Jay Conger: Why Chief Executives Fail

Professor Jay Conger outlines what companies can do to develop leaders for the times in which management alone is not enough - when only leadership will do

By Leon Gettler

Jay Conger noticed a trend emerging when he was researching why chief executives fail. Many of them were simply fast-tracked too quickly by companies too eager to get quick results. The United States energy company Enron was the most extreme example.

Priding itself on achieving the transformation from old economy gas pipeline business to new-economy powerhouse, Enron put managers into senior positions without their necessarily picking up any industry experience. Trading decisions involving billions of dollars were made with nothing to fall back on. At the other extreme lay old-economy behemoths like General Motors, struggling to become more nimble.

The name of the game is trying to find a balance between the two extremes. "It's a tricky process because, if you have talented people and you don't move them fast enough, they will get bored and leave you," Professor Conger says.

"On the other hand, if you move them too fast, they actually don't learn and they move on and make the same mistakes they made in the last job."

As professor of organisational behavior at London Business School and senior research scientist at the Centre for Effective Organisations at the University of Southern California in Los Angeles, Conger is regarded as one of the world's experts on leadership. Business Week has placed him at number five on its list of the world's top 10 management gurus.

The balancing act - providing leadership experience without excessive risk - is not easy for any organisation. The problem, Conger says, is that business organisations are not great development labs for leadership. However, they can produce good managers.

The distinction between the two is crucial. "To me, managing has a lot more to do with operational focus," he says. "It tends to be more tactical, it tends to rely heavily on systems and metrics, and it's built largely around making the status quo more effective, more efficient and more productive.

"Leadership has a lot more to do with longer-range focus and it's more strategic. It has more to do with your personal set of behaviors and it has more to do with the quality of inspiration and aspiration. Leadership is longer-range and more emotional. Management is shorter-term, more operational and more about the transaction."

That said, for Conger a manager can still be both: it is not a question of one or the other. "A person can embody both activities, although we do have a tendency towards doing more of one than the other. The problem is that businesses have exactly the same tendency, which means they miss the opportunity to develop leaders.

"Business organisations are not designed to be great training grounds for leadership development. They are great training grounds for execution of an existing business model and, if I am right, all you need are managers. The problem is that every few years that business model comes under attack and, when it does, you need leaders. Now, the problem is that you haven't been developing them, so you get blown out of the water."

If Conger is right, it is not just a case of businesses lacking the right training environment for leadership. Business organisations have a perverse side that sabotages leadership development. "Companies need leadership talent in two stages: the entrepreneurial stage when they are starting out, and then the crisis or intervention stage. But for everything in between, what they really want are executors, people who carry out the mandate, and those stages actually discourage leadership.

"You could argue that organisations, although they say they want leadership, actually don't want too much. They want the leadership of the CEO, not the leadership from the ranks below. And it's a long-term investment. Most companies don't have the fortitude to keep investing in it, because they want to see a faster payout."

So, how long should a company take to develop its leaders? Conger's answer would leave directors and CEOs nonplussed.

"If you think of jobs and bosses and education as a key tool, then my argument would be to develop senior leaders probably over 15 to 20 years so that you are conscientious about the process and you are methodical about developing people who demonstrate leadership talent. You move them through a variety of jobs and you think about who would be the different bosses for them.

"You make sure you have a variety of businesses at different stages and you cycle them into that variety of experience, making certain that along the way they have two or three bosses who are really outstanding role models, and they can spend time learning from them.

"My belief is that you need to be in a job for two to four years to see the fruit that your actions bear. And as you get more senior, it takes longer for the fruit to bear. You may be able to stay two years as a junior, but in a general manager's role you probably need to be there five years."

However, in today's workforce, job-hopping is not only common, it is mandatory in some industries. Few people stay in one organisation for more than five years and even fewer for 15 to 20 years.

"There is your catch. Most organisations don't even think beyond a quarter or a year; that's why it is so difficult."

But it is not just about spending more time and money. Organisations also have to think smarter about the performance measurement and remuneration systems they have for developing leaders. "Part of the problem is that the reward structures and metrics that organisations use are short term. In some ways they are also about conservatism; they don't want them to take too many risks. Those rewards and metrics actually discourage people from having the learning experiences they need for leadership development, from thinking longer term and taking measured or calculated risks."

This means organisations should develop systems tailored to the strengths, needs and outlook of individuals.

It also means recognising the seasonality of leadership. Organisations need different leaders for different circumstances. Conger cites Abraham Lincoln as an example. In the 1830s, wanting to leave a legacy, Lincoln had a vision of constructing bridges and roads around the US so that rural towns could send produce to the cities and build a nation. His hopes were dashed when economic hard times necessitated budget cuts.

"He didn't realise the time was coming when he would rise to the occasion. Had it not been for the Civil War, he would have been lost to history."

The problem cuts the other way too. "There's a crisis and they put in a turnaround leader. That is needed. But a turnaround leader may not understand how to grow the business. So, while they get it out of the crisis, the business stagnates because they don't understand growth and innovation. "Part of the challenge is helping people understand that you have different styles for different situations and, even within the same situation, you might have to vary your style. The question is, can you teach people how to read those nuances?"

Why Chief Executives Fail was published in the May 2003 edition of Management Today. For details of Management Today back orders please click here.