Macro Levels Trends – Brazil – Latin America: WEF 2018 : Leadership

The second discussion panel discussed the idea of' 'A New Era of Leadership', recognising that - beyond stalwart the domestic devotees of high profile “powerful men” such as Putin (Russia), Erdogan (Turkey) and to a lesser extend the 'soft-power' of Modi (India) and Xi Jinping (China) - much of the global public had become either somewhat or wholly disenchanted with the state of progressive democracies.

The USA's politics today viewed by Americans and other nationalities as a derisory pantomime throughout the Presidential elections, with what was then only the bombastic theatre of Washington today increasingly writ-large over world politics, from trade protectionism to the (seen as necessary) restrengthening of the 'Atlantic Relationship' per Russian border activities and Syrian affairs, and so seemingly the role NATO beyond the auspices of the UN.

The central issue that emerges and appears ever less opaque, is that historically a nation's citizenry would be largely united behind what it considered at best good leadership that had come from the masses, (eg Roosevelt, Eisenhower) to whom they could connect, to at worst adept leadership supported by good advisors (Nixon, Ford, Bush Jnr) through which America could indeed operate as the 'Free World's' policeman.

Yet today, the fact that national unity in many western nations has cleanly divided into the 'progressive left' and 'retrogressive right' because of the influence of the overt left-leaning mass-media and so enormous middle-nation reaction (with little centre-ground), it means that any notional 'people's mandate' is effectively lost.

So although the machinery of democracy still operates, the 'theatrical politics' itself (having grown over the last two decades arguably since the 'spin' of Blair's Britain) with today's use of TV personalities ((Trump and potentially Oprah) appears ever more divorced from serving the people, even if that be the façade. Instead increasing numbers of people appear to think, politics only serves the totems of corporate advantage and the egos of the political classes.

Hence the people have begun to become disinterested because of the lack of true representation and hence mistrust of career politicians and the media-machine.

It is this increasingly obvious state of affairs that prompted the Latin American WEF 2018 discussion about 'Leadership'.

Once again, the observations by investment-auto-motives are provided within [the square parenthesis].

A New Era of Leadership -

Chaired by Andres Velasco, (Ex Finance Minister for Chile) the panellists consisted of :

Candido Bracher - Deputy Chairman of Banco Itau

Paul Bulcke - Chairman of Nestle

Maria Christina Frias - Journalist

Alejandro Ramerez - Entertainment Sector Businessman

Luiza Trajano - Chairwoman of Magazine Luiza (Retail)

Ngaire Woods - Lavatnik School of Gov't Oxford

The Chair 'got the ball rolling' with mention of a Chilean survey which asked who do people admire the most?

The answer returned was the 42% most admired soap opera actors.

[NB with the inference that admiration translates to potential for credible leadership, it obviously appears utterly surreal (indeed wholly 'societally-dismorphic') to any persons of basic appreciation about the qualities for political leadership. Yet given the modern age of the screen-derived political persona (eg Reagan to Schwarzenegger to Oprah) unfortunately wholly 'proven' and so believable that a well screen-crafted public persona moves into the political arena.

But this should come with a public health warning, it is indeed a very real possibility that the public rise of 'female empowerment' tied with 'LGBTQ empowerment' through marches, en mass 'pink-sash' charity events and flash-mobs, could indeed create such overwhelming voter popularity for an apparent 'humanistic saviour' (such as Oprah) that the door to national tyranny could be easily opened and not so easily closed, once the 'god-head's' edicts started to grow. Thus more potential for a dystopian 'Big Sister' than the archetypical Orwellian 'Big Brother' seen with Stalin, Mao etc].

Thereafter, the order of Chile's most admired was: football-players, journalists...then in the middle ground the general sense of accomplishment and expertise were economists and academics...and at the very bottom union leaders, business people, church leaders and politicians.

[When a nation has become so 'socially-inversed' that pretend characters and drama plot lines become a closer fit with the public's mindset than their real-world leaders, it highlights a very severe problem, but of course a great populist solution regards 'ready-made' next era leaders].

The Chair states :

“We live at a time in Latin America were trust in politicians, institutions and democracy is 'way down'”...” where new dimensions are appearing (ie more females)”...”but let us not kid ourselves, since we are still far from leadership that truly represents the broad diversity of our societies”.

“Other challenges includes the news cycle and (leaders) being watched 24 hours a day”...”Populism waning in some countries but rising in others (ie USA)”....”a time to regain sustained economic growth”...”and so these are the enormous challenges for leaders”.

So as posed to the panellists the answers were:

A. Rameirez -

Unfortunately the beginning of his answer was inaudible, but went on to likewise cite from another survey in a major Mexican newspaper which highlighted the low levels of general trust...

“all institutions have eroded their credibility...but in general order, the best retained are universities, the church, the army....then in the centre: human rights commission, printed media, business organisations....and the lowest: the banks, TV, the Supreme Court, Senate, House of Representatives, the police, union leaders and political parties....things have gotten appreciably worse”.

To provide a worldwide perspective he cited another survey by the Pure Research Centre which spanned 50 countries, and indicated that when compared to conditions fifty years previously. 88% of Vietnamese, Indians and S.Koreans stated that they were noticeably better-off . But at the bottom of the list was Latin America, when only 38% Brazilians believed they were better-off.; whilst in Peru and Colombia only about 28% believed so...Mexico showed 13%, and Venezuela came last with 10%.

The question Rameriz poses is that why should this be so when in many regards the quality of life and standards of life is so much better for many per per capita income, life expectancy, illiteracy, infant mortality, even extreme poverty.

“I believe this has to do with a cognitive dissonence between reality and perception, this stemming from the rule of law...with only 8% of the world's population we have 40% of the homicides...and of the 50 most violent cities, 42 are in Latin America. This has to do with a failed drug policy over last fifty years...its not working. Mexico has seen many Reforms (that should assist the economy) but the continued perceptions of corruption and violence given a low Presidential approval rating.”

“In this context people are willing to vote for the unknown, and that's what we face right now...candidates that promise much with little substantive economic, political and public policy understanding and tools, indeed even retrogressive in places. The threat that advancements will be undone to return to economic nationalism”.

To counter this: “The business community can work on 2 fronts: support the rule of law, and inclusive growth. For many years attention was focused upon the macro-economic (inflation etc), but did not do enough for those left behind”.

[The Mexican example highlights that even with the substantive economic growth of the last two decades in mid-level value activities – progressing from earlier 1960s'70s Bracero Programme and seen with the 1990s/2000s Maquiladora Programme and much else – and so very visible improvement for the middle-aged and elderly to see, the feeling appears to be that whilst more are living the appearance of the American (consumeristic) Dream, because of added economic pressures, and the result of increased necessary and voluntary social separation life feels more 'exposed'. This even more so during downturns when unemployment grows, crime increases and the individual feels at greater risk].

The Chair highlighted the role of the Free Press, which has massive historical importance in LatAm, but also now suffers from issues such as 'fake news' and increasing commercial pressures regards audience sizes, constant rolling-news etc. 
“Where do we go from now, especially to reconcile the need for maturity and long-termism vs the short-term demands?”.

Frias : “this has always existed, way before the internet, and illustrates a maturing of broadcast news, so a learning curve. But the duopoly that is Google and Facebook controls the flow of information and society should not 'delegate' to those not supportive of democracy, who don't have the expertise to see well investigated news, method, criteria and credibility. This is the importance of professional journalist”.

Chair - “As per the rule of law, Brazil has seen some companies flout this, what can be done?”

Luiza Trajano -

“We do need a Free Press, but one that actually properly reports on the issues at hand, not focus upon the trivia such as what shoes are being worn – as has been my experience”.

“Business founders often need to be completely absorbed with the start-up of their enterprise, ad so social issues are not considered, but as a firm ages so its social responsibilities expand. This not easy to achieve but glad its on the agenda. With a more equitable society we will see better results. I came from a family background where the commercial knowledge specifics were not overtly important (pointing to professionalism criticisms by her company auditors). Business cannot take the place of the government but 60% of our (Brazilian) population earn less than 2000 Reals, with some migrant Chinese women bussed around for 4 hours per day. So companies must become aware. And young consumers are now ethically aware and that impacts your bottom line. I belive in the Free Press and my shoes!”.

[This did not answer the set question but instead purported what has become 'Director's Diatribe' regards ethical business, the role of the press etc. A very stilted answer not helped by the need for cross-panel translation.

From an external perspective, it seems that Trajano is not of the same calibre as the rest of the mixed gender panel. Instead, she seemingly elevated to that of business head in the same way as Oprah was: a woman of the people who, as well as evident self-drive, was also 'made successful' to befit the modern ideal of the entrepreneurial woman. Gaining from the Brazilian rise of the consumer through the 1990s and 2000s; and with public exposure in part for self interest and in part so as to encourage others to both consume and to enter the business world.

To focus upon such aspects that were out of context to the question and topic of debate - such as her auditor's criticisms and her shoes (even if humorously) - illustrates what may be LatAm's biggest problem: the educational divide between the 'Old Guard' Establishment and the obvious push of 'democratized entrepreneurialism' which ironically backs a few high profile public faces. The capability-gap especially obvious when compared to the innate 'rounded' capabilities of a well educated and hard-won career rise of the archetype 'corporate (wo)man' or indeed even the under-appreciated devout 'corporate manderine'.

The good entrepreneur needs to learn at least thrice as fast as the corporate person, so it does raise questions when such a no doubt nice but seemingly relatively inept person gains (or is given by others) such a social position and public voice].

The Chair asks the Brazilian banker about what can be done to assist the national recovery, and how the banking sector can regain its credibility...

[Before answering, Bracher commiserates about the death of the rights activist Marielle Franco.

She has criticised the actions of the military police in fevella's, and specifically the death of a young man, who was somehow caught-up in the ongoing hard-hitting war by the authorities on drugs and fevella originated crime.

Obviously, the major problem for the authorities is the paradox of dealing with ethnicity 'diversity' issues and protection of rights, whilst also recognising that crime inevitably stems from people in such neighbourhoods, who themselves may be hiding behind their 'ethnic diversity' and indeed using formally organised protest groups to do so in order to claim apparent righteousness and apparent innocence – the deleiberately created and very paradoxical 'guilty-victim' syndrome or 'cry-bully' that inhabits so much of the far left in many nations today].

Bracher continues -

“we are starting the biggest crisis seen in decades, in 2 years we lost 8% of GDP, something never seen before. But we grew 1% last year and this year we are pushing 3% growth. The health of the banking sector is pivotal in the growth of an economy. To do so sustainably means both 'bottom-line' growth which itself is only made possible by appreciating the bigger stakeholder picture and the long-term. This means understanding the 'journey' of clients, from the opening of a current account to vehicle and property loans etc; trying to solve their problems. Good business leaders should be able to listen to their 'constituents'. The 'technology gap' has created an income divide between those who are IT literate and those who are not, yet that IT has also allowed us to better communicate and listen to people. Leaders today must commit themselves to resolving society's needs.

“As per banks, there are two approaches: the short term and the longer term structural reforms needed. The parallel is the managing of a country like a company. Banks can be 'loved' but requires much consideration to ensure that all banking 'contact points' ensure positive interaction and the inevitable negative experiences are as small as possible. So, remain humble for continuous improvement.

[The 3^rd Industrial Revolution mated to the IT-centric 4^th].

“Also recognise that financing large companies provides for ever more widespread job creation.

[It should be recognised by those outside of LatAm that an estimated 55% of the region's employment is within the general spheres of the 'Black Economy', so the subject of formal economic inclusion is obviously of major interest to LatAm economists and policy-makers]

The Chair addresses Ngaire Woods about the manner in which experts have been derised by the public, seen as either inept or no longer independent [this perspective prompted by the agenda-pushed UEA climate change debacle]. “What may be done to reverse this, and how to instil in under-graduate technocrats the sense of a professional mission?”

Woods -

“We [at Oxford's Blavetnik Centre} believe its far bigger than about technocrats but about politicians, as seen by elections wherein people voted against the Establishment, whether France, Italy, Chile, the UK Brexit vote, etc. This is a huge warning signal to every democracy about what's going wrong. We want to know why such popularism has grown, and its not because people are stupid.

“The 3 lessons :

1) People suffering socio-economically listen to those politicians who understand. This (basic expectation has been lost by politicians who use PR, focus groups, online surveys, etc to 'lead' and 'respond' and that is not listening. France's Macron won because he had people ask the public what they cared about (ie not traditional canvassing).

2) Communication – the simple meaningful messages “Make America Great”, “Take Back Control” etc do not have to be simplistic. Taking the time to make complex issues simplified and intuitive.

3) What is the 'transformative vision' that centre-point politics need?

I find it astounding that when 60% of Brazilians are hardly making ends meet, that politicians are still focused on balancing the budget and inflation. It's sensible, but that's not a vision that mobilises people; and that's the task of business leaders and public-policy setters to demand of politicians.

Woods again invokes the UK's post-WW2, the “Attlee Vision” that kick-started its economy and achieved better social well-being.

“So what's the vision today? Leaders have a big task in front of them to create a vision, mobilise the populace and achieve that vision.

[The great concern, given the raft of problems being faced by the supposed 'elite' regards the problematic confluence of still sluggish economies, the angry masses, the technology gap and its critics, and vitally the chasm between 'good news stories and statistics' and the reality on the ground, is that each leadership community looks to each-other to solve the innately big problems whilst still serving itself, so creating a game of 'pass the (problem) parcel' with accordent criticism of the other sides: Governments vs MNCs vs Populist Leaders...and so an ever-circular argument].

The Chair highlights the point that too much time is spent pronouncing about the instruments of public policy, not the goals. And to alter the direction of debate he asks Paul Bulcke (an MNC leader) about the somewhat damaged reputation of MNCs and yet also important their roles toward creating a better society; with acknowledging the local (typically BRICs+) criticism of 'importing foreign values'.

“How can MNCs be purveyors of better practices, especially regards the labour market?

Bulcke -

“First let me refer to the 'admired' rankings previously and the high scores of actors etc. This is not in direct contrast to any criticism of MNC's but politics.

As per 'leadership', let me quote an old Chinese philosopher “we are not only responsible for what we do, but also responsible for what we do not do”. Given that the title of this forum is 'Turning Point', if we (all leaders) don't take the right turn (especially for LatAm) (ie become “responsible for not doing” the right things) that would be bad.

“Leadership is not about time/tenure, but what you pass on the next leader and the long-term. This especially so in LatAm where 6 elections offer the chance for the right turn. Strong institutions, structural reforms...everyone knows what has to be done, yet it is not done because of short-termism. (The recent trend toward) Populism is formulating simply what the others did not do. The idea of inclusiveness is an anathema when you did not care for the biggest part of the population. In an age of new global growth LatAm is very well placed [per the full industrial and commercial value chain], with the 'democratic dividend' of a young population that can be deployed over the next 20-25 years...so a unique opportunity regionally.

“Leadership is required, not simply politics, along with integration of the continent, so looking beyond the Asia-Pacific west and Euro-African east. As for companies, they will be judged on what they do not, as well as do. Beyond shareholder and to stakeholders since economic activity is inevitably linked to society. In Nestle “shared values” to intersect in a positive way.

“We at Nestle have been here for 100 years, and we are in countries that offer little in the short term and only make sense in the long term. We look to all involved: consumers, suppliers, farmers...thst is leadership. But we will be criticised; as a high tree we ctach more wind; but don't hide-away, engage and explain as we try to do.

The Chair raises the topic of Populism again, highlighting the problem that many Brazilians live on BRL2000 ($600 per month), so we need some solutions. And asks of the panel “what will you (personally) do to overcome the 'societal disconnect'?

[The fact that there was such a reticence to answer, highlights the size of the problem and the way in which no 'leader' wishes to be held accountable for their promises].

The answers that eventually came was the normative ideology of CSR and 'corporate citizenship', shaping a bold vision, being critical when public policy is failing and being more constructive. Also the observation that big election campaign promises are, after election, are watered-down or forgotten...the country needs to be 'vaccinated' against such lies and false pledges. Leaders need to both listen and be inspirational, give hope but carefully (ie managed with capability) since (in Brazil) the policies about homes for the poor and foreign-study student grants were shown to be worthless.

The Chair highlights similar past experiences of unkept promises in Argentina and Peru - “a pretty common habit” - and then opens up questions from the audience.

Audience Questions -

A person from Caracas, Venezuela, for Ngaire Woods “How to get leaders to connect with the people, their 'soul”.

NG - “we need a new model, we thought it would be purely from economic growth, but worker-share of that growth is less than ever, and outsourcing and robot threats add more concern. The economic data supports the mass feelings of anxiousness. I like mention of the soul, because this is about dignity, not just economics. The populism appeals to people's self-worth, identity...so the new 'compact' has to be not just 'redistribution' (of wealth) (eg Universal Income proposition) but 'dignity' hence the 1945 UK model.

Another audience member from the new start-up arena regards food safety [after the Brazilian Beef scandal] asks “how large companies deal with a new generation of young leaders from start-ups?”

Bracher answers “at Banco Itau we deal with over 200 start-ups, our posture is that of curiosity and learning, we finance many to initially understand how they work in structure and intra-cooperation, and so we seek to mimic that. The old management theories of organigrams are being altered, things being more organic less organigram. So a changed mindset in HR, from individual performance to collective performance. Innovations comes from cooperation.

Bulcher says “society will be transformed in this way. It does not go against established companies, so we embrace youth and its new philosophies. LatAm is a 'young' continent so we muct embrace.

An audience member from Chile says “Given the interconnect between society and companies, what would you choose, social influence from a 'leader' (as per the political slant) or a manager (as per the corporate)?”

Ngaire Woods

“Leaders have to be able to forge the vision and mobilise the people; people mobilise when they feel they are creating it”.

Luiza Trajano

“I would like to add that leaders take people further than they thought....its about hearts, minds and pockets...in their hearts when they feel the strategy is true, from their minds they participate regardless of their level, and their pockets is about sharing profit with employees. The pocket the most important dimension.

[What ever Trajano's actual business acumen, this does at least demonstrate she has an understanding that for those whose lives are massively constricted, all the rhetoric is meaningless, what matters is society's and corporations' demonstrated fairness regards the spread of wealth].

Thus, it is easily recognised by both inference and directly stated facts, that the term 'Leadership' from whatever quarter (corporate, political, social) only becomes meaningful and applicable to the masses when they actually see improvement in their own lives.

Many, though no all, of the 'elite' seem to believe that the term 'leadership' is a broadly applicable term relevant to their job description, and often see it as a badge of honour for past achievements of climbing the slippery pole of the organisational hierarchy.

And that includes the very necessary focus of such a typically demanding position of ensuring ROI and EPS, top-line growth and either running an expansionary yet simulateneously lean corporate machine, or endeavouring to generate a company turnaround toward a better future.

All admirable goals and far harder than the majority of staff and middle and lower management will ever understand.

The best leaders (as stated by some) seek to create a true societal difference, when one is so desperately required – as the Cadbury's, Hershey's, Leverhulmes and Henry Ford sought to do.

Each recognised their calling to make a better world, from model villages to improve the housing conditions and aspirations of factory workers, to the introduction of the then enormous $5-a-day pay increase to not only help create an additional captive market for Ford cars, but to ensure the basics of food and housing could be bought so that individuals and families could be relived of the very detrimental effects of poverty and actually grow themselves to become moralistic Americans.

Lastly, perhaps an excerpt from the legendary film 'Lawrence of Arabia' tells all.

During the  anti-Ottoman Arab  Revolt the idealistic Major T.E. Lawrence effectively asks the nomadic, tent-dwelling leader why his people love him so much?

 "I am a river to my people” (in terms of providing for their needs and instilling their dreams).

(Thankfully the Arabs and Turks have long since been able to see beyond yesteryear conflicts and - beyond the unfortunate Syrian hotspot - and seek a brighter 'progressive-conservative' Middle-Eastern future.).

Yet the sentiment remains as true today as then, and it should be a motto upon which all leadership is built.

All Latin America leaders alike must realise today, that to avert yet more anger-led mass unease, or indeed the possibility of new people's revolutions, they must become as unified, stolid, inter-connected as the sources, tributaries and main channel of the Amazon River.

They must become the convincing model for betterment and display how the 'sources' of self-discipline, health, education and morality leads to a river mouth of individualistic and national strength.