Leadership Crashes on Wall Street
October 1st, 2008 by David Utts
Financial experts and our politicians are telling us that we are in the midst the worse economic crises since the Great Depression. As congress scurries to limit the damage – we have to ask ourselves how did this happen and what can businesses do now to manage their focus and forward progress?
While there are many complex financial reasons one can point to – an underlying reason for this crisis is clearly a lack of leadership. When true leadership exists there is a/an:
- Focus on adding value to the market place that supports growth in profitability for shareholders.
- Emphasis on creating organizations that inspires others to bring out their best in service of the mission.
- Alignment between actions taken to succeed and fundamental values that drive those actions.
- An emphasis on building meritocracies where pay for performance is honored all the way up to the C-Suite.
- Focus on personal authenticity and integrity.
“[Leaders] have clearly defined values that guide their choices and actions and which they articulate often; they embrace change as inevitable and regularly challenge the status quo; they have the courage to stare reality in the face and act; they have a sincere passion for learning and for developing other leaders.“
Allan Lafley – CEO of Proctor and Gamble
As we look at the current crisis it is safe to say most, if not all, of these leadership qualities were missing in many Wall Street leaders. Point blankly; greed and unenlightened self-interest by those in “leadership” positions bare a great responsibility for the failure on Wall Street. These executives took advantage of the existing laws and abundant credit to fill their own pockets. This greatly aided the process that led to the current mortgage crisis and ultimately to the economic situation we find ourselves in today. In addition, this ball got rolling a long time ago. Yet, I am equally aware that while leadership is a central issue here – Wall Street leaders were merely actors in what appears to be a larger systemic issue. Hopefully, our financial and political leaders will have the fortitude to generate a deeper resolution beyond any bail out.
“It’s fine to celebrate success but it is more important to heed the lessons of failure.”
Bill Gates
Certainly, there are some great leaders out there. One’s who have a personal stake in their role, have integrity and value the pay for performance model. Some of the corporate leaders that come to mind are Steve Jobs of Apple, Robert Iger of Disney, Alan Lafley of P&G, Bill Gates, and Warren Buffet. This is not to say these leaders are perfect yet you can see that they are motivated by more than the money they make. And the good one’s make plenty of money. For example, Steve Jobs salary is $1.00 a year – yes that’s right $1.00. Yet, he makes 74.5 million a year based on his stock options! That is what I call pay for performance.
“John Sculley ruined Apple and he ruined it by bringing a set of values to the top of Apple which were corrupt and corrupted some of the top people who were there, drove out some of the ones who were not corruptible, and brought in more corrupt ones and paid themselves collectively tens of millions of dollars and cared more about their own glory and wealth than they did about what built Apple in the first place — which was making great computers for people to use.“
Steve Jobs – Apple CEO
Yet, a big question is – how many executives are extraordinary leaders? There is some compelling and sobering research that has been done by Bob Anderson of The Leadership Circle indicating that only about 20% of those in executive positions actually embody a high level of leadership competencies. His research further indicates that what is required to embody leadership is a quantum shift in mindset. Anderson has discovered that when this mindset is in place – leadership competencies naturally “boot up” in an individual without any need to provoke them from the outside. Further, what is required for this quantum shift to occur is the commitment from leaders to their personal development journey.
I would be the first to agree that for many years the development process seemed mysterious and hard to put your arms around. Also, the development programs that have been deployed for years by organizations have typically been made up of a patchwork of leadership development approaches that failed to meet the desired outcomes. However, recent breakthroughs in our understanding of leadership and the means of developing leaders have changed this dramatically. Leadership development is now more scientific in its approach.
Given these breakthroughs the questions become – why are we not seeing a growth in strong leadership? First, these are fairly recent breakthroughs that have occurred over the past few years and that are just reaching the forefront. Second, there are many who still hold an outdated belief that states “leadership development is nice to have yet is not critical to our success.” Yet, the central challenge we face in developing more outstanding leaders involves corporate executives embracing the value of engaging in and committing to their own personal development journey. Making such a commitment and putting muscle behind this will require a major shift for most executives and their organizations.
For successful executives, the reluctance in making such a commitment is understandable. After all, it requires executives to question some of the very habits and views that helped them achieve the current level of success and to be open to the possibility that there could be an even more effective and profitable way to get things done. That being said, if you ask anyone who has fully embraced the leadership development journey and I guarantee you they will all say that it has vastly improved the results they achieve as well as the personal fulfillment they gain from their work.
Unless more enlightened leaders see this and commit to rigorous development programs for themselves and their leadership teams – we will likely not see the population of true leaders growing. If that does not happen and we don’t consider other systemic causes behind the current crisis (and others we are facing in business and worldwide) – we are merely placing Band-Aids on the problem through some bail out package. It has been heard in many other contexts that “The definition of insanity is doing the same things expecting different results.”
“Times and men’s fortunes change and we now are in a time of unprecedented difficulties.” [There is a] misalignment between bonuses and shareowners and the public”
Jack Welch – Former GE CEO
Given that a lack of leadership and the recognition that there is a direct link between leadership and business results – organizations and their leaders must face some key questions:
- If your organization believes that leadership is important, what qualities of leadership are most important to have in our executives in order to serve your market, clients, shareholders and other key stakeholders?
- What is your organization’s strategy for developing those leadership qualities?
- As an executive, if you have a desire to increase your impact and influence, what actions are you taking to empower your abilities as a leader?
- What personal beliefs and systemic organizational issues are blinding or blocking you or your organization from making leadership development a strategic priority?
- Do you have access to a practical and proven methodology that will ensure you are consistently enhancing your leadership in a sustainable way.
“Character will define the life that you build and make sure every action you take demonstrates your integrity“
Robert Iger – CEO of Disney
Again, we are at a time that is calling for courageous action. There is no more courageous action than to commit to expand our awareness and capabilities. Many leaders have confused gaining senior leadership positions as “having made it” when in actuality they have just hit the tip of the iceberg when it comes to the impact they can have on their organizations, the business and those around them. Yet, maximizing this impact requires that executives ask far more of ourselves, to accept they know far less than they think they do about leading, and to awaken to the learning necessary to tap their true greatness and power.
