If its first twelve years are any indication, the twenty-first century risks going down in history as the century of scandals. A series of increasingly high-profile financial scandals—Enron, subprime mortgages, the LIBOR rate rigging—coupled with bailouts have knocked corporations off their high pedestal. Business leaders now grace the covers of leading magazines for all the wrong reasons—among them, Bob Diamond, Barclays Bank’s former CEO implicated in the LIBOR scandal, and Rajat Gupta, McKinsey & Company’s former managing director convicted of insider trading.

Diamond and Gupta are smart leaders known for their sharp intellect, and their organizations benefited greatly from their smartness. What got these leaders into trouble is not their lack of intelligence but their lapses in judgment. In a 2009 McKinsey Quarterly survey of 2,207 executives, only 28 percent responded that the quality of strategic decisions in their companies was generally good, 12 percent thought good decisions were altogether infrequent, and the rest (60 percent) thought that there were as many bad decisions as good. Smartness is like a wild horse: riding it can be exhilarating for a while until you are thrown from it. To tame and harness smartness for the long run, you need wisdom—the stuff that gives you ethical clarity and a sense of purpose. When wisdom provides the moral compass, smartness can become even more potent. Clearly, the need of the hour is for smart leaders who can act and lead with wisdom. Many business leaders who attended World Business Economic sessions in 2010 and 2011 have called for business reformation and renewal by rethinking values. Many corporate leaders intuitively appreciate the value of wisdom. Yet with a few notable exceptions, like Warren Buffett, Bill Gates, Bill George, John Mackey, Narayana Murthy, Ratan Tata, and Oprah Winfrey, they don’t know how to operationalize it in a business context. Some leaders view wisdom as a noble concept but difficult to put in practice in the business world. Others hear about wisdom in a religious context when they go to church on Sunday but are at a loss on how to apply this spiritual wisdom at work on Monday morning.

Wisdom is both timeless and timely. Yet few attempts have been made to date in the West to articulate wisdom in the language of business, let alone provide corporate leaders with practical tools to systematically apply wisdom in their day-to-day work. This book frames wisdom in a modern context that makes it accessible and practical for smart, busy leaders like you, so that you can learn to act and lead as a wise leader. By reading this book, you will gain new perspectives, learn new capabilities, and develop new practices that will help you become a wise leader no matter what role you play in your organization.

We have been studying the concept of wise leadership—the practice of wisdom in a leadership context—since 1989. Both of us share the motivation to help leaders discover the genius that lies dormant within the wider ecosystem of employees, customers, and partners and to tap into that collective intelligence to bring value to their organizations as well as the larger society.

In our multiple lines of work as management consultants, advisors, business researchers, and teachers, we have worked with over seventy companies around the world and with hundreds of top executives in different parts of the world. This book is the result of our cumulative experiences, insights, study, and observations.

The germ of this book came from our own desire to discover our full potential. We both consider ourselves smart, but we have not always been wise when it really mattered. We came to realize that our own smartness created invisible boundaries to what we could accomplish and where we could go with our lives and our profession. As part of this process, we realized that by breaking down boundaries, we could change our lives. In that sense, this book reflects our own experiences and personal journeys. By sharing our learning with you, we hope to ignite your leadership genius.

Prasad: I grew up in two worlds. One was the world of science, competition, and academic smartness and the other the world of wisdom and contemplation. Like many other Indian children from traditional families in the 1970s, I went to a Sanskrit teacher to study Hindu scriptures in the mornings while attending regular school during the rest of the day. I got my doctorate in physics at the Indian Institute of Technology in Chennai, India. For a long time, the path of smartness and the path of wisdom did not intersect in my actions or my consciousness. While working as a physicist at the University of Utah, I moved gradually into the world of technology and tool making and ended up at Apple. As a research fellow at Apple University, I had the opportunity to interview several Nobel laureates, high achievers, psychologists, and spiritual leaders while researching how people learn, lead, think, communicate, create, and collaborate. I became interested in the relationship between ordinary and extraordinary changes in thinking, between individual learning and team learning, and began thinking about how to synthesize ancient wisdom (e.g., from classical Hindu texts like the Upanishads) with contemporary ways of thinking. Through such personal explorations, interviews with extraordinary leaders, and experimentation with corporate clients as an educator and a facilitator, I gained insight into the concept of practical wisdom and its application in the field of leadership and innovation.

Since 1990, my research and consulting focus has been on cross-cultural leadership and innovation, and it has led me to understand more about smart and wise leadership. I have had the opportunity to work closely, as a coach and an advisor, with over one hundred CEOs, executive team members, and board members from the United States, Europe, and Asia over the past twenty-three years. Those experiences helped to hone my understanding of the importance of values and a noble purpose and shaped my thinking further around wise leadership. This book draws on these lessons.

Navi: I grew up in India in a bicultural (French and Indian) environment and was the first child in my family to go to college. I set high standards for myself, which led me to the United States to study for an M.B.A. Then it dawned on me that there is more to life than becoming a smart management consultant who would make organizations run smarter and help them compete and win in the marketplace at all costs. I decided to dedicate my career to helping smart corporate executives evolve into wise leaders who are open to learning from others and willing to serve a higher purpose. Over thirteen years, in various capacities—first as an industry analyst, then as an academic researcher, and now as an independent strategy advisor—I have helped hundreds of business leaders worldwide cultivate an open, collaborative, and global mind-set that they can use to act and lead wisely in today’s interconnected world. My purpose is to leverage my multicultural background, interdisciplinary educational training, and extensive consulting experience to create practical new business frameworks that integrate Western and Eastern perspectives on innovation and leadership. This book and my first one—Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth—are aimed at helping people leverage the ingenuity and wisdom that we all possess so we can transcend our differences and forge a wise global community.

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In this book, we distill practical wisdom into six capabilities that twenty-first-century business leaders can use to cultivate wise leadership. Here you will learn how to evolve from a smart leader to a wise leader by discovering your noble purpose, acting authentically and appropriately, learning when to lead and when to let others lead, deciding with discernment, knowing when to hold on and when to let go, and cultivating enlightened self-interest. Through the practice of these six capabilities, you will gain practical wisdom, using values and ethics to guide your smartness towards serving a noble purpose. Warren Buffett, CEO of Berkshire Hathaway; Ratan Tata, former chairman of Tata Group; Oprah Winfrey, CEO of OWN and Harpo Productions; and Narayana Murthy, cofounder of Infosys, are some of today’s leaders who have found ways to apply practical wisdom in their businesses and made their companies highly successful. You can too—and in the dynamic, complex, globalized business context of today, cultivating this kind of practical wisdom is both a smart move and a wise one.

Prasad Kaipa
Campbell, California
November 2012

Navi Radjou
Palo Alto, California