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Steinthór Pálsson on the economy of trust

  • Nicolas Wilson
  • |
  • Feb 12, 2018
Steinthór Pálsson on the economy of trust

Nicolas Wilson is an MBA student who participated in the Ivey MBA Leadership Conference on Feb. 2. He shares insights from Steinthór Pálsson, former CEO of Landsbankinn, on leading change in the midst of crisis.

History is spotted with events of such magnitude that the reality of the occasion is felt by entire societies.

Steinthór Pálsson, the former CEO of Landsbankinn, was at the centre of such an event and shared his insights at the Ivey MBA Leadership Conference on Feb. 2.

With the inevitable in sight, on Oct. 6, 2008, Geir Haarde, then Prime Minister of Iceland, took to the airwaves to make a final address to his country’s people. His closing words became a symbol for the looming financial crisis that would be felt across the nation. As the people of Iceland gathered around their television sets, Haarde bid his farewell with three parting words: “God bless Iceland.” As their leader’s words echoed through the streets, the people of Iceland were left frozen with fear and uncertainty about what was to come.

The Icelandic financial crisis from 2008-11 led to a collapse of the krona and the default of all three of Iceland’s major banks. For a country with a population the size of London, Ont., the world had never seen a banking collapse of this magnitude before. Politicians and the media turned against the banks and there was a complete lack of trust from the people. Iceland was in the midst of a crisis and in need of a leader. As newly selected president of Landsbankinn, one of Iceland’s largest banks, Steinthór Pálsson took on this role.

Do what is right

When Pálsson spoke to MBA students, at the core of his message was the notion of the importance of communication, trust, and commitment to what you believe is right. Pálsson met with all of his employees in small groups; he listened to what the employees needed to be able to do their jobs with pride. Listening and communicating will allow a leader to gain trust and trust amplifies results. In Pálsson’s words: “The economy of trust is very important.”

Pálsson did the right thing when it was difficult to do so. While the other two major banks decided to undergo a complete rebranding, Pálsson did not. Against the opinion of many, Pálsson chose to keep the name of the bank and instead focus on changing the mindset of the bank.

Being a good leader is difficult when you’re in the role and becoming a good leader is the product of experience. If you listen, trust, act bravely, learn from your mistakes, and commit to taking on the challenge with passion, your leadership will provide results.

Pálsson’s message is a valuable lesson for us all.

“If you’re going to take people though a snow storm, you need to be passionate about it,” he said.