Saturday, November 6, 2010

Leadership Qualities and Skills: Opportunities, Challenges and Enigmas

In the lively Twitter world there was an effort in June 2010 by Padmasree Warrior, Chief Technology Officer of Cisco Systems to compile one-word descriptions of what leadership meant to the members of Twitter community. What emerged was a fascinating collection of over one hundred pithy words that purport to reflect what leadership meant to the Twitter community. Interestingly, the listing displayed very high level of expectations of sublime human qualities from a leader, making a leader almost a super-human. Quite probably, scores of management articles attributing exceptional heroic qualities to a leader would have influenced common persons to deify leadership. That said, leadership does require some exceptional human qualities and skill-sets which makes it all the more intriguing as to why most leaders tend to lead defined domains.

Trust, empathy, passion, courage, integrity, mentorship, empowerment, reflection, aggression and commitment are ten sublime leadership qualities while skills of knowledge, vision, strategy, execution, performance management, intuition, analytics, decision-making, networking, and statesmanship are ten leadership skills that are widely recommended. Any leader who possesses these exceptional twenty leadership qualities and skills ought not to fail ever. Yet the best of leadership also encounters failures, some of the failures putting their businesses to serious jeopardy while most leaders stop seeking challenges after tasting initial successes. The answer to the puzzle lies in the possibility that the very same qualities and skills that provide leadership strength also create operational comfort zones and organizational weak spots when leveraged beyond high percentile general human endowments.

Most management theories teach entrepreneurs and companies to stick to basics and focus on core competencies. Most leaders take the advice all too seriously it would appear. Entrepreneurs and founders after setting up and growing an enterprise prefer to manage the enterprise collectively rather than rediscover their entrepreneurial capabilities in new domains. Professional leaders prefer to take established companies to greater heights based on proven economic and business principles rather than venture into unproven and economically unviable domains. Leaders exceptional skills utilize their skills to become unchallenged in their leadership cocoons than enable alternate models challenge the established paradigms. Leadership Darwinism works to inhibit broader economic and industrial development relative to potential and possibilities. Given the tremendous power of the twenty leadership qualities and skills as discussed below, leadership models should inspire leaders to seek new opportunities from harsh challenges on a continuous basis.

Qualitative dimensions

Leadership qualities typically set high expectations and require authenticity and sustainability. Most of the leadership qualities are also expected to become organizational credos. As an organization becomes larger and multinational, however, interpretation of qualities becomes increasingly complex with individual and business activities focusing on quantitative rather than qualitative aspects. In addition, cultural and societal factors of different countries respond differently to a globally standardized set of leadership qualities. As an extreme example, certain leadership qualities may have different interpretations in Japan and America, or between India and China. Some multinational enterprises address this by having co-CEOs or sharing leadership responsibilities between leaders of different nationalities who while sharing common corporate leadership qualities are also equipped to relate them to local cultural ethos.

Dynamics of corporate competitive advantage influence, or get influenced by, regular business transactions and strategies between firms, and how different managers approach competitive strategy within a firm. A fundamental question, for example, is whether the firm is the core viable entity in a nation or the industry or the economy constitutes the core. The level of trust a firm displays with its co-players in the industry depends on how important it is for the industry to survive and grow as a national comparative advantage. The openness and transparency with which a firm operates in a competitive environment are often dependent on how the industry or the economy defines the rules of competition. While certain qualities such as ethics have to be simply non-negotiable as an essential component of exemplary leadership, competitive industrial dynamics and comparative national dynamics often dictate multiple hues for the other qualitative factors.

The more homogenous or balanced the industry is the less would be the competitive dynamics within an industry but greater would be the comparative dynamics across the nations. Typically, in such situations the competitive intensity between firms within the industry tends to be lower and collaborative propensity between the firm and its vendors on one hand and distributors on the other hand tends to be higher. Leadership qualities such as trust and empathy enable the leaders forge collaborative relationships with all in-country stakeholders for shared competitive advantage. Even amongst competitors, a base level competitive excellence that exists as a national comparative advantage helps industry level collaboration. The Japanese automobile industry that is knit together by JAMA, a Japanese industry association and the Indian software industry that is represented by NASSCOM, an Indian software industry body are examples of national collaborative dynamics for global comparative advantage.

Leadership qualities become organizational credos only when they are institutionalized. One way of institutionalization is to advocate the qualities as guiding principles for developing leaders. Sustainable institutionalization would occur when business processes and operational practices emphasize the qualitative dimensions. For example, firms often forecast their input requirements on the higher side to cater to possible slippages in supplies. Suppliers, on the other hand, factor in such excess forecasting and try to deliver what they can. Collaborative supply chain planning, in contrast, considers that the objectives of the firm and the vendors are, in fact, aligned and both parties should discuss requirements and capacities collaboratively and transparently to maximize business opportunities. Technological development in Japan is comparatively effective because of component suppliers and end-product manufacturers collaborate from the drawing board stage itself. Trust as a leadership quality fosters collaboration within a firm and in inter-firm relationships.

Some leadership qualities are mutually reinforcing as in the case of trust and empathy, passion and commitment, and mentorship and empowerment. On the other hand, a couple of the factors could be somewhat contrarian as in the case of reflection and aggression. There would be perpetual synergy between empowerment and mentorship. Leaders need to empower their subordinates and mentor them simultaneously. It leads to virtuous leadership development in organizations. In contrast, aggression and reflection are counter-intuitive to coexist in a leader but wise leadership requires a leader to reflect upon his aggression to achieve optimal resource allocation and revenue generation. Moreover, the leadership qualities are applicable as per situations. While collaborative planning requires a firm to be empathetic to its vendors, a firm cannot allow its empathy towards a handicapped vendor go beyond justifiable limits and affect the business results. Similarly, trust in business has its limits, especially when proprietary information determines a firm’s competitive advantage.

Quantitative dimensions

While qualitative leadership factors tend to label successful leaders differentially, it is the underlying skill-set that drives leadership success. It is, of course, well established that skill-sets required for leadership success could vary across industries and even within firms in an industry. While knowledge is the foremost driver of leadership success there is no defined base of knowledge that is either contextual or prescriptive. Clearly, industry knowledge is more important than domain knowledge within an industry to become a successful leader. It is generally felt that industry knowledge does give an edge in terms of quick assimilation and contribution. Successful cross-movement of leaders across industries, though less frequent, is not unusual. In fact, in times requiring resetting of objectives or turnaround of declining businesses, leaders from other industries are known to have brought fresh thinking and successful growth. Knowledge, from a leadership angle, has to be interpreted in terms of understanding the core products and processes of the firm as well as the industry, the value chain from design to delivery and the critical success factors for competitive advantage.

Successful leaders have a complete grip over their own leadership value chain that involves vision setting, strategizing, execution, and performance management. Leaders who emphasize all the four aspects equally, and in addition recognize the interconnected and iterative nature of the four components tend to be more impactful than others. While these processes are in one sense team efforts the leadership role in integrating efforts across domains and directing efforts along hierarchies cannot be overemphasized. Traditionally vision setting is viewed as a relatively one time action while strategizing is accepted as an annual activity; execution is recognized as a continuous but delegated activity but performance management is considered as an annual or bi-annual activity utmost. Fast changing industrial dynamics suggest an accelerated paradigm in which vision is reviewed annually, strategic opportunities and challenges are analyzed even within a year, execution is elevated for leadership attention through benchmarks and metrics, and performance management is integrated as a continuous mentoring activity.

For leaders as well as the led, decision making is the most important vehicle and the most visible symbol of executive effectiveness. While decision making methodologies vary with leaders, there is no denying that successful leaders deploy a highly individualistic mix of intuition and analytics in decision making. Dependence on intuition tends to be higher when the leader has deep industry and domain experience. Resort to analytics would be worthwhile when reliable or predictable data sets relating to various causative factors are available. Despite significant enhancements in algorithmic and heuristic capabilities, mathematical modeling and simulation, analytics which are more easily verified with real time observations and logic remain as the preferred ones.

A successful leader networks with outside world as much as within the organization. An ability to represent the firm in the industry, an industry in the economy, an economy in the nation and a nation in the world represents a leadership ability to represent multifarious development needs. At another level, an ability to connect with internal team members formally and authoritatively as well as informally and unobtrusively is an essential component of leadership. There are three underlying dimensions to successful networking. Firstly, a willingness to think beyond the firm enables a leader to connect with competing firms and economic stake holders with equanimity. Secondly, an ability to seek, appreciate and where appropriate improve each other’s points of view helps leaders to forge a broad spectrum of relationships with leaders with similar quality and skill levels. Thirdly, an ability to connect with simplicity and mesmerize with thought leadership helps leaders to gain spontaneous acceptability with both internal and external stake holders.

Statesmanship is the hallmark of a successful leader. Particularly with a second tier leadership team with high talent levels ability to exert stature internally and externally becomes important for leadership sustainability. Leadership is not about winning arguments and debates or enforcing business cases. Internally, it is about amalgamating a heterogeneous organizational team with articulation of inspirational vision and strategy. It is also about securing consensus and endorsement for a collective organizational way forward in uncertain environments marked by plurality of options. Externally, it is about establishing optimal competitive dynamics in the industry, maximal comparative dynamics in the economy and equitable distributive dynamics for the society. Statesmanship is the skill of leveraging on each of the leadership qualities and skills to achieve a positively influential role in all matters requiring leadership guidance and intervention.

Opportunities, challenges and enigmas

Like the management theories referred to earlier this piece also deifies leaders and leadership and leaders with superhuman qualities and extraordinary objectives; however, the leadership treatise does not end here. Leadership has its opportunities, challenges and enigmas.

Leaders by definition seek challenge. It is surprising as to why a large majority of leaders seek their careers in relatively easy to operate, product and market specific enterprises. It is also surprising as to why leaders tend to stymie alternate leadership development by perpetuating themselves in well managed enterprises. Leaders tend to leverage on some of their exceptional skills, be it communication skills or negotiating skills, to secure dominance over their organizations. Creative and socially responsive and responsible leaders, however, always seek new challenges that test their established qualities and skills as well as motivate them to acquire new ones.

Leadership has great opportunities in creating ideas for growth, marshalling human and capital resources to convert ideas into realities and generate wealth. Generation and distribution of wealth in an economically stable and socially equitable manner is a great leadership responsibility in any country. Leaders, perhaps, ought to follow different ways to achieve this objective depending on the diversity of industrial and national cultures they operate in. Countries differ significantly in their social, industrial and economic needs at different points of time. Leaders must apply their leadership skills in the manner that enhances the national wealth in the most productive manner. That is the greatest opportunity that a leader has.

Rapidly growing emerging markets require leadership in all sectors of the economy and industry. Yet, some sectors such as economic and social infrastructure, and industries which support such infrastructure, require top quality leadership talent. Power plants and power equipment makers, roads and commercial vehicle makers, builders and construction materials makers, rail utilities and bullet train makers, airlines and aircraft makers, and alternate energy technologies, to name a few, require high caliber leadership which can meet the challenges of such sectors. Managing regulatory pathways and meeting social expectations with beneficial user value propositions constitute one pair of challenges while generating mega resources and establishing viable projects with long lead times for affordable services constitute the other pair of challenges. The few successful firms in infrastructure sector have indeed benefitted from top class leadership. The leadership need for India is for greater depth and spread in these sectors.

In free market or liberalized economies, leadership needs appropriate incentives to move to the needy areas. Unfortunately, incentives for entrepreneurs and professional managers exist in established industries or industries with viable market potential rather than in industries which face distant economic viability. Turnover and profit maximization, market capitalization and shareholder returns are parameters that entrepreneurs and professional leaders seek because incentives in terms of bonuses, commissions and stock options are often linked to such parameters. If, in spite of lack of or skewed incentives, India has made some progress in infrastructure development, the leadership credit must go to the large band of officers from the Indian Administrative Services (IAS) who set up and managed infrastructure projects and a few entrepreneurial leaders who loved nation building or the few professional managers who saw early a futuristic opportunity in infrastructure building. Massive development of infrastructure and cutting edge technologies require equally significant incentives to attract top class leadership talent.

While governments and investors need to create appropriate regulatory policies and investment avenues for such developments, leaders would also need to be creative and develop paradigms that harness the opportunities that lie in such challenging sectors. The twenty leadership qualities and skills that have been discussed in this post would need to be put to test in infrastructure and sunrise sectors than the tried and tested established industrial structures.

Posted by Dr CB Rao on November 6, 2010