Rise and Fall of Leadership

By Guido Stein

Few concepts have received such widespread attention over the last two decades as that of leadership. Below, Guido Stein discusses the complicated balance between leadership and results, and considers the qualities that make a great leader.

“Orders will not take the place of training”

MaryParker Follet, 1925

An Appealing Topic

Few concepts have received such widespread attention over the last two decades as that of leadership. A search for “leadership” in the world’s largest online bookstore finds over one hundred thousand titles. And that does not include the many works that cover the same subject matter without using precisely that term, such as the many classical works on ethical and political excellence, for example.

When I ask the participants in my programs at IESE Business School of the University of Navarra why this should be, they come up with a wide range of possible reasons, such as: it’s not clear what is meant by leadership, there are as many theories as there are authors, that it’s all hot air, that it’s a fad, that it’s easy to write about, that it’s a sure way of making money, and so on. The holders of these opinions are unanimously critical of the leadership literature, which they regard as unscientific and either esoteric or else superficial and unsubstantial, if not banal.

On the other hand, quite a few think that leadership is important for individuals, organisations, countries and families; that there are many different ways of looking at it; that it can decisively affect a person’s career; that it is difficult to capture in a theory that is both comprehensive and practical at the same time; and that it is a multi-faceted phenomenon which in some respects is constantly changing, yet in other respects is always the same.

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Depth and Scope of Leadership

An intuitive and naive approach to the phenomenon of leadership in organisations suggests a classification based on levels. Starting at the most basic level, we have the “leadership” status a person acquires by the mere fact of being appointed to act as boss. In an organisation, a job title allows a person to give orders and, in principle, expect them to be obeyed, on threat of coercion or punishment: a boss has that right. It is the power that comes from having the last word on hiring and firing, and on the remuneration and promotion of subordinates. It is what John Maxwell calls positional leadership, where people follow because they have to.

Yet it is not enough by itself to drive the kind of leadership that will help to develop people’s full human and professional potential.

If a person goes beyond the power afforded by status and connects with his subordinates, building a solid personal relationship (what nowadays might be called a “personal chemistry”), that person has moved on to what Maxwell calls the level of permission, where people follow the leader and are willing to make an effort beyond what is strictly required because they want to.

The connection is based on the feeling people have that the leader cares about them, that they are not indifferent to him. Trust in the leader starts to grow because he shows the people who follow him that they are valuable to him. In fact, people are less concerned who leads them than to know they are important to him. To some extent they recognise his generosity and respond to it by giving their affection and effort.

If this sense of connection takes root, the workplace climate is transformed, giving the mere exercise of power, as practiced on the previous level, a very effective veneer of congeniality. And yet this is not enough to establish a lasting leadership: goals have to be achieved, too. A leader who does not get results is banal. At this third level, which Maxwell calls the level of production, people follow because of what the leader has done for the organisation, in terms of the goals he has achieved. The goals a person has achieved convey a stronger message than anything else and serve as a fulcrum on which to leverage subsequent decisions.

There is a complicated balance between leadership and results. It is difficult to talk about leadership without somehow associating it with a bottom line, whether understood in narrow economic terms or in a much broader social and human sense. The burden of a leader’s responsibility is measured against what he is expected to achieve. Everything else is excuses, however reasonable or well argued they may be.

A leader may decide to stay at this level: his achievements are recognised, assuring him personal security; there is a good atmosphere because he treats people well and he does not discourage his followers but spurs them on. He has gone beyond the minimum requirements reflected in the previous two levels. But if he stops here, he will be missing the best of what it means to lead; and he will be squandering the huge potential that still lies within himself and the members of his organisation.

If a leader is able to look beyond the bottom line and overcome the initial temptation of short-term success, he will find that, once again, he comes face to face with real people. It is in his hands to make them a genuine priority rather than a cosmetic excuse. If he makes it his business to add value both to the company and to its members, they will reward him with more than just a good workplace climate: they will show him loyalty — the loyalty they owe to someone who helps them grow as professionals. “I’m better now than before” is the fruit of comprehensive leadership. It is not until this fourth level, which Maxwell calls the level of people development, that it is fair to talk of a team, as a great deal is now held in common, including the desire to achieve an external, commercial result, as well as an internal, personal result. The stability of the commercial result is founded on the solidity of the personal result. Finally, at the level Maxwell calls the pinnacle, a leader has followers because of who he is and what he represents. This is the practical effect, not the logical conclusion, of a continuous process of development, effort and commitment.

Leadership can be induced in individuals but it cannot be mass-produced. At the pinnacle, leadership is conferred on the leader by others, whereas at the position level it is conferred by the company; at the second, third and fourth levels it is earned by the manager through his one-dimensional effort.


It is difficult to talk about leadership without somehow associating it with a bottom line, whether understood in narrow economic terms or in a much broader social and human sense.

Some Inductions About the Levels of Leadership

Advancing from one level to the next takes time. A person who takes shortcuts risks trying to reach a goal for which neither he nor his followers are prepared. The drive to advance through the levels comes from commitment, which slowly gathers strength. And yet the leadership relationship varies with the people being led: a leader cannot always be at the same level with all the people he leads, as the level does not depend only on him but also, and above all, on the attitude adopted by his followers. With some he will be a positional leader; with others he will have a more personal relationship; with some he will get results; and with others he will strive to develop them and win their loyalty.

On the other hand, it is easier to lead well from the second level than from the first; and it is easier to lead well from the third level than it is from the second, without the backing of a solid track record. And once a leader has the united, loyal support of all the people in the organisation, external obstacles, however formidable, become much less daunting.

The results will be more reliable the higher a person has risen in the exercise of leadership and the larger the number of close followers he has in his team. Their intelligent, voluntary obedience will effectively force him to maintain his level of excellence: by obeying, they tell him what to do.


What Makes a Leader Different

A person’s leadership skill determines his effectiveness as a leader, as it converts his personal dedication into results. Without that skill, his efforts will not have the impact they should have. Experience shows that some managers put a great deal of time, effort and concentration into their work but achieve very little, while others, in comparable situations, achieve much more with the same amount of effort. These more effective managers are able to reverse the ratio of effort to achievement by working as a team, so that everybody works with everybody else, rather than for everybody else.

Personal talent is no guarantee of excellent results. The difference between a second-rate team and a great team lies in the attitude of the team members, not in the talent of the team leader. With a very talented leader and rotten apples, you have a lousy team; and with a very talented leader and a poor attitude, you have a run-of-the-mill team. If the attitude is just average, you get a good team; and if the attitude is positive, the team’s effectiveness grows exponentially.

As Aristotle pointed out: what we do through our friends is as if we had done it ourselves.

Influence. Leadership can be measured in terms of the influence the leader exercises over others, so that they do what the leader wants them to do and even want what the leader wants. Exercising such influence must come naturally, as in the phrase attributed to Margaret Thatcher: “Being in power is like being a lady. If you have to remind people that you are, you aren’t.”

A leader derives his influence from the respect his followers have for him. In fact, one way to measure leadership quality is the respect of the leader’s inner circle. The quality of a leader’s closest followers is directly proportional to the quality of the leader himself. If a person wants to lead better people, he must strive to be like the kind of people he aspires to lead. To become who he needs to be, he must give up the comfort of being who he is. A leader’s opinion of his followers provides a useful clue: if he thinks they are worthless, the first thing he needs to do is examine his own attitude. The power a leader wields is determined by those closest to him.

Orientation. Steering a ship is a task many people are able to perform, but setting the ship’s course is a task reserved for a few. We cannot expect a leader to be a prophet, as that would be a vain pretension; and yet Solomon recalls that without a vision to guide them, people perish.

In some respects the principles of leadership are unchanging, but the practical application of those principles is relative, as it differs from one leader to another and from one situation to another. Circumstances matter; they matter a great deal. That is why leadership requires the orientation that comes from intuition, grounded in experience and supported by a method. In the literature this is often referred to as the helicopter view, where the manager, alternately and at will, “zooms in” close to the scene in order to act and intervene and then rises above it again to get an overview of the situation: action, overview, action, overview. Alternately closing in on the detail and then distancing oneself to see the big picture.

A leader must feel comfortable with the way decisions are made and priorities are defined, as this will be one of his strengths. A leader must leave his comfort zone but stay within his strength zone.

Connection: reaching others. People do what they see. Communication is not enough. A leader brings what he thinks — his vision — to life by effectively modeling his ideas through his behavior. Initially, his followers are attracted by who the leader is and what he does, and only secondly by what he says. People follow the person they understand best. In fact, another way to measure a leader is by his ability to take people with him wherever he needs to go.

As we said earlier, people do not care how much a leader knows, until they know that they matter to him. This opens the way for other types of judgment about the leader, which will always be based on his generosity and his ability to dedicate himself to a task.

Prioritize. A leader knows it is not always possible to act and lead at the same time, and that doing things does not always lead to achieving things. The first thing he must do is define what matters to him, his field of action — because, for a leader, everything is at stake. If he is able to put first things first, his followers will recognise what is important at any given time and their efforts will follow the Pareto rule, whereby 80% of the results come from 20% of the actions.

A leader must feel comfortable with the way decisions are made and priorities are defined, as this will be one of his strengths. A leader must leave his comfort zone but stay within his strength zone.

Commitment. A leader gains authority by giving authority. Once he has chosen the people who will do what he wants to be done, he must exercise self-control and not interfere while they do it. If a leader wants to create wealth, all he needs to do is lead others. If a leader wants to multiply his influence, he must lead leaders, who will only emerge if he delegates power and responsibility. This requires a different mentality.

A leader must give way in order to progress; in other words, he must relinquish rights in order to acquire responsibilities. That is how a leader earns promotion. Impetus is his best ally.

The final characteristic of a leader is confirmed when his successor takes over. True leadership is seen in retrospect.


Perennial Leadership

There is no real substitute for good, effective management. Companies need morally whole and psychologically mature leaders who know what they are doing, both on a technical level and as managers: leaders that can be trusted. A symbiosis of humility and self-esteem.

In a robust organisation, members know what motives, feelings and desires drive those who lead them; they know their strengths and weaknesses; they understand their personality traits and emotional states; and they are aware of the less conscious side of their behavior. In return, the type of leader that companies need must set limits to his inner theater when relating to the people around him, who deserve genuine attention and respect, not a pretense.

An all-around leader must be able to read the hearts and minds of his colleagues and followers, just as he reads the growth of the business or its reflection in the P&L and balance sheet. This reading gives rise to commitment, dedication and changes, which in the last analysis are changes of attitude.

He is responsible for his actions, which convey the principles by which he wishes to live. He is not deceived and deceives no one, but faces reality as it is, not as a selective, subjective perception of what he would like it to be. He stakes all his personal resources on creating a congruence between the needs of employees, the needs of the organisation and the keys to the success of the business. That congruence is the basis for the effectiveness and good atmosphere of a person who is in command of his own destiny. It tells leaders and followers that they belong to the same community, that they are engaged in a venture that is worth the effort it requires, and that the end they are pursuing transcends their own selfish interests because it entails a common good that multiplies the sum of individual good.

When a leader helps people believe in themselves, achieve what they need and desire, and develop their potential through effort and learning that prompts fresh learning, he will have helped them give the best of themselves.

About the Author

Guido Stein is associate professor at IESE Business School in the Department of Managing People in Organisations and Director of Negotiation Department. He is partner of Inicia Corporate (M&A and Corporate Finance). Professor Stein is a consultant with firms in diverse sectors such as finance, industry, energy and professional services. He is the author of more than 40 business cases and numerous technical notes. His current research focuses on undesirable turnover in top management, power and taking-charge processes.




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