Understanding the triad of great leadership - context, conviction and credibility

Citation

Leavy, B. (2003), "Understanding the triad of great leadership - context, conviction and credibility", Strategy & Leadership, Vol. 31 No. 1. https://doi.org/10.1108/sl.2003.26131aab.001

Understanding the triad of great leadership - context, conviction and credibility

Brian Leavy

What is the essence of great leadership? Every time a leadership guru proposes a new theory that tries to define it in terms of particular personality traits or styles of behaviour, we can easily think of successful executives who do not fit their model. For example, few experienced managers would disagree that Jack Welch, former CEO of General Electric, is one of the outstanding business leaders of his generation. Yet Welch is hardly a prime example of either of two leadership traits that researchers have identified as essential in two recent best-selling books. Not to take anything away from his accomplishments, Welch does not personify either "emotional intelligence" (Daniel Goleman) or "level 5" leadership (Jim Collins). Though concepts like emotional intelligence and level 5 leadership may be useful, they fall well short of providing insight into the essence of outstanding leadership, particularly at the institutional level.

Theories based on traits or styles work well at middle management level, but tend to provide less insight into institutional leadership, where whole organisational populations have to be inspired but leaders have little opportunity for personal interaction. A decade of research has led me to the view that leadership effectiveness at this highest level can be better understood in terms of three main elements - the context for leadership, the conviction of the leader and the flow of credibility over time and tenure.

Context - defining the opportunity

Leadership impact at the institutional level is always shaped by context. Great leaders make history, but not always in circumstances of their own choosing (to paraphrase Karl Marx). Former US president Richard Nixon proposed that the formula for placing any leader among the great had three elements, "a great man, a great country and a great issue". Without the second two, he believed, potential greatness will remain unrecognised and unfulfilled. Churchill once said of a talented predecessor that he was unfortunate to have lived at a time of great men and small events. In the movies, an Oscar-winning performance begins with securing the right role, a truth that applies to real life as well.

In the business world, leadership roles are shaped by corporate history and the context of the time. If General Electric had chosen Stan Gault to be CEO in 1981, and Jack Welch had gone to Rubbermaid, how would they both be viewed today? In many ways, Gault's performance over the years was just as impressive as Welch's, but Rubbermaid is like off-Broadway theatre compared with the scale of drama at GE.

Business leaders typically play out one of three main roles, builders, revitalisers or inheritors. The first two offer the greatest opportunity to make a personal mark, whether through building great enterprises like Bill Gates (Microsoft) or Ted Turner (Turner Broadcasting), or revitalising formerly great companies, as Roberto Goizueta did at Coca-Cola or Michael Eisner did at Disney. In contrast, the contributions of skilful inheritors, like David Glass at Wal-Mart, tend to be seen as less dramatic, making it more difficult for them to stand out or to be seen as charismatic.

Conviction - providing the drive

Having the opportunity to make an impact, however, is not the same as making one, and the individual leader must still have the talent to meet the challenge and the conviction to rise to it.

At the CEO level, imagination and drive are more likely to distinguish outstanding performance than professional expertise. Yet many of the categorizations of the energy and enterprise of great CEOs are too generic, and fail to uncover the deeper wellsprings of inspirational leadership, which are always context specific. Take the idea of executive vision, for example. Without context, it is little more than image or fantasy. This is one reason many corporate mission statements turn out to be ineffective and lack "gut-grabbing meaning", as Built to Last authors Jim Collins and Jerry Porras have often argued. Leadership that truly transforms is deeply rooted in values, convictions and principles of a more transcendent nature.

For psychologist Howard Gardner, the essence of inspirational leadership lies in the ability to create and act out compelling stories, particularly stories of collective identity, which appeal to both reason and emotion. Great enterprises, like Wal-Mart, are built on potent founding stories, embodied in larger-than-life characters like Sam Walton. Talented inheritors, like David Glass, keep the spirit alive and maintain its momentum. In their turn, great revitalizers reinterpret shared legacy and make it relevant to new and formidable challenges. For example, in the aftermath of the 11 September terrorist attack, the world watched mayor Rudolph Giuliani brilliantly rediscover the spirit and resilience of "The New Yorker" and articulate it in a new and compelling way that helped rally the city at a time of great uncertainty and distress. Likewise, over more than a decade, we have seen how Jack Welch has re-interpreted the spirit of General Electric and rekindled the American dream within the country's leading business institution. What Welch accomplished reaffirms to the business world that entrepreneurial flair need not be lost with scale, in spite of much depressing evidence to the contrary.

Credibility - generating the currency

The third element in this perspective is credibility. All great leaders recognise credibility as the dynamic currency of leadership, yet it rarely figures in traditional theories. Any theory of institutional leadership has to concern itself with how credibility is created and destroyed over time. In the first place, an examination of credibility helps us to recognise our natural tendency to romanticise our leaders and exaggerate the credit that we give to them for the things that happen, both good and bad. However, arguments over whether leadership is more style than substance miss a key truth. As a case in point, veteran Washington correspondent Helen Thomas continues to rate president Kennedy ahead of his successors because he rallied Americans to aspire to noble goals at a time of national self-doubt. What the "Camelot" presidency illustrates is how symbol and substance can work together to be transforming.

The flow of credibility also depends on performance in the arena, and leaders are continually trading in this currency throughout their tenures at the top. The focus on styles and attributes tends to make us too preoccupied with how leadership capacity differs from person to person. However, it is just as important to understand how it varies in any given individual over time. Too much credibility can be as harmful as too little. As credibility grows, the line between confidence and hubris often becomes very thin, as Jack Welch learned several times in his GE CEO job, and again in his "retirement" years too. Another problem develops when the senior executives who report to the CEO start to behave like acolytes, an ominous sign that credibility has shifted to credulousness. For instance, former president of Honda, Kiyoshi Kawashima, stepped down early when he found that his senior people had taken to agreeing with him much too often. It's a pity more leaders do not follow his example.

At the other end of the spectrum, credibility can be lost in trying to move too quickly in advance of key constituencies. Jacques Nasser's failed bid to re-invent Ford Motors as a consumer services company is a dramatic example. At the time of his appointment as CEO, Nasser was widely seen as the best in the business, yet, "somehow during the course of his tenure he managed to create a lack of trust among virtually every constituency", as one of his board members put it. Other leaders lose their effectiveness over time because their spirits get tired or their stories get old.

Thomas Jefferson once described the US presidency as a "splendid misery", and no incumbent aged more quickly over his years in office than Lincoln, one of the greatest American presidents. Clearly exemplary leadership takes its toll.

Even where great leaders manage to remain strong in body and spirit over lengthy tenures, few are able to reinvent themselves and their stories when the original version no longer excites and emboldens those they would lead. Margaret Thatcher still felt like she could go "on and on" at the time that her political career ended in tears and she failed to recognise that her story had run its course. As another example, Ken Olsen of Digital was lionised in the business press for more than 20 years, but arguably he undermined a great legacy by holding on to the top job too long. Jack Welch recognised this danger at General Electric when he told a forum of Asian business leaders that he was "not retiring because I'm old and tired" but because "an organization has had 20 years of me" and has to "renew itself".

The perspective on leadership presented here has three major implications that should be considered.

Selecting leaders: matching talent and role

Oscar Wilde once remarked sardonically: "All the world's a stage, but the play is badly cast". Good casting is key to leadership effectiveness at institutional level, but business history is littered with examples of poor selections that have destroyed value and damaged reputations. Casting is an art in itself, whether in business or the performing arts, and there are few reliable guides to getting it right.

Success in supporting roles is no guarantee of effectiveness at institutional level, because top leadership is different in kind as well as degree from that at all other levels of management. Few expected Wal-Mart to succeed so well under David Glass, because Sam Walton was seen to be an impossible act to follow. Even fewer would have foreseen the tenures of Jacques Nasser at Ford, Doug Ivester at Coca-Cola or Eckhardt Pfeiffer at Compaq all ending so abruptly. These three talented executives had major achievements to their credit prior to taking the top job. For example, Nasser first successfully ran Ford Europe. Ivestor's departure from Coca-Cola was also hard to understand because it was widely believed that no understudy had ever been as well groomed for succession. Pfeiffer's firing was equally unexpected. At the time of the Digital acquisition in early 1998, Ben Rosen, chairman of Compaq, described Pfeiffer as "unquestionably one of the industry's most talented executives" with "a tremendous strategic sense, an ability to execute and an ability to lead". A year later, Rosen fired him, and said he regretted not having done it sooner.

The lesson to be learned is that institutional leadership seems to require the right blend of passion and pragmatism, and most of the miscasting that we see in the business world tends to come from getting this balance wrong. The right blend can change over time. For example, we have seen strong passion to achieve unique technological solutions create great enterprises like Polaroid and Apple, and later the same passion almost brought these enterprises to their knees. The histories of enduring enterprises tend to be marked by cycles of gradual and radical change. During the evolutionary phase, an existing business model is clarified, refined and finessed. This phase often requires steady adaptation. During the evolutionary phase, passionate leadership can be dysfunctional, as happened at Apple in the mid-1980s. On the other hand, conviction leadership is needed where great enterprises have become over-adapted to old realities and radical change is required. For instance, in 1985, John Ackers was the obvious choice of most IBM watchers for CEO. At the time, Big Blue looked as if it were on course to dominate every segment of the computer industry and become the world's biggest company within a decade. Given this prospect, Ackers had been chosen as a steady hand on the tiller to keep this strategy on course. He was neither cast for, nor could he find the inspiration to fulfil, the transformational leadership role that IBM urgently required in the early 1990s.

In contrast, part of the genius of General Electric to date has been the effective selection of passionate and pragmatic leaders to match its revolutionary and evolutionary cycles over its long history, according to the renowned management consultant Richard Pascale.

Educating leaders: perspective not prescription

While good casting is essential, there is no role that fully prepares someone for leadership at the top, and new incumbents must learn quickly once in office. Most CEOs pick up their most valuable professional skills and knowledge on the way to the top. So how do they upgrade their leadership skills? Jeff Immelt, the new CEO at General Electric, is an avid reader of history and biography, but rarely reads business books, and he is not unusual. During his heyday at Citigroup, John Reed read deeply into the history of scientific ideas, studying "how ideas evolve" and how great scientists develop "a sense of where the breaks are coming", and he was an unusually innovative banker for his time.

What leaders like these seek most is perspective, not prescription. Yet academic and consultants continue to bombard them with advice on attributes, styles and behaviours and wonder why so many take no notice. If effectiveness depends on the ability to create and embody a compelling story that will reach into the hearts and minds of every stakeholder, then CEOs need to learn how to uncover the deeper values that they share with their followers. Then they need to articulate these values in fresh and compelling ways that link their company's future opportunities with its history. If too many CEOs show little capacity for visionary leadership, it is not because they lack advice on lateral or creative thinking. More likely it is because their interests are too narrow, their deeper values remain untapped and they are failing to stretch themselves beyond the "completeness of a limited man", to use the phrase of John Stuart Mill.

In these dynamic and uncertain times, it seems timely to look again at the role that the humanities might play in the education of leaders, particularly at the institutional level, where a humanist perspective is most needed. "Wherever did we get the notion that in management there is a reasonable separation of the intellect and the spirit?" asks CEO James Autry of Meredith Corporation. Yet, much of our traditional approach to the training of leaders seems to reflect this view. The distinguishing mark of the liberal arts is their emphasis on integration and wholeness, and we might all now benefit from recognising anew what many business leaders and academics of the post-war era believed over half a century ago, that an immersion in the humanities can help an executive become not only a wiser, broader person, but also a wider, broader businessperson. Few advanced executive development programs go near to developing this capacity today, and many do not even try.

During the early 1950s, the world was embarked on a long struggle "between opposing ideals, opposing ways of life", as Donald David, then dean of Harvard Business School, described it at the time. Today, we are facing this struggle afresh, at a time when business has become the leading institution in geo-political development, and the need for the humanist perspective at CEO level is now more pressing than ever. In leadership studies generally, we still do not know fully know where great transcending ambition comes from, but if history is any guide, then the kind of ambition that built the cathedral at Chartres, painted the Sistine Chapel or circumnavigated the globe for the first time with a starving and mutinous crew, does not come from personal ego or the search for material success alone. An earlier generation of business leaders believed that management, like the arts and education, should serve a higher purpose than just the needs of business. It now seems timely to recover this value if our institutional leaders hope to be able to inspire their employees and help make working lives more meaningful in this post-modern world.

Changing leaders: protecting legacies and reputations

Finally, inspired casting at the institutional level is likely to remain very challenging well into the future. Many leadership tenures end prematurely due to poor selection from the start, others because incumbents fail to grow in office. However, in today's dynamic and uncertain world, good selection also comes unstuck because the requirements of the role shift radically over time. CEOs are being removed more rapidly than ever before when firms hit difficult times, and the process is rarely handled well. Shareholders are often outraged when they see massive payoffs to failed executives, like the deal Disney offered CEO Michael Ovitz. For their part, departing CEOs, like Jacques Nasser or Doug Ivester, feel used and betrayed after years of dedicated service, and many leave with their confidence shattered and their reputations in tatters. Stories of careers being revived at this level are rare, and this represents a shameful loss of talent to the corporate world.

We have to find a better way, and the main responsibility lies with the board. Today, miscast CEOs tend to bear too much of the blame. No wonder many demand golden parachutes at the outset, though few expect to use them. If Ivester was basically wrong for Coca-Cola, was this not a failure on the part of Guizueta and the board? Boards must held more accountable for casting errors, and the argument for separating the roles of chairman and CEO seem more pressing than ever. Strong boards with independent chairs are also needed to take both timely and appropriate action when leaders who become miscast or lose their credibility over time have to be removed in the wider interest. This was why Compaq was able to act faster than most.

Some CEOs are one-strategy specialists - ruthless cost cutters - like Al "chainsaw" Dunlop, were brought in to strengthen the balance sheet and cash flow in times of difficulty but proved to be incapable of growing the business once the storm was weathered. Moreover, those who are most effective at embodying their original strategy may become so typecast in the eyes of their followers that they only generate confusion when they try to re-invent themselves. There are also times when companies need to change their leaders for reasons more symbolic than substantive. In times of crisis, the drama associated with leadership change itself can help prepare an institution for transformation, generating a self-fulfilling dynamic. Several decades ago, the choice of Don Petersen to lead a Ford Motor Company that had grown stodgy, symbolized the need to change and helped to bring about "the comeback of the 1980s" by successfully implanting a compelling new story of participative management that was very foreign to the company's tradition.

Boards need to find a better approach to the management of casting problems and to deal in a more equitable manner with CEOs who must make way in the company's overall interest. The first consideration is timing. Boards shouldn't move too quickly and remove a talented executive at the first crisis he or she encounters. If Coca-Cola CE Goizueta had been axed after the New Coke fiasco, or John Reed had been forced out during Citgroup's trauma of the early 1990s, those firms would have lost two of their most outstanding CEOs. In other cases, however, boards delayed too long because they judged performance solely on the numbers and fail to monitor internal morale. For example, as the shares at Abbott Laboratories soared, Bob Schoellhorn became widely seen on the outside as somewhat of a hero, while rapidly losing the respect of his own executives for the arrogance and excess that eventually led to his downfall. Boards also tend to delay too long when a founding entrepreneur has to go.

Rare are the CEOs who are right for all contexts, and rarer still the casting directors who never get it wrong. Greater acceptance of these realities, and greater care in distinguishing loss of credibility from lack of competence, will help boards take more timely actions and explain them to their wider publics.