A November article in The Economist has made a case for flamboyant, visionary chief executives. At the other extreme, New York Times columnist Paul Krugman wrote in an April piece that banking should be boring and, by implication, CEOs in this sector should best be solid, bland people. This debate evokes business consultant Jim Collins’ classic treatise on “Level 5” (or top of the hierarchy) leadership, in which he argued that egocentric chiefs do not determine success— instead, leaders who combine humility and fierce resolve are the ones who make corporations truly great.
I submit that this discussion is irrelevant. It does not matter if a CEO is a flamboyant manager or an anonymous technocrat. What matters is the true quality of his leadership.
To illustrate, on the one hand consider successful “rock star CEOs” such as General Electric’s Jack Welch, Apple’s Steve Jobs, ICICI’s K.V. Kamath and UB’s Vijay Mallya. They are flamboyant and have built successful businesses. However, we have also witnessed superstars who have delivered dismal results—Satyam’s B. Ramalinga Raju, Hewlett-Packard’s Carly Fiorina and Enron’s Jeff Skilling. On the other hand, quiet unassuming leaders—Wipro’s Azim Premji, Tesco’s Terry Leahy and anonymous public sector CEOs—have created great corporations.
So it appears that both superstars and anonymous CEOs have succeeded and failed. Hence, this difference in personality cannot be the key to outstanding leadership. Moreover, most of these leaders surely possess the essential qualities of leadership, including vision, determination, execution and the ability to inspire people. Yet the above empirical evidence clearly shows that these attributes alone do not lead to success. What, then, are the key discriminators of effective leadership?
My hypothesis is that three qualities mark out an extraordinarily successful leader.
The first quality, an honest commitment to the organization over self, guides leaders to take decisions which always create true value for their company, even where these decisions conflict with their self-interest. For instance, admitting a strategic error and withdrawing from a venture in which a lot has recently been invested but which now appears doomed to fail can paint a leader in a poor light. Yet, true commitment to the organization will ensure that the CEO arrives at this decision clinically. This quality also ensures that greed and narcissism, the Achilles’ heel of many leaders, are kept at bay.
The second discriminator, a razor-sharp strategic mind, ensures that the CEOs arrive at strategically important decisions incisively. They are not led astray by the initial lure of a fancy new acquisition or pricing strategy. Many CEOs fail because they have not considered all implications of their decisions, and in today’s complex world, these are indeed challenging to assess.
The third discriminator, an overriding focus on the long term, is important because quarterly results are today a constant barometer of performance. Long-term focus requires resolute farsightedness and the ability to withstand unrelenting short-term pressures. Strong organizations designed for sustained success are built when CEOs construct long-term horizons for every important stakeholder and building block—people, consumers, communities, processes and brands. Sacrificing this future at the altar of quarterly financials or bonuses is a recurring temptation which only a focus on the long-term can help avoid.
These three discriminators of extraordinary leadership are only the icing on the cake. The basic recipe of good leadership—vision, determination, execution excellence and team skills—is always a prerequisite. If a CEO possesses both the icing and the cake, then it is of no consequence whether he is a superstar or a bland boss.
Harish Bhat is chief operating officer, watches, Titan Industries Ltd. These are his personal views. Comment at firstname.lastname@example.org