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What makes a successful leader?

Most bosses and managers know that people who have great leadership skills can raise productivity, help retain staff and be responsible for creating successful operations that provide increasingly fatter pay packets for all concerned.

Brian Tracy penned the best-seller Fast Track to Business Success. Tracy says enlightened leadership is central to business success.

“The three most important qualities of leadership are vision, courage and tenacity,” he says. “Other qualities are important, but lacking those three nothing will work.”

Vision not only sets the sights on success, but it has to be shared with key stakeholders to make it happen. This should be supported by strategic thinking, goals and plans.

On courage, Tracey relies on the thoughts of former British prime minister Margaret Thatcher.

“The essence of all virtues at the sticking point is courage,” he says. “It’s the willingness to go forward, to take the risks without guarantees.”

He argues that the truly successful business people need this quality. Tenacity completes his leadership troika being the quality of a leader needed to overcome the things that can go wrong in business.

Tracy believes success for small operators can be enhanced by them recognising that they can’t do everything themselves. “Today in America, [so many] small business owners have business coaches,” he says. “The number of coaches has gone up by about 500 per cent in the last couple of years.”

But is leadership always Churchillian – tough and uncompromising? Hard man Donald Trump is the classic celebrity CEO who is known for his unwillingness to let soft, emotional issues get in the way of tough decisions. Chainsaw Al Dunlap, who the late Kerry Packer brought in to the Nine Network to cut out the fat left behind by Alan Bond’s ill-fated ownership of the television network was also famous for his ‘take no prisoners’ approach to corporate turnarounds.

In good company

This cliché of hard men leading their ‘troops’ into corporate battles actually has been questioned by one of the world’s most respected analysts of business leaders – Jim Collins – author of Good To Great and co-author of Built To Last.

Good To Great tried to work out how and why some good companies ultimately became great companies. With a team of 20 from the University of Colarado’s Graduate School of Business, over five years Collins set out to identify those organisations that became great and then tried to look for common traits in their leaders and their strategies to explain the greatness.

The companies he put in the great category, in terms of results, had cumulative stock returns averaging 6.9 times the general market in a 15-year period to 2000.

To give you some idea of what that means, Collins considered what happened to GE over that time. “To put that in perspective, General Electric (considered by many to be the best-led company in America at the end of the twentieth century),” he writes, “outperformed the market by 2.8 times over the 15 years 1985 to 2000.”

The companies included Gillette, Kimberly-Clark, Wells Fargo, Fannie Mae, Abbott, Circuit City, Kroger, Philip Morris, Pitney Bowes, Walgreens and Nucor.

Key traits

Collins has come up with a number of reasons for the success of these companies but at the core was a similarity of leadership styles, which he called Level 5 Leadership. And this was no slam, bam, thank you mam-type leadership. There were no chainsaws and celebrity CEOs among these leaders.

“We were surprised, shocked really, to discover the type of leadership required for turning a good company into a great one,” Collins admits. “Compared to high-profile leaders with big personalities who make headlines and become celebrities, the good-to-great leaders seem to have come from Mars.”

He uses adjectives such as quiet, self-effacing, reserved and in some cases even shy. However, they were determined with strong wills but they didn’t have trouble with personal humility.

According to Collins, Level 5 leaders can pull this critically important double play and their companies really benefit. “They are more like Lincoln and Socrates than Patton or Caesar.”

They not looking for backslappers and it’s the company that’s more important than themselves. They are not shrinking violets and can make big decisions.”

Darwin Smith, the former CEO of Kimberly-Clark, made the big decision to sell the mills, which for a paper business was a big call, but he did throw the proceeds into what looked like promising brands in the 1970s called Kleenex and Huggies.

The business press called it ‘stupid’ and Wall Street experts in the brokerage houses put a ‘sell’ rating on the stock.

Collins has dug up one of Smith’s great one-liners about his approach to leadership, which he revealed in retirement: “I never stopped trying to become qualified for the job.”

How humble is that? No hubris or arrogance there.

Leading great people

Another common leadership skill noted by Collins is his leaders’ intent “to get the right people on the bus”. Eventually, even if they needed to change the seating, once they had the right people they could make the decision on what route they were going to take to get to their destination.

“The main point is to first get the right people on the bus (and the wrong ones off the bus) before you figure where to drive it,” Collins concludes. “The second key point is the degree of sheer rigour needed in people decisions in order to take a company from good to great.”

And it’s not just in the selection process, but in the kinds of debate these leaders permitted to bring out the best answers to the curliest of questions.

It’s no use having great people then being too fragile a leader to hear what they say about you and, more importantly, your company. It is so obvious.

Jack Welch was the fearless leader of the US public company GE. But he wasn’t just a boss, he was a leader and in one year, he once told a Sydney audience, he and his management team acquired nearly one new company a day!

He also revealed that every year the bottom 10 per cent of his workforce was ‘let go’ because he always wanted motivated people who really wanted to be with the company.

He admitted it was a tough policy, but he reckons many of those who were shown the door came back to thank him because they needed the push to find another job that empowered them and gave them greater satisfaction.

Leadership

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