Good Leaders Can Overcome Institutional Inertia in a Crisis

Good Leaders Can Overcome Institutional Inertia in a Crisis

by Michael G. Jacobides - May 18, 2020

Although Covid-19 is clearly a catastrophe, it offers what every social scientist craves: a “natural experiment” that allows us to compare different responses to similar shocks. We have already learned much about what does and doesn’t work in tackling the virus itself. We can also glean profound lessons about the role of leaders.

Consider the experiences of Lombardy and Veneto, the regions where the virus first emerged in Italy. Both are prosperous and have solid infrastructures. The two are similar demographically and differ just slightly in population density, and the virus hit them at about the same time. But their Covid-19 outcomes were radically divergent. As of the end of April, Lombardy’s registered cases amounted to 6.75 per thousand residents, and 1.24 in every thousand residents had died. In Veneto, the figures were 3.59 and 0.27.

Why such a big difference? As so often in this crisis, it comes down to the speed and nature of the response. Veneto’s officials were quick to make the coronavirus a top priority, rolling out extensive testing and asking sick people to self-isolate unless they truly required hospitalization. In Lombardy, testing was lacking and patients were hospitalized indiscriminately, turning medical facilities into mega-contamination sites.

The actions of the two regional presidents defined the differing responses. Veneto’s Luca Zaia steered a steady course, communicating consistently with the public and adjusting policies as new information emerged. Lombardy’s Attilio Fontana took his cues straight out of the populist’s handbook. First he downplayed the risk. Then he blamed it on immigrants and the Chinese. Finally he executed a clumsy volte-face when the depth of the crisis was unmistakably clear.

The differences can’t be attributed to party politics. Both leaders belong to the conservative Lega Nord, or Northern League, and both are professional politicians. The differences sprang from ability, strategy, and leadership skills. The idea that leadership matters is nothing new, of course, and we have already drawn valuable  lessons on leading during the pandemic. Good leaders need to be direct and bold (yet not inhumane), especially in a crisis. They must be decisive and unite rather than divide. The critical lesson of the pandemic is just how big a difference good leadership can make.

The truth is that in normal, predictable times, leadership is not that critical; the quality of institutions and other structures is far more important. Leaders are more symbolic than practical; they are figureheads who can inspire, but they don’t actually do all that much. Whatever virtues leaders have, whatever appetites, skills, and communication talents they bring to the table, they may be unable to overcome deep-seated organizational inertia, transformational though they may try to be. But in a crisis, even the strongest organizational habits, structures, and resources may be inadequate to meet challenges that are formidable and sometimes completely new. In those circumstances, strong leadership is crucial. Rough seas demand a skilled captain.

In countries large and small, Covid-19 has been showing us who the true leaders are. At present, everyone’s favorite is New Zealand’s Jacinda Ardern, whose approach seems to have paid off handsomely. But an even better example may be the Greek Prime Minister Kyriakos Mitsotakis.

Unlike New Zealand, Greece is plagued by structural problems: Its population is aging, its institutions are weak, its civil service is ineffective, and its National Health System is badly under-resourced. What’s more, the country was only just beginning to climb out of the longest and deepest recession in its history when the pandemic struck. Yet it has mounted one of the most effective responses in the world: as of this writing, just 148 Covid-19 deaths in a country of nearly 11 million. Mitsotakis has kept the population wary but not panicked, cajoling the notoriously independent-minded Greeks into a surprisingly high level of compliance with social distancing, shop closures, and other measures to contain the virus. Even more impressive, he has overseen a well-run state operation that has earned the public’s trust, and he has leveraged the crisis to digitize and rationalize a cavernous bureaucracy in record time. Granting that severe difficulties surely lie ahead for a country so heavily dependent on tourism, his was a remarkable feat.

As we start to emerge from the crisis, there will be less scope to initiate reforms, the urgency and momentum of which will no longer be enough to overcome inertia. Leaders will again take second place to the civic infrastructures over which they preside. That fact points to a clue about which ones will have truly managed the pandemic well. It will be those who not only got their countries through it but also seized the opportunity to reform the state, giving their nations a stronger infrastructure after Covid-19 than they had before it. Countries - and companies - must hope that their leaders are not just helping them survive the pandemic but are using the crisis to make a lasting difference.

Michael G. Jacobides holds the Sir Donald Gordon Chair for Entrepreneurship and Innovation at the London Business School.