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'Intelligent conservatism', not charisma, key to leadership success

Study finds little resistance if charismatic leaders take firms in the wrong direction  

11 April 2013

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By Manju Manglani, Editor (@ManjuManglani)

Conservatism is more important than charisma in business leaders, a new study has found.

The research into Europe’s largest and oldest firms, including Royal Dutch Shell, Glaxo and LaFarge, found that leaders who demonstrated ‘intelligent conservatism’ were ‘a better bet’ than charismatic leaders like Apple’s Steve Jobs.

“In our study of the leadership and strategy of 100-year-old European corporations, we found a different style of leadership was far more common among companies that have achieved enduring success – something that we call ‘intelligent conservatism’,” said Dr Christian Stadler, associate professor of strategic management at Warwick Business School.

“This is a surer way to lead successfully rather than relying on charisma. Six out of 18 winners of Germany’s manager of the year award went on to make huge strategic mistakes that badly damaged their companies. The understated ‘intelligent conservative’ leader doesn’t make such big mistakes.”

Stadler says the problem with charismatic leaders is that, because of their exceptional powers of persuasion, there is little resistance if they are taking the company in the wrong direction.

“If your company is heading in the right direction, a charismatic leader will get you there faster,” he said. “Unfortunately, if you’re heading in the wrong direction, charisma will also get you there faster.”

By contrast, Stadler found that ‘intelligent conservatism’ has bred steady growth for leaders and their businesses over a long time.

“Occasionally, charismatic leaders pop up, but for the most part, the leaders of these 100-year-old European companies have succeeded by listening to their people and relying on old-fashioned industry expertise,” he said in MIT Sloan Management Review.

“Listening takes time, and yet it ensures that an organisation is not only on board but also engages everyone in the process – producing more solid results in the long run and leading to less reckless strategic shifts.

“At Glaxo, for example, top executives displayed a keen interest in learning from their scientists when the company started the transition from being a producer of milk powder to becoming a drug company in the 1920s.

“The second ingredient of ‘intelligent conservatism’ is that it has an in-depth understanding of the corporation. Not surprisingly, in our study of long-lived corporations, 97 per cent of CEOs were promoted from within.

“In-depth knowledge of the organisation makes it easier for the leader to form responsive networks and to find out what is going on throughout the enterprise.”

Stadler’s research also found that leaders who had risen up through an organisation were often the drivers behind its transformation into a global business.

“Our study suggests that, the most dramatic and successful transformations of outstanding corporations happened at a time when leaders who had spent their entire career with the company gained control,” he said.

“Sir John Bond was at the helm of HSBC when the corporate colonial bank turned itself into a global financial powerhouse. John Loudon, Royal Dutch Shell’s leader in the 1950s and 1960s, helped to overhaul the entire structure of the oil giant, creating a business model that generated growth for more than 30 years.

“These leaders succeeded because of – not despite – their long experience in their companies.”

 

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