Soriano: The root cause of failed leadership

Enrique Soriano
·3 min read

The country is once again battered by the current wave of infection. This extraordinary crisis is indeed unpredictable and a once in a lifetime event and no training or experience in previous downturns has prepared any leader for it. With infection rates back with a vengeance and at record levels, it is time for our leaders overseeing the Inter-Agency Task Force (IATF) for the Management of Emerging Infectious Diseases to reflect on all the outrage and contempt as there seems to be a collective and justified reason for people to be livid at their perceived actions—or inactions.

Repeating the same thing

For starters, let me quote Albert Einstein when he said, “The definition of insanity is doing the same thing over and over again, but expecting different results.” While the word “insanity” may be too strong, I do see that mindset as a common trap that most of us fall into during the course of running our lives and our businesses. What the quote really meant was that it is foolish to repeat ineffective actions.

With the restrictive lockdown blanketing the expanded National Capital Region this week, it is clear that we all failed to mitigate this crisis. And the economic impact of this new lockdown can be staggering. Economists estimate losses to range between P10 billion to 15 billion a day. At about the same time last year, the National Economic and Development Authority reported that the economy lost P1.1 trillion or 5.6 percent of the gross domestic product (GDP) across the agriculture, industry and services sectors during the first 45 days of the enhanced community quarantine. And just to put all of these issues into context, the small and medium enterprises (SMEs) are expected to suffer the brunt of this new restriction. No doubt it is one of the hardest hit sectors with 30 percent of these enterprises in danger of being wiped out permanently. And just for the record, the SMEs represent a staggering 98.6 percent of all businesses in the country, contributing close to 40 percent of our GDP and employing more than 70 percent of the workforce.

Comfort zone

As business leaders, we have our respective comfort zones and admittedly are creatures of routine. Even the most spontaneous among us stick to a lot of routines and habits in life. For us to overcome any adversity, it is important that we challenge the status quo and try different approaches to the problems that we confront in our lives. So yes, the phrase widely credited to Einstein holds true not just for our government leaders but for all of us. The key to success is this: If we want different results than what we are getting, we have to try different approaches!

In my years of coaching family businesses across Asia, I can conclude with certainty that there are a lot of business owners, mostly next generation leaders who never should have been running a business in the first place. Three-quarters of business initiatives disappear; new manufacturing plants close prematurely; poorly conceived joint venture deals and their partners end up in courts; start-ups fail to gain momentum. Why? Aside from inexperience, non-compliance of best practices, lack of governance, poor controls, obsession to cost, ill trained and entitled next generation successors, the likely culprit falls on their arrogance with a mindset of invincibility. I call it hubris.

Arrogance

When the leader fails to recognize it in himself, admit to it, or take steps to correct it, arrogance can demoralize his workforce and undermine the success of his business. When I started advocating corporate governance to family owning businesses more than a decade ago, I found arrogance to be one of the most destructive behaviors a leader can possess. It is dangerous because it can lead to making poorly flawed and unplanned decisions. Decisions that range from whimsical termination of good employees just because the owner felt disrespected or was not greeted in the corridor, to the unnecessary purchasing of personal hobbies that they believe will immortalize them, draining company resources and destabilizing the business.