Last week’s Hurricane Sandy should serve as a crucible event for Boards of Directors since they are ultimately responsible for risk oversight and strategy.
In their HBR article, Warren G. Bennis and Robert J. Thomas define crucibles as severe tests or trials that “force leaders into deep self-reflection, where they examine their values, question their assumptions, and hone their judgment.” For a crucible to be used as a transformative learning experience, the most critical leadership skill is adaptive capacity.
Adaptive capacity hinges on the ability to grasp context and deal with complexity. Adaptive leaders don’t fall into the trap of framing issues in overly simplistic either/or terms like “Was Sandy caused by climate change or not?” Instead, they seek to understand the many forces, links and feedback loops within complex systems that defy certainty and prediction.
“It’s time to plan for a warmer world” is the first sentence in a report just released by PwC about the links between carbon intensity, global temperature and climate change. These complex links that have led to sea level and temperature rise were contributing factors in Sandy’s uniquely destructive scale.
Adaptive capacity is also a function of a leader’s strength of character and perseverance. These qualities are especially important for those who have the foresight to challenge previously successful business models that have become outmoded, and who are committed to leading their organizations through the difficult changes required in building resilience.
Disasters like Sandy have a way of puncturing our false sense of separation from other people and our environment. Who could look at the images of suffering and destruction and not feel a sense of identity with and compassion for those whose lives were so tragically affected? Who could not feel a sense of awe and humility at nature’s destructive power?
A crucible moment like Sandy creates the imperative to look with unbiased clarity into the inter-connections and porous boundaries between shareholders/stakeholders, internalities/externalities, short-term/long-term, and self/other.
Sandy underscores the imperative for Boards of Directors to reflect upon and reexamine what fiduciary duties of good faith, care and loyalty mean in a world where a changing climate will affect us all.