LIKE most love affairs which end badly, this one has left a bitter taste in the mouth. Corporate leaders, once superheroes and revered bringers of wealth and happiness, have fallen out of favour with their adoring fans in America.
In the wake of the dotcom crash and falling share prices on Wall Street, and with Enron-like scandals exposing, most of all, top management’s greed still fresh in the public’s mind, it seems almost foolhardy to try to defend corporate leadership today.
After all, with the lesson learnt, it will seem better to say that this is a particularly ugly phase in corporate history and move swiftly along. Time, some might say, to dismiss the gung-ho leadership styles of the 1990s and open another (more governance-inclined, ethically-correct) chapter in the management books.
But not so fast, argues Jeffrey A. Krames, who claims we could be losing valuable and useful knowledge by indiscriminately dismissing the lessons of the corporate leaders of what he terms the “modern era.”
Krames, after all, ought to know – in addition to being the author of The Jack Welch Lexicon of Leadership, he has spent the last 21 years writing about and studying the great corporate leaders in America in his position at McGraw-Hill.
According to Krames, currently vice-president and editor-in-chief of the publishing house's trade division, we should not allow the actions of a few chief executive officers (CEOs) to give the impression that all business leaders are greedy evildoers.
“Most CEOs want to do the right thing,” he said, although he agreed the actions of the corporate leaders who displayed “avarice greed” were totally inexcusable.
“We would, however, be making a grave mistake if we chose to dismiss all of this great knowledge from a generation of leaders that has changed the competitive landscape and who has great lessons for us,” he said. “There were many leaders who created better ways of running businesses.”
According to Krames, he has been fascinated with the topic of leadership and has always been curious to understand what makes these people “tick” and what makes them so successful. This curiosity has led him to study and talk to some of America’s top business leaders such as Jack Welch, formerly chairman and CEO of General Electric (GE), Bill Gates of Microsoft, IBM head Lou Gerstner and Dell Computers founder Michael Dell, as well as US Defence Secretary Donald Rumsfeld.
In his next book 7 Exceptional leaders and their lessons for transforming any business, scheduled to be released in April, Krames describes that there were several traits common to seven corporate leaders – Welch, Gates, Gerstner, Dell, Herb Kelleher (Southwest Airlines), Andy Grove (Intel) and Sam Walton (WalMart) -- who made his list.
He said they were the only ones who “made the grade” after he started with over 50 CEOs when he began his research over five years ago.
“Many of the others fell off the list. Their companies failed to compete or they got fired,” he said, adding credence to his first observation: the best CEOs build organisations that outperform their peers and stand the test of time.”
Secondly, Krames said, good leaders tended to develop an “Outside In” perspective. Krames quoted Welch as saying in 1999 that “you must look at your company as your customers or suppliers might.”
He said GE and IBM prior to Messrs Welch and Gerstner got into trouble precisely because they became too insular.
“GE invented something called NIH or Not invented here which meant that anything which did not originate from within the company was not considered,” he said. “Jack Welch killed the NIH. Instead, he said it was a badge of honour to learn from someone else.”
Krames said he found top leaders had what he called “an evangelical leadership gene”, the third trait in common.
“Some might call it charisma which I would define as a crusading or ardent enthusiasm,” he said. “You can say they have a fire in their belly.”
According to Krames, another trait which top CEOs have is an inherent understanding of the critical role of organisational culture.
He said that merging different organisational cultures were often the most complex tasks during and after a merger.
That is why, according to Krames, good leaders need to understand that they have to create a distinctive culture for their organisations.
“You cannot bring about meaningful change in an organisation without changing the culture,” he said.
Another trait recognised by top leaders is to be able to identify and implement the best ideas regardless of origin.
He said top CEOs were also visionaries: they developed next generation products, processes or solutions.
Microsoft saw the future in software, Walton saw the future in discounting even though he was not the first discounter while Welch said the future of GE was not in manufacturing but in services and recreated the company.
Finally, Krames said, the best CEOs “advance the leadership body of knowledge in some way.”
He said there were many CEOs who succeeded but the seven who made the grade created lasting concepts or ideas.