THE CEO FILE - JSE MAGAZINE

THE CEO FILE

A good business leader requires much more than a winning smile and commanding personality. So what defines the elements of success?

THE CEO FILE

Here’s a quiz… Which dyslexic teenager began his rise to fame by (unsuccessfully) growing Christmas trees and is now a toothy-smiled, charismatic billionaire who is linked to more than 400 companies, including a gym, airline and mobile phone network? Which techno geek, who as a boy built an electric alarm to keep his siblings out, left a well-paid job in finance to start the world’s largest online retailer – in his garage? And which one-time aerobics instructor and gender activist graduated summa cum laude from Harvard to be voted the first woman on the board of the planet’s biggest social networking service?

The answers are all household names – Richard Branson (Virgin Group), Jeff Bezos (Amazon) and Sheryl Sandberg (Facebook). They are the ‘rock stars’ of the corporate world, like Marisa Mayer (Yahoo) and Mark Zuckerberg (Facebook), and before them Steve Jobs (Apple), Jack Welch (General Electric) and Bill Gates (Microsoft). Closer to home there’s our own African A-list that includes the likes of Aliko Dangote, Maria Ramos, Patrice Motsepe, Johann Rupert, Brian Joffe, Jannie Mouton and Elon Musk (SA born and raised, of course).

All these high achievers are powerful, bursting with ideas. And even more than that, they are super-wealthy, loaded, mega-rich – and they worked hard to get to the top. That said, though, does this make them good leaders?

‘I don’t buy into the idealised business leader that we put on the cover of Forbes or Fortune magazine – the Bransons and Zuckerbergs,’ says executive coach Dale Williams, who wears many hats, including that of lecturer in strategic thinking at the University of Cape Town. ‘A person may be on a magazine cover, but you don’t get a good sense of what the individual is really about. The analysis is mostly one-dimensional, attributing financial success as evidence of good leadership and ignoring flaws that at times can prove fatal to their businesses. It’s only then we realise that their ability to lead actually wasn’t that fantastic.’

Case in point is the recent resignation of Martin Winterkorn, German CEO of Volkswagen, after emissions tests didn’t turn out to be what they claimed. He is still listed as the world’s 20th best-performing CEO in the 2015 Harvard Business Review, and ironically topped the same ranking the previous year in the category CEO of the company with the best reputation scores. ‘There’s a huge difference between a successful businessperson and an extraordinary leader,’ says Adrian Saville, economics professor at the University of Pretoria’s Gordon Institute of Business Science and chief strategist at Citadel. ‘Making a lot of money alone doesn’t make for a great leader. Great leaders build businesses that last long after their tenure is over, and people want to work for them – not for money but for the experience.’

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‘Great leaders build businesses that last long after their tenure is over, and people want to work for them – not for money but for the experience’

Saville has been involved in research to identify common attributes of companies that ‘thrive’ under vibrant and effective leaders – as proven by disproportionally good performance compared to their peers and the broader market.

‘These “thrivers” have ways of extraordinarily reinventing themselves. Our research identified that their leaders share at least four key attributes,’ he says. ‘The first one is an innate curiosity: they read widely and display broad-mindedness. They are curious, and that curiosity is fed by constantly testing, questioning and reading away from conventional business literature.

‘The second attribute is that they surround themselves with exceptionally good people whom they have invariably nurtured themselves and retained. So they “grow their own timber” instead of “hiring guns”. These leaders encourage risk-taking and independence through federal models in which people take ownership of their ideas and ventures, while being accountable for their successes as well as their mistakes.

‘The third attribute is running a bottom-up business. In contrast to top-down businesses, which devise a strategy that is then driven by the leadership or C-suite, bottom-up means constantly using information from the bottom of the company to identify potential problems very quickly, to become demand-led or customer-directed.

‘The leader is fed granular information directly from the shop floor by talking to employees, understanding customer behaviour or having systems-based data and technology in place that shows what is working and what isn’t working.’

The fourth attribute is clearly communicated succession planning, which reduces scheming and politicisation at the workplace.

‘That way there’s no guessing who will get the keys to the throne,’ says Saville. He lists the following SA companies as best examples of such leadership style: Wilson Bayly Holmes-Ovcon, EOH, Famous Brands, Mr Price, Clientele, OneLogix and Truworths – although he adds that the fashion retailer recently went against the concept of ‘growing your own timber’ when it brought in a ‘hired gun’ from overseas.

Williams, who also is an associate of the Centre for Creative Leadership, applies their leadership model of ‘direction, alignment and commitment’ in his executive training.

‘I’ve used this simple definition with hundreds of executives and they find it elegant and powerful,’ he says. ‘A great leader is someone who can set a clear direction and create alignment among the people he or she is leading, as well as maintaining commitment to the group’s objective.

‘Setting direction is the most straightforward of the three points. A leader says: “We are here, we want to get there, these are our goals.” The alignment is trickier because it means collaborating with other people, and the hardest is the commitment because this means creating an environment where people buy in.’

The CEO file
‘A great leader is someone who can set a clear direction and create alignment among the people he or she is leading’

DALE WILLIAMS, EXECUTIVE COACH AND ASSOCIATE, CENTRE FOR CREATIVE LEADERSHIP

Over the past decade, he has seen a massive shift in leadership training from hard business skills to self-awareness and emotional intelligence, because many hard skills can be delegated. For instance, a CEO who is great with people but not clued up about numbers and finance can delegate this to his chief financial officer.

‘Ten years ago it was about how to be a strategist, how to plan ahead and how to run finances,’ says Williams. ‘Now the focus lies on personal growth and sharing. Leaders get to learn about themselves, think about relationships and about taking time out from work.

‘Often leadership training will include a “fireside chat” where the CEO talks about his personal journey – sharing his mistakes, errors in judgement, successes and failures. I’ve seen people drop their guard: they no longer hold up the picture of being the infallible leader who should be admired. They show a lot of vulnerability in front of the people that report to them.

‘I believe one attribute that all business leaders must have is to know themselves, and through this be able to build – and sustain – relationships. Some leaders do well for a while but eventually implode because all the enemies they made along the way come back to haunt them.’

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Branson’s empire is built on this premise. He once said: ‘Business is all about personal contact. No matter how heavy your workload is, don’t allow yourself to work in your cubicle or office all day, every day. For your own well-being and the health of your business, you need to get out and about, meeting people and developing relationships.’

A Sir Richard-style, open-plan office and flat hierarchy can contribute to better communication. In SA, many senior executives are giving up their plush corner offices and other perks to work among the lower ranks, open to engaging and mingling.

A good leader also needs to be a good listener and show humility, according to Owen Skae, director of Rhodes Business School and president of the South African Business Schools Association.

By this definition, narcissistic property mogul Donald Trump must be the antithesis of the ideal leader. The US’ most famous comb-over has been derided by the Economist for insulting women and immigrants, travelling in a private plane emblazoned with his name, and humiliating contestants on his TV show, the Apprentice. The magazine further points out that since 1991, four Trump-themed companies have gone bust. Skae argues that now more than ever, CEOs have to be integrated thinkers who are decisive when confronted with complexity and paradox.

‘Business is no longer about outputs – in other words products, services, market share – but outcomes as well, such as the question “what benefits come to society from business?”,’ he says.

‘Gone are the days of stereotypes and generalisations. Business leaders have to continuously learn and relearn, take nothing for granted and have to balance often contradictory and opposing issues. Such as, for example, seeking new business opportunities while also addressing compliance issues.’

‘Business leaders have to continuously learn and relearn, take nothing for granted and balance often contradictory and opposing issues’

He explains that the advent of the ‘six capitals’ (natural, manufactured, human, intellectual, social and financial), as well as the focus on triple-bottom and top-line thinking, have changed leadership requirements. The new business landscape further requires ‘board bandwidth’.

Skae says: ‘This means being able to cope with a multitude of external environmental issues that emanate from unexpected sources, making sense of how the organisation will respond and then acting upon it in the best interest of the organisation and being responsible to stakeholders.’

One example of this is Unilever CEO Paul Polman, who has stopped making quarterly results public and is vocal about his strategy to grow the business while halving its environmental impact. ‘We must play our part in improving lives, enabling a more sustainable way of living by consumers, and providing shareholder growth,’ he is quoted by the Guardian. ‘This is our purpose.’

In addition to long-term value creation, Dutch-born Polman also advocates collaboration and partnerships. This affirms the new understanding that leadership does not reside in one person or role but is considered a collective effort. In this scenario, the CEO is an ‘activist-in-chief’ who regards his position as a privilege and puts the business before his own ego.

Saville agrees. ‘Exactly. We found that inspiring leadership takes the form of a system that is cultivated or established under a certain leadership. It’s an ecosystem.’

‘Rock star’ leaders have a way of making people believe that they are the company, in the sense that Virgin is Richard Branson, Apple is Steve Jobs and Amazon is Jeff Bezos. This can become a problem for the sustainability of the business. Intriguingly, charismatic leaders don’t typically outperform their more earthbound counterparts. Quite the opposite, according to a 2013 article published in MIT Sloan Management Review.

‘Exceptional powers of persuasion make it easy for them to overcome resistance and opposition to their chosen course of action,’ it states.

‘If your company is heading in the right direction, a charismatic leader will get you there faster. Unfortunately, if you’re heading in the wrong direction, charisma will also get you there faster.’

This doesn’t mean your C-suite needs to be dull – there’s always space for brilliant, eccentric geeks. As a rule, however, business leaders seem likelier to succeed if they spend more time learning from their mistakes and listening, as opposed to showboating.

By Silke Colquhoun
Image: Andreas Eiselen/HSMimages