Navigating an increasingly complex world requires leaders to hone their existing skills – and acquire new ones. The Australian Graduate School of Management (AGSM) at UNSW Business School offers MBA programs, graduate certificates and short courses that equip leaders to not just manage disruption but out-think it.
What once felt like uncertainty has become the new operating environment. The leaders succeeding aren’t the ones who can predict what’s next. They’re the ones who know how to make sound decisions when the path ahead isn’t clear.
“There’s a skill set leaders can learn so they and their organisations can thrive in complexity,” says Associate Professor Michele Roberts, Head of School at AGSM and Associate Dean (Post-Experience) at UNSW Business School. “The leaders who handle disruption well aren’t smarter or calmer but have learned to make good decisions about unexpected information.”
These skills are at the core of AGSM’s MBA programs, equipping graduates to lead with confidence through complexity, uncertainty and change. “We’re not teaching people to predict disruption better. We’re teaching them to triage it and know the difference between a problem that needs management and one that needs leadership. Today’s leaders need new skills, mindsets and confidence to thrive.”
Scientia Professor Richard Holden, Vice-Chancellor’s Professor and Chief Societal Economist at UNSW and Director of the Manos Institute for Cognitive Economics, researches the impact of rising complexity. “Cognitive economists think about complexity as things that are costly or difficult to figure out,” says Holden, who lectures in AGSM’s MBA programs and contributes to its short courses. “Standard economics assumes that once you have the relevant information, you can immediately determine the answer.” He gives the example of deciding what car to buy. “You consider different attributes, read consumer reports and take test drives. Once you have the information, boom, you’re done. In reality, it’s much harder than that.”
The neuroscience of complexity
“Cognitive economics is an emerging field that takes the human reasoning process very seriously,” says Holden. With multiple factors to consider in business, the work at the Manos Institute is compelling.
“Cognitive economics is about getting inside people’s heads and researching how computationally costly it is to think through and analyse problems,” he says. “That starts at the individual level and for organisations there’s an added layer of complexity, often with people putting together the conclusions of different individuals or teams. Once you adopt the perspective that it’s about things being difficult or costly to figure out, it gives you a different lens from standard economics.”
Holden says this way of thinking about complex problems helps leaders appreciate that “having all of the information is only part of the solution”. To untangle complexity, leaders need methods to cut through the forest of data that can prevent clarity.
“You probably don’t want to have less data because it’s an important piece of the puzzle,” he says. “But having so much data now highlights that leaders need to consider the decision they have to make and what information would best support it. Start there and work backwards.”
Leaders are constantly assessing the allocation of resources in their organisation. Applying a cognitive economics framework can help. “Leaders need to think about the organisational and analytic resources they require for different problems,” says Holden.
Similar to a P&L statement informing cash flow, cognitive economics puts a value on the resources needed for deep reasoning. “Understanding that you have a fixed budget of these resources and thinking strategically about allocating them is critically important.”
It’s the kind of mindset shift that has to be learned, says Roberts. “In a period of such disruption, organisations are struggling to grow so there is an urgent imperative for leaders to get a solid grounding in innovation and change management to find new paths for growth.”
Doing good and doing well
Examples of organisations behaving badly are multiplying. The AGSM ethos is that ethical behaviour is an essential tenet of good business and that companies grow and prosper when they also strive to do the right thing. Add to this the fact that the generations entering the workforce today are searching for purpose-led organisations and eschewing those in which the C-suites are beset by scandal.
“When everything is shaking and changing around you, what’s needed is a solid grounding that allows you to cope with that change and make good decisions,” says Dr Simon Longstaff AO, Executive Director of The Ethics Centre and Adjunct Professor at AGSM. He says the behaviours that undermine that foundation are hypocrisy – “where an organisation or its leadership says one thing then does something else or requires other people to” – and complacency about a problematic status quo – “everybody else is doing it”.
This ethics vacuum leads to a poisoned culture. “When a leader presides over policies and structures that signal a gap between words and actions, it creates cynicism within an organisation,” says Longstaff. “That acts like an acid that breaks things down and you are less able to deal with complexity.”
The “we’ve always done it this way” excuse is equally corrosive. To distinguish management from leadership, Longstaff imagines an organisation as a cork floating in a stream. Management keeps it stable so people don’t fall in – but the cork still drifts where the currents lead. Leadership is what determines where the cork actually goes. “Management is fine if the water’s calm and heading the right way but when it’s turbulent and there are rocks and waterfalls ahead, leadership really matters,” he says.
“How you lead in those circumstances is fundamentally a question of ethics. A clear set of values and principles that are rooted in an organisation’s defining purpose and function is what provides the stable foundation for making sound decisions in highly complex times.”
To overcome the common blind spot about these ethical questions, Longstaff and The Ethics Centre have developed a leadership and cultural strategy they call “constructive subversion”.
“What you subvert is the unthinking custom or practice,” he says. “A leader never accepts that something is done just because everybody else is doing it. They say, ‘No, that’s not good enough’, and constructively engage to get their organisation where it aspires to be.” By adopting this strategy, leaders build and strengthen the foundation that’s required to cope with complex times.
Longstaff says ethics is not “a disposition to be good or nice”, but a set of skills – and one that AGSM invests time in developing in its students. “Particularly in our full-time MBA program, we give the students a framework to understand that the most powerful force on this planet is human choice, and that’s ultimately what ethics is about. We want students to be alive to this complexity and know they can develop a skill set so they’re better able to deal with it.”
By building the necessary expertise across change management, cognitive economics and ethical leadership, AGSM alumni are prepared for the next global shock – and the one after that.
Presented by AGSM @ UNSW Business School
