Series: Wizwords in
Leadership n°
040-E
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e-published: November 2002
"Why CEO's
Fall"
A
contribution
based on a study-assignment [1]
by
Eric A. Koester
Class
of 2004 Master
of Arts in Leadership graduate
of
the THIERRY Graduate School of Leadership.
Today,
we live in a world that has changed dramatically in just the past decade.
Use of the internet, cell phones, and high-speed travel has made our
world much smaller and increased opportunities on a global scale.
At the same time, this “smaller world” now has information at the
fingertips of more than just the privileged few of years past.
With this change in our society has come a change in the leaders
overseeing it. Bill Clinton called himself the first President of the “new
medium,” referring to the explosion of information disseminated by a
growing media business. Clinton
is not alone, as leaders of organizations from non-profits to corporate
giants have been forced to adjust the tactics necessary for success. Today, more than ever, we are seeing a world that does not
tolerate failure. This
statement alone has redefined the role of today’s leader.
A
leader is held to higher standards, is given a greater set of expectations,
and is responsible for the actions of those around him.
These expectations should not be labeled as unrealistic because this
is what it takes and will continue to take to be a leader.
Leaders throughout history – from Julius Caesar to King Tut to
Andrew Carnegie – have all been forced to work in a position that is
different from those in the position of a follower.
And while the role itself has not changed, a number of important
issues exist for leaders and several key skills are evident in all
successful leaders today. Being
a leader is not any easier than it was in years past, but new skills are
being required to help adapt to a world in transition.
When
looking at the ultimate success of a leader, it is important to ask if that
person is successful because they are in the right place at the right time,
or if they are the right person regardless of the situation.
More than ever, we are seeing a society that lacks patience and
thereby is willing to tolerate leadership changes in order to seek different
results. Political and business
leaders see the fact that long terms may not be in their future.
And whether they are a long-term leader or one with many stops on
their road, any successful leader must be able to adapt their leadership to
the situation presented.
Critical
Issues for Today’s Leaders
Today’s
leaders face several key issues that are critical to their success.
These leaders are not limited to those in high political offices or
responsible for large corporate organizations, but apply to leaders in
numerous positions and areas. While
the landscapes of the political and business arenas have changed, the real
change has been in society as a whole.
The resulting obstacles that plague leaders exist on a grand scale.
This includes issues with increased individual rights, a lessening of
tolerance of failure, and an increase of communication.
Particularly
in more advanced areas of our society, the United States, Europe, and many
Asian nations, we have seen a swing in terms of rights and expectations.
This swing has resulted in a society that is now more concerned with
individual rights than rights of the group.
John F. Kennedy Jr. spoke to this dilemma with his statement, “Ask
not what your country can do for you; ask what you can do for your
country.” The message was a
simple one – in a society or group, it is easy to insist upon individual
rights, but that will not advance the society or group as a whole.
This is evident in the rampant use of litigation in today’s society
– rights of smokers, rights of consumers, and rights of victims.
While it is certainly important to advance the rights of humans in
general, the issue lies in the fact that certain groups are granted
additional rights at the expense of rights of other groups.
Individuals who make choices to smoke are now able to sue big tobacco
companies for millions of dollars. It
seems unfortunate that consumers in general are adversely affected due to
the increased insurance premiums and other economic difficulties that arise
from these situations. These
situations are ones that benefit individuals who are, for all intensive
purposes, receiving consequences of actions that they chose for themselves.
The
transition to a society focused on individual rights has caused
ramifications for the leaders of society.
From an increased need to battle corporate lawsuits for today’s
businesses to the growth of human resource issues within companies, new
challenges abound for those in leadership.
While it has certainly had drastic benefits in some areas, others
have raised new challenges that prevent change or stagnate growth.
In corporations, the management and leadership must ultimately
consider differing stakeholders in their decision-making.
In politics, personal scandal is now a simple way to become removed
from office.
From
the increased focus on individual rights has come a decreased acceptance of
mistakes and failures from our leaders.
More than ever we see the indiscretions of individuals, and even the
rumors of such indiscretions, as front-page news.
While it is certainly expected to hold such leaders to higher
standards, the emphasis on this behavior has become greater than in past
years. So much so that we are now at the point of analyzing the
indiscretions of leaders from the past – ruthless kings, robber barons, or
morally corrupt senators. Today’s
media has perpetuated the lack of tolerance for failures, mistakes and
oversights. Whereas success was
judged by the quality of work produced by journalists in the past, today
journalistic success is based upon the investigative results.
The journalist to break the next big story or scandal has become the
envy of the industry. Today’s
leaders must understand that their role is not simply a direction-setter and
team motivator for any organization.
In
the past, many of the same issues were often raised, but were done in much
smaller realms. Today’s consumer is now much more involved with information
that was in the past considered to be known only in certain circles.
Now more consumers hold corporate ownership and are interested in
issues that were once outside of their interests in general.
More often than not, those issues that are of interest are the
negative ones that society may believe will cause downward movement in stock
valuations. That has led a
fast-moving media to be able to communicate information to these consumers
and to hunt for the latest personal or professional information of a
company’s executives. No
longer are activities that were once considered ‘part of doing business’
accepted; they can be the sole reason that doubt creeps into investors heads
and a reduction in share price ensues.
Political leaders suffer the same issues.
In fact, countless political leaders have been forced to confront
personal issues before their peers. One
example is the actions of George W. Bush’s daughter, Jenna.
Her actions with a counterfeit identification used to purchase
alcohol raised concerns about the president’s capabilities.
No longer are leaders judged by their performance – instead they
are judged by the ability to perform without mistakes.
Leaders
in Environmental Fields
The
largest difference for leaders in environmentally focused arenas is the
effort required to convince a society of the need for action.
These leaders confront all of the same issues as addressed
previously, yet must do it in an atmosphere without a public mandate.
Of course consumers and individuals feel that protection of the
environment is important, but countless surveys have shown that consumers
rank this issue very low on their list of priorities.
This leads consumers to question activities that either cost them
money or raise hurdles in daily activities.
Political leaders promoting “green” agendas have struggled to be
elected and are unable to receive a mandate for the public for this type of
work to be done. For this very
reason, the key issues for all leadership within environmental fields is
taking new risks into new endeavors, communicating with the public, and
willingness to persevere.
As
has been said, the key issue for leadership of environmental fields is
communication. In the 1990s, environmentalism was a hot topic, but it has
become much less important to today’s governments and consumers.
For this very reason, the major challenge of anyone involved with
environmental issues is developing new ways to promote the urgency and
importance of the environment. Much
as any salesperson, environmentalism must become the only option for future
success. The effort will
require new partnerships and extensive risk-taking. Because the environmental industry is relatively small in
terms of its dollar impact on the economy, it will be important to gain the
support of other industries and take risk in new endeavors to promote the
cause. These efforts are the
crux of the issues that will need to be tackled in order to grow consumer
sentiment, the key piece for success of environmental leadership.
Ultimately,
environmentalism will struggle until humans are better able to see the
urgency with which is needed to attack these issues.
Because of the fact that the battle is not a quick one with a simple
path to success, environmental leaders will need to be patient and willing
to take the long road in order to achieve success.
With this mantra, environmental activists will be able to see their
work fulfilled.
Skills
of Today’s Leadership
Leadership
has been defined as a skill that ultimately determines the success or
failure of an individual in a position of power.
However, the question has been asked if leaders are born or made –
if it is in fact possible to teach leadership skills.
While it is relatively simple to define and teach technical skills
including finance or law, an understanding of leadership, and the skills
that encompass it, is not as easy.
Oftentimes described as a “soft skill,” leaders have certain
traits that are noticeable in their actions.
These traits overlap and intricately relate, but are visible when
analysis of leadership is done.
Competency.
Even at its most basic level, leadership requires competency.
This is not a simple term to define nor is it a definition that can
be applied unilaterally across leaders or individuals. Competency is the ability to function effectively including
communication, organization, and decision-making. In most cases, effective leaders excel at the basic
components of competency and are, therefore, able to devote their time to
other energies. Examples
include the ability to set priorities, managing personal agendas, written
and oral communication skills, resource management, team functionality, time
management, decision-making, some technical skills and understanding, among
others. While this basic
competency may seem very simple, not all individuals are comfortable with
these requirements. Without a
basic level of personal and professional competency, it is impossible to
achieve and utilize other skills necessary for the most effective types of
leadership.
Unfortunately,
leaders are easy targets when any problems arise.
Booz, Allen, & Hamilton’s article quantifying various aspects
of today’s CEOs claims that succession has risen 53% in the past 6 years. Dissention amongst the various leaders within any
organization ultimately reflects on the top leadership in any team.
Without basic competency – the ability to understand complex
scenarios and problems, the skill in various different types of
communication medium, and others – it is impossible for a leader to gain
the respect of those beneath the leader on the organizational hierarchy.
These faults are seen as a weakness that other leaders will attempt
to blame for any other problems.
This
competency does not imply that leadership requires genius-levels of
intelligence, and, in fact, many of the brightest individuals in our society
are unable to be effective leaders. Effective
leadership requires a level of competency that includes a basic
understanding of a wealth of concepts and the willingness to learn about
concepts that are not presently understood.
Today’s CEO is not responsible to know details of development of
complex software engineering in the R&D department or the journal
entries of the finance organization, but an effective leader must have the
basic competency to be able to effectively communicate with and manage over
those skilled individuals in those areas.
Communication.
As stated before,
communication has changed in its scope and depth in the past ten years.
With this change has come an increased need for leaders who are
excellent communicators and public relaters.
Unfortunately, it is possible for a strong leader in terms of
motivation, strategic planning, and decision making, to be ineffective in
their ability to communicate. This
problem may be the ultimate downfall of the leader due to the fact that they
are unable to truly reach the important consumers of information.
Many point to the inability of President George H. Bush to
communicate with the American people as a cause for his defeat by Bill
Clinton in 1992. Clinton, known as an incredible people person, was involved
in different forums than Bush including MTV and the Arsenio Hall Show –
venues that helped Clinton capture younger voters.
Ultimately, Clinton’s presidency was defined by his ability to
connect with the American people, despite setbacks in his personal life.
Its
leader is the focal point of any organization.
From President George W. Bush or former New York Mayor Rudolph
Guiliani to former General Electric CEO Jack Welch or Apple CEO Steve Case,
we often think of any organization in terms of its leader.
While in reality, the leader only represents a small portion of the
actions involved in the day-to-day operations of any organization;
responsibility is quickly assigned to the individual in charge.
Therefore, as that focal point, both externally and internally, a
strong leader must have very good communication skills.
Externally, the leader is the mouthpiece of the organization,
informing, educating, and resolving. Without
the communication skills to effectively perform these activities, the voice
of the company is lost. Internally,
the leader sets the direction and must also serve to inform, educate and
resolve those on the inside. Without
those skills necessary for success in both arenas the leader is destined to
alienate those he is representing or those he is trying to inform.
Diversity.
Effective leaders must be “Renaissance Men,” skilled in numerous
endeavors and areas. One
of the first “Renaissance Men,” was Leonardo DaVinci, a skilled artist,
inventor, and writer. In his
era, DaVinci needed this diversity of skills in order to survive and keep
food on his table, but today leaders need diversity in order to be
effective. Any organization
from a volunteer group to the largest publicly traded company requires a
wealth of functional areas to be successful – clerical, legal, financial,
technical, and many others. While
it is important for leaders to be skilled themselves and maintain a minimum
level of competency, ultimately, effective leaders must manage and oversee
other people. As a result, it
is important for an effective leader to become, ‘the student of many and
the master of none,’ as a common phrase has been used. This diversity can oftentimes come from nowhere but
other experiences or from the flexibility to quickly learn on the fly.
Ultimately, an effective leader cannot be one-dimensional or risk
being removed when problems outside of his comfort zone arise.
To
be able to effectively manage an organization with numerous functional
challenges, a strong leader must be able to understand and manage these
functions. This is where
diversity is crucial. Larry
Ellison, the CEO of Oracle Corporation, has been called one of the greatest
sales people of the technical industries. This salesperson has grown Oracle into the largest supplier
of database software in the world. However,
the troubles of Ellison have not come from problems with sales and revenues,
but instead have stemmed from problems with the technical product glitches
and poor customer service. As a
result, Ellison has been forced to retool is focus and dive into other areas
of the company to enhance the company.
It is this need to quickly shift focus that is crucial for an
effective leader.
Tying
into the diversity required of leaders is creativity.
A key component of diversity is the creativity to pull from this
background and experience to develop new alternatives to questions.
Leaders are oftentimes asked questions that do not have easy answers
or simple solutions. For this
very reason, creativity helps any leader to explore new options and
differing directions. The
‘Renaissance Man’ must be able to pull from his skill set and develop
new answers.
Dedication
& Sacrifice. Leadership
is not for the faint of heart. In
order to be effective as a leader, dedication and sacrifice are required.
It is nearly impossible for most people to accomplish all that is
necessary to be successful in business in a typical 40-hour workweek.
A leader is able to prioritize items in their lives in order to
accomplish things that are of the utmost importance.
This prioritization often involves a commitment to their role as
leader. Without that dedication, commitment, and sacrifice, it is
impossible to see the results that a driven person hopes to achieve.
Unfortunately,
the time necessary for success in many high profile areas can lead to
conflicts with personal commitments for those leaders.
Divorces are not uncommon for leaders of corporations, coaches of
sports teams, and political representatives.
As a subset of the dedication and sacrifice required for success as a
leader, it is also crucial to be able to develop and maintain commitments to
priorities outside of the role as a leader.
Thirst
for Knowledge.
Curiosity is a trait that is often used to describe the actions of
children – walking through the park or playing with computers.
The thirst for knowledge that is always seen in children is one that
successful leaders have been able to carry into their roles as adults.
In short, leaders must not be afraid the ask the age-old question,
“Why?”
The
importance of this trait cannot be understated and is so important for the
individual responsible for setting the direction of the team.
Leaders must search for new answers, solve complex problems, and work
with diverse individuals. In
order to be successful, a leader must be curious to know and be dedicated to
the art learning. It has
been said that in any organization, if you are not growing, you are dying
– there is no in between. Growth
requires curiosity and a thirst for knowledge from books, teaches, and
observances that is evident the most successful of today’s leaders.
Controlled
Competitive Drive to Risk & Succeed.
Leaders are competitive.
Warren Buffett and Bill Gates, two of the wealthiest men in the
world, are partners in a charity bridge tournament each year.
While the event benefits several charities, observers have said that
this partnership of corporate leaders is extremely competitive.
In fact, when beaten by the world’s number one bridge player, Gates
and Buffett decided that the following year that they would invite their
competitor to become their partner. The
move paid off as the team went on to win the tournament.
Examples of this competitive drive abound in successful leaders in
areas outside of their work including golfing, marathons, and other
ventures. It is this competitive drive that has made them successful in
one arena and is carried into other activities.
This
controlled competitive drive is also crucial in decision-making of risks.
Leaders must not only be willing to compete and drive their
organization to the top, but must also be willing to take the necessary
risks to achieve that success. In
the 1980’s, Intel decided to risk its present place as the leader in
memory chips to position itself to take control in the microprocessor
business. With this decision,
the company decided to take itself into the red, and lost $203 million
dollars in 1986. However, as we
can see today, the company was able to take the risk and look at its place
in the market in order to become the giant it is today.
The key to risk management is an understanding and quantification of
such risks – what is the upside potential versus the downside risk. Any leader today must be willing to risk, but must also be
controlled in their decision-making to realize risks that are best for their
organization. Some risks will
not pay off, but if a decision is made and the options are known, risk can
be the single greatest opportunity for any organization.
The
competitive drive is what often fuels a leader and motivates them to work
longer, harder, and more, in essence, to be more dedicated.
It helps leaders to push their team, organization, or business to
higher levels. It is
necessary, and some might argue crucial, to success.
However, it is also important for this competitive drive to be
controlled. Without control
over the competitive nature, a leader will wind up making ill-advised
decisions and even competing with those working for the same common goal.
In the case of the merger between AOL and Time Warner, both sides
initially hoped to maintain the leadership structure that had helped the
individual companies achieve success, but uncontrolled competition between
the leadership factions ultimately led many to forgo their redefined rolls
for other opportunities. What
had made the leadership of each organization successful was the very cause
of the departure of several key members of the team.
Without
a competitive nature to risk, the freedom to risk and the understanding when
to take a risk, a leader will not achieve their highest potential.
It has been said that a bird will never fly if they are not willing
to step out of the nest. This
is most certainly true of leadership. To
take the saying further – leaders must know when to step out of the nest,
particularly when they plan to step first.
But they must have the foresight to know when it is important to
watch other step out first and witness their activities.
Being first does not mean being right.
Trust.
The job of any leader is difficult for many reasons.
However, one of the most difficult aspects of a leader is the trust
they must put in those around them. The
CEO of some companies can, in essence, be responsible for millions of
individuals. As a result it is
wholly impossible to directly oversee a million individuals, the corporate
hierarchy becomes an extensive tool.
Today,
managers are being taught that the key to success is hiring talented
individuals and giving them the freedom to do their job.
While this is a simple concept, it is much more difficult to
practice. Just as parents are often leery to relinquish the car keys to
their child after they receive their license, leaders are sometimes wary to
relinquish control for fear of failure.
Many leaders have struggled as they wear multiple hats within a team
because they are too afraid to trust others to fulfill those roles.
While this practice may work in the short term, it is a recipe for
disaster if a leader cannot cultivate other leaders.
For this very reason, successful leadership is sometimes described as
the ultimate act of teaching. Leaders
must be able to educate others on their vision and then must be able to
trust their pupils with carrying out that mission.
At
Ventana Medical Systems, the company founder and inventor of the
technologies that are used in all current products, was a laboratory genius.
His work was world renown and he had received countless awards for
his university research work. When
it came to developing a business, Dr. Tom Grogan knew his limitations.
Dr. Grogan continued to do what he did best, research and develop new
technologies for the business, but left the operations decision to a team he
had helped to choose. This act
of trust helped Grogan to grow Ventana into a success, but required the
ultimate act of trust.
Self-Confidence.
Confidence is not easily gained but
can be quickly lost. For
success in leadership, self-confidence is a key trait.
Simply put, without self-confidence, decision-making will suffer and
results will be impaired. Leaders
may not always have the right answers or the right questions, but without
the confidence to trust themselves, their team, and their experience, it is
very difficult to be successful.
The
key issue with self-confidence is the fact that confidence is a line that
can quickly become cockiness. It
is important to be confident when dealing with any situation, but it is also
important to know when to confer with others and gain a greater level of
understanding. This trait is
one that blends into many of the other traits that have been previously
discussed. It serves as an
underlying trait that must exist in order for the others to be exposed and
utilized.
Luck.
While it may seem difficult to label luck as a core competency
required for successful leaders, it is necessary for success.
Rather than define the competency as luck, we will label it as the
‘X’ factor. Anyone who has
watched sporting events or other competitions can understand that there is
always certain ‘X’ factor involved.
It is this factor that allows a team or individual that is superior
on paper to be beaten by an inferior opponent.
Oftentimes it is impossible to define what the ‘X’ factor is or
was, but it was a certain combination of events and action that lead to an
unexpected outcome. In the 2002 Super Bowl, the St. Louis Rams were considered
superior in all facets of team play and were given a significant advantage
by odds makers, but the ‘X’ factor was in play and the New England
Patriot beat the Rams by a last minute field goal.
A
strong leader must be able to deal with defeats that are out of his or her
control and use that defeat to grow the organization as a whole.
The key point in this characteristic is the ability to grow from the
setbacks. A perfect example of
setbacks such as this includes the personal story of Bill Gates.
The computer genius failed out of Harvard University.
In retrospect, it is seen as an abnormality that such a brilliant
mind would fail, but he was able to learn from those experiences and, as a
result, build one of the strongest companies in the current market.
In short, a strong leader must be able to understand and accept that
despite the best efforts, planning, and execution, failure does occur.
However, if this failure is used as merely a roadblock instead of a
dead-end, success will eventually occur.
Rather
than stop at the point of saying that it is necessary to be lucky to be a
successful leader, it is important to better understand luck.
It has been written that luck is a point where preparation meets
opportunity. This relates
to two earlier characteristics of dedication and risk.
Based upon the practice of these two other competencies, luck plays
into the scenario because of the fact that it does not guarantee success. The role of the leader is particularly important in those
failures because they are responsible for moving the organization forward
despite the influence of the ‘X’ factor.
Leadership
Today
Would
George Washington or John D. Rockefeller been a successful leader in
today’s society? The point of
this question is to truly identify if skills of leadership do exist or they
are simply the result of the right individual at the right place and time.
Can we put Washington as the leader of the newly formed Afghanistan
and expect success and would Rockefeller be able to turn American Airlines
back into one of the most powerful companies in the world? These two men are viewed with great regard because they
achieved incredible results. But
are they excellent leaders, or simply men in situations that allow success?
I
believe the answer to the question above is yes – these leaders would be
successful because of the skills they possess.
Today’s leaders face a society that is very different from one of
fifty years ago – even ten. Our
society has become much smaller and its leadership has become a focal point
on both a professional and personal performance basis.
However, today’s successful leaders share something will their
brethren of the past, including Washington and Rockefeller, flexibility.
Although several very important, even critical, skills have been
discussed throughout this paper, ultimately a strong leader must be
flexible. This is what
separated all past leaders from those who were unable to reach the highest
levels. Flexibility is the reason that leaders are often able to transition
from one political office to another, or from one company to a new one.
Good leaders are able to move quickly and adjust to change.
No
matter the changes in our society, good leaders will be able to take many
key skills and apply them to a new situation to be successful.
It is this skill that separates leaders from the crowd.
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THIERRY Graduate School of Leadership
[1]
An analysis-assignment in the "Leadership
Concepts and History" subject-course (2002-2003 academic year).
Base-document is an article in Strategy+Business, a Booz Allen Hamilton
Publication. ©
Copyright 2002, Eric A. Koester, and where applicable, Thierry Graduate
School of Leadership. All
rights strictly reserved for all countries. THIERRY
Online © Copyright 2002-2007, The THIERRY Graduate School of Leadership. All
rights strictly reserved for all countries.
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