Thoughts on Leadership: Rethinking 'The Wisdom of the Crowd'

For years the public has been at the forefront of demanding greater results, transparency and accountability from the leaders it engages. Over time, this has fed through directly into key decision making e.g. the hiring activities of leaders at the highest levels, where the importance attached to an individual’s actions are emphasized. This is a good start.

However, in order for the public to achieve the desired results, it has to strike a balance between empowering their leaders to act and its psychological demands for them. We are all for transparency and accountability. In some ways, the idea of the wisdom of the crowd is contradictory when it comes decision-making in leadership.

On the issue of governance, if the practices employed are not good enough, they may fail in yielding the intended results or impede leadership. In the case of transparency, an ill-informed debate or contribution will water down the importance of the process of transparency.

There is therefore a need to rethink 'the wisdom of the crowd'. Many leaders in key positions are clearly frustrated because of the failure by the public to strike a balance between Leadership and the wishes of the appointing public.

A case in point is the recent call for a referendum in Greece to determine the way forward given the economic problems that the country is facing. From the outset, a key question arises - Does the public have the information to make financial decisions?

Certainly, the Greek public may only care about keeping their jobs and having no pay cuts while the issue of being part of a larger union - the European Union is secondary. In my view, there may therefore be little or no economic value in seeking the popular vote on this. Here are some pointers that would be helpful in striking the right balance in the future.

First, Create leaders, give them power

In theory, leadership by consensus, a.k.a. the wisdom of the crowd is an attractive idea. The fact that so many people have an interest in the actions of leaders, and the fact that leadership relies on ideas that are as likely to come from the public as they are from a peer; means that every idea that emanates from the appointing public should be welcome. Not always.

Leadership, like anything else in business, benefits from a free hand and access to power as much as it does from feedback. However, ‘micromanaging’ leaders is definitely counterproductive, given the fact that leadership is about innovation, decision making and at times it entails doing things differently.

Keep leaders, keep them on their toes

At the higher levels, in the private and public sector, the governance and accountability objective is to keep leaders, but not to let complacency set in. Undoubtedly, critiques should be offered - as the goal is to have more leaders than managers and to ensure that leaders serve without excesses.

Traditionally, leaders let their game slip in some areas after some time and at this point intervention is necessary to avoid widening the gap between strategy and outcome. Keeping leaders is important in ensuring the continuity. It is important to keep in mind that in most cases Strategy implementation is adversely affected when leaders do not stick around for long.

Keeping it Real

Of course, leaders are hired, appointed or elected to serve rather than lord it over people. Therefore, they should be selfless and committed to the good of all by thinking of the organization as a whole at the corporate or nation level. However, once the leadership is in place, we should allow them a free hand to make decisions. The leadership we put in place does not need us to second-guess them at every move they make. They have a level of discretion and the public should have a level of trust.

However, leaders too should develop critical strategies for navigating through their days in leadership roles, as this may be what determines success or failure.

SME Accounting Solutions Soar Into Space

NASA has built a brand new $500 million mobile launch platform that will be used to send people to asteroids or Mars.

In Kenya, SME Accounting solutions are also heading skyward. Michael Pedersen has developed ‘Uhasibu’- an innovative SME accounting package that utilizes cloud computing.

According to Michael, “Uhasibu is developed specifically for the legislation and workflows present in Kenya. It improves financial management by generating KRA compliant VAT reports with ease, monitors your petty cash, keeps track of your incoming (partial) payments and generally stay on top for your financials”.

In today’s world, it is impossible to ignore the rise of technology, the impact it is having on the enterprise and the resultant implications for business.

Cloud computing is a technology that uses the internet and central remote servers to maintain data and applications. Using cloud computing consumers and businesses alike can use applications without installing them and can access their personal files at any computer with internet access.

In my view, SMEs should try out Uhasibu for the innovation, economy and convenience that come with it. The fact that the accounting package is cloud based takes away the need for large upfront software investments. Uhasibu runs online and charges only a small subscription fee.

Launched in September this year, this cloud-based package is equipped with mobile technology and email capabilities. At the click of a button, you can generate and send out invoices to customers via email. What is interesting is that you can do it from your mobile phone.

An example of the practical application of its innovation is that a entrepreneur can generate an invoice in real time when sitting across the table in a client’s office.

But at its most basic level, Uhasibu is all about meeting a more fundamental need - to bring simplicity into accounting for Small and Medium Enterprises (SMEs).

Engel’s Co-efficient on the Rise Again.

Recently we have experienced the depreciation of the shilling against major world currencies. According to major researchers, the shilling is among the worst performing currencies in the world. This has had negative effects for both consumers and businesses.

On the consumer front, Engel’s co-efficient, the proportion of food costs in household spending, is on the rise. Our research indicates that the coefficient has hit a new high in a period of 3 years amid a sharp increase in commodity prices.

Kenyan families are now devoting a larger portion of their income to food, a clear indication of the depreciation of the shilling against major world currencies. As expected, retailers have moved fast to adjust the prices of commodities (e.g. flour, sugar, rice, milk and bread) so as to cushion themselves against increased cost of buying.

The implications of a weakening shilling on SMEs

There are certain things SMEs can expect as the Kenya shilling hits new lows. First, manufacturers will suffer through high input costs since Kenya is heavily reliant on fuel and imported goods.

This will force SMEs to carry a huge burden in relation to increased operational costs. As a result, many SMEs will scale down some of the projects they have planned because increased operational costs will require a response on the revenue side of the business.

Indebtedness will be on the rise as manufacturers seek more credit to cover the shortfalls in operational costs and as individuals borrow money for consumption purposes. Inevitably, SMEs with a dollar debt will lose more as they will not have a way of maintaining growth.

The banking sector will see an increase in bad debt if this situation persists. Banks have effectively wrapped their tentacles on individuals and businesses and this could exacerbate the bad debts situation. Given that most individuals and businesses have multiple accounts or loans; it is likely that hard times could trigger a domino effect that could see other commitments within the banking sector suffer.

There will be a rise in the cost of credit as individual banks match their lending rates to their cost of credit. Banks will certainly exercise more caution when lending to SMEs and this will hurt SMEs by discouraging borrowing in the short-term.