To set your organization on the path to lasting success, focus on institutionalizing three key behaviors, rather than on the powers of any one individual
We all know that business is a team sport, but how many teams do you see on business magazine covers? From Henry Ford to Elon Musk, we’ve been putting CEOs on pedestals and singing their praises for centuries.
Superstar leaders tend to be remarkable people, but many of them also disappoint us in the end. Sometimes it’s because of bad behavior. At other times, it’s because the shine wears off.
Take Theranos’s Elizabeth Holmes and FTX’s Sam Bankman-Fried, for example. They were visionaries revolutionizing healthcare and finance respectively, until they were convicted of fraud. Or Sir Terry Leahy, the former boss of supermarket chain Tesco. Heralded for his vision and strategic nous, he left on a high in 2011 having delivered soaring profits and market share during his 14-year tenure. It didn’t take long for his star to fade; his strategy of investing in hypermarkets looked decidedly misguided, in hindsight, when the business posted a record £6.4 billion ($8.2 billion) loss just four years later.
So, why is our collective judgment so easily clouded when it comes to prominent leaders?
We’re dazzled by the vision and single-mindedness that win interview slots, and bowled over by the force of personality that seemingly moves mountains as easily as stock prices.
Individual brilliance is not a bad thing. It helps to have strategic flair and the ability to inspire belief in customers, employees and investors. But personality and individual talent alone do not make a great leader or a great business. They offer no solid, long-term foundation for success, because they disappear when the leader does. And if they inspire too much faith, they can obscure risks that would otherwise have been probed and decisions that should have been challenged.
What do great leaders do differently?
We’ve spent 20 years studying the traits of enduringly successful organizations, from the board down. What we’ve learned is that the best leaders institutionalize three behaviors that lead to lasting success: critical thinking, great communication, and shared focus. They build cultures that live on, long after they hang up their boots.
Steve Jobs was the archetypal superstar CEO, with celebrity status, extraordinary vision, and a strong personality, all of which he used to great effect. But, contrary to popular belief, he didn’t build Apple around his personal brilliance alone. Instead, he shaped a culture that was based on collaboration and subject matter expertise, and reinforced by an unusual functional structure. No one has overarching control over Apple’s products. Design, engineering, marketing and other specialists need to work together to get things done. Since Jobs’ death, Apple has flourished under his successor Tim Cook – a leader who doesn’t fit the superstar mold, but who has faithfully nurtured that winning culture.
Compare this with Jack Welch. ‘Neutron Jack,’ so called because he fired so many people at GE that buildings stood empty, was much feted during the 1980s and 1990s. In the words of Bocconi business school professor Robert Grant, Welch “remade GE in his own image. The culture and management style that he had fostered were reflections of his own personality and values.”
The result was a combative, results-driven culture that largely depended on Welch’s personal interventions. It worked wonders – while he was still CEO. Once he stepped down in 2001, cracks started to appear, and the conglomerate’s astonishing run of share price growth went into reverse. Soon the health of its financial model came under scrutiny, and GE eventually slipped out of the Dow Jones index altogether.
How can leaders build cultures that outlast them?
Leaders are integral to company culture, but they can’t just set an example or tell people how to behave and assume the job is done. Enduring culture is not built on the leader’s personality, but on successful behaviors that are embedded into the day-to-day life of the business. This means using systems, rules, technology and processes as guardrails, which make desirable behaviors easy to do and hard to avoid.
In this regard, Eiji Toyoda offers much inspiration. He didn’t turn Toyota into one of the world’s greatest automakers through audacious strategy or ambitious fundraising. He did it by patiently hard-wiring the principles of lean management into its culture. The daily rituals of the Toyota Production System (TPS) – kaizen, kanban, poka-yoke – remain a way of life at the firm to this day, decades after his death.
But you don’t need to create new rituals to emulate Toyota’s approach. Every organization already has bucketfuls of them. They’re the routine, regular interactions in which performance and plans are analyzed and discussed, and through which decisions are made — project retrospectives, monthly performance reviews, board meetings, and so on. By seeing these rituals as culture-building opportunities, and putting the right processes around them, leaders can use them to embed desirable behaviors that endure.
Heroes may make better stories than systems, but systems make better companies. And that’s what great leadership is really about: making the business the superstar, by systematically building a culture of brilliance. It may not be as glamorous as gracing magazine covers, but its impact and legacy will be felt far deeper and last far longer.
Pippa Begg and Megan Pantelides are co-CEO and head of research respectively at Board Intelligence. Begg is the co-author of Collective Intelligence: How to build a business that’s smarter than you (LID Publishing)
