On Becoming a Leader

Fast forward thirteen years to 2002. As I write this in Cambridge, Massachusetts, much of the world is consumed with the question of whether the United States will go to war with Iraq. Former President Jimmy Carter recently won the Nobel Peace Prize, and, days later, North Korea revealed that it has nuclear weapons after all. The possibility of nuclear catastrophe looms over the planet as it has not done since the early 1960s, at the height of the Cold War, when every American school child knew to duck and cover in case of a Soviet attack. When I wrote that original introduction, the United States was still recovering from the stock market crash of October 1987. Since then, the nation has undergone a period of unprecedented prosperity—only to become mired, in the last year or two, in the most painful recession most people under 50 have ever seen. In 1989, the Democrats, eager to take back the White House, had high hopes for the charismatic young governor of Arkansas. Bill Clinton would serve two terms as president, only to be impeached (and ultimately acquitted) after a tacky scandal involving a young White House intern with an infamous blue dress. George W. Bush is now in the Oval Office, after losing the popular vote in 2000 and having the presidential election decided, for the first time ever, by the Supreme Court of the United States. The human genome has been decoded and the secrets of the human brain revealed as never before, thanks to extraordinary imaging technology. And AIDS is no longer an automatic death sentence in America, although it is killing more people in sub-Saharan Africa than any disease since the great plagues of the Middle Ages and rapidly spreading throughout Asia.

The opening chapter of On Becoming a Leader urges readers to "master the context," and that is both more important than ever and more difficult. In some ways, everything is different from how it was in 1989. Indeed in his 1999 best-seller, The Lexus and the Olive Tree, Pulitzer Prize-winning journalist Thomas L. Friedman writes: "the world is only ten years old."

The World Wide Web provides the most dramatic example of how the last decade has transformed the world. In 1989, the Internet's 400 early adopters were predicting that it would revolutionize how people communicate, but even they could not imagine how pervasive it would become. As I write this, there are more than 580 million Internet users worldwide, and usage doubles every 100 days. Even if the Berlin Wall had not fallen on November 9, 1989, the ability of people around the world to effectively communicate electronically brought down all the walls that previously separated and ghettoized nations.

Since 1989, technology has done what ideology could not and created a worldwide community of the wired. The web allows revolutionary minorities to make their case to the outside world, even when they are under siege, as rebels did several years ago in the Mexican state of Chiapas. But even as technology has facilitated the global exchange of ideas and made the world a smaller place, it has failed to make it a peaceful one. The last time I had the heart to check, the world was torn by twenty-five border disputes, involving some forty nations. And instant communication—that most modern of inventions—has facilitated, rather than impeded, the rise of religious fundamentalism around the world, in a form that demonizes nonbelievers and gleefully puts the most up-to-date technology to medieval use. As a result, we now live in a world where a woman can still be stoned to death for adultery, and everyone can watch it on satellite TV.

The world has undergone economic transformation as well. China has embraced entrepreneurism and other forms of capitalism. And the European Union, once dismissed as a Utopian pipe dream, is now a reality—so real it has eliminated the franc and the deutsche mark and replaced them with the Esperanto of currencies, the euro. In the United States during the last dozen years, the New Economy emerged, soared, and crashed. During the 1990s, it seemed as if every bright twenty-something started his or her own e-business and saw its stock boom even before products were marketed or profits turned. Given that this was an economy based almost entirely on promise, the dot bomb should have come as no surprise. But certain elements of the New Economy are still valid in spite of the woeful state of the Nasdaq.

The New Economy was fueled by intellectual capital, as the economy of the twenty-first century will be. The days when a company's most important assets are buildings and equipment are gone forever. Ideas are now the acknowledged engine and currency of the global economy. For leaders, and would-be leaders, the take-home lesson of the New Economy is that power follows ideas, not position. Right now, the business media are filled with stories on how dispirited workers have abandoned the dream of early retirement as they watch their 401(k) balances shrink quarter after quarter. In the last half of 2002, workers are happy to have jobs, and are doing what they have to do to keep them. But that will change. And when it does, leaders who want their organizations to succeed will once again have to reward, even cosset, those employees who have the best ideas. Bad economic times allow second-rate leaders to exercise power recklessly and with impunity. Good times will come again, and when they do, the leaders who survive and flourish will be those who treat the people around them, not as underlings, but as invaluable colleagues and collaborators.

Just as the New Economy rose and fell, so has the imperial leader. One of the truly dreadful trends of the 1990s was the emergence of the celebrity CEO. Chrysler's Lee Iacocca was probably the first modern business leader whose face became as recognizable as a film or rock star's. Americans have always tended to see their institutions as the lengthened shadows of great men—a tendency that drove a genuinely collaborative leader like John Adams to near madness—and we have tended to reward such charismatic leaders out of proportion to their contribution. But that tendency got completely out of hand in the last years of the twentieth century.

The principal indicator of how out of sync the image and reality of the typical corporate leader had become was executive compensation. No one expects successful entrepreneurs or hard-working heads of successful companies to take a vow of poverty, but executive compensation spun out of control in the 1990s. In 1970, a CEO in America made forty-four times as much as the average worker. By the year 2000, the average CEO was making more than 300 times the average worker's salary, according to the AFL-CIO. BusinessWeek reported in 2002 that America's top executives had median annual compensation of $11 million, in a nation where the median income is around $30,000 a year.

The most disturbing aspect of this grotesque disparity is that it underlines the dangerous and growing gap between the 1 percent of Americans who control 50 percent of the wealth and everyone else—namely, the vanishing middle class and a burgeoning underclass that lacks hope and health insurance. The rise of the middle class was the great economic success story of the second half of the twentieth century. The disappearance of that middle class, made up of people who had come to believe that loyalty and hard work would bring security and a comfortable standard of living, may well turn out to be the most important economic story of the new century. And unless the current trend toward more and more wealth in fewer and fewer hands is reversed, it could be a very grim story indeed.

When CEOs began to make as much as tsars, they should have known they would eventually reap the whirlwind. Instead, many became increasingly arrogant. In 2001 and 2002, one high-flying company after another crashed, in a spreading scandal about accounting irregularities, illegal loans, and insider trading. The march of shame included Enron, WorldCom, Adelphia, Global Crossing, and ImClone—some of their top executives were indicted and led off in handcuffs. Most shocking of all may have been the prospect of domestic goddess Martha Stewart facing criminal charges for selling her ImClone stock shortly before it was announced that its much anticipated new cancer drug would not get FDA approval. Her downfall was anticipated with unseemly glee by people who joked about prison-striped wallpaper and stenciling her cell, a case of taking-pleasure-in-the-pain-of-others that one wag termed Marthafreude.

Philosopher Ralph Waldo Emerson used to hail friends he had not seen for a long time with the greeting: "What's become clear to you since we last met?" One thing that has become clearer than ever to me is that integrity is the most important characteristic of a leader, and one that he or she must be prepared to demonstrate again and again. Too many leaders—corporate heads but church officials and leaders in countless other fields as well—forgot that they were under scrutiny and that they could be called to account at any time. They forgot that something's being legal doesn't mean it's right. And they forgot that what the public giveth, it can take away. Just ask Martha Stewart.

The corporate scandals have had a devastating effect on the stock market, one that is liable to persist long after the headlines about Enron and other rogue companies have been forgotten. Trillions of dollars of wealth were destroyed by men who themselves walked away with princely severance packages. So pervasive was the cloud over American business that Intel's former CEO Andy Grove declared: "These days I'm ashamed I'm part of corporate America."

Where does this leave today's leaders? One likely outcome of the recent tumult is that, eventually, executive compensation will become more modest, although CEOs are still likely to make more in a year than the average worker will make in a lifetime. Because workers are now stockholders, thanks largely to those now shrunken 401(k)s, they are likely to demand more genuine performance of their leaders in the future and to pay them less lavishly for it. Heads of nonprofits and other large organizations will likely receive less money and more scrutiny as well. That will probably be a good thing. Everything we learn about creativity suggests that money is more often an obstacle to creative work than an incentive. More modestly paid leaders might be able concentrate more fully on the intrinsic rewards of doing good work. And they might be more likely to recognize that their role has a moral dimension that is just as important, in its way, as fattening the bottom line.

My hope is that the furor will die down enough for people to look, deeply and critically, at such vital questions as, What are the purposes of the corporation and other organizations in today's world? The metaphor of the organization as a machine that creates value for stakeholders is too simplistic, everyone agrees. But what metaphors are more illuminating? I am intrigued by the notion of the organization as a changing, responsive organism and by Charles Handy's ideas about the organization as community. The case for viewing a company or other organization as a community is especially compelling in a world where we spend more and more of our lives in the workplace and grow ever hungrier for greater balance between work and personal life. Even as we are shackled by our pagers and cell phones to the workplace, we long for work that seems meaningful enough to justify missing out on great chunks of our children's lives. Leaders of every kind of organization need to be thinking long and hard about such issues as meaningful rewards for workers and humanizing the downsized workplace. It would be tragic if the recent scandals so distracted and preoccupied leaders that they failed to address these moral and philosophical concerns. And it would be even more tragic if the scandals were to cause business to be perceived as an unworthy calling, just as political scandals have so often tainted public service in the past.

As ugly as the recent headlines have been, I think it is important to remember that our attitudes toward leaders are cyclical. We tend to lavish disproportionate attention and praise on them for a time, to treat them like royalty, only to turn on them at some point and treat them like devils. Neither extreme is true. It is worth remembering that for every Dennis Kozlowski (the ousted CEO of Tyco), there are hundreds, even thousands of able, honorable business leaders. And there are good men and women at the top in non-government organizations, community-action groups, colleges and universities, cultural institutions, and other nonprofit organizations. These are the people would-be leaders need to seek out and emulate.

Let me give you just one example. I recently published a book comparing and contrasting young and old leaders, titled Geeks and Geezers. One of the impressive senior leaders co-author Bob Thomas and I interviewed was Sidney Harman, CEO of Harman International Industries. Not long ago, when every day seemed to bring a new revelation of corporate mischief, Sidney sent a message to the company's stakeholders in its quarterly report. He told them that the company does no business with its mostly independent board members and outlined the mechanisms that are in place to ensure the integrity of the board and the firm itself. He assured the stakeholders that he would know if something were amiss because, he wrote, "I am fully engaged in this company. I pay attention and I know what goes on throughout it." There is a name for that kind of responsive, responsible behavior. It's called leadership.

One of the most important things that Sidney, like all great leaders, does is to cultivate a culture of candor. I had been writing about leadership for many years before it struck me that there was a vital aspect of any organization's success that had been overlooked—not great leadership, but great followership. Sidney keeps a plaque on his desk that reads: "In every business there is always someone who knows exactly what is going on. That person should be fired." Sidney's plaque is ironic, of course, and he is committed to listening to, even inviting, informed dissent. But, in too many organizations, those who speak unwelcome truths are fired or at least marginalized.

One tragic example involves the Challenger explosion. On January 28, 1989, the Space Shuttle Challenger exploded shortly after launch, killing all on board—six astronauts and the first teacher in space, Christa McAuliffe. It was the worst space disaster in American history, made even more heartbreaking by the presence of the crew's families, and it need not have happened. Only the day before, Roger Boisjoly, an engineer with NASA supplier Morton Thiokol, had warned his superiors that there was a serious flaw in the spaceship's O-rings. Boisjoly's fate was that of so many modern-day Cassandras whose well-informed alarms are ignored. Boisjoly's reward for his courageous efforts to prevent the disaster was the end of his career. Since then, he has made his living lecturing on whistle blowing and other ethical issues, in large part, because he was unable to get another job in aerospace. One hard-won bit of advice he gives would-be whistle blowers—make sure you have another job lined up first.

However honorable, dissenters are rarely embraced by their organizations. I am reminded of a recent cartoon showing an industrial titan, surrounded by his suited minions, who is barking: "All those opposed, signify by saying, 'I quit.'" Organizations tend to deal harshly with those who insist upon speaking embarrassing truths, as Enron's Sherron Watkins learned, as did FBI agent and critic Colleen Rowley. And yet no one is more valuable to the organization than the subordinate willing to speak truth to power. Organizations sometimes go to absurd, even immoral lengths to ignore bad news—the auto industry's silence on dangerous car and truck models is an egregious example. But authentic leaders embrace those who speak valuable truths, however hard they are to hear. Nothing will sink a leader faster than surrounding him- or herself with yes-men and women. Even when principled nay-sayers are wrong, they force leaders to re-evaluate their positions and to poke and prod their assumptions for weaknesses. Good ideas are only made stronger by being challenged. The subordinate who speaks truth to power needs courage, and may pay the price for candor. But, by doing so, he or she evinces nothing less than leadership. The willingness to stand up to the bosses may not save the candid individual's job, but it will serve him or her well in another, better organization.

That brings me to another thing I've learned since writing On Becoming a Leader. Great leaders and followers are always engaged in a creative collaboration. We still tend to think of leaders, like artists, as solitary geniuses. In fact, the days when a single individual, however gifted, can solve our problems are long gone. The problems we face today come at us so fast and are so complex, that we need groups of talented people to tackle them, led by gifted leaders, or even teams of leaders. As co-author Patricia Ward Biederman and I write in our book, Organizing Genius: The Secrets of Creative Collaboration, "The Lone Ranger is dead." In order to lead a Great Group, a leader need not possess all the individual skills of the group members. What he or she must have are vision, the ability to rally the others, and integrity. Such leaders also need superb curatorial and coaching skills—an eye for talent, the ability to recognize correct choices, contagious optimism, a gift for bringing out the best in others, the ability to facilitate communication and mediate conflict, a sense of fairness, and, as always, the kind of authenticity and integrity that creates trust. Nothing about the world today is simpler than it was or slower than it was, which makes the ability to collaborate and facilitate great collaboration more vital than ever.

Two recent events seem especially relevant to leadership today. The first is 9/11. The terrorist attacks on the World Trade Center and the Pentagon on September 11, 2001, changed American life as profoundly as the attack on Pearl Harbor. Those of us who think fulltime about leadership and change have long argued that the pace of change continues to accelerate and that we must find ways to embrace and celebrate it. But some change is hard to love, and 9/11 is a prime example. Since the Great Depression, the United States has been a place of growing security. No war has been fought on American soil since the Civil War. For all its inequality and racism, the nation has been a place of remarkable freedom and acceptance of diversity. The attacks of 9/11 made the United States seem far less safe. In 2002, the terrorist bombing of a night club in Bali, clearly aimed at Westerners, and a series of sniper attacks in the Washington, D.C., suburbs, further eroded America's sense of itself as a secure nation. We are still coming to terms with 9/11, trying to find meaning in the thousands of casualties, digging in its rubble for lessons that will transform it into something more than a senseless catastrophe.

One thing we know is that a more dangerous world makes the need for leadership, in every organization, in every institution, more pressing than ever. In 2002, in the course of studying how geeks and geezers became leaders, Bob Thomas and I discovered that their leadership always emerged after some rite of passage, often a stressful one. We call the experience that produces leaders a crucible. I once told an interviewer who asked how I became interested in leadership, that it was impossible to live through the 1930s and '40s without thinking about leadership. There were giants on the earth in those days—leaders of the stature of FDR, Churchill, and Gandhi. And there were also men who wielded enormous power in the most horrific ways—Hitler and Stalin—men who perverted the very essence of leadership and killed millions of innocent people in the process. The Great Depression and the battlefields of World War II were my crucible, as they were for so many people my age.

The crucible is an essential element in the process of becoming a leader that I didn't fully appreciate in 1989. Some magic takes place in the crucible of leadership, whether the transformational experience is an ordeal like Mandela's years in prison or a relatively painless experience such as being mentored. The individual brings certain attributes into the crucible and emerges with new, improved leadership skills. Whatever is thrown at them, leaders emerge from their crucibles stronger and unbroken. No matter how cruel the testing, they become more optimistic and more open to experience. They don't lose hope or succumb to bitterness. In a moment, I'll describe some of the qualities that I now realize are essential for leadership, although not sufficient to ensure it. But first let me say something more about crucibles. Leadership guru Abigail Adams was right on the mark (as she so often was) when she wrote to son John Quincy Adams in 1780 that hard times are the crucible in which character and leadership are forged: "It is not in the still calm of life or the repose of a pacific station that great characters are formed," she counseled. "The habits of a vigorous mind are formed in contending with difficulty. Great necessities call out great virtues." Just as World War II forged the leaders of the second half of the twentieth century, I predict that 9/11 and the dot-com implosion will be the crucibles that create a whole new generation of leaders. If so, we will have reason to celebrate as well as to mourn.

In addition to the qualities I describe in On Becoming a Leader, all leaders have four essential competencies. First, they are able to engage others by creating shared meaning. They have a vision, and they can persuade others to make that vision their own. Hitler is a ghastly example of this ability, and a reminder of the under-appreciated role that rhetoric and performance play in leadership. One reason that leaders are able to promulgate their vision is because they are exquisitely attuned to their followers and feel their pain, their wants, their needs. Leaders, in every field, are richly endowed with empathy.