Leadership culture

The idea of what constitutes great business leadership has changed more radically in the past 30 years than in the previous five decades and is in the process of changing again.

A shift from managerial capitalism to investor capitalism, particularly in the US, placed a premium on visionary, entrepreneurial, charismatic leaders, often endowed with imperial powers by hopeful shareholders and boards.

With that shift in the 1980s and 1990s came a wave of popular business literature, equating chief executives to warlike leaders, from Alexander the Great to General George Patton, and a revival of interest in ancient “management” texts such as Sun Tzu’s The Art of War and Machiavelli’s The Prince.

But, as Nigel Nicholson of London Business School has written in his latest book The ‘I’ of Leadership, “the lesson of history for leadership is that whatever worked yesterday won’t necessarily work tomorrow.”

The bubble in charismatic chief executives started to deflate in the early 2000s, pierced by corporate frauds at US companies such as Enron and WorldCom. The recent financial crisis laid low a further generation of aggressive leaders of the biggest banks.

Research by writers such as Jim Collins (Good to Great) and Rakesh Khurana (Searching for a Corporate Savior) has shown the appointment of a charismatic outside boss will not necessarily put a company on the path to success. Often, lower-profile chief executives, frequently appointed from inside the company, performed better. “Self-effacing, quiet, reserved, even shy – these leaders are a paradoxical blend of personal humility and professional will,” Collins wrote. “They are more like Lincoln and Socrates than Patton.”

What Nicholson describes as our “infatuation” with leadership is unlikely to go away: the short-term success of bank chiefs, so soon after the cautionary tales of Enron and others, proves that. But radical thinkers such as Gary Hamel suggest the future of many companies will be as networked organisations, linked by social media, in which a premium is placed on teamwork. Such an evolution will put more emphasis on people-centred management and leadership qualities such as integrity, competence and adaptability.

Andrew Hill