Ten Commandments for Successful Leaders

8/14/2019 Ten Commandments for Successful Leaders

1/4

How to run a company wellOct 23rd 2003 From The Economist print edition

Ten Commandments for successful leaders

LEADING a big public company is one of the world's most important jobs. It is

already fiendishly difficult, and seems to be getting harder all the time. Those

who make it to the top frequently fail: they stay for shorter and shorter periods.

And there is more competition than there used to be for the talents of top bosses

because private equity now offers another option. To judge by the huge pay

packets offered to the few deemed capable of doing such jobs, there is a dire

shortage of people thought to have what it takes. Here is a ten-point checklist of

the necessary qualities.

1. A sound ethical compass. If the boss's values are undemanding, the

company's will also be wobbly. That may not put it out of business, but it means

the company will have to pay a premium for talent. Good people do not like

working for organisations whose values they mistrust. But ethical values are

difficult to acquire on demand, in middle life. The deeper sources of constraint

are hard-wired at an early age, says NYU's Mr Allen.

2. The ability to take unpleasant decisions. Many judgments must be made

on the basis of ambiguous information. Leaders often have to deal swiftly with

conflicting demands without being sure of their facts. That calls for a strong

stomach. Those who cannot bear to inflict pain or risk making enemies, or who

need cast-iron evidence before making up their minds, should not apply.

3. Clarity and focus are essential requirements for making those awkward

judgments. Leading a large company, and dealing at speed with a host of

complicated and many-sided issues, is an immense intellectual challenge. To

extract the crucial point from complexity is essential for devising an effective

strategy. In order to survive the clamour for time and attention, a leader must

also be able to screen out unnecessary noise and to focus on what really matters.

That goes with realismthere is no point in aspiring to the unachievable.

4. Ambition. The best leaders are empire-builders who want to create somethingthat outlasts them. That is different from ego-boosting personal ambition. It

1


2/4

supplies the ruthless drive and the obsession with excellence that are essential

components of good leadership.

5. Effective communications skills are a relatively new requirement, the resultof the increasing intrusion of the outside world: media, analysts, shareholders,

environmental groups. All require a corporate leader who can talk convincingly

which is not always the same thing as telling the whole truth. Motivating a large

workforce requires a gift to present a clear vision persuasively. A leader who

cannot inspire trust and convey authenticity will find the task difficult.

6. The ability to judge people is an essential prerequisite, given the

importance of human capital. Lord Stevenson, the chairman of HBOS, a big bank

(and also of Pearson, which part-owns The Economist), says that he spends

perhaps three-quarters of his time getting to know the top 150 people where he

works. Mr Welch used to describe himself as the world's best-paid human-

resources director. Judging who will work best in which slot is one of the key

tasks of leadership. Like so many aspects of the top job, it requires intuition as

well as experience.

7. A knack for developing talent is needed to build a stock of future leaders.

People learn far more about the art of leading from a good mentor than from a

great book. So effective leaders need not only to spot where the talents of a

particular individual might be best deployed; they must also be teachers,

conveying their skills to those around them (and encouraging others to teach

their colleagues too). That is the way to create leaders at many levels in an

organisation.

8. Emotional self-confidence. Accumulating a pool of talent requires an ability

to work with people who may be better at their job than you are at yours, and to

guide and motivate them. Leaders who are jealous of their followers do not

inspire loyalty. Self-confidence also allows people to admit to weakness and ask

for help without feeling defensive or inadequate. Successful leaders need to be

able to say, I don't know what to do next, without losing the respect of their

colleagues.

9. Adaptability will prove invaluable when things go wrong. Surviving a reverse

calls for resilience and flexibility. It is one thing to spot a change in the market, orin public attitudes, or in the political climate. It is quite another quickly to devise

2


3/4

a completely different approach, even if that means abandoning an idea to which

a leader has been passionately committed. Yale University's Mr Sonnenfeld is

cataloguing ways to turn misfortune into fortune. The key seems to be an ability

to reframe: to reshape a problem so that from some angles it can look like asuccess.

10. Charm is not a quality taught on MBA courses, but few get to the top without

it. A bit of luck helps too, though that may prove hard to arrange.

Many of these qualities are useful for leading any enterprise, but especially a

publicly traded corporation. In turn, the way companies are led determines the

prosperity of nations and the happiness of their workforce and their customers.

In response to the scandals and collapses of the past two years, governments

have rushed in to tighten the rules of corporate governance. That is no bad thing:

good governance may not guarantee good performance, but at least it provides

tools to tackle bad management. And it is right to give boards a sense of

responsibility and the means to exercise it. All this helps to rebuild trust.

There is, though, a danger that regulators, under pressure to be seen to act, will

eventually go too far in some countries. Regulation is only one of several growing

and conflicting constraints on corporate leaders. The glare of the media, the

incessant demands of analysts and the increasing politicisation all make the job

harder to do well. But corporate leaders now have an alternative. The demand for

capable people to run businesses held by private-equity ventures is booming.

And if all else fails...

Talk to the chief executive of a public corporation about a job in private equity

and the first question is, When can I start?' They bite your hand off, says

Ashley Summerfield, a headhunter with the London office of Egon Zehnder.

Running a business for a private-equity firm means not only shelter from the

limelight: no small shareholders turn up at your annual meeting to moan about

your pay, and the media and non-governmental groups are much less intrusive.

In addition, there is a refreshing lack of ambiguity about what you are expectedto achieve. The timeframe is manageable. The investor is rational and interested.

3


4/4

The rewards for success are huge. And nobody asks awkward public questions

about your pay package.

Running a large public company is still a thrilling and rewarding job, but nobody

should take it for granted that there will always be a supply of leaders with talentand integrity willing to take it on. Too much mistrust and invective, and some of

the best may simply decide the task is not worth the effort.

4

Documents

Ten Commandments for Successful Leaders