Chancellor, members of the university, staff, graduates and guests.
Graduates – this is definitely your day, you have taken initiative to follow your interests, you have taken responsibility to build your skills and you have earned a just reward.
As economics, finance and accounting graduates you will now all be very familiar with economic theory and the role of markets in driving efficient outcomes. You will have learnt there is a role for regulation in taming markets and ensuring some degree of equity and security for consumers. However what of the role of leadership in driving outcomes in this broader context? Thinking about the financial crisis, decisions by the leaders of financial institutions have had a tremendous impact not only on the institutions themselves, however also the economies and societies in which they operate.
It is my opinion that there will also be considerable value to you in your career in how you think about leadership. I would like to reflect on this topic based on my experience in the reinsurance and capital markets businesses over almost 20 years. I would like to pose three questions which I will answer based on this experience:
1. Is it possible to lead without being the leader?
2. What does leadership look like in a financial markets?
3. What do some of these observations mean for you here today?
I think the first question about being able to lead without being the leader is valuable to consider where ever you are in your career. I think the second of leadership is particularly relevant given the current outlook and your disciplines of study.
Considering the first question – Is it possible to lead without being the leader?
I started my career in the insurance and reinsurance industries and have had the privilege of working with some excellent people and organisations in some very engaging roles. When I was in my 20’s I lived in Chicago for 4 years and had a role as head of strategy for a reinsurance business. My responsibilities covered 30 countries and involved frequent travel, to places as varied as Panama, Paris, Mexico City, Hamburg and London.
This was attractive to me at the time given my age, however there were business constraints, I had to perform – it was challenging to bring together groups of people across countries to work however we were working on implementing a vision for where the business needed be – the best resources being available to clients no matter their location and a strong pipeline of growth opportunities for staff to focus on. I had senior management support to do the things I needed to do and this led to some excellent outcomes.
In this context, the organisation was sound, there was a vision for the business that I could implement and therefore I could provide leadership without being “the” leader.
2. What does leadership look like in financial markets?
After 13 years in the insurance and reinsurance industry I decided it was time to look for new challenges and this was guaranteed by my decision to make the move to global markets in investment banking in 2007 – we all know the financial crisis began in 2008.
I recall a video conference during this period with a gentlemen who used to run the New York Office of the Federal Reserve. This is a key institution in the United States given its proximity to financial markets and he was a man of immense experience who had taken a leadership role in resolving a number of financial crises during the 1990s. He had excellent perspective and we had arranged for him to speak to our clients at around the time Lehman Brothers was failing. He was to join us via video link from an office in New York for 60 minutes to provide his thoughts on the crisis and where things were heading.
The scene was set, we had our best clients in a board room to hear his wisdom and when he came online he was in an auspicious setting, high backed leather chair in a wood panelled room. However when he began to speak it became clear that he was clearly dismayed by events that were unfolding and was unable to provide his usual analysis and insight.
Ultimately the video conference went for less than 5 minutes and this was an important message in itself. My conclusion was that he did not want to mislead – the range of potential outcomes was so extreme as nothing was working as it should and the system was failing. One aspect was the business had been split up across activities – loan origination, structuring etc – to the point there was no real commercial or regulatory oversight.
It was possible to make more money in the short run by splitting up the value chain and extending credit to uncreditworthy borrowers, however this was not sustainable and not enough people questioned this method of doing business from the bottom to the very top of these organisations.
My conclusion is that markets do not provide leadership in and of themselves. The stewards of institutions should not only assess what is possible given the market, but also determine what is right and wrong in a broader context. They need an ethical framework and they need to take ownership of their role in the system.
3. What do these observations mean for you here today?
By achieving your qualifications you, among your alumni, have much to gain from the system. However you also have an obligation to contribute. You can do this either by participating, by choosing to lead or by actually being the nominated leader.
By participating, at a minimum, remember what you have learnt, ask difficult questions and have high expectations of your leaders. Do not necessarily accept prevailing attitudes.
You will come up against situations that challenge you to take on a leadership role. Choose to lead, have courage, remain connected to your peers, continue to follow your interests, stay involved in your university, and this will most definitely help you determine right from wrong as well as your own potential.
If you do find yourself in the position of nominated leadership, this is an exciting path. Remember to consider what is possible in the context of what is right and wrong. Providing a solid vision for your people, this will help them do the right thing. Also remember that we must invest in business as well as in society to ensure we succeed tomorrow – history in my experience has shown that good leadership can provide for a bright future.
I hope these observations are useful to you in your future endeavours. Congratulations again on your achievements. Thank you for the opportunity to speak to you.