Leadership and Long-Run Experience in a Time of Radical UncertaintyDr. Laurence B. Mussio
By Laurence Mussio and Mona Malone
These days, we have borne witness to an extraordinary historical moment. Instinctively, this feels like the Big One, massive in scale, and diabolically targeted equally at individuals and societies – our bodies and our economy. “Radical uncertainty”1 is the order of the day.
If we are in uncharted territory, then what’s the use of previous experience to decision-makers? There is no playbook for this unique crisis. It mutates in real time. But taking a nuanced long-run view can provide context, insight and inspiration as new playbooks are written.
Experience can guide when it cannot govern.
“Exogenous events” (to economists) and “something really bad” (to the rest of us) have punctuated the history of Canadian banking. Turn your mind to deposit-taking, lending and investing in times of world wars, Depression, and epidemics, and you get the picture.
Let’s look at two different examples drawn from the experience of Canadian banking to get an idea of what previous generations faced: the first, pathogenic contagion; the second, financial contagion.
In 1832, a devastating cholera outbreak in Montreal resulted in devastating health emergency. Then-Magistrate and Montreal banker Peter McGill struggled alongside with city officials to deal with an epidemic that doubled the annual death rate and threatened public order. In Geoffrey Bilson’s riveting account, during the height of the crisis, the artillery fired nightly barrages to “clear the air” in the vain hope the smoke would dispel the pathogen. Between 1832 and 1871, 20,000 Canadians died of cholera. For most of the 19th century, pandemics occasionally stalked banking and commercial life.
Financial contagion also frequently threatened, though in different ways. The Panic of 1907 first destabilized the New York and then the broader North American banking system. The swift action of senior Canadian bankers played an important role in the return to stability. The Globe suggested at the time that steady confidence “through a time of panic” demonstrated “the solidity of the Canadian banking system.”
In a series of national emergencies, decision-makers confronted different kinds of radical uncertainty without the capabilities of today’s scientific, technological and financial systems. Leaders confronted each new crisis, making fateful decisions affecting lives and livelihoods – surely not without a human touch of anxiety and inner struggle. Those were also moments of truth: organizations built to last prevailed; others faltered. It was also in these moments that great leaders were made, just like they are being made today.
Insights emerge from each situation. First: each generation confronted the challenges before them with resolve, ingenuity and courage, often against an enemy that initially threatened to overwhelm: a pathogen, a financial crisis, or a wartime emergency. Fortune favoured the prepared and the disciplined. The burden of leadership remained: to understand the need, to instil trust and confidence, and to act decisively. When necessary, course correct.
Second: radical uncertainty, in its many guises, is the frequent unwanted passenger on a journey where few established rules apply. This is where character matters: remaining calm under tremendous pressure, using available facts, understanding context, remaining open to unconventional views, and acting with deliberate speed. That is a lesson in how to rewire a 747, in flight, through heavy turbulence.
Our collective experience in crises should give us cause for hope. In every generation, the leaders and employees in Canadian banking have been tried and tested. Through the toughest-imaginable circumstances, they kept national financial networks functioning. They ensured that disruption did not degenerate into destruction. Remember 2008. The Great Financial Crisis now looks like a dress rehearsal for what we are experiencing. And this much larger crisis may yet be a dress rehearsal for what awaits us down the road.
In this moment, however, the Great Crisis of 2020 is allowing us to relearn something about ourselves: that our country and our institutions are resilient; that, together, we have accomplished difficult things; that our hope in the future, and how we respond, will help define us.
It is our turn now to deal with a new “radical uncertainty.” What decision-makers do in the coming weeks will define their place in the history of the companies we work for, the country we love, and the families, neighbours and communities depending on us. Emergency decisions taken today, as Yuval Harari notes, may become permanent fixtures and fast-forward historical processes. It is a momentous responsibility. The track record suggests that history is on Canada’s side, and even if it will take us a while to get there, there is every reason to hope we are equal to the challenge.
Mona Malone is the Chief Human Resources Officer and Head of People and Culture, BMO Financial Group. Dr. Laurence B. Mussio is the co-founder of the Long Run Initiative (LRI) and author of the new, two-volume scholarly history Whom Fortune Favours: The Bank of Montreal and the Rise of North American Finance, to be released in mid-April.