to demonstrate consistent competence in a particular area.  Expertise trust may be attributed via accreditation. For example, the title ‘Certified Practicing Accountant’ (CPA) is granted to accountants who achieve certain educational hurdles and undertake ongoing professional development. A Registered Nurse has quite literally been granted rights to practice under government legislation: nursing and veterinary Acts of Parliament dictate who can practice and what is expected of accredited professionals. 

Expertise trust is also gained through the experience of an individual’s or corporation’s day to day effectiveness. The same applies to voluntary roles such as sports coach or rural fire service membership.  As noted, expertise trust can no longer be taken for granted. For example, the take down of the Global Financial Crisis (GFC) showed us that accountants can fudge the books or turn the other way as companies trade while insolvent. Priests and schoolteachers have taken advantage of the trust given them and abused children or covered up the illegal behaviour of others. Politicians rort their own expense allocations and travel rights whilst accusing those on welfare of ‘bludging on the taxpayer.’   Expertise-based trust, particularly as embedded in the professions, is under threat. 

Structural trust – are you in the position to offer an objective view?
Structural trust ‘reflects how roles and ambition colour insight and spin information.’ Structural trust is about the degree to which an individual is distant or independent enough from a situation to give untainted, objective advice or judgement. 
In the past, typically, but not always, the most effective advisors resided outside of the organisations they gave advice to. This is due to the fact that organisational or structural distance acts to prevent some of the more rampant conflicts of interest that plague direct reporting relationships. External auditors, for example, are hired by and report to the board, not the CEO. Approval for the release of new drugs comes from an independent government-funded agency, not the pharmaceutical company promoting and thus benefiting from the approved sale of a product. Well-governed societies institutionalise structural trust by creating ‘arms-length’ organisations. For example, those that investigate corruption, or independent scientific laboratories that test for drug use by athletes.  

According to Joni, high structural trust may be seen to exist when we answer ‘yes’ to the following question: ‘Given this person’s role and responsibilities, can s/he offer judgement untainted by his/her (own) goals or interests? 

Correctly or incorrectly, structural trust may be seen to reside in a range of figures such as clergy, academics, journalists, or even popular radio announcers. At times, however, the structural trust we thought these individuals had proves to be an illusion. Shock jocks claiming to be independent accept secret endorsements for the products they talk up on air; academics fail to declare sponsorships and politicians accept donations or largesse from companies they are elected to regulate. 
At times, we need to acknowledge that although an individual holds personal or even expertise-based trust, they are not in a position to be truly independent in a particular circumstance. In such cases, one may be obliged to seek out an alternative source of advice.

Implications for the 2020s
With the erosion of expertise trust and structural trust, humankind is increasingly relying on personal trust, on those we know directly. An individual might distrust their doctor’s view, for example, but take advice from their medically unqualified relative. As a consultant, I am often asked for business or investment advice at social functions. When I suggest to the person concerned that they should consult an accountant or lawyer the answer is typically, ‘you can’t trust accountants’ or ‘a lawyer will charge me money.’ As one witty internet meme puts it, many of us would rather trust ‘Karen on Facebook’s’ view on climate change rather than that of  a scientist with decades of experience and research behind them. 

Lack of trust is eroding our institutions and will eventually erode our society and community functionality. Through better understanding of the different types of trust we can choose to invest in building the kinds of trust that matter. 

Life really is all about trust.

Philip Pogson FAICD
August 26, 2020.
Philip has been a company director, Chair, and business owner for more than 20 years. He consults and advises on strategy and governance across a range of business sectors and also co-owns and operates a music production and promotion business. 

Seeing what we want to see in our economy & the failed art of picking winners

posted 15 Jul 2020, 15:43 by Michelle Stewart   [ updated 15 Jul 2020, 16:10 by Philip Pogson ]

We see what we want to see in our economy: Exhibit I – hard hat jobs are good jobs

One of the challenges of the current recession is that the quick thinking and action needed to deal with the pandemic, and manage the economic consequences, serves to reinforce existing ideas of what makes a nation, its economy and our communities ‘work.’ Dealing with the crisis has in some ways reinforced stereotypes, mis-information on the actual makeup of our economy and a desire to return to that old ‘go to’ for Australian governments of all stripes – the temptation to pick winners.

Firstly, what is the construct of our economy? Where are the jobs? For example, governments and professional lobbyists continue to push the value of the mining sector - and mining is essential for a modern economy. But the mining sector only employs approximately 228,000 people in Australia. In comparison, accommodation and food services employs just under 900,000 people, professional, scientific, and professional services just over 1 million. 130,000 people work in Australian Universities alone while 1.4 million local and overseas’ students are enrolled in higher education courses at any one time. In several regional centres across Australia, the local university is the largest employer and greatest contributor to the local economy. Larger still on a national level is retail at 1.3 million employees while health and social assistance tops the list at a whopping 1.7 million jobs.

Hard hats and high visibility vests make for great media moments for politicians - being seen on mining and construction sites looks good on the 6pm news - but our economy is driven as much by those wearing lab coats, retail sales uniforms and nursing scrubs, as blokes sporting steel tipped boots and King Gee work gear. (Gender stereotypes are only used only to make a point.)

Governments tend to view trades, manufacturing, and mining as ‘real industries’ with real jobs, real wages and making real a contribution to the economy and the community. Service jobs like nursing, hospitality and childcare often seem like a soft option in comparison. It should also be noted that service jobs are dominated by women and young people, and it is women and young people that have lost their jobs in the greatest numbers since Covid-19 laid waste to the Australian economy.

Governments see what they want to see.

The failed art of picking winners: Exhibit I – University fee changes

As well as seeing the economy the way they want to see it, governments also have a habit of trying to pick economic winners, to place taxpayer funded bets on the industries of the future. Who can forget Queensland Premier Joh Bjelke-Petersen and his support for the water-fuelled hydrogen car, or the farming boom that was supposed to follow the building of the Ord River scheme in the remote Kimberley region? As the Australian National University’s Adam Triggs commented recently in an article, ‘Australian governments have a long and unusually proud history of being terrible at picking winners.’

The latest in the long list of governments betting on a hunch about the future is the proposed once in a generation adjustment to University fees. Under changes announced recently, Arts degrees will be more much more expensive, rising 113%, so they cost more than medicine, dentistry, and veterinary science – presumably because arts degrees do not lead to jobs, or at least to ‘real jobs’. In comparison, teaching degrees will drop in cost, even though it is difficult to find evidence of substantial growth in the number of teachers required except in specific disciplines such as maths and science, and in regional and remote geographic areas.

In comparison, law and commerce degree fees will rise a modest 28 per cent – most politicians are lawyers of course - while the fees for agriculture and maths degrees fall 62 per cent. Teaching (as noted), nursing, clinical psychology, English, and language degrees will fall 46 per cent, while science, health, architecture, environmental science, IT, and engineering degree fees will slide down 20 per cent.

Although the Federal Education Minister, Dan Tehan claimed the fee structure to be introduced in 2021 meets the needs of the market, little hard evidence was provided to support his hand-picked winners. Like the Ord River Scheme, the rationale appears to be ‘build it and they will come.’

The failed art of picking winners: Exhibit II – the jobs of the future do not yet exist

It is widely accepted in the academic literature, and it is a matter of common experience, that the jobs of the future do not yet exist! Who in 1985 would have predicted the emergence of jobs such as ‘web designer’, ‘video games inventor’ or ‘life coach’? The next decade will present even more complex challenges for job prediction as we are at the very beginning of the impact of Artificial Intelligence (AI). AI could drive the creation of a whole new economic and social era. 

One British report estimated that between 10-30% of UK jobs could be wholly or partially undertaken by AI. The report also noted that in the past such massive revolutions sometimes created more jobs than were lost – although the pain of transition after the first industrial revolution of the mid 1800s, for example, was profound. Thousands of rural poor drifted to the city to work in factories for low wages and in often appalling conditions.

What skills are needed for the next generation of jobs? The well-regarded QS Top Universities guide, a global university ranking handbook for students, noted the following in a 2019 on-line report:

 ‘ In 11 years’ time, the year 2030, it’s highly likely you’ll be working in a job that doesn’t even exist yet – and no, we’re not talking about building flying cars or developing the world’s first time machine. The world of work is evolving quickly, which means you have to figure out how to prepare for a future job role that’s impossible to predict.’

 The report went on to suggest that five broad skillsets were key to future employment:

1. Cognitive flexibility

2. Digital literacy and computational thinking

3. Judgement and decision-making

4. Emotional and social intelligence

5. Creative and innovative mindset

Clearly, the QS Top Universities guide folks are not singing from the same hymn sheet as the Federal Government's education boffins.  Mr Tehan can, it seems, predict the future of work, whilst the world leading QS guide cannot, or will not.

Of the above list – and there are many other similar dot point lists of desired future employee attributes - only digital literacy and computational thinking aligns directly to one of the degree areas in the new Federal government fee structure. That is, information technology (IT). The other four skillsets seem as much the outcome of an arts degree as any other discipline.

To repeat the words of Adam Triggs: Australian governments have a long and unusually proud history of being terrible at picking winners.’

 We see what we want to see in our economy: Exhibit II – the Australian arts sector

Governments see what they want to see and pick the winners they want to see win.

As a business person with a performing arts degree - yet who has spent years of consulting in fields un-related to my initial university education including reinsurance, R&D and science and medical research strategy - it has been instructive to observe how studiously the Federal Government has worked to avoid seeing the arts and creative industries as a key and productive business sector needing economic support that provides 'real jobs' to 'real people.'

The arts in Australia contribute around $15B to our economy yet according to an ABC report, up to 200,000 individuals were not eligible for the JobKeeper payment despite being registered as sole traders. Many in the arts sector move from assignment to assignment, rather than working as long-term casuals, so they do not have continuity with a single employer. Government seems not to have noticed that assignment to assignment work patterns are the norm in some sectors.

Even when the Prime Minister belatedly launched a $750M ‘rescue package’ for the arts sector, which mostly consisted of loans, he felt it necessary to focus on the tradies and technical staff employed in making theatre sets and on movies, rather than on our artistic creatives. It was all hard hats and high visibility vests again, not a man-bun, ballet dancer, circus artist or set of dreadlocks in sight. Who is it that Mr Morrison thinks comes up with the ideas that drive ‘real’ jobs for tradies and technical staff in the arts if not artists and creatives?

I am not of course having a shot at tradies and technical staff, just at politicians who see what they want to see and pick the winners they want to see win. A tradie all kitted out in a hard hat and vest and blessed with a job and a family is a good thing to see. An artist kitted out in black, dread-locked, but with a family to support is, well, a bit of an embarrassment!

The future starts now

Many people more intelligent and well-informed than I am from the Grattan Institute, to Union leaders, business organisations to local Mayors, have pointed out that ‘now’ is the time to think creatively about the future of Australia. Now it the time to make bold, new investments and to shed out-dated mindsets.

Thinking deeply about the future, what we want and what is important, means being honest about the present. It means recognising that all sectors of the economy contribute to social and community success, not just the ones our political leaders think are important. 

All too often governments see their role as coming up with ideas themselves, in picking winners, but in reality, they are typically best deployed as regulators (i.e. of soundly constructed, fair markets), supporters, enablers and connectors rather than idea generators. And by supporting and enabling I do not just mean getting behind the rich and the powerful and presuming what is good for them is good for society as a whole, but listening to the poor and the vulnerable, or the talented poor - like our artists!

Let’s stop trying to pick winners and work harder to ensure more people get a say in what winning actually means - now and into the future.

Philip Pogson FAICD

July 8 2020.

Philip has been a company director, Chair, and business owner for more than 20 years. He consults and advises on strategy and governance across a range of business sectors and also co-owns and operates a music production and promotion business.


The Art of the Trade-Off

posted 31 May 2020, 20:11 by Michelle Stewart

Trade-offs are part of life

Anyone who has conducted a personal or business negotiation, reached any kind of deal, or made an agreement with another person, knows what a trade-off is. Given the above sentence describes just about all of humankind, the reality is, we have all made trade-offs even if we do not recognise or use the term. 

A trade-off can be described as a situation in which we attempt to balance two apparently opposing and, at times, equally attractive outcomes. A builder, for example, might face a trade-off between doing a job accurately on the one hand and doing it quickly on the other. Parents constantly trade-off freedom and independence for their children with their child’s safety and well-being. Independence and safety are both important. Going out for a few drinks with friends involves trading off how much we drink in the evening with how we want to feel in the morning!

On a larger scale, think of the complexities involved in managing water allocation across Australia’s vast Murray-Darling Basin river system. How do we trade-off the value of water extracted for cotton irrigation in the Darling River’s headwaters, versus water for downstream graziers and townships, versus environmental flows for wetlands and other river habitats? How much water do we think should get all the way to the river mouth and flow into the sea? On what basis do we decide who gets more and who gets less in any trade-off?

In an ideal world, a builder does her or his work to the required standard AND quickly, each of the Murray-Darling river’s stakeholders gets all the water they want, and excessive alcohol does not cause a hangover. After all, ‘win-win’ is typically seen as the best possible outcome in any negotiation or business deal. The problem is, we do not live in a perfect world. As a result, the Art of the Trade-off is a fact of life.

Risk management involves trade-offs

As discussed in my recent blog on risk, managing risk involves trade-offs. That is, establishing what degree of risk an individual, community or organisation is prepared to accept at what financial and other costs and/or impact. It is virtually impossible to eliminate risk without totally ceasing activity. If there were no vehicles on the road, there would be no car accidents. If we shut down hospital operating theatres, there will be no surgical errors, but more people will die from untreated ailments. That is the trade-off.

At the everyday level, I suspect most of us accept the kind of trade-offs I have outlined. At a societal level, I contend, our capacity to articulate, discuss and implement effective trade-offs has atrophied dangerously over the past 20-30 years. This undermines the future of democracy in Australia and elsewhere.

Everyone can be a winner, can’t they?

Australia has gone for nearly three decades without enduring a recession. As a result, there is a widespread view that we can address (or fail to address) difficult challenges without trade-offs and without any particular group or section of society losing out. We can all be winners all the time. 

For example, as I write, the New South Wales government, which is facing an enormous budget deficit due to the corona virus, has announced a 12-month public sector wage freeze. Although applying to all state public servants, including politicians, it has been pointed out that three important groups of state employees - health workers, emergency services and teachers – will be affected. These three groups, it has been rightly argued, have played an enormous role in dealing with the recent drought, fires, floods, and the current pandemic. The state government’s trade-off offer is that there will be no forced redundancies if a wage freeze is accepted. On the surface of it, that seems like a fair deal. But fair to whom? 

In response, some commentators have pointed out that a wage freeze will have a disproportionate effect on struggling rural and regional areas. Others have suggested cutting capital projects such as new sporting stadiums or museums instead. The fact that building new stadiums also employs people seems to have escaped analysis. 

It is not only a matter of what economic value we place on the people or projects that get the money, it is also about our underlying personal and societal values. That is, how we balance (trade-off), justice, equity, and accountability with economic sustainability, thrift, and prudence – two very old-fashioned terms!

The easiest alternative to governments articulating, discussing, and addressing difficult trade-offs with citizens is to borrow more cash and ‘kick the can down the road.’ This solution is tried and true. It is what we have been doing in Australia for 13 years. Afterall, the last Commonwealth government surplus was back in 2007-8. Since then, as a nation, we have been living on credit. That is, on borrowed money. With next to zero interest rates, borrowing to enable us to do everything we want surely makes sense. Perhaps it does. But there is a trade-off involved. We are saddling future generations with our debt. Consciously or unconsciously, are trading off the well-being of future taxpayers for the well-being of those living now.

Thirty years of economic growth has ingrained a deeply held view that everyone can be a winner, that difficult trade-offs do not need to be made or can be put off indefinitely. Put bluntly, I should be able to enjoy a high level of government services and pay a low level of taxes. Or I can avoid tax and offload my responsibility to others as many global companies and well-off individuals now do as a matter of course.

How should we allocate health expenditure: to the young or to the old?

Before all the blame is laid at the feet of the very rich and global corporates, here is another trade-off we have been avoiding as a community. In some estimates, a third to a half of the lifetime cost of health takes place in the final 2-3 years of an individual’s life. This is particularly the case for those over 80. Yet research consistently shows that the best return on investment for the health and well-being $ is in the first decade of a child’s life. How much are we willing to trade-off the well-being of the young for the well-being of the old? 

In asking this question I am not advocating that the elderly are of less value than the young. Both my parents are almost 90 years of age and I want the best of them and for others of similar vintage. All lives are of equal value. In a perfect world each and every person would have access to the healthcare they need, when and where they need it. But in reality, governments already ration healthcare and rarely admit it. Unofficial healthcare rationing is an easier course of action for politicians and policymakers than running fraught and emotional ‘trade-off’ conversations with citizens.

A future of tough choices

I am positive about Australia’s future and always have been. I am positive about the capacity of younger generations to lead this country well. However, I believe that at a personal, business, community, and societal level we need to re-learn the Art of the Trade-off. This applies to corporates, not-for-profits, boards, management, workers, and individuals. The start of this journey is being honest about the trade-offs that must be faced. 

Governments have learned to lie to us. They have learned to say that nobody will be worse off when a tough decision needs to be made. This is partly because all too often, that is what we want to hear. Some of the trade-off conversations we have avoided are now becoming pressing issues. Climate change, rising debt, water allocation, health equity, low cost housing, energy and public transport are but a few of the issues we have ‘kicked down the road’ but need to address over the next five years or even sooner. 

Trade-offs are inevitable and will inevitably be made. But let’s commit to getting better at talking about those trade-offs and to improving our capacity to make effective medium and long-term decisions. After all, that is what democracy, good management and sound governance is all about.

Philip Pogson FAICD
June 1, 2020

Philip has been a company director, Chair, and business owner for more than 20 years. He consults and advises on strategy and governance across a range of business sectors and also co-owns and operates a music production and promotion business. 

What’s the risk?

posted 17 May 2020, 22:59 by Michelle Stewart   [ updated 18 May 2020, 01:55 ]

Life has always been a risky business. The fear and concern generated by Covid-19 has served to surface the fact that there are widely varying understandings of risk across our community. There are equally broad views as to how serious risk can and should be managed or, to use the technical term, mitigated. Cost is always an issue in dealing with risk. Even as I write the debate is growing about cost and impact of managing the current pandemic. That is, how much should we spend for how long to protect how many people from catching the disease - and what impacts are we prepared to accept on our personal freedoms, livelihoods, and the broader economy. These questions are not recent: they have been raised across millennia. Talk of risk raises emotional issues, a point I will return to.

So, what is risk?   Some definitions are broad and others quite narrow. One states that risk is the potential for the uncontrolled loss of something of value. Another that risk is the chance of something happening that will have a negative effect. A narrower, more business focussed understanding sees risk as an ongoing or upcoming concern that has a significant probability of adversely affecting the success of major milestones.

Most risk definitions encompass two aspects: 1. Uncertainty as to whether or not a particular event will happen; and: 2. Loss, the notion that an event or occurrence will have unwanted consequences or result in loss of some kind. Embedded in the twin ideas of uncertainty and loss are the very reasons why it is not easy to get people to agree on what is, and is not, a risk. Firstly, individuals may have widely different views as to how likely it is that an event will happen, and secondly, they disagree on whether or not a particular consequence is acceptable. For example, a 30% risk of losing $1000 on an investment may mean little to a multi-millionaire but much more to a pensioner. A sixteen year old spending the day on the beach with friends is likely to have a different view of the risk of skin cancer than their parents or, indeed, to a dermatologist whose waiting room is filled with adults wishing they had ‘slip, slop, slap-ed’ when they were young! 

The role of values and emotions

Values, emotions, and beliefs impact how we understand, perceive, and react to, risk. It is human for individuals to see ourselves as rational beings whose views are objective and thus correct. In fact, all of us interpret life through  our personal values and observe events with our unique set of emotional lenses.

In regard to the pandemic, for example, a values dichotomy has emerged which is expressed as the risk of death from the disease versus the risk to the economy from a shut down. Some would have governments focus their strategies on absolutely minimising the pandemic’s health impact on people. They argue that each and every human life is of value. Others claim that it is no good saving human lives if the economy is in ruins and thus unable to fund health and education services when the pandemic is over. The question is, how much are we willing to invest in minimising the health risk to individuals and at what risk to the economy? Or to be blunt, how many lives should be saved and at what cost? 

An even more acute frame than people versus the economy is the relative value of younger versus older citizens. In this rationale, it is correctly argued that the risk of dying from Covid-19 is disproportionately higher for the those over 70 years of age and otherwise frail. Given that the elderly and chronically ill have little economic value and have lived the greater part of their lives already, proponents argue, they should either accept the greater risk of death or be prepared to isolate themselves. The economy must go on. Some commentators and politicians have even said that it is selfish for the elderly not to accept that they are going to die in disproportionate numbers! 

Values and emotions have a deep impact on how we understand and act in regard to risk.

Risk concepts

Leaving aside the pandemic, there are several concepts that can assist in better understanding, discussing, and dealing with risk and, in the process, help answer the age-old question, ‘what’s the risk?’

Risk likelihood and impact

Project managers and board directors will be familiar with this 2x2 matrix that is often used in risk discussions. All organisations can use a framework such as this to generate insightful conversations about the 8-10 key risks the organisation faces and how they might be categorised or segregated. Risk segregation is an important concept as it introduces the notion that not all risk is the same. It is generally accepted that the most attention should be given to managing those risks that are likely to happen, and will have a high impact, followed by those that are less likely to happen but will have a significant negative impact if they do. As with all 2x2 matrices, this one has its strengths and downsides. It is helpful, however, in commencing the risk journey.

Risk mitigation

Once key risks have been segregated or categorised another set of conversations can commence around mitigation. That is, what can be done to lessen the likelihood and/or impact of an unwanted occurrence. Put another way, how might uncertainty and loss be minimised? There are at least four types of risk mitigation strategies. These include: 

risk avoidance
risk acceptance
risk transference; and: 
risk limitation

In a stock market listed company, insolvency is a risk executives and boards wish to avoid. As a result, strong risk avoidance controls are put place. This may be less so in an entrepreneurial start-up venture where the owner accepts a higher risk of insolvency.
The concept of risk acceptance acknowledges the fact that there are risks that individuals and organisations choose to accept. Walking down a street has its risks but unless the street is a known crime haunt, we accept those risks as minor. Risk acceptance is not the same as risk ignorance. Risk acceptance should be a chosen rather than accidental strategy.

Risk transference may be as simple as contracting an insurance company to take over all or some aspect of risk via an insurance policy. Insurers then bundle up their many policies and offload their aggregated risk through buying reinsurance. Modern insurance policies allow consumers to set their own level of risk. For example, a car owner agreeing to pay the first $500 of any claim. Outsourcing offers another strategy whereby enterprises can transfer risk. For example, choosing to outsource security services, payroll of even manufacturing.

Risk limitation is a common form of mitigation. To limit the risk of hacking, a company may have a policy of setting complex passwords. To minimise the impact of a computer systems failure, organisations implement off-site back-up processes. Similarly, wearing an approved face mask lowers the chance of infection during an epidemic.

Differential risk
Differential risk refers to the fact that there are known links between one factor and another. For example, a person who is older has a statistically greater chance of being diagnosed with dementia. As a corollary, young persons have a lower risk profile for dementia-related illnesses. A town built on a fault line is very likely to have a differentially higher risk of being destroyed by an earthquake than a similar village elsewhere. Insurers use differential risk frameworks to price insurance policies in areas prone to bushfire or cyclones. A homeowner can limit the possibility of their house being damaged by a cyclone, and potentially pay lower insurance premiums, by building to accepted cyclone standards. 

As comedians say, timing is everything. It is often forgotten that risk can increase and decrease over time with or without intervention. The philosopher G.K. Chesterton observed: 

‘If you leave a thing alone you leave it to a torrent of change. If you leave a white post alone it will soon be a black post.’

A small pothole in a road potentially becomes a dangerous crevasse if left to its own devices for long enough. Not visiting the doctor about chest pain could lead to a heart attack. Choosing not to pay for regular small upgrades of a key software program may result in having to invest a substantial sum to purchase a major new version. 
Perception and understanding of risk changes over time. Forty years ago, virtually no school did a risk assessment before taking a group of children camping in the bush. In 2020, whole manuals are written on the topic!
Risk is not static. Risk can and does change over time. Leaving a known risk alone rarely makes it go away.

Business and corporate governance circles often express a concern that too much attention is now paid to risk and risk management. This may well be the case, but then along comes the GFC or a massive bushfire season and society appears woefully unprepared. Equally, the possibility of pandemic is a low likelihood, high impact event – and Australia’s last major epidemic was the Spanish flu 100 years ago. In general, I believe a deeper and broader understanding of risk and risk management is a positive at an international, national, institutional and community level. A little knowledge of risk might be a dangerous thing, but zero understanding leads to disaster.

Philip Pogson FAICD
May 18 2020.
Philip has been a company director, Chair, and business owner for more than 20 years. He consults and advises on strategy and governance across a range of business sectors and also co-owns and operates a music production and promotion business. 

Scaling New Heights

posted 26 Apr 2020, 22:24 by Michelle Stewart   [ updated 28 Apr 2020, 00:35 by Philip Pogson ]

The book of growth for small and medium size businesses

A significant percentage of business books focus on large organisations. In addition, they often draw their material from a familiar short list of likely suspects: companies such as Apple, Microsoft, Amazon and Facebook. In days gone by it was the industrials: GE, Ford, Shell, BHP etc that dominated. Fewer academics and consultants turn their attention to Small and Medium Enterprises (SMEs). If they do, the result is often a “how to” manual rather than a thoughtful compendium of distilled reflections and wise advice. In addition, it is still relatively rare that the business exemplars and case studies provided are from Australia and the Asia Pacific region rather than the US. 

Scaling New Heights is a recent release by Craig Saphin. Saphin is an Australian senior executive cum coach and consultant who has worked in diverse roles across Australia, China and Asia – including a significant period of time as Executive Director of technology and HR services company, en Japan Inc., which is publicly listed on the Tokyo Stock Exchange. Given Saphin’s diverse Asia Pacific experience, and his actual achievements in scaling up and growing enterprises, it is not surprising that this book does not follow the well worn path laid out by many of its predecessors.

Growth framework
Scaling New Heights draws together a range of research, personal experience and interviews with leader-managers in a 5-pillar structure:

1.    Business Foundations
2.    Sales Strategy
3.    People and Culture Strategy
4.    Strategic Marketing; and:
5.    Operational excellence

The pillars
The first pillar, Business Foundations, advocates for a strong focus on developing a concrete, long term vision for the business, something that is often lacking in SMEs. The owner/operators of small companies can struggle to get past day to day problem solving and achieving monthly stay-in-business sales targets. It is hard to find time to focus on where they want to head in the medium to long term. The reality is, all SMEs are busy. Most owners are pulled in many directions at the same time. The enterprises that grow don’t allow themselves the busyness excuse. They make time to think about and plan for the future.

Distinctiveness is important. There are some well made observations in the book about the naïve approach that even some large Australian companies take when expanding locally or overseas. Many set growth objectives despite not really understanding what will make them genuinely distinctive and competitive in a new context, country or culture. In this regard I enjoyed Craig’s interview with Arun Nangia who revealed that he regularly asks his leadership teams one penetrating question: Why will we win? It’s a great question and one that I will ask more often! Variations might include: what do we need to do to ensure that winning this year translates to winning next year (and the year after)? And: Who among our competitors could beat us - and what are we going to do about it? 

The focus on sales and marketing, key planks for any SME with ambitions to grow, is welcome. Saphin approaches sales and marketing from the perspective and constraints of a small or medium business. I never got the feeling he was scaling his advice down from a Big Business playbook, for example, whereas several of the principles he lays out for smaller enterprises can readily be scaled up.

I was pleasantly surprised by the attention given to people and culture, and on developing in-house talent rather than automatically reaching for the external recruitment lever. This is an area of business success that is all too often glossed over in the SME literature. Saphin is a strong advocate for business owners investing in staff training and development, particularly for the under 35s. He recognises that development and training are are not one and the same: training is for skills acquisition while development is about one’s longer term career and focus. 
There are some no holds barred missives for new managers embarking on their leadership journey: 

"A new manager has to learn how to be selfish by treating their time as a valuable currency; trading the currency at pre-arranged times as much as possible."


The fifth Pillar, Operational Excellence, emphasises adopting efficient and effective IT systems and mechanising/automating key processes. There is sound advice for business owners and leaders around the necessity of acquiring the accounting and financial skills they need to enable the business to scale up. I have observed a reluctance among some would be leaders to get in and "do the numbers”, particularly if they come from an HR or non-accounting background. In reality, if you want to lead a successful enterprise you should know the numbers as well or better than anyone - with the possible exception of your accountant or CFO.

The operational excellence pillar is rounded out with sub chapters on risk and compliance, financial reporting and insurance. Saphin does not avoid the all important topics of how to structure one’s company – the various modes of incorporation, partnerships and joint ventures - and the advantages and disadvantages of undertaking mergers and acquisition versus driving internal growth. On the former, I am still surprised how little business owners and executives know about the available options for corporate structure, share ownership and governance – and how little thought they give to which corporate structure is most appropriate at what stage of their business development. A key question being when and how to bring independent directors onto the board, if at all. On this vexed matter, well informed is well-armed! 

Real life examples make for authenticity
When one gets to a certain age – Craig Saphin and I are of approximately the same vintage – there is often not much in a book like this that is genuinely new. It is typically how the author synthesises ideas, advice and research in new ways that provides the value - and Saphin organises his ideas creatively and effectively. 

I particularly enjoyed the relatively long vignettes (interviews) that were included in the book. The interviewees were refreshingly honest about their ups and downs as leaders. There was none of the ego and self-promoting hype that can plague business publications and make them feel inauthentic. 

I also appreciated the fact that successful women were featured, not just successful men, a balance that can still be missing, even in 2020.

In conclusion
Scaling New Heights can be read in a 3-4 sittings or on a chapter by chapter basis. Either way, it is well worth the investment. Although targeting SMEs, much of the content is readily applicable to larger enterprises. I found that I re-acquainted myself with ideas I already knew, but also learned some new tricks. What more could any of us ask of a business book?

Information on purchasing Scaling New Heights can be found at -

Philip Pogson FAICD
On behalf of Stuart Jones GAICD and Office Manager, Michelle Stewart

Philip has been a company director, Chair and business owner for more than 20 years. He consults and advises on strategy and governance across a range of business sectors. 

Mount Stetind in Northern Norway - Philip has climbed this (not quite to the top!)

By the way, what do I do now?

posted 16 Apr 2020, 17:37 by Michelle Stewart   [ updated 16 Apr 2020, 17:42 ]

By the way, what do I do now?

One of the challenges I have faced personally and professionally over the past 6-8 weeks is deciding where to put my time and effort. It has been very tempting to either fall into a stupor and do nothing or race around jumping from task to task. This is hardly surprising given the range and pace of change that has hit every aspect of our lives: health, finances, places of work, loss of employment, restrictions of movement, social distancing and much more. There has also been a spiritual aspect over the past days with churches and synagogues closed for Easter and Passover for the first time in 100 years and traditional family time and holidays disrupted. 

On reflection, I believe that there are 4 areas we need to pay attention to now and into the future:

- Responding as best we can to the challenges we face moment to moment, day by day

- Preparing for the “new normal” post the immediate covid-19 crisis

- Looking out for friends, family, neighbours and the vulnerable 

- Mental, physical and spiritual self-care

My suggested priorities are not listed in order, we are best to move between them as needed and as we are able.

Respond as best we can

I imagine many of us have done just this in recent times – responded as best we can to the many unwanted and complex challenges that presented themselves. I have sometimes felt I should be doing more, particularly more in a 24-hour period, but chastising myself for not being on top of everything does not help. We now know we are running in a middle-distance race or even a marathon, not a sprint.

One wise mentor of mine, when asked what his leadership philosophy was, responded by saying: ‘I do the best I can and accept the results I get. I then try and do a little better the next time.’ There is a refreshing pragmatism in this view, one that speaks from hard won life experience. 

In the past weeks, this has often meant putting off until tomorrow that which I really can’t face doing today – the opposite of my pre covid-19 approach!

Prepare for the ‘new normal’

It is clear that life will not be returning to normal as we knew it back in February 2020. Life will stabilise again, but it will be different. Until the advent of a vaccine, money will be tight, many more people will be unemployed or under-employed, whole industries such as travel and air transport will face massive ongoing challenges, some regions – particularly those recently struck by bushfires – will be disproportionately impacted, retail, the arts and hospitality will struggle to bounce back, investment in health will be much higher and on-line meetings may be here to stay! There are and will be new opportunities to be had, but I have focussed on the challenges as I feel I must highlight the need to plan for a NEW normal. I cannot envisage a situation whereby the majority of communities, businesses, NGOs and individuals immediately re-commence life as we knew it once the restrictions come off.

It is almost impossible to offer blanket advice on the new normal except to encourage us all to develop at least 2-3 future scenarios. One scenario might be quite radical in a good and bad sense, another might be more moderate. Put another way, we have to try and visualise a radically bad future, a radically good future, a moderately changed future and hybrids embracing several combinations of the good, the bad and the ugly.

Let’s hope the nasty scenarios never happen, but in articulating them we are at least prepared mentally for the worst.

Look out for family, friends, neighbours and the vulnerable

I am sure that you have noticed that some people are coping well and some not. Some of us, myself included, are coping OK one day, and not coping the next. Stress and anxiety are running high so it should be no surprise that alcohol sales are up – alcohol has always been used to lubricate and self-medicate!

If we wish to exit the current crisis as a functioning society with functioning communities able to sustain functional employment, as many of us as possible need to reach out where we can to assist others. In recent years the term pastoral care has come into more general use. Once applying largely in religious entities, schools, workplaces, hospitals and whole communities now embrace the term. Pastoral care has its roots in the Latin root 'pascere' (to feed). In a Christian context, Jesus was described as the good shepherd (pastor) who took spiritual and physical care of his flock – a metaphor that was and is particularly powerful in agricultural societies.

I am amazed how grateful people are of a simple phone call. Just this morning I received an encouraging email from a colleague that in a moment lifted my whole psyche. Others have reported finding a gift package on their doorstep or an unexpected offer from a neighbour to assist with shopping or other tasks. In addition, it is so important that we do not neglect to support the frail elderly and disabled and those who care for them.

It is my hope that we emerge from this pandemic with a new-found respect for, and practice of, pastoral care across our nation and around the globe.

Mental, physical and spiritual self-care

Some would argue that self-care should come first – it is certainly not an add on. The more anxious, concerned or uncertain we are, the more likely that we neglect to look after ourselves. One wit recently quipped that she expected half of us to emerge from isolation overweight and the other half as alcoholics. A respondent immediately commented that he expected to emerge overweight and an alcoholic!

What a blessing that many of us can get outdoors to exercise, for example, which sharpens the mind and gets our heart rate going. I’ve read some great advice on mental health which includes avoiding too much negative media and taking time to stop, reflect and meditate.

Our spiritual selves crave nurture. How important then is music, poetry and the great spiritual works that are written for times just like these.

Philip Pogson FAICD

April 14 2020.

Philip has been a company director, Chair and business owner for more than 20 years. He consults and advises on strategy and governance across a range of business sectors and also co-owns and operates a music production and promotion business.


Finding identity in small things

posted 7 Apr 2020, 03:31 by Michelle Stewart   [ updated 7 Apr 2020, 03:38 ]

I am what I do

Last Monday after uploading the previous article in this series, ‘Decision-making under pressure’ Michelle, our Office Manager and I, packed up our office and handed in the keys.   More than a month ago I could see where the pandemic was headed. We needed to get our costs down fast and rent was our largest fixed cost after wages.   By 3.30pm I’d packed the last boxes into my car. I took a deep breath, allowed myself to feel the wave of emotion that welled up, and drove home. Many people here and overseas far worse off than me of course, but I felt quite raw. For 20 years The Leading Partnership had an office in North Sydney. We were not operating out of home or holding meetings in a coffee shop; we had a place of business to call our own. I’ve come to understand the degree to which having a commercial office defined me and defined our business. I suspect I am not the only one at this time who is coming to a new realisation of how much my self-image is tied up in what I do, or don’t do, professionally. Formerly busy people are sitting idle; compulsive travellers are staring at the walls and plotting their escape; University students who once had jobs to cover their living costs suddenly have no income and are moving back in with their parents; sports people who train their bodies for clashes with other teams or competitors are now pumping iron for what? Parents who don’t see themselves as teachers are upskilling in the national curriculum, while teachers who never wanted to work for the School of the Air are doing just – without even applying for the job!

It is so easy to go into default mode and find our meaning and identity in what we do, particularly if society sees what we do as important and valuable. When that is taken away, or new challenges intrude into our lives over which we have no control, who are we? What is our identity? What value do we have?

I do what I am

The opposite to defining ourselves by what we do professionally, is allowing who we are as people to guide our priorities and activities. I do what I am, rather than I am what I do.

In the late 1990s, when considering making the transition from regular employment to becoming a consultant and business owner, I spent many hours thinking about my personal purpose, what I felt I was put on earth to do. I actually have my own statement of purpose. In January each year I sit down and review my annual plan, which is based on that purpose, and set new goals and foci for the coming 12 months. It’s a well organised ritual.

The word ‘purpose’ has as its root a Latin term meaning ‘object in view’, ‘intention’, ‘aim’, or ‘by design.’  Purpose is the reason we are called into being - the design for which we are intended, the way we make meaning in our lives. There are individual, organisational and community benefits to be had from setting aside time to discover, explore, challenge and deepen one’s personal and collective sense of purpose. Firstly, operating from a deep sense of purpose is energising and engaging – human beings want to lead meaningful lives. Those functioning ‘on purpose’ are typically more focused, more open to possibility, and less concerned with barriers and blockages.  Secondly, the developmental experience of living out and journeying towards our personal purpose brings us closer to friends, colleagues and family.  Finally, purpose connects us to that which is beyond ourselves and the everyday world – it puts our lives in perspective and invites each one of us to serve some greater idea, principle or end.

Over the past decade or so discussions around purpose and meaning are re-entering professional bounds.  We are overcoming stigmas that considered such conversations as vaguely religious and therefore out of bounds amongst well brought up adults.

Despite having thought about purpose for two decades, despite carefully structuring my priorities and activities so as to act from my core life purpose, the past weeks have destabilised my sense of self. I am now pretty much through it – at least for the time being.   Writing about this process helps.

Finding identity in small things

At a time when major industries such as tourism and airlines are on economic life support, and the arts and sports sectors have shuttered up, society is functioning off the backs of some of our less recognised and poorly paid citizens.   We now have the eyes to see some of the invisible people in our midst.   Shops are open because shop assistants and shelf stackers, who are on or close to the minimum wage, keep going to work.   Aged care facilities continue to be manned by an underpaid, often immigrant workforce who care for our elderly and frail despite legitimate fears of Covid-19 having a disproportionate impact in aged-care facilities.   Buses, trains and ferries provide ongoing public transport for those who need it because key staff keep turning up.   Parents are speaking with new-found wonder of the skills and dedication of teachers who have worked 12-hour days getting lessons on-line.   Fresh from supervising home classrooms for a couple of weeks, some parents have even come to recognise that their kids are as ratty as their teacher said they were!   Nurses and doctors are working long hours under high pressure while in some countries, retired health workers are volunteering to come back to their jobs during the pandemic  - talk about operating from a deep sense of purpose…

Leaving aside the toilet-paper wars and other petty nasties, in the midst of an unwanted crisis we are carving out a new-found sense of community and collaboration. Governments and Unions are partnering with employers to solve massive, unforeseen problems while political ideologies have been unceremoniously ditched because they are useless in the face of a pandemic. A National Cabinet is moving quickly to ensure state, territory and national interests are as aligned as they can be. Nothing is perfect, mistakes have and will be made, but remarkably, we are not falling apart.

In all of this, there are opportunities to find identity and meaning in small things: a kind word, a thank you to a person whose work we’ve never before noticed, a phone call to a friend, a Zoom meeting between grandparents and grandkids, reading a book for an hour in the late afternoon or the opportunity just to stop and smell the roses. What a wonderful autumn Sydney is having, for example, it’s just beautiful!

The ‘small people’ of our society – the poorly paid, the unemployed, the elderly, immigrants, the disabled and those who care of them, the pay cheque to pay cheque households where there is never a dollar to spare – are used to finding their meaning and identity in small things. They often have little choice. For many of us - the professionals, the newsmakers, the well remunerated, the much-travelled -  finding meaning in small things is best seen as a work in progress.

Let’s keep working on it.

Philip Pogson FAICD

April 6 2020.

Philip has been a company director, Chair and business owner for more than 20 years. He consults and advises on strategy and governance across a range of business sectors.


Decision Making Under Pressure - It Never Was Easy

posted 29 Mar 2020, 16:05 by Michelle Stewart   [ updated 29 Mar 2020, 16:09 ]

The view is perfect in the rear-vision mirror.....

As many commentators have observed, the Covid-19 crisis presents the most difficult and comprehensive set of global challenges since World War II. Governments, health systems, companies, not for profits and communities are struggling on a daily, even hourly basis to come to grips with a constant stream of disruptive change occurring at every possible level. In the face of this crisis there has been relentless criticism in some quarters of government and company decision-making, often from an ill-informed or ideological perspective. As one cartoonist quipped, social media experts on bushfire fighting appear to have done PhDs overnight and morphed into virologists and population health gurus!

On a serious note, it is important for us to understand that some poor decisions will always made in a crisis. The longer this pandemic goes on, the more bad decisions will be made. It is hard to make good decisions at the best of times, it is even more difficult to make sound decisions under constant pressure, when you don’t have all the required information, where the full range of possible impacts of each decision are not known and when you are personally over-extended. 
I would also point out that it is rarely the case in a crisis that strategic options fall cleanly into baskets labelled ‘good’ and ‘bad’. It is more often the case that the only options available are unpleasant ones. Your job as leader is to decide which of several bad or unpleasant options you choose and for what reasons. For example, do you completely close down the country now and cripple the economy or slow the economy down more gradually and possibly see more people fall ill? Lives will be lost either way. How many lives are you willing to give up or save and at what economic and social cost? Only an armchair critic would see these as simple, clear cut decisions.

That is why hindsight vision is perfect…

Leaders as decision-makers
The role of leaders is to make decisions and judgements.  Jack Welch, the famous CEO of GE once said, “80% of decisions can be made on the spot, 20% can’t. Wisdom is knowing the difference.”   I have great sympathy, even compassion for our Prime Minister, Premiers, business and community leaders and folk such as Chief Health Officers. They have many difficult decisions to make and not enough time to make them in. I believe that they have put in place an enormous range of effective policies and strategies in a very short period of time and made some very tough calls along the way. They have made some poor choices as well – that is life in a crisis. In the end, you make the best decisions you can based on the information available at the time. 

Yet some in our community do not seem to recognise that policy and strategy formation in a crisis is not the same as in normal times. Some critics can only examine the motives and practices of our national leaders through their pre-existing political lens. Conservatives support conservatives and progressives, progressives. Anything done by ‘the other mob’ is always wrong. Others allow their rusted-on cynicism and prejudices to dominate their interpretation of events. They see their role as pointing out other people’s flaws and inconsistencies whilst rarely drawing attention to their own. 

If I was a senior leader in our society now, I would crave a bit more encouragement, compassion and support from the community. Personally, I believe it is better to let history – and the inevitable formal investigations that will take place  – provide the expert commentary. The passing of time and the application of more objective criteria will allow deeper insights to emerge, enabling us to learn from this crisis and apply that learning to the next such event.
Returning to decision-making, no matter how much information and analysis one has access to, leaders are called to make timely decisions. In this, I believe we can learn from General Eisenhower’s approach to one of the most difficult decisions of the 20th century.

The toughest decision of the 20th century?
On the evening of June 4, 1944, General Dwight Eisenhower, Supreme Commander of the Allied Forces, chaired what has been called ‘one of the most important councils of war in military history’. Allied D-Day plans for Europe were in place, enormous amounts of equipment and people had been irreversibly committed to the task. The largest invasion force of all time was equipped and waiting.  Failure at this point would have set the Allied forces back years and perhaps changed the course of WWII.  Yet the weather in the English Channel was atrocious.  The purpose of this late evening meeting was to give the final ‘go – no go’ order upon which thousands of lives depended. After hearing the best available scientific weather forecasts and engaging in deep discussion it was now up to Eisenhower to make the final decision.

His biographer writes:

‘He (Eisenhower) was obliged to weigh not only the decision itself, but the longer-term impact.  There was utter silence in the room, the only sounds to be heard were the wind and rain pounding Southwick House.’ Beetle Smith, (an English General who attended the meeting), later wrote that he was awed by “the loneliness and isolation of a commander at a time when such a momentous decision has to be taken with full knowledge that success or failure rests on his judgement alone.’’’ 

As history shows, Eisenhower rose to the challenge, took what proved to be the correct decision and the invasion commenced the next day. Another writer commented, ‘It was Eisenhower’s moment of trial – and he responded with what can only be called greatness.’ Some might say Eisenhower got lucky, but then luck follows the brave!

Analysis and synthesis
In common with many of today’s leaders, Eisenhower had available to him the very best information and analysis that money could provide – in this case, the combined might of the entire Allied war effort. Yet, no amount of data could actually take the decision for him. Eisenhower alone had to sift, weigh and synthesise the data and make the best judgement he could. That is what it is to be a Supreme Commander. This extreme example illustrates a key principle: analysis alone cannot create synthesis. As leader, Eisenhower’s role was to create a coherent whole from the parts presented to him, not break down the data into even smaller pieces in the hope that somehow the truth would spring forth from amongst the fragments.

Analysis is the process of systematically assembling and logically treating data and information so as to solve a problem or yield a result that is reasonable and defensible. Over time, the process of analysis has been codified into approaches that segment problems into manageable steps. The scientific method is one example of codified problem-solving, as are trademarked rationales such as ‘The McKinsey Way’ or the Microsoft software development process.

In contrast, synthesis has its origins in a Greek word that originally meant ‘to place together’. Great synthesisers seem to generate an instant conception of the whole and in the process ‘place the pieces together’ in imaginative and creative ways. Synthesis and intuition are closely related. Intuition is, according to scientist William Glaser, ‘a not fully self-conscious application of knowledge and experience.’ Originally, intuition referred to ‘spiritual insight’ from the Latin intueri which meant to ‘consider or contemplate’ or ‘to gaze upon attentively’. Good analysis is more of a science whereas synthesis, or intuition, is an art. Just because synthesis is an art it does not mean that it cannot be cultivated. Good musicians transition to greatness through ongoing practice and performance. 

Leaders get better at decision-making, including decision-making in a crisis, through taking timely decisions, not falling into inaction.
New ideas or options (intuitions) are often created in the subconscious when the brain is allowed to burble along in the background not while we are bombarded with reams of data. This is why bad decisions and poor judgement are rife during a crisis – the brain becomes overloaded. The art of good judgement in decision-making draws on both analysis and synthesis, on a capacity to understand the whole as well as constituent parts. Developing a capacity for good judgement requires us to systematically develop our imagination and draw on the imagination of others.  

Being our best selves in the current crisis
Like Eisenhower on the eve of D-Day, the greatest leadership challenges involve making effective judgements in the face of incomplete information and ambiguity. Great decision-makers learn to speedily weigh up data and analysis and move into synthesis.
Relatively few individuals will be major leadership players over the coming months, most people will only have an impact on immediate friends, business colleagues and family. For the latter group, in which I include myself, taking up the challenge of being our best selves in the current crisis requires us to make personal decisions as to where and how we can make positive a contribution. 

I ask two things of us all: firstly, that we each seek to lead as best we can wherever we find ourselves; and secondly, that we encourage and support those making the big, tough decisions. These women and men are human too.

Philip Pogson FAICD, March 2020

Philip has been a company director, Chair and business owner for more than 20 years. He consults and advises on strategy and governance across a range of business sectors. 

Week Two Update

posted 22 Mar 2020, 21:11 by Michelle Stewart   [ updated 22 Mar 2020, 21:12 ]

What an extraordinary week we have had!

Unprecedented times
The times really are almost unprecedented. I suspect we have to go back to World War II (WWII) to find a parallel to the kind of national and international disruption, pain and suffering we are facing at the moment. Both my parents were born in 1931. Their early childhood years were thus at the tail end of the Great Depression. They entered their teens in the midst of a global war of awful violence and human misery. It was hard. There was rationing and the possibility of invasion. Brothers, sisters, fathers and mothers went off to war or were seconded to work in war industries. My dad is the youngest in his family and one of his brothers, my uncle, fought in the Pacific and survived. The point is, they came through as did the greater majority of Australians of that generation. We are their heirs. We will also come through and rebuild on the other side. Some reflections follow that I hope are encouraging.

Lead when and as we are able
Whatever our role and status, now is the time for us to exercise leadership in any way we are able. I don’t necessarily mean “Big L” Leadership: few of us will be called to be a Premier, Prime Minister or a CEO. I am referring to the leadership opportunities that come our way in everyday life. Over the next weeks and months we will need people right across our community who can acknowledge uncertainty but think clearly, respond with compassion and remain task focussed. As a business advisor and school Chair, I see teachers, business people, University staff, health experts, friends and family acting this way already. On the flip side, these are stressful times. Our way of life has changed with a violent lurch and we are not sure where we are lurching to. For myself, I am working on being aware of, and not ignoring, my own anxiety and tiredness. I am also keeping up and expanding while I am able my exercise routines and making sure I have a list of things to do that I enjoy.

Avoid blame and finger pointing
Beyond a certain point, spending our energies pointing out what others are doing wrong, where they are acting inconsistently or not meeting our expectations is not productive. Leaving aside those in the health sector, we should keep in mind that our Premier, senior ministers, business and community leaders and Prime Minister will be working extraordinarily long hours under exceptional pressure. These people are human and thus imperfect - just like us.  They also have families and loved ones they will be hardly seeing and no doubt worrying about – just like us. Now is not the time to fight arguments on social media and relentlessly criticise others, particularly those with “Big L” leadership roles. Now is the time for our community to seek unity and goodwill and ensure that the majority of our citizens, including the poor and needy, come through this as best they can.

Look to and plan for the future
As I noted in the first paragraph, WWII came to an end as did WWI and the Spanish Flu pandemic in 1919. Humankind is resilient and creative. We can choose to be our best in a crisis, or chose the opposite. As I said last week, The Leading Partnership is open. If we can assist in any way just ask. If you can’t pay that does not matter! Money is not the object, beating the crisis is. My email is:
In closing, take care. Best wishes to you and your loved ones.
Philip Pogson FAICD
On behalf of Stuart Jones GAICD and Office Manager, Michelle Stewart

This photo is of the island of Kvaloya in far northern Norway.  I took this picture on a visit in 2018.  It was summer, just before midnight, and this is about as dark as it gets!  (enjoy....)

Everyone needs a strategy - preparing to bounce back post Covid-19

posted 15 Mar 2020, 20:11 by Michelle Stewart   [ updated 15 Mar 2020, 20:18 ]

“Everyone has a strategy ‘till they get punched in the mouth.” (Mike Tyson)
Mike Tyson is not widely seen as a business guru and in any case, this is a pretty confronting statement evoking the worst of toxic masculinity. Some context might be helpful. The Tyson quotation is actually the first sentence in a significant book titled ‘Strategy: a history’ by world-famous strategic studies academic, Sir Lawrence Freedman. In writing a history of strategy, Freedman’s contention is that no strategy is any good unless it can withstand a punch in the mouth, that is, a big shock.
Covid-19 is that shock, the unwanted punch in the mouth for Australia and the world. It will hit us economically and socially. But now is the time to plan to bounce back once the worst is past. Some thoughts follow.
We are open for business and willing to help – don’t worry if you don’t have the budget
Firstly, The Leading Partnership is open for business while following health advice re hygiene and social distancing. We are here to help in any way we can – whether or not you have the budget to pay. My personal purpose is ‘to act as a creative force to enhance the lives of others.’ I do what I do because its my vocation not because I get paid. So if you want to talk anything over formally or informally, please call and make a time to catch up. Conversely, I am not too proud to say we might need help. We are a small business with limited means and don’t have the deep pockets of major consulting firms.
What can your organisation do now?
1. Plan for the future
It is inevitable that there will be some kind of economic downturn post-Covid-19. It is counterintuitive, but now is the time to think about where how you are going to bounce back in 6 or 12 months’ time. ‘Never waste a crisis’ has never been more applicable. It looks like many of us will have extra time on our hands over the coming weeks so let’s use that time well to re-think and re-position for the future. Drawing on our 40 years’ consulting experience, and some major turnaround projects, we would love to help in any way we can.
2. Bring forward projects or objectives that need to be done but are on the backburner
Projects like board reviews or products reviews can be brought forward. We are set up to do comprehensive board reviews on-line and via phone or video hook-up. Again, if cost is an issue, please talk to us about it. I am sure we can find a way ahead. It’s better for morale to keep things moving and keep your people active and engaged – whether on-line or face to face - rather than to fall into reactive mode.

3. Look after your people, look after yourself 
Pandemics are all about physical health but there is and will be a mental and emotional toll. The Chief Health Officer has just said that he expects the impact to last at least 6 months. Freelancers and casuals will be very badly hit financially in this environment, but even those with jobs risk depression and anxiety. We also need to pay attention to our own health and well-being as leaders and to that of children, the vulnerable and the elderly. It’s a crisis so let’s practice kindness and empathy rather than panic and selfishness. We are in this together across Australia and around the world.
All the best,
Philip Pogson, Stuart Jones and Michelle Stewart
The Leading Partnership
Philip Mobile: 0412 459 156

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