Nov 17, 2019

Manage decline or change the world: the next generation’s dilemma

written by Lisa Eason

Leaders can be divided into custodians or creators. Custodians are stewards of established organisations; creators build new ones. Each can be a noble pursuit.

Society needs both types of leader. Institutions such as hospital foundations, universities, large companies, housing associations, big charities, academy trusts, local authorities, government ministries — these structures require prudent stewardship. Start-ups and the organisations of tomorrow demand a different skill set. They are led by risk- takers who live to experiment, who can thrive without infrastructure and who want to invent the future.

Most custodians are sensible people who prefer order to uncertainty, work well within accepted norms and rules, are adept at navigating hierarchy and bureaucracy, and choose scale over innovation. By contrast, creators — entrepreneurs — are less collegiate, more impatient, and enjoy disrupting the status quo. They tend to do well in the chaos of markets and changing technology. They sacrifice security and can cope with failure, because they understand that defeat often goes with the territory. They pursue what is frequently a lonely path, without the peer support and systems inherent in any larger entity — in the hope of constructing something new.

Creators don’t operate only in the private sector, there are pioneers in the non-profit sector, too: think of Jimmy Wales, founder of Wikipedia; Brett Wigdortz, founder of Teach First; or Tim Berners Lee, inventor of the World Wide Web. Mavericks tend to gravitate towards business because their free-wheeling tendencies are more accepted there. Are they more selfish than those who work in the public or charitable sectors? Perhaps, although I suspect a hunger for autonomy and a desire to express ideas are greater motivating factors.

Well-educated and ambitious young adults will mostly see big, blue-chip organisations as respectable places to develop their careers, rather than the precarious prospects of self-employment. Things take time to build — be they human resources, brands, factories, reputations or technology. Traditionally, academic high flyers gravitated towards custodian roles. By contrast, strivers from outside the well-connected elite frequently ended up working for themselves.

Starting from scratch can avoid problems: old institutions can be weighed down by historic pension liabilities, outdated IT, lease obligations, redundant constitutions, toxic cultures and incessant politics.

Many legacy institutions face existential threats, thanks to technology and demographic shifts. In media, retailing, automotive, oil, transport and banking, the old models are gradually falling apart. Public services such as policing and education are ill-equipped to adapt to the expectations of 21st century citizens.

Institutions may be embracing soft issues such as diversity, inclusion and the environment, but are they addressing the tougher hazards — how to stay competitive, solvent and relevant?

The next generation of leaders of established organisations can choose: do they want to manage decline? Or can they rise to the challenge and transform legacy structures? Entrepreneurs are usually better at tackling creative destruction — but will the custodian class take the necessary and difficult actions?

I worry that we are not teaching young people the right skills to be leaders of tomorrow. Business is the most popular degree subject in Britain, accounting for 342,970 enrolments in the 2017-18 academic year — more than those taking maths, computer science or engineering and technology combined. I wonder how practical these business qualifications will be in the real world.

New organisations usually lack capital and recognition. Yet these absences can be advantages. A dearth of money can bring out resourcefulness, while too much cash (see WeWork and other unicorns) can be dangerous.

The best founders are lean; there is nothing more off-putting than an extravagant entrepreneur operating a loss-making business. Meanwhile, having no reputation means start-ups and their founders can make mistakes relatively quietly, and learn from them.

I suspect it can be hard for creators to play the part of a custodian and vice versa. Partnerships between the two types might be the answer, although there are likely to be clashes and inevitably only one vision will prevail.

I think worthy custodians of institutions follow Giuseppe Tomasi di Lampedusa’s dictum from his novel The Leopard: “If we want things to stay as they are, things will have to change.”