Bronwyn Ruth Williams on why leaders must take on a greater share of risk

Skin in the game

Leaders must shoulder a greater share of operational risk in the quest to create value, argues Bronwyn Ruth Williams

How does leadership provide a fresh perspective on management? The clues are right there in the definitions of those two different words. We can see this in developments such as guaranteed public bailouts of private businesses and banks, which ensure that certain individuals have guaranteed upside without taking on any sort of risk.

Leaders inspire change. They bring We can also see this in the political people together to effect a new future – sphere, in the sense that politicians often one in which the organisation will have have popular rewards for implementing the opportunity and scope to move in a well-received policies, but don’t have any different direction. stake in the consequences of policies that

Managers, on the other hand, keep go wrong. the show on the road. They make the If we want to fix leadership in the connections and clear the West, we must make sure path to execute a course of action that has already We must that those risks and rewards are more equally been determined through make sure shared. In particular, we the process of leadership. To put it another way, that risks and must share the rewards of leadership decisions with leaders are in the business rewards are the people who actually of value creation – i.e. creating new sources of value more equally help leaders create and develop those new futures – whereas managers are in shared and sources of value. At the business of managing, the same time, it is immeasuring, monitoring or extracting value portant for leaders to take on a fair prothat has already been created. portion of the risks involved in the big

So what is the fresh perspec- decisions they are making. tive that is so badly needed for the myriad challenges faced by 21stcentury leaders? In both the political and corporate spheres, the single most important thing that organisations need to get right in the future is reciprocal skin in the game. If we think about value creation, too many of our current leadership structures are geared towards outsized Bronwyn Ruth Williams is a South African futurist, economist, writer, rewards for leaders and managers – but keynote speaker and without shared risk on the downside. strategic consultant