Leadership in Europe: A Recipe for Reducing Legal Uncertainty

Concerning the legal environment of business, the lawyers who teach as full-time instructors in American business schools affirm that managers would rather have a challenging environment that they know than one that is characterized by headlines such as, “Legal Uncertainty Imperils EU Agreement.” At the E.U.’s parliament, which represents the E.U.’s citizens, the president of the European Council, Herman Van Rompuy, said in the wake of the agreement, “An intergovernmental treaty was not my first preference, nor that of . . . most of the member states . . . It will not be easy, also legally speaking. I count on everybody to be constructive, bearing in mind what is at stake.”[1] Investors were “largely dismissive” of the Council meeting  at which the extra-E.U. agreement on strengthening the enforcement mechanism of state deficit and debt limits had been reached at the end of the previous week. Alan Brown, chief investment officer at Schroders Investment Management, which had at the time almost $300 billion under management, said of the results of the Council meeting, “Yes, it was what I expected, and yes, I was disappointed.”[2] Schroders was backing up this view with a modest bet against the euro. Relatedly, Barclays was forecasting the currency to fall from $1.30 on December 13, 2011 to $1.25 by June 2012. Besides the pessimism on the “intergovernmental treaty” as well as a possible increase of funds from the $500 billion cap on the agenda at a Council meeting in March 2012, the sheer uncertainty described by Van Rompuy lowers the value of the announced agreement and the outlook concerning the viability of the euro as well as the E.U. itself.

Federalismus in Action: Jose Barosso of the E.U. Commission and Angela Merkel of Germany / NYT

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

1. Steven Erlanger and Stephen Castle, “Europe United, Minus One: A Firm German Imprint on an E.U. Transformed,” International Herald Tribune, December 10-11, 2011. 

2. Matina Stevis, Frances Robinson, and Marcin Sobczyk, “Legal Uncertainty Imperils EU Agreement,” The Wall Street Journal, December 14, 2011; Tom Lauricella, “Euro at 11-Month Low,” The Wall Street Journal, December 14, 2011.

Greco-Roman Achilles’ Heel: Democracy or Leadership?

In assessing the abilities of the E.U. states of Greece and Italy to manage their respective debt-loads as expected by E.U. leaders, the impacts from the governance systems can be distinguished from the impact from compromised or failed leadership. In general terms, a forceful, visionary leader can leverage an existing governance system to “produce.” However, it is also true that a faulty system can make transformational leadership difficult if not nearly impossible.


The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Meg Whitman at HP: A Leader or Manager?

Referring to the appointment of Meg Whitman as CEO of HP, Ray Lane, chairman of the board, said, “We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead.”[1] On both scores, Lane was actually referring to management rather than leadership. Even the setting of strategy is within the purview of management, as in strategic management; implementing a strategy is the epitome of management. Similarly, recognizing market opportunities is strategic in nature, and thus a function of managing a company as a whole.


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

1. “HP Names Meg Whitman as New CEO,” Reuters, September 22, 2011; “HP’s Whitman: I’ll Focus on Leadership,” The Bottom Line, msnbc.com., September 23, 2011. 

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).

See: 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.

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 14^th 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.

See "Charismatic Leadership: A Reply."

Presiding over a Debt Precipice: President Obama of the U.S.

In the context of a rapidly approaching deadline on increasing the ceiling on U.S. Government debt, Barak Obama found himself rebuffing pressure from anti-tax “Tea Party” Republicans in the U.S. House while needing enough non-partisan credibility for his warning of an impending economic catastrophe to be believed by the citizenry and Congress. That is to say, Obama’s failure to stand back as the Democrats and Republicans in Congress duked it out on spending cuts and tax increases mitigated his stature or credibility as Presider in Chief. An editorial in the New York Times refers to this role of the president as "the utimate guardian of the constitutional order."[1] To preside is to be oriented to the viability of the whole. This means stepping in when the system itself is at risk. Partisan involvement compromises the ability to function in a failsafe capacity, as the "ultimate guardian."

The full essay is at "Presiding over a Debt Precipice."

1, Eric A. Posner and Adrian Vermeule, "Obama Should Raise the Debt Ceiling on His Own," New York Times (July 22, 2011). 

Gandhi as a Model for the Arab Spring

After two weeks in 2011 of mass protests in Egypt for representative democracy and the ouster of President Mubarak, the Egyptian government agreed to concessions including allowing freedom of the press, releasing of political prisoners arrested during the protests, and commencing a committee with the opposition to consider constitutional amendments. The "regime also pledged not to harass those participating in the anti-government protests."[1] Gandhi would have been proud, though the protesters left room for improvement on this score. Understanding how they could have done so can be of use to pro-democracy protesters not only in the Middle East, but also around the world.

The full essay is at "Gandhi as a Model for the Arab Spring."

1. David E. Sanger, “As Mubarak Digs In, U.S. Policy in Egypt Is Complicated,” The New York Times, February 5, 2011

Leadership at Lehman: On the Failure of Richard Fuld

The failure of Lehman Brother suggests that too much power may go with formal position while non-positional leadership in organizations is not given enough of a chance to check the excesses of office. Richard Fuld could take advantage of much having to do with his formal position so he would not have to lead. In contrast, a competent subordinate, Mike Gelband, faced a considerable headwind in trying to lead through persuasion without the benefit of a position trumping Fuld’s own.

The full essay is in Essays on the Financial Crisis, which is available in print and as an ebook at Amazon.

Related Essays:

 "Fuld's Arrogance at Lehmen: Systemic Risk"

"Lehman's Dick Fuld as the Antagonist in the film, 'Too Big to Fail'"

"Fraud as Fair: Lehman as Beneficiary of Society's Pro-Business Cultural Values"

"Executive Stature: Glimpses of the Man Behind the Curtain"

"Lehman Bros: Insufficient Accountability in Corporate Governance"

Prudent & Measured Calculation Over Principled Leadership: U.S. President Obama on Democracy Protesters in the Middle East

Despite several days of overwhelming popular grass-roots protest in Egypt, on January 30, 2011, the U.S. Secretary of State, Hillary Clinton, stopped short of urging the Egyptian president, Hosni Mubarak, to resign.  According to The New York Times, she spoke of "a process that must include a government dialogue with the protesters and “free, fair, and credible” elections, scheduled for September." In the face of overwhelming protests going on in Egypt, the top U.S. diplomat was urging a dialogue in January through the following September. Specifically, she declared, “We have been very clear that we want to see a transition to democracy. . . . And we want to see the kind of steps taken to bring that about. We want to see an orderly transition.” 

The full essay is at "Calculation Over Principled Leadership."

President Obama's Role in Budget Negotiations: Undercutting His Role in Presiding

On April 5, 2011, President Obama observed, “We’re going to have some very tough negotiations. And there are going to be, I think, very sharply contrasting visions in terms of where we should move the country. That’s a legitimate debate to have.” (1) He sounded very presidential in making the statement because he was taking the perspective of the nation as a whole. Furthermore, he used that vantage-point to try to keep negotiations from falling off the track. “If they can’t sort it out,” he said, “then I want them back here tomorrow.” (2) In short, he was presiding, rather than being partisan in taking a side, as he framed the situation facing the union. 

                                             Doug Mills, The New York Times                 

However, even as the president was referring to the two sides sorting the budget out as “they,” he himself was on one of the sides. That is, even though he “sought to position himself above the nitty-gritty haggling going on in Congress, which . . . limited his influence on the process” yet distanced him from any blame, his taking a side in the dispute subtly worked against his attempt to preside to hold the process as a whole together. (3) 

The full essay is at The Essence of Leadership, which is available at Amazon in print and as an ebook.

1.   Gregory Korte, “Meeting Fails to End Impasse on Federal Budget,” USA Today, April 6, 2011, 2A.

2.  Naftali Bendavid, Jonathan Weisman, and Carol E. Lee, "Budget Talks Head to Brink,” Wall Street Journal, April 6, 2011, pp. A6.

3. Ibid.