Wednesday, November 15, 2017

Client-Centered Ethical Leadership: A Recipe for Trust at Goldman Sachs

With its incentive-structure that rewards a quick profit on the next trade even at the expense of advising clients in line with their long-term interests, Wall Street has its work cut out for itself even in maintaining trust, which, after all, is the basis of a market. On March 15, 2012, the New York Times reported that over all, “the percentage of people who have little or no faith in the fairness of investment companies rose to 41 percent in 2011 from 26 percent in 2008, according to Yankelovich Monitor 2011.” Even banks and insurance companies fared better, and household income played no role in the findings. At the time, Goldman Sachs was doing its industry no favors in terms of reputation. Indeed, the “best and the brightest” on Wall Street had created or enabled a rather narrow and self-serving corporate culture and a lack of ethical leadership that could otherwise turn around the bank by transforming its dysfunctional culture.

For support, I am not going to use the SEC investigation into fraud at Goldman (a case which the bank settled without admitting wrongdoing), or to the findings of Sen. Levin’s committee in 2010. Nor am I basing my conclusions on a Delaware judge’s criticism of the bank over the multiple and potentially conflicting roles it played in brokering an energy deal. I not even going off the charges made by the hipsters in Occupy Wall Street movement. Rather, I have in mind what is in my judgment an honest report made publically by a well-placed insider in Goldman—something that is exceedingly rare and thus potentially extremely enlightening.

In his stinging opinion-piece in the Wall Street Journal on March 14, 2012 issued just shortly after he resigned from Goldman Sachs, Greg Smith excoriated the bank where he had worked for twelve years, accusing it of moral turpitude if not sordid, short-sighted, greed. “To put the problem in the simplest terms,” he writes, “the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.” He describes meetings in which the clients’ interests did not even enter into the equation. In fact, according to Smith, the grandson of Lithuanian Jews who had emigrated to Johannesburg, at least five of the executive directors at Goldman regularly refer to their clients as muppets. I suppose this means that the clients are deemed so stupid they can (and should) be easily controlled or managed by their “advisors” at Goldman, who are evidently the smartest kids in the room.

Even as government investigations and a protest movement can get far more press, an essay by an insider can be far more enlightening in terms of what is really going on behind a bank’s mission statement. Undoubtedly aware of this point, Lloyd Blankfein, the CEO at Goldman, and Gary Cohn, the bank’s president, referred in a letter to employees to Smith as “this individual” and to his essay as “an individual opinion.” Lest it be forgotten, leadership too is associated with individuals. Ironically, Smith rather than Blankfein and Cohn was exercising leadership—even ethical and I would say transformational leadership as against a ploy to deny and discredit in order to retain power. Leadership does not reduce to power. Indeed, the ethical, transformative leader must risk it, and Smith—being persona non grata on Wall Street—certainly risked more than that in having his essay published.

One Wall Street executive said it was “unforgivable” for Smith to make his opinions so public; rather, he should have taken them privately to the firm’s senior managers. However, he had doubtlessly done so only to be ignored, given the weight of the bank’s culture going against him. Indeed, as a middle-level manager, his complaint would not have gained much play. So the Wall Street executive’s advice can be rendered as enabling a dysfunctional corporate culture rather than being constructive. Ethical or transformational leadership cannot contravene the logic of power in a firm’s hierarchyand thus the intervention must be top-down rather than bottom-up.

As an alternative to ethical leadership, relying on customers to discern that they are not being adequately served and thus decide to leave may be advocated by others on Wall Street as the best solution as it makes use of the market mechanism. Thanks to Sen. Carl Levin’s committee, it was already widely known that at least one issue of the sub-prime-mortgage-based derivatives being sold by Goldman was referred to in internal emails as “crap.” The customers to whom it was sold had no basis to know that it was crap, or that Goldman’s sales people thought it was crap. It is not as if the marketing included: Tell the prospective customer that the security is crap. Perhaps the only customer buying that line would be a former governor of Alaska who could see Russia from her house.

Moreover, selling “crap” to “muppets” reflects not only a blatant disregard for customers, but also a marked level of disrespect of those who are ostensibly being served. It is as if the emails had read: “We could serve the idiots dog food and they wouldn’t know any different.” It is from such a haughty place that even the powerful today can fall so far and so unexpectedly fast. Yet it is not clear to me how many of Goldman’s muppets would walk from superior returns, if indeed Goldman has been out-performing its rivals, out of an overriding sense of self-respect. One would think that customers would prefer bankers who have their backs, but some undoubtedly believe in buyer beware (caveat emptor) and virtuously apply the strict doctrine to themselves as if in a Calvinist fit of self-discipline. The trade-off between even short-turn returns and self-respect is itself within a rather sordid corporate culture, and for it to be changed I think we need to consider the prospects for ethical, transformative leadership at the upper-echelons of the bank rather than rely on brave middle-managers or external protestors, investigators, or even customers. To make this case, I need to point to the salience of a firm’s culture—and in particular its ethical dimension.

Lest a firm’s culture be thought to be of marginal significance from the standpoint of the firm as a going concern financially, Smith attributes Goldman’s culture of yesteryear, which “revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients,” as the “secret sauce” that made the place work as a credible and trusted investment bank that thrived financially.  To be sure, the fact that partners had their own fortunes on the line gave them an incentive not to risk losing established clients by undercutting them by a focus on short-term profit über alles. Even so, a bank’s culture can play a large role in whether short-term or long-term greed is the order of the day. According to Gus Levy, who led Goldman Sachs in the 1960s and 1970s, with long-term greed, money was made with clients, not from them. Deciding whether to include or relegate customer interests is a decision or value that spreads like wildfire through an organization. This occurs by means of the organization’s culture. If Smith is correct, the culture at Goldman came to include a lack of regard for customers, or muppets. Because the customers were expecting that their interests would not only be considered, but also emphasized, Goldman’s violation of its corresponding obligation means that the ethical dimension of the culture is particularly salient here.

Lest the moral quality of a firm’s culture be presumed to be an unimportant element of a firm’s culture, Smith makes the startling claim concerning what had come of the bank’s culture: “I truly believe that [the] decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.” A single-minded effort to make money even at the expense of a customer’s immediate interests, such as in selling crap to muppets, turns out not to be a good strategy. Indeed, it is unethical. Indeed, I have been surprised at the positive correlations I have found in hearing of unethical companies, such as Days Inn for instance, being also not very competent, at least at the retail level. Unethical people tend not to be very good at their day jobs. Perhaps a character flaw is the common denominator behind unethical conduct at the expense of customers and incompetence.

However, Goldman Sachs has been financially successful even if its culture and leadership have been rather squalid. To be sure, Smith claims the bank is on borrowed time, given its lack of regard for its muppets. “People who care only about making money will not sustain this firm—or the trust of its clients—for very much longer,” he writes. In any case, the bank could doubtlessly be much better shape financially were ethical leaders installed who did not have such a vested interest in the extant dysfunctional culture.

Smith points the finger principally at Lloyd Blankfein, the sitting CEO who had bragged that Goldman was doing God’s work and yet defensively tried to discredit Smith as only an “individual.” More generally, Smith points to the dearth of ethical leadership at the bank. “The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.” Leaving the reference to axes aside, Smith’s point is that the ethical dimension of a firm’s culture is very important to the firm’s financial survival, and that ethical leadership is vital for the dimension. Culture, ethics, and ethical leadership are like a pyramid of sorts with the top setting the tone (and rewarding it). Promoting people for unloading toxic securities on unsuspecting muppets is not the way to build ethical leadership, and thus an ethical culture. Lest all this be reduced to practices of questionable legality—as if business ethics reduced to business law--Smith reports no such impropriety. The fatal flaw in Goldman Sachs is moral rather than legal.

If only the problem were legal in nature. Smith’s prescription is much more difficult to implement than catching cheats: “Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons.” This medicine attacks the extant culture itself, which, after all, is based on making money for the firm. Unfortunately, the effort must come out of that culture. Therein lies the rub.

How to interlard ethical leadership even at the board level in the midst of moral turpitude is to ask something to renounce what it is in order to become the opposite. Cultures normally resist that sort of thing. The board would have to be sufficiently distant from the managerial culture as to be willing to expunge the extant tip of the managerial iceberg and replace it with an ethical leader who is known as a change agent. It might be that the chair of the board must go to stockholders for support in order to make changes in the board. In any case, a new CEO, one taken from afar rather than even from stakeholders, would be necessary. Once installed, he or she would have to work downward, rooting out the rot; this cannot be done from the middle-level of management. In fact, opposition can be expected from throughout the management structure. Bringing in a powerful change-agent (preferably an ex-marine) in human resources, such as the guy O’Neal brought in at Bank of America, could help the CEO systematically find and extract elements of the old culture and quickly replace them with new, solid oak. That would be God’s work, borne of ethical rather than defensive leadership. The clients would come to appreciate it and reward the visionary victors handsomely, whether in terms of bonuses, profits, or dividends.




Sources:

Greg Smith, “WhyI Am Leaving Goldman Sachs,” The Wall Street Journal, March 14, 2012. 

Nelson Schwartz, “Public Exit From Goldman Raises Doubt Over a New Ethic,” The New York Times, March 15, 2012.
Susanne Craig and Landon Thomas, “Public Rebuke of Culture at Goldman Opens Debate,” The New York Times, March 15, 2012. 

Wednesday, October 4, 2017

Leadership Consulting: Stances on Scholarship

As the field of leadership consulting continues to proliferate, fringe-elements have developed that risk taking down the credibility of the field itself as well as its more solid practitioners. In this essay, my objective is to make those practitioners aware of the damage to their field (and indirectly to their own practices) that is being committed on the periphery. Relatedly, my task extends to making scholars of leadership aware of how leadership itself is being undermined as a concept used (and abused) in the business world. I contend that maintaining the distinction between consulting (including writing on it) and scholarship is in everyone’s interest, even if some “coaches” believe they have a momentary interest in blurring the lines for personal gain.

Taking a practitioner's experience, which is quite valuable in its own right as praxis, as tantamount to scholarship involves a rather basic category mistake. Treating an academic literature as if it were merely another opinion among those of practitioners is also a category mistake. For example, practitioners who view the academic literature on business leadership as "one of the many perspectives that make up the puzzle" attempt to reduce theory or the results of empirical research to opinion, as if the strictures of research methodology were mere dross. A category mistake is also made when one treats non-scholarship as if it were scholarship simply on the basis of being “actionable.” This includes conflating a "how to" book with a theory or the results of an empirical study.

I am not claiming that every (or even most) practitioners commit such category mistakes. Nor am I contending that scholars are the only people with knowledge; rather, scholars are in the business of formulating knowledge under fixed rules of reason and methodology and then passing it on to the benefit of practitioners. I am merely contending that the roles are distinct, even if some practitioners (and scholars) may blur them.

If scholarship is indeed the same as anecdotal experience or opinion--both being "perspectives" or knowledge--the accumulated knowledge is essentially relegated, not to mention disrespected. While Thornton may be a fantastic consultant, she does not have the educational credential necessary for her to function as and be recognized as a scholar. I want to emphasize that I am not disvaluing the work that she or other consultants do. In my view, they provide valuable services to managers and even entire companies. My point is merely that, as I'm sure more practitioners know, consulting experience is not the same as expertise in the study and knowledge of leadership.

The bottom line is perhaps that the accumulation of knowledge on leadership is difficult enough. A "new age"-like democratization of the formulation of what counts as knowledge, whereby every leader and consultant deems himself or herself to be an expert on the knowledge of leadership without an advanced degree on the subject, dilutes what counts as knowledge and misleads people who take the opinion as fact. That is, conflating opinion with knowledge is apt to increase undetected fallacies and errors exponentially (not to mention result in perpetually reinventing the wheel) because the "rules" established and followed by scholars in accumulating knowledge are not necessarily followed. Users assume they are, and are thus mislead when the rules are not followed because they are not known.

Therefore, I recommend that practitioners, whether leaders or consultants, take great care in utilizing the academic literature of leadership. Does the author have a doctorate, meaning a terminal degree that includes comprehensive exams graded by an academic faculty and a successfully defended dissertation (e.g., Ph.D., DBA, DSciM, JSD, or EdD)? Does the text look solid academically, with citations or end-notes and a healthy bibliography including articles in academic journals, or is the book essentially a "how to" book with bullet-points and "feel good" potential-sounding platitudes? My point is that there is A LOT of daylight between these two types of books on leadership; they should certainly not be conflated. Doing so puts the user at risk for relying on something stated as if it had survived analytical or empirical methodology when it had not.

To be sure, "how to" books with lists and inspirational platitudes may serve a viable purpose for some practitioners (including those who write them). This hypothesis could be tested empirically by a social scientist careful to distinguish positive correlation from causation. My point is that this purpose is different than that which is satisfied by the knowledge on leadership formulated and vetted by scholars. By its very nature, ratiocination and its accompanied research methodology live at some distance from praxis, even where the analytical beam is focused on an applied concept. You have a taste of this distance right here if you are thinking ratio what? Ironically, the best knowledge is accrued by scholars who do not conflate what they are with what they are studying. In the scholars’ world, “actionable” does not trump or eclipse, much less expunge theory and empirical results.


There are undoubtedly many practitioners who appreciate having access to knowledge that has been vetted by scholars; such knowledge on leadership can indeed be useful, whether to a leader or a consultant. Sadly, I must admit that I have encountered some consultants who seem content to vaunt their own "actionable" opinion over academic knowledge even on leadership, and still other consultants who seem to treat what they advocate as if it too constituted scholarly-derived and vetted knowledge. It is in the interest of the consulting sector to disgorge itself of such fallacies because 1) a leadership consultant’s practice can benefit from scholarship on leadership and 2) credibility is a valuable commodity for consultants. The last label a “coach” wants applied to him or her is “snake oil salesman or saleswoman.” By drawing on the academic literature, a consultant can distinguish himself or herself from the “coaches” who sell platitudes. In other words, distinguishing scholarship (even on applied concepts) from praxis is in the interest of consultants who want the field of consulting gain credibility and their own practice appreciate in value.

Saturday, August 19, 2017

A European Utility Re-Envisioning Energy: An Opportunity for Visionary Leadership

When Eneco began a business called CrowdNett in which the company would sell large home-batteries to people having solar panels, the Dutch electric utility was on the way toward putting its electricity-production business out of business. The company would continue, though radically transformed. The strikingly different strategic-course correction was based on a rather unique vision of a novel social reality in which homes generate their own energy and then some. In the context of climate change and accumulating carbon dioxide in the atmosphere, Eneco’s CEO had an opportunity in 2017 to lead not only organizationally, but societally as well by promoting the radical social reality already envisioned.
Already by 2017, surplus power generated by houses with the solar panels could be stored in large batteries. Eneco could tap into “a portion of that storage to help balance the electricity grid. Customers [received] 450 euros, or $530, a year for allowing use of their batteries.”[1] The customers could also rent a meter called a Toon for €3.50 a month for an expected energy savings of 10 percent. However, to give customers an incentive to produce as much energy as possible beyond their consumption, Eneco should have agreed to pay per unit of energy sold to the company and given the Toon monitors away (or with a small initial fee). The incentives of the customers as producers would have been more closely aligned to Eneco's strategy. Even so, the value of the company's vision is unimpeachable.
It may seem odd in conventional terms that Eneco would encourage its customers to buy less electricity; such an approach to selling a commodity would under normal circumstances be quite bizarre, but the company’s management did not view the company as necessarily being in a commodity business for long. Moreover, the management questioned the very notion that large power plants are necessarily the default means of energy production in spite of the fact that they were at the time. The people at Eneco were utilizing their energy to transform not only the company, but also the entire energy sector, with implications far beyond the E.U.
How did the management get to that point? When the company was “locked in a profit-zapping battle with competitors, cutting prices for electric power and natural gas,” the management “decided that a radical change was necessary.”[2] Hans Valk, a former head of Eneco’s customer business, explained the thinking at the time as: “What we are trying to do is switch from selling a pure commodity to selling energy as a service.”[3] That is, Eneco would provide services to the people generating the energy. The company bought Jedlix, for instance, so to be able to get into the business of providing charging services for electric cars. Leveraging the information available from the home energy monitors, Eneco could enjoy a sustainable competitive advantage in solar-panel repairs.
In terms of the original energy-production end of the business, when “large volumes of wind and solar-generated electricity” undermined “the economics of traditional power plants,” Eneco could perceive “the outlines of a future in which conventional power plants on longer [would] supply the bulk of a home’s electricity.”[4] In a dramatic reversal, the home would be the generating site and Eneco would purchase the right to draw surplus energy in order to transfer it to homes in need of an infusion of energy. Eneco could thus potentially transition itself into being a transfer-conduit and balancer rather than a producer. The company would be juggling “a thousand points of light,” or sources thereof, and the light would be cleaner and thus in line with limiting climate change. This picture is tailor made for visionary leadership, not only organizationally, but for a societal and even global audience as well. 
In his 1989 inaugural address, U.S. President George H.W. Bush had envisioned a thousand points of light in terms of community service. He was attempting to call forth the dispersed energy of the American people. Similarly, Eneco’s CEO had an opportunity as early as 2010 to take up the mantel of visionary leadership to envision for the world a future wherein homes and businesses are the sites of energy production from wind and the sun. In parallel terms, the CEO could have extrapolated to home gardens and local farmers’ markets as potentially playing a much greater role in food production, hence reducing the carbon footprint in transporting foodstuffs. The coherence of such a vision would be amazing, such that the leadership could be quite effective in the promotion of the vision. It could be called, Radical Decentralization in a Globalized World. Such a vision is the stuff that leaders are made for. Even the radical strategic shift in buying energy-servicing companies pales by comparison. To be sure, strategic management and leadership differ; each has its own purview.[5] When the two are conflated, the bottom line usually sees to it that strategic considerations dwarf or compromise the more ethereal visionary leadership. Yet as the European energy utility demonstrates, strategic change need not be the whole story, and the combination of strategic redirection and a radical vision going even beyond the organization itself can be huge, with major dividends in the long term.


For more on visionary leadership and management, see The Essence of Leadership: A Cross-Cultural Foundation, available in print and as an ebook at Amazon. 



1 Stanley Reed, “Dutch Utility Bets Its Future on an Unusual Strategy: Selling Less Power,” The New York Times, August 18, 2017.
2. Ibid.
3. Ibid.
4. Ibid.
5. Skip Worden, The Essence of Leadership: A Cross-Cultural Foundation (Seattle, WA: Amazon Books, 2017).

Wednesday, August 16, 2017

From Visionary Leadership to Management: Taking a Bite Out of Apple

Founders and otherwise visionary leaders in business can be distinguished from managers, even though a manager may be running a company. For one thing, managers may resent leaders for being able to take in a larger view while relegating—even dismissing the petty, which can be so alluring to the managerial mentality. Leaders in turn may view the implementation of a vision as nugatory at best. More abstractly, change as paradigmatic (i.e., shifting from one broad framework to another) has its fans (i.e., visionary leaders), while the status quo has its own defenders (i.e., managers). Vision and big ideas are typically associated with a company’s founder or visionary leader, whereas bureaucracy tends to go with the implementation-focus of managers (including executives). In short, to suppose that leadership and management are the same is to ignore a lot that separates them. In the case of Apple, the shift from leadership to management that occurred with the passing of Steve Jobs may be at least partially responsible for the subsequent decline in the company’s stock price. In this essay, I explore the change at Apple to demonstrate why management should not be conflated with leadership.

Material from this essay has been incorporated into The Essence of Leadership, which is available at Amazon in print and as an ebook.

The Essence of Leadership

In The Essence of Leadership, leadership itself is reformulated in such a way that what emerges—the essence of leadership—is distinct from related phenomena, including management, presiding, and mentoring. This is not to say, however, that leadership bears no relation to strategy—hence the complex concept of strategic leadership, which is not without risks. Leadership itself contains risks, which a focus on the essence of leadership, rather than, for instance, taking leadership as simply about having influence, can arguably minimize. Such risks include the cult of the leader, to which charisma and attributions of heroism are especially susceptible, and the distorting impact of ideology, such as in Burns’ version of transformational leadership. Shaking out the risks and distinguishing leadership as a unique phenomenon are ways of pointing back to the essence of leadership, which applies in virtually any culture. That is, the essence is cross-cultural. Taking comparative religion as a stand-in for cultures, I demonstrate that the essence of leadership can be informed by Taoist, Buddhist, and Judeo-Christian principles.


 The Essence of Leadership  is available at Amazon in print and as an ebook.



Saturday, August 5, 2017

Charismatic Leadership: Between Fact and Fiction

A Guest Post by Edith Luc, Ph.D.

A remark I often hear about leadership is that true leaders are inevitably charismatic. I am often bewildered such remarks, because they insinuate two misconceptions: first of all, that leadership is limited to extraordinary people, and that the group leader is entirely responsible for mobilizing his/her group around a common vision.

In an era where organizations depend more on collective intelligence than solely on the chief’s charisma, it is risky, almost utopist to wait on manifestations of a charismatic leader believed to be of unique and exceptional nature, and able to mobilize everybody at the same time. What we really need is the combination of every worker’s leadership. Can it be then, that the definition of charismatic leadership is not the same for everyone? This brings us to ask the question: What is charismatic leadership?

Charisma: A gift, an exceptional influence that a person exercises on others.

According to fundamental writings on the subject (those of Max Weber, of Holl, 1985; Sohm, 1982; see Ouedraogo, 1993), there are five fundamental characteristics that define charisma:

1.       It is a relational phenomenon;

2.      where a person exercises a strong influence on others;

3.      by means of exceptional strength or natural charm;

4.      This charisma is recognized by followers, or disciples;

5.   Finally, the charismatic leader and his/her followers share an experience that is both emotional and enthusiastic.

Charisma: A phenomenon that depends on recognition, which is what creates followers, or “disciples”.

The charismatic individual is gifted with an extraordinary power stimulated by the support of his/her immediate followers. A so-called “emotional community” is created   between the leader and his/her followers, that is , a sharing of emotions; a communal, emotionally-charged experience highlighted by admiration and enthusiasm; a quasi-invisible trust and a feeling of power.

The recognition of others:

In other words, charisma is an attribute that requires recognition in order to be manifested. This recognition is what creates a group of individuals who will obey to the call and vision of the charismatic leader. A recognition that depends on the individuals, on their emotional connection in the presence of this leader, and on the faith they have in this person. It is also important to note that the leader’s influence is not universal. That is, not everybody feels the same enthusiasm towards the individual in question.

Hitler then, was charismatic for some but not for others. In the same way, Obama is charismatic for some, but not for all. Let us take the case of Dominique Strauss Khann. Before May 14th 2011, many (but not all) described him as a charismatic leader, ready to follow him in his presidential aspirations. However, since this fatal date, Khann’s charismatic leadership has significantly evaporated due to a lack of social recognition, a lack of faith in his person and in the exemplarity of his presumed actions. This is so even though the individual’s “exceptional” talent remains the same. What has changed is the admiration manifested by his initial admirers. Therefore, there is no charisma without the eyes of admirers, of followers. Charismatic leadership then, is a volatile and impermanent attribute.

Does one need a quality similar to charisma to practice leadership? Must one have a certain influence on others?

First of all, let us remember that leadership is an influential process between individuals mobilized by a common objective. It is not at all necessary to have an exceptional gift such as charisma to exercise influence at the heart of a group. What is more, the exercise of leadership belongs to all those who want to and are able to influence the development of a situation or the resolution of a problem.

However, some specific elements are needed in order to encourage the desired impact on the group, among others:

1.       The conviction that the objective is worth the time and efforts to reach it. This conviction can bring timid people to get out of their usual path.

2.      Credibility. It comes from experience, expertise and reputation. This credibility needs to be constantly developed in relation to one’s domain of activity. It encourages the attention and interest of collaborators, while at the same time reinforces one’s personal sense of worth.

3.      Trust. Not only in yourself, but also in your decision and actions. It is the opposite of doubt and incertitude, which are sometimes necessary for self-improvement, but are harmful to leadership when chronic or unjustified.

4.      Verbal and non-verbal transmissions. These are necessary for successful communication of convictions, credibility, self-confidence, enthusiasm, as well as the belief in the chances for the objective to be achieved. Whether verbal, non-verbal, written or oral, all facets of communication are useful in the practice of leadership.

5.      The ability to valorize competencies (interests, motivations, aspirations, supports and abilities) of your collaborators, clients, suppliers and collectivities. The practice of leadership is not undergone in a closed atmosphere; rather it needs to be done in a social environment. A true leader is someone who achieves the expected results, while at the same time adapts a collaborative environment around him/herself. To achieve profit goals by alienating oneself is a characteristic of greed, not of leadership.

To conclude, one of the misconceptions of leadership is that only a few people, gifted with unique charismatic abilities, can influence and mobilize others. In reality, leadership needs to be shared and practiced everywhere and by everyone in organizations and societies. These days, enterprise executives look to be surrounded by partners that will help them solve problems and that will be able to put forward innovative solutions that go out of the beaten path.

© 2011, Edith Luc. All Rights Reserved.


Charismatic Leadership: A Reply

I am particularly taken by the following passage from Edith Luc’s essay on charismatic leadership: “(I)t is risky, almost utopist to wait on manifestations of a charismatic leader believed to be of unique and exceptional nature, and able to mobilize everybody at the same time.” I am reminded of the emphasis that American corporations place on the CEO position and the U.S. Government places on the U.S. President. The focus on one person, rather than a council, presumes that certain individuals are so unique and exceptional that perhaps even human nature itself is surmounted. In other words, the theory behind charismatic leadership may imply such extraordinary differences within human nature that some people are essentially super-human, and thus subject to hero-worship.

Charisma, which comes from charismata, literally means “gifts of the spirit”—implying that a person with charisma has something special bestowed by God. Hero-worship may thus be part and parcel of charismatic leadership. While such worship may be viewed as innocuous when Barak Obama is the beneficiary, Edith Luc reminds us that Hitler, too, was regarded as a charismatic leader. The film Triumph of the Will shows that he was worshiped by many Germans and even Hitler himself presumed his survival of assassination attempts was a sign that God approved of his mission 

In short, it can be dangerous to get carried away with one-person leadership manifested with charisma. The one-person approach itself may encourage or invite this danger wherein a suspension of critical belief accompanies an exaggerated focus on a particular leader’s person such that a charismatic leader can even get away with mass murder. Hence, it might be useful to re-evaluate the assumptions behind charismatic leadership and consider the viability of alternative types of leadership.

If human nature is not as wide-ranging from ordinary to exceptional as charismatic leadership theory requires or supposes, then even the emphasis on a single individual in an organization or government may be artificial and excessive. Implications from a more egalitarian approach to leadership include substituting councils for individual top leaders. In the U.S. Constitutional Convention, for example, delegates debated a presidential council as an alternative to a one-person office. With the revolutionary war not long in the past, the delegates decided for the latter because of the energy required of the commander in chief. In a world wherein the default for leadership is “one-person,” the shift to the council alternative can seem radical. This over-reaction to such a change may attest to the addictive properties involved in the recognition of charismatic leadership, rather than to any “radicalness.” Therefore, it might be useful to consider alternatives to charismatic leadership within the one-person approach.

Within the one-person leadership tradition, implications from begging off of charismatic leadership include re-evaluating the pay differential between the workers and the CEO of a given company and reducing the duration of the presidential election campaign (which is now almost two years—half of a term). In other words, if charismatic leadership tends to exaggerate the unique and exceptional characteristics of leaders of organizations and governments, then the rest of us should pay less attention (and money) to the individuals who rule our organizations and governments.

Even though the one-person leadership arrangement that supports charismatic leadership may be over-extended in modern society, the notion of a collective intelligence strikes me as anthropomorphic, as intelligence is a quality of a mind rather than an organization. Relatedly, treating a society or organization as an alternative to a charismatic leader may be faulty—meaning going too far in the other direction. Treating everyone as “participating” in leadership risks making leadership itself a tautology; everybody does it. Also, if everyone is simultaneously a leader and follower, the terms may lose their respective meanings on the way to a muddle. The recognition that is required for charismatic leadership does not in my view render the followers leaders; the leader’s leadership is not usurped and thus democratized to the whole. I am not suggesting that Edith Luc goes so far as to assert these claims, but someone could reach them from the notion of collective intelligence, which she does assert and I deny.

Perhaps the notion of collective intelligence comes from small group dynamics wherein a discussion gains momentum and results in a conclusion. I would argue that such a process is a function of exchanges of information between discrete intelligences (i.e., minds). With regard to charismatic leadership, I believe the recognition depends on the leader being of a sufficiently large organization (or government). At close range, such as in a group, a leader cannot seem “larger than life” and thus is not apt to seem unique and extraordinary. In other words, some distance is necessary for the illusion of a charismatic leader’s “superhuman” quality to be apparent. “No one is a prophet in his or her hometown” may be getting at this point. So I submit that charismatic leadership does not apply to the group or department level, but, rather, to upper echelon leadership in an organization or government (and even then, to a sufficiently large one).



Source:


Edith Luc, “Charismatic Leadership: Between Fact and Fiction

Related:  See The Essence of Leadership, which is available at Amazon in print and as an ebook.