Announcer: You’re listening to the Scotiabank Market Points podcast. Market Points is designed to provide you with timely insights from Scotiabank Global Banking and Markets’ leaders and experts.
Patrick Bryden: Welcome to Market Points. My name is Patrick Bryden, Managing Director and Global Head of Thematic and Sustainability Investment Research at Scotiabank.
We have an incredible episode lined up for you today that addresses a critical challenge we are all facing. Organizations are in a constant struggle to navigate a world that is becoming more and more polarized. So, what steps can we take as business leaders to turn down the temperature, bring stakeholders together, and find common ground?
My very special guest today is Karthik Ramanna, author of a new book, The Age of Outrage: How to Lead in a Polarized World. The book expands on his popular Oxford course, Managing in the Age of Outrage, to provide leaders with steps they can take to make sense of the animosity surrounding them, work constructively to overcome it, and emerge a better organization.
Karthik, it’s great to talk with you again. Thanks for being here.
Karthik Ramanna: My pleasure, Pat. Such a pleasure to be here with you and your audience.
PB: Before we start to get into the heart of the discussion, can you tell us a little bit about yourself, what your path has been, and how you got to where you are now?
KR: Sure. My name is Karthik Ramanna and I’m a professor of business and public policy at the University of Oxford’s Blavatnik School of Government. I was born in India. And I came to the United States as a student and my terminal degree was a PhD at MIT, and thereafter, my first job was at Harvard, at Harvard Business School, where I was a fairly quantitative economist teaching topics like accounting and finance.
And then the financial crisis hit, this was around 2008, 2009, and I had my own little personal crisis, and I said, well, the great problem in the world doesn’t seem to be that there aren’t enough MIT trained economists teaching Harvard MBAs how to make more money. There seem to be other problems, and maybe I should be focusing on those.
And so, I was given this remarkable opportunity to pivot to teaching leadership in the Harvard MBA. So, I self-educated on leadership with a year’s leave of absence and then came and taught the required course on leadership and ethics in the Harvard MBA. I did that for several years. And then I was recruited away to become the first Director of the Master of Public Policy program at the University of Oxford where I’ve been ever since.
PB: That’s amazing. So, let’s jump into the book. You identify three sources of outrage that you term: a) fears for the future, b) the raw deal, and c) ideologies of othering. Can you please colour in for us what you see in these diverse drivers and how you think about them?
KR: The first thing I say to people when, you know, we talk about managing in the age of outrage, I say managing in the age of outrage is not managing outrage. Managing outrage is crisis management. I mean, it’s not easy, but we know how to do it. You will bring in a PR team, you will sort of figure out what’s going on, you’ll try, you know, de-escalate and so forth. But when you’re doing this in the age of outrage, the velocity of stuff you’re going to deal with, and the frequency with which you’re going to deal with it, is just sort of completely different order of magnitude.
And so, if you took simply a firefighting approach to it, then when would you have the time to do the fire prevention? And more importantly, if you’re a for-profit business, when would you have the time to do all the innovation and growth and all the other stuff that you need to do in order to compete and win?
So, if you’re thinking about managing in the age of outrage, you’ve got to take a completely different perspective to it than say, managing outrage. I say look, as a general manager, you have to draw on a whole host of tools. Like you have to draw on finance, on marketing, on accounting, on HR, et cetera. You can’t be a general manager and say, oh balance sheets, I don’t do balance sheets. That won’t work very well, right? So, in the same sense in this age that we live in you can’t just say, oh, I have no way of thinking about, you know, sort of the systemic outrage we’re dealing with. It’s just, no, it’s just a functional skill, like your finance, marketing, accounting skills that you have to now build as a general manager for this day and age.
With that background we said, okay, well, what does it mean to live in this age of outrage? Where does this outrage come from? Now, most of the book is really focusing on the questions of the how to manage it, rather than the why we are in the outrage. But we kick it off with an understanding of the why the outrage. And that’s where these three forces that you mentioned come in: the fear of the future, the sense of raw deal, and the ideologies of othering. Let’s just quickly unpack each of these three.
When I say fear of the future, I mean, just think about it, we’re on the cusp of an AI transformation that promises to effectively disrupt the world in a way that the industrial revolution perhaps disrupted the world, right? For thousands of years after the agricultural revolution, the vast amount of human productivity in societies was channeled towards agricultural activities.
And then the industrial revolution comes in and changes everything and AI promises to within the course of a generation do the same thing, right? Imagine explaining to your grandparents’ grandparents, the kind of jobs you do today. They wouldn’t even begin to understand what, you know, your job or my job is because jobs look so different then.
PB: They’d laugh.
KR: Yeah, they’d laugh. They’d say, well, maybe what kind of BS job is that, right? I’m plowing a field. And, and so, and in that sense, if you try to explain to people, maybe even two or three generations from now, right, what are the jobs that will be there? We have no idea, but this is the beauty, or the promise of AI is it can be remarkably disruptive.
Now that’s both a good and a bad thing, but it is precipitating this fear. Now, beyond AI, of course, there are other causes of the fear for the future. There’s climate change, right? Imagine, for instance, if the North Atlantic trade winds stopped blowing the way they do, it would completely change the weather in Europe. Imagine if the monsoon winds stop blowing the way they do. You know, we think migration is tough now? We’d end up with migration on two orders of magnitude greater than what we’ve ever seen, right?
PB: Yeah.
KR: So, these things, shifting demographics, much of the world outside of sub-Saharan Africa is getting older, right? So, shifting demographics is another problem. So, people look at the future and they worry that even in the course of one generation, things are going to look very different. That’s the first thing that’s precipitating this outrage.
Now, if we were just dealing with this fear and we had deep trust in our institutions, you know, like we did actually at the time of the Industrial Revolution, people were very much more religious than they are today. So, religious institutions in particular were more trusted than they are today. But, you know, we’re living in a time where our institutions and our leaders perhaps they’re not as well respected as they have been in the past. So, there’s a sense that our leaders have been perhaps dealing us a raw deal. That the narratives, for instance, in the West that we were sold around immigration and globalization, they just haven’t panned out, right? And so, people get this sense of the raw deal. So that’s your second factor. You’ve got to sort of lop that on to the fear of the future.
And perhaps as a consequence of these first two factors, you’re seeing sort of a retreat from the global humanist project, from this idea that, you know, was born quite frankly off the Enlightenment, the French Revolution, that through the pursuit of knowledge, we’re all in this together and we will advance the human condition.
We’re seeing a retreat of that to our more sort of innate tribal instincts. The us versus them kind of mentality, right? And so, you sort of put these three things together and suddenly, you know, of course, we’ve dealt with all three of these forces in the past, right? But the fact that they’re all there together, at the same time, and that they are manifesting at the degree to which they are, that’s what’s making this the age of outrage. And that’s why, as a business you got to have, you know, a strategy for this moment.
PB: Yeah, that is very well put for our listeners. And I just want to expand on that, maybe kind of touch on this idea of amplification or putting fuel on the fire. You know, it strikes me that what you have outlined is compounded by many of the challenges of recent years.
So, I’m thinking, you know, specifically as you were touching on the great financial crisis, COVID, inflation, geopolitical conflict, and how such tensions are basically turbo charged by the immediacy of social media and the accessibility of it. What are your thoughts here about how things get amplified?
KR: That’s a great question, Pat. You know, the way I explain it is, social media is not a causal factor, it’s a catalytic factor. And what I mean by that is, you know, if we were somehow able to sort of wave a magic wand and make all the social media in the world go away, we’d still have the outrage, unfortunately.
But it is the case that the social media is making what is a bad situation, worse. There are certain things about social media like the confirmation bias associated with the idea that, you know, you’re shown the things that you’re more likely to sort of support in the first place coupled that with the anonymity. You know, it sort of results in what we call a state of emotional contagion.
And that makes things actually pretty damaging and particularly for young people, you know, I mean, there’s sort of growing evidence that the brain is actually fairly plastic up to the age of 25, but certainly under the age of 16, is remarkably impressionable, and the idea that people who haven’t really evolved to deal with feedback, the scale and velocity that social media provides, people under the age of 16 have to cope with this. It can have long term impacts on their development, on sort of, you know, addiction patterns and so forth, which we aren’t, you know, we haven’t fully understood.
We’re beginning to understand this in the same way that we were, we didn’t fully understand the impact of tobacco maybe 50 years ago, but we knew, well, something here doesn’t quite sort of, you know, make sense.
PB: I think you’re really touching on things that we all probably think about quite a bit and that there’s shockwaves from events, and that there’s shockwaves from the medium through which these events are actually being communicated to all of us. So, yeah, I appreciate those insights.
You know, I was super impressed by your efforts to help readers understand the science of aggression and I actually just thought that was really brilliant in the book and really the bedrock aim of what you’re trying to convey here is, quote unquote, turning down the temperature.
Can you give us a sense for what you learned on this front?
KR: Let me first start with a confession, which is I wrote that chapter on turning down the temperature, really for myself, because I’m, you know, just like most people out there, really prone to get upset and outraged by so many things that I see on a daily basis, right? So, I’m not like this, I’m not like this super Zen person by any means, I’m pretty intense.
So, you know, because there’s this tendency of managers to see themselves as somehow, above it all and, that the idea that, oh, there’s everybody else that’s outrage, and I have to manage them. I said, well, actually, the first thing you got to do is manage yourself because you’re just as human as everybody else.
And actually, there’s a reason I’m not on social media with the exception of Instagram, which actually I don't manage myself, my husband manages my Instagram. But the reason I’m not on social media is because quite frankly, I don’t trust myself. I don’t trust myself to not say the things that, you know, then I’ll sort of regret.
So, when we talk about turning down the temperature, it’s really first and foremost for managers to understand their own psyche, right? And the behavioral science of aggression actually has some surprisingly helpful insights into how we can do that more effectively. The first and simplest of these insights is that ambient conditions matter.
And what we mean by that is that something as simple as being in a cool room, a comfortable room, where you know people aren’t invading your personal space, is going to make you, put you in a much better state of mind than being in a hot crowded room where you’re jostled and so forth. Being around a circular table is going to make you less conducive to aggression than being in a rectangular table, you know, simple things like that matter. So, that’s the first basic insight, ambient conditions matter.
The second is that your first instinct to, you know, triggering events is going to be your emotional instinct. And your emotional instinct is deeply sort of shaped by what you were just doing. So, if you’ve got this sort of completely unrelated triggering event, sort of the proximate emotional state that you were in matters.
So, this is why actually the implication of that is sort of sleep on important things, right? You’ve heard this probably from your grandparents. This is way, you know simple advice, which is don’t send an important email until you’ve slept on it, right?
PB: Any Canadian hockey parent knows the 24-hour rule.
KR: There we go, yeah. So, the neuroscience of aggression basically corroborates that.
The third thing, the third insight from that literature is probably the most surprising, which is, you know, there’s this tendency to say, okay, so I’ve got the ambient conditions right, I’ve slept on it, so I’ve got the emotional stage thing right, and so now I can think about this cognitively or rationally and I’ll come to the right decision. The challenge is, of course, that what we think of as our cognitive or rational response is not necessarily objectively rational, because our analysis, our rational analysis of a situation is a product of what we might call lived experiences, what the literature calls knowledge structures.
So, when we think that we’re doing a rational analysis of a situation, what we’re doing is really just putting on our knowledge structures onto a situation. And this is actually one of the key reasons you want a diverse team to be able to look at a problem and help you think through a problem. And diversity here doesn’t mean necessarily, you know, diversity on racial lines or on gender lines or things like that. That could be important. But it means that people in the team have had different lived experiences. Have had different knowledge structures. In fact, I say, you know a team could be tremendously diverse on racial and gender lines but if everybody went to Oxford, they may not be very diverse at all, right? In fact, you might have a perfectly diverse team that’s all white men, but they’ve had very different lived experiences and they help you see in some sense the things that you don’t see.
So, that’s what we mean by a diverse perspective in this context, that you want people to bring different knowledge structures to the problem. And the reason for that is, this was a sort of for me a really surprising insight from this literature in neuroscience, because I’m not a neuroscientist, is that the brain, I heard this great description of the brain from another neuroscientist who said that the brain is sort of like, consciousness in the brain is sort of like controlled hallucination, right? And so, the idea is that the brain is up there making up its own stories about sort of how the world works. And every so often sort of checks in with the real world and says, ah, yeah, okay, so it’s roughly aligned with what’s going on. That’s why it’s sort of controlled hallucination.
So, surrounding yourself as well as a manager, surrounding yourself with people who you trust to speak truth to you, right? Building a team that is able to bring you those diverse perspectives, but that you’ve cultivated the trust in that team, that they’re able to speak true to power. That’s what makes you an effective manager to turn down the temperature.
PB: Resilience is a tough thing to foster when as you’re touching on external polarization challenges might also be accompanied by those internal divisions within companies.
So, you know, how specifically can organizations implement proactive measures that sort of steel up the culture to adversity but also remain flexible enough to react nimbly to difficulties that become inescapable.
KR: I think the key theme around resilience that I’ve noticed with leaders who have managed this successfully or, you know, just as much you learn from people who have managed it less successfully, so the book covers both kinds of cases, is that they don’t try to solve it all, right? And in fact, the best leaders recognize that they themselves are going to make mistakes. So rather than expect or trust them to have the right judgment on all of the problems that are going to come, you know, in the context of this age of outrage, how do you equip the organization to make those decisions, right?
So successful organizations have done two things. One is they train people regularly and thoughtfully to make great decisions. That’s sort of step one.
And step two is that once you’ve trained people to, you know, have the judgment to make good decisions, you want to make sure that you don’t punish them if they do end up making the wrong decision. Because if you start punishing people for making the wrong decisions after you’ve trained them well, then people will never exercise that judgment again, right?
So successful organizations do these two things and sometimes it’s hard to do both, right? So sometimes you will delegate things to people and then they’ll screw up and you’ll say, okay, now we’ve got to get rid of this person. Well, chances are you’ll never get innovation again in the organization, right?
Now the other side is you can’t just delegate things to people and not train them how to use that judgment well. Because then you are going to get the screw ups. So, you’ve got to do both of those two things, right? You’ve got to trust your process, and you’ve got to trust the outcomes of that process.
There’s a great story of a CEO of a company doing this in the book. And she’s in the process of sort of a major cultural transformation to bring more accountability in the organization, more trust and management in the organization. And she’s only about 13 months into this, into her tenure as CEO and this cultural transformation of this organization when the COVID crisis hits. And, you know, I mean, as you know from COVID, everything goes to hell and, you know, people are confused and scared and this and that. And her senior team gathers around her and say, you know, now that we are in COVID, we need to get on war footing and, you know, we should stop this cultural transformation business, and you should tell people what to do.
And she says, hell no. If we didn’t build this culture for this moment, what did we build this culture for, right? The whole point of the cultural transformation is that you want it to work in a moment of crisis like this so that people feel empowered to make the important decisions that they would.
And this is, you know, she said, look, if this crisis, if the COVID crisis had hit five years into my tenure as CEO, and I’d been well into this cultural transformation, I would never be second guessing this question. And this is a really powerful insight that great leaders don’t let the present shape their vision of the future.
They in fact invert that logic and they lean into the future that they want to create, and they shape the present with it. And that’s what you see people doing. Even today in this age of outrage, the really successful leaders are saying, yeah, we live in tough times, but you know what? This is the future that I’m trying to build. And it is that best version of the future that I’m going to lean into, into how it is I treat people today and the kind of culture I build and sustain today.
PB: I have to say it’s hard for me to imagine a better time for your book to come out.
Can you please comment on heightened geopolitical risks in recent years? And I will suggest the emergence of what I’m going to term ‘geoeconomic’ risks this year. How do such tensions engender greater complexities for leaders to navigate in an already difficult world? And where are there constructive opportunities?
KR: So, look, as you say, it is a complex world, and it’s a very uncertain world, geopolitically. Supply chain resilience has become central in a way that it wasn’t even during COVID. And that’s just the first of many issues.
I mean, you think about for instance, countries in Europe. European governments have typically operated as welfare states and part of the reason they can operate as welfare states is because defense spending has been so low. But that’s going to all change and European countries are going to have to step up their defense spending which means they’re going to have to pair back on their welfare states, which means companies are going to have to step in in a way that they haven’t been used to stepping in, right? So, it’s just going to change the very nature of business in many, many different ways.
At the end of the day, I take a very pragmatic approach on this. I say, the business of business is business, right? What we don’t want is for businesses to suddenly become, you know, sort of CSR overdrive machines and things like that, because they’ll very quickly bankrupt themselves. And the nature of the problems that the world presents today are so complex that no one organization, whether business or government, is going to be able to solve them.
You know, it doesn’t matter whether you’re the president or prime minister of your country. It doesn’t matter if you’re the President of the United States. You’re not going to be able to solve all the problems in the world. It’s just that, you know, they’re very complex. And as we said earlier, the causes of the age of outrage are so systemic and structural.
Now if you’re the CEO of a business, you know, whether it’s an oil company, a beer company, a luxury goods company, whatever it might be, say okay, what part of this problem is authentically connected to your theory of value creation? To your ability to make money and focus on that, right?
The point is, the business of business is business, and the world is a complex place, in terms of the geopolitics or the geoeconomics, as you call it. So, own that part of this geopolitics that is really relevant to how it is you’re going to make money. Because that, if you don’t own that, you do so at your own peril, and your business will very quickly eviscerate.
But be careful about trying to own the things that really aren’t connected to your value proposition, because just as equally that will bankrupt you too, right, because of the scale of this problem.
PB: Given the deep well of angst that you’ve tapped into and that you have literally written the book on how to navigate such daunting issues, are you hopeful about the future?
KR: Yeah, I, you know, I’m by and large a very optimistic guy. As a professor, you have to be hopeful because you’re educating the next generation. And part of the reason I spend so much time educating the next generation is because I think that we are not condemned to study history simply to relive it.
We study history and we understand from these case studies so that we can build a better version of the future. And every year I have the great fortune to be surrounded in the classroom by a remarkable quality of talent, of people, you know, who want to dedicate themselves to improving lives of others.
And so that gives me great cause for optimism. But I say it shouldn’t be an idealistic optimism. It should be an optimism that recognizes, or cognizant of, the realities of the situation. So, John Kennedy, President Kennedy, described this as being an idealist without illusions, and I think that’s a perfect way in which I would want my students to behave and certainly I aspire to be every day.
PB: I think that’s really well put. I think in a similar vein, in a lot of our work, we have talked about how that idealism is needed to, in a sense, lead, but how important it is to have that grounded in realism.
And so ultimately, the expression of that has to be some form of sensibility, a sensible outcome that is achievable. So, I appreciate how you frame that.
This has been wonderful. Is there anything we should have asked today that you would like to speak to as a final message for our listeners?
KR: As I reflect on my experience with, you know, leading in the age of outrage over the course of the last decade, two things strike me. I’d say these are two axioms that actually underlie the whole book and the last decade of work in this space.
The first is no matter what you do, don’t try solve the whole problem. Because no one individual or organization will be able to do that. And the second is, no matter what you do, recognize that you will be seen as part of the problem, right? You can’t please all of the people all of the time. And part in the nature of leadership is to make a judgment call on that issue, and recognize that, you know, there will be some people who will be disappointed by the choices you’ve made. But don’t make this a popularity contest either.
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