The effects of the departure of the United Kingdom (UK) from the European Union (EU) will not be determined by the day on which this may occur. The terms of the agreement are what matters.
While a new extension has been approved until October 31 for the British Parliament to reach an agreement, clearing fears about a savage Brexit, no one denies another clear symptom of failure: three years after the British referendum to get out of the EU we continue without agreement and uncertainty prevails.
The history of these three unproductive years has left us with lessons in leadership and risk management that are more relevant than ever in today’s increasingly volatile and uncertain political contexts.
- Lead responsibly: When the former prime minister, David Cameron, called for the Brexit referendum on the pretext of fulfilling his electoral promise, he did not take responsibility for the consequences. Moreover, he submitted his resignation after receiving a result contrary to the one he weakly defended. In fact, he never made clear the potential consequences of leaving the EU. In the current political landscape, we see leaders who adhere to, or are influenced by, populist currents that appeal to people’s instincts and primary emotions, and do so with the short-term vision of getting political support and votes, without worrying about the coherence or feasibility of their proposals. However, responsible leaders understand that their mission is not to translate those emotions directly into decisions, but to mediate with rational arguments in the realm of what is possible.
- Embrace complexity: The way in which such a complex and strategic decision as the United Kingdom leaving the European Union was reduced to a "Leave / Remain" vote illustrates just how simplifying such big decisions can lead to much bigger problems. When a big decision is oversimplified, either for the sake of making it easy to communicate or to deliberately confuse, the important details that enable an informed decision are lost. Brexit was a process with multiple implications above and beyond the political vote, with regard to issues that are economic, commercial, financial, migratory, etc. However, in the campaign, the voters were faced with a very simplified dilemma and finally decided in many cases to vote with their hearts and not with their reason.
- Achieve consensus: The Prime Minister, Theresa May, invoked Article 50 before seeking a consensus among MPs and imposed her own red lines for Brexit, a unique vision that she has defended tooth and nail. Nobody doubts now that it would have been much better if, before triggering Article 50, she had sought consensus. As a leader, she has been inflexible and intransigent, and has not taken Parliament into account, such that her plan was struck down on three occasions in the House of Commons, right up to the last moment. The result is an important division in the main parties and in society. She believed that her mission was to save the country from a Brexit without an agreement, but cooperation is essential to gain support and heal wounds in a fractured country. Leaders should never deify themselves and ignore the voice of their constituents; the legitimacy of a political leader comes from the citizens.
- Learn to negotiate: Credibility, coherence and transparency are fundamental assets to cement a long-lasting agreement. When May returned from Brussels after speaking with J-C. Juncker, President of the European Commission, and M. Barnier, the Chief Negotiator of the EU, she addressed the British media with contradictory statements, sending confusing messages that were damaging to the course of the negotiations. In such situations, consistency is basic; actors cannot self-sabotage their position with their actions outside the negotiating room. Another tactical error of May's team was to overestimate the UK's strengths and underestimate the ability of the 27 EU countries to defend a common position.
- Manage risks: Faced with a global context of high uncertainty, companies must learn to anticipate risks. Multinationals usually have Corporate Intelligence departments dedicated to assess the geopolitical situation, determine possible scenarios, think strategically and create contingency plans to minimize the impact of potentially disruptive events, but this is not so common in small and medium-sized enterprises. For example, in the case of Brexit, PSA Peugeot-Citroën bought the British subsidiary of Opel, Vauxhall, from GM, so that the French car company could retain a position in the UK to circumvent import and export costs when the UK abandons the EU.
- Prepare for more uncertainty: Our world is uncertain and there is no immovable status quo. For executives, this uncertainty translates into continuing to measure risks and make contingency plans for their companies, especially those that are integrated into global value chains. Some companies that had already prepared for the UK making a non-negotiated exit from the EU on March 29, with the resulting operating costs, such as production stoppages, storage costs, and the associated financial and logistics outlays, will have to recalculate and rethink their strategies. Under any circumstances, these associated costs could cause a reduction in their profitability. Other companies have already started looking for alternative markets, on both sides of the English Channel.
- Value talent as your nation's most powerful asset: The prolongation of this highly uncertain scenario has generated a drain of talent with solid experience, and has severely limited the UK's ability to attract and retain global talent, so important to the development of the manufacturing sector but, above all, so necessary in the services sector, on which a large part of the UK economy depends.
It is well known that in politics mistakes are not made, a single mistake is made – in this case, the effects of David Cameron's arrogance – and everything else is a consequence. This extremely complex context would have been a challenge of immeasurable scale for any of the great leaders in history, and it is this challenge that Theresa May inherited. Undoubtedly committed, tenacious and persevering, May has tried, however, to lead Brexit in a very transactional way, seeking the execution of her plan and not the construction of consensus in a polarized country. The transformational leadership that the UK desperately needed depended on the ability to communicate a clear vision built on consensus, to listen and show empathy and to inspire confidence but, above all, enough flexibility to change course and in this way obtain the necessary results.
Given the context of strong uncertainty about the length of May's term, we can only hope that the next person to lead the UK knows how to conduct a high-impact leadership that will manage this complex process that is still incomplete and, in turn, inspires, and lift the morale of a wounded nation. Let's learn the lessons.