Tallinn University of Technology

Gunnar Okk, Vice-President of the Nordic Investment Bank, believes that leadership and management are both underpinned by two main components – decision-making and communication, and that the role of charisma in a leader’s success tends to be overestimated.

Gunnar Okk was interviewed by management consultant and coach Veiko Valkiainen for the January 2021 issue of the Estonian magazine Director.

Gunnar Okk

Across the world, strikingly different approaches have been adopted by leaders of all persuasions in an effort to achieve the best possible results. The what, where, when, why and how are intriguing subjects for discussion, especially considering that, in essence, human nature is the same everywhere.

Gunnar Okk contends that there is no special recipe for a perfect leader, and that everything depends on time, place, and the particular circumstances. In principle, leadership and management are always situational. Moreover, success sometimes depends on an essential ingredient – luck.

What is the essence of leadership? What kind of value are leaders and top managers hired to create? Simply put: what do top executives get paid for?

A simple answer is that an executive gets paid to realize the goals of the payer. Good leaders and managers add further value by giving the business owner new ideas about other goals that could be achieved in the organization.

Top-level managers can certainly set their own goals, especially if they are entrepreneurs, or entrepreneurially minded. As business goals are achieved for the most part by organizing the work of other people, the main leadership problems usually boil down to communication and relationships between people. If we think about the business world in particular, then pragmatism comes into play and an executive’s success is indicated by how much their employer is willing to pay them, and how long they remain in the position.

You’ve spoken before about cognitive robotics, and semi-thinking robots that are likely to make and carry out simpler management decisions. But do you agree that managing people is a job that only humans can do?

Yes and no. It all depends on the people in question and on the level at which they’re working and being managed. Repetitive and easily modellable management situations can clearly be carried out by a robot. IBM's Deep Blue computer defeated world chess champion Garry Kasparov back in 1997, and according to Moore’s Law, we can expect the speed, memory capacity and efficiency of computers to increase year after year.

I would say that leadership and management are both underpinned by two main components – decision-making and communication.

The volume of information, the speed of decision-making, and getting the timing right when implementing decisions are critical success factors. When it comes to the Sensitivity: Confidential volume of information and response speed, humans have not been able to compete with machines for a long time now. Probabilities can also be mathematically calculated. For example, today's finance industry uses extremely complex risk management computing models on a daily basis, where machines compute and compare hundreds of billions of combinations and probabilities.

Things get more complicated in decision-making when the available alternatives are very similar in their probability. This is when the final decision-maker’s intuition comes into play, and it’s likely that information technology will not be able to provide the answers in such cases in the near future. Machines also make logic-based decisions and lack emotions. Many unreasonable decisions are often made by perfectly reasonable people when emotions come into play. Based on currently available information, it also seems impossible to predict whether technological singularity will ever arrive and what the real consequences will be.

You have extensive leadership experience. How would you describe your leadership style?

I don't think I'm one of those narcissistic leaders who puts a high premium on their leadership style and is constantly thinking about how things might look to others. Every leader's nature and style are defined by their subordinates, colleagues, and clients, not the leaders themselves. So far, it seems that I’ve been able to complete the work that has been expected of me, and I think that's what counts.

What do you like most about the leadership role? Why do you do this kind of work?

It's always rewarding when, in addition to achieving specific goals set for you, you have a chance to contribute to people's personal development or to the broader development of society in general, and make the world ever so slightly better in the process. There’s no better feeling than that.

Why should someone want you to lead them?

They shouldn't. In the real business world, a leader doesn’t participate in popularity contests or beauty pageants. Leaders choose their own teams of people that they want to work with, not the other way around. The role of charisma in a leader’s success tends to be overestimated in my view.

What are some of the most important beliefs that you have based your actions on over the years?

On reflection, I’ve actually formed quite a few beliefs over time, although some of these might be questionable in leadership terms. For example, what is truth exactly when it comes to management? Just knowing a certain fact might not give you the real picture if you don't add the right context to it.

Truth = fact + context

I like formulas. This particular formula was pointed out by Jeff Immelt, the former head of General Electric, whom I once met at Harvard Business School.

Secondly, time is actually every manager’s biggest concern and problem, especially top managers, regardless of how professional and experienced they are. How to maximize every unit of time in the most effective way? Calendars fill up quickly, and successful managers must be able to control the use of their time and see where it’s being wasted. This requires self-discipline and an ability to learn from your mistakes.

Added to this, leaders and managers have to constantly analyse different situations, as well as people's reactions and behaviour. When it comes to these analyses, racking your brain about individual facts or details is not as important as learning how to recognize patterns that start to be repeated. Once you’ve recognized a pattern, you’re likely to have figured out the whole issue. Stop analysing, don't waste any more time, make a decision, and take action.

Every top manager always has the organization's development strategy on their desk. The first stage involves planning in collaboration with advisors, owners, or the board representing them, followed by taking action with colleagues and subordinates. I’ve handled these processes repeatedly and seen their outcomes up close. I have to say that a mediocre strategy implemented perfectly always beats a perfect strategy carried out in a mediocre way.

What do you consider to be the biggest success story of your career?

Perhaps the fact that I’ve been able to act consistently as a leader in different areas of life, and acquired opportunities to learn new things, and a deeper understanding of how the world actually functions.

What has been your biggest failure as a leader? How do you handle setbacks?

Without a doubt, taking decisions that seemed to be right at the time they were made, but which turned out to be the wrong ones. I was having lunch once with the former top manager of ABB, Percy Barnevik, and I had the opportunity to ask him the same question. He mentioned two things. One was an ill-judged large-scale acquisition investment in the USA, which resulted in both financial losses and some loss of reputation, and the other was that he’d made the mistake of giving people a third chance.

I’ve stepped on exactly the same rake myself, and not just once. People must always be given a second chance, but traffic lights must have three lights, no more. Experience has taught me time and again that bad things – if it’s clear that they really are bad – only get worse with time. Of course, a leader has to be humane and have compassion, but above all, loyalty to the organization you work for as a whole is of prime importance.

Sometimes this requires a cool head – and a thick skin, too.

One more important thing – setbacks in leadership are normal, and often unavoidable, and shouldn’t be feared. Every successful executive takes some risks but also has to be able to manage them so that things don't escalate. Sometimes the difference between success and failure is that the right decisions made by successful leaders only slightly outweigh those made by others.

It’s also said that there’s a paradox between the volume of information being used and the probability of making the right decision. If your decision is based on having Sensitivity: Confidential 100% of the information available, the probability of making the right decision will most likely be 100% as well. In real life, managers rarely have the optimum time and resources to achieve this.

Developing this idea: if you have 50% of the information, the probability of the right decision is also 50%. The paradox lies in the fact that, apparently, 60% of the information is enough to make the right decision with about 90% probability. So in order to be a successful decision-maker, all you have to do is identify the point at which you have 60% of the information at your disposal to have a high probability of making the right decision.

With your current experience, what advice would you give to your younger self as a leader?

Read more and learn to manage risks. Be more confident, but also get to know yourself. Finding a balance between confidence and knowing your capabilities and what you actually want is one of the most important things.

If you weren't a top manager, what would you be doing?

Every person's life goes as it goes – it depends on things we know and things we will never know. In my opinion, it’s no use speculating with what-ifs.

What I can say is that I’m quite curious by nature. I’ve always been interested in art and culture, and creative areas in general. To a broader extent, these interests include technological innovations and engineering as well.

I’m one of the founders of the joint Finnish-Estonian Cultural Foundation and have been acting as Vice-Chairman of the Board of the Finnish Tuglas Society for the past ten years.

So in order for people to have choices and opportunities in life, educational development is crucial. Without it, we wouldn’t have our language or culture in Estonia, and the nation in its current form. The future of the whole country depends on the existence of and an increase in a critical mass of people with sufficient drive and education.

What’s the biggest stumbling block that leaders encounter time and time again in your opinion? What’s the number one leadership skill that they should focus on more closely?

It’s hard to single out one particular thing, as situations can vary a lot. Perhaps the most typical mistake made by both owners and managers at different levels is being ambiguous and lacking clarity when defining their expectations and the criteria for success when they communicate with their staff. Imprecise and vague talk, not to mention “things that go without saying”, leads to different interpretations, and sometimes to misunderstanding. This situation is worse in an international company, where some speak and think in one language and others speak the same language but think in another. Expectations about the desired results must be clearly communicated in a way that is understandable to everybody.

Secondly, a lack of understanding often lies at the root of not identifying the reason for an employee’s poor work performance or, worse, for just accepting it; the effect Sensitivity: Confidential on everybody else can be devastating and demoralizing. Constructive feedback and tough conversations might seem unpleasant, but leaders and managers can't avoid them.

Also, when newly appointed managers start in an organization, they usually get the urge to establish a new vision and strategy reflecting their own ideas, and to make changes right away. Unfortunately, according to history and statistics, the failure rate for radical changes of this sort is quite high, and the reason usually lies in managerial mistakes.

It’s important to keep the vision in mind, of course, but whether or not the changes will succeed also depends on clarity as to why the current situation is unsatisfactory. In addition, a consensus has to be reached that the changes are urgently needed. A professor at Harvard Business School described the formula for successful change as a function of the multiplication of dissatisfaction (D), vision (V, where to go), and process (P, how to get there), with the component of luck (L) added on.

Delta = f(DxVxP) + L

It’s a good idea to take this complexity into account from the start.

What advice would you give to someone taking on their first leadership role?

Choose people who are smarter than you in their field of competence and who have a different personality from you. Friends who are similar to you and who you otherwise enjoy spending time with can make complicated management situations very difficult. It’s also worth remembering that the most important keywords in leadership are focus, clarity, responsibility, and accountability.

Which books on leadership would you recommend, and why?

Leadership books are a global mega-business, but a large number of them come from the States, where the business environment and situation differ a great deal from the one that many of us find ourselves in. Some bestsellers are actually collections of entertaining anecdotes constructed retrospectively, which are as helpful to read as any work of fiction. In my opinion, some of the books also present simply made-up pseudo-theories illustrated with an abundance of figures and diagrams.

I used to be very keen on books by Jack Welch, the legendary top manager of General Electric. I even wrote a couple of sentences recommending one of his books, which appeared on the back of the Estonian edition. However, many of his once-innovative ideas are not very helpful today because the environment, situations, and values have changed so much.

The first book I’d venture to recommend is the one that I reckon I’ve learned the most from – The Leadership Mystique – which has also been translated into Estonian. I had the opportunity to meet the Dutch author, Manfred Kets de Vries, at the INSEAD Business School. He’s not a retired CEO but a psychoanalyst that the Financial Times and the Economist have recognized as one of Europe's leading thinkers in the field of business management.

The second recommendation is a book by Nobel prize winner Daniel Kahneman called Thinking, Fast and Slow. Reading it has significantly broadened my horizons and my understanding of how the human brain and psychology work. Should I ever put together a management training programme for young, upcoming leaders, I would definitely include this on the reading list.

A third title could be Hot Spots by the British psychologist and practical management professor, Lynda Gratton, whose lectures and seminars I attended at London Business School. This book addresses the manager's role in keeping their organization's internal culture healthy and viable, and how to increase the probability of hot spots of progressive energy and focus forming in the organization. A good book!

Gunnar Okk's six key takeaways

  • Vision. A good leader develops a realistic vision for the future and sees the big picture in every situation.
  • Confidence and humility. A good leader is (at least on the outside) confident, but does not try to appear infallible and is ready to admit their mistakes and show that they are vulnerable.
  • Trustworthiness. A good leader is trustworthy and trusts others as long as there isn't a reason not to do so.
  • Communication skills. A successful leader is able to communicate clearly and naturally with the general public, employers, employees, and clients alike.
  • Value-based leadership. The best leaders create a value system for employees, and can generally avoid issuing orders and imposing restrictions as a result.
  • Energy. Excellent leaders can motivate their subordinates and give them an energy charge that is powerful enough to pass on to their own subordinates.

Career history

  • Born in Tallinn in 1960.
  • Current position: Vice-President and Chief Operating Officer at the Nordic Investment Bank (NIB) since 2020.
  • Additional positions: Chairman of the Board of Tallinn University of Technology, member of the Research and Development Council that advises the government of Estonia, Vice-Chairman of the Board of the EstonianFinnish Cultural Foundation, Vice-Chairman of the Board of the Finnish Tuglas Society, board member of the Helsinki Estonian Academic Club.
  • Previous positions at NIB in addition to the Vice-President’s role include Head of Human Resources, IT, and Business Intelligence, and Head of Planning and Administration.
  • 1998-2005: CEO at Eesti Energia AS; previously General Director of the same company.
  • 1997-1998: Member of the Executive Committee, development director of Tallinna Bank AS.
  • 1996-1997: Deputy head, the northwest area at Svenska Statoil Detaljhandel AB, Stockholm.
  • 1993-1996: General director, AS Eesti Statoil, previously Operative Manager.
  • Previous posts: editor-in-chief of international cooperation programmes of Estonian Television, deputy editor-in-chief for film production at the studio Sensitivity: Confidential Eesti Telefilm, deputy head of the technical and construction department of the Estonian Ministry of Culture.
  • Graduated from Tallinn University of Technology as an electrical systems engineer (1983).
  • Further executive education: Academy of Economics in Kiel, Germany, INSEAD Business School in France, London Business School, Aalto University in Helsinki, and Harvard Business School in the USA.

Nordic Investment Bank

The Nordic Investment Bank (NIB) is an international financial institution founded in 1976, with its headquarters in Helsinki, and currently co-owned by Estonia, Iceland, Latvia, Lithuania, Norway, Sweden, Finland, and Denmark. NIB offers long-term loans and warranties to clients in both the private and public sectors. The Bank’s mission is to finance investment projects that increase productivity and improve the environment of the Nordic and Baltic countries. The loan projects are financed via international capital markets and NIB uses no taxpayer money from its owner countries. The size of the loan portfolio is currently over 20 billion euros. NIB has been active in Estonia since 1994 and has granted a total of 1.5 billion euros in loans. Leading rating agencies Standard & Poor’s and Moody’s have given the Bank the highest credit rating AAA.