What does it mean to be at the helm of affairs today? In the rapidly changing world of business, ideas about leaders and their style of operation are keeping pace with a democratic world. By Deborah Tarrant
Microsoft Australia's former Managing Director Steve Vamos has a salutary tale of one of his earliest lessons in corporate leadership. As a young sales employee at technology behemoth IBM, he was describing the challenges he faced in cutting a particular deal when one of the company's senior sales executives started dragging Vamos away by the arm. The younger man put up quite a protest. "Why won't you come with me?" asked his boss. "Because I don't know where you are taking me," replied Vamos.
That lesson stuck with Vamos, and its significance has played out in various ways across a stellar career in the fast-moving technology industry, through the vagaries of a start-up with ninemsn and the challenges of running the regional operations of Apple in the mid-1990s. Without doubt he's applying the most important rule of leadership in his latest post as the Vice President of Online Services at Microsoft's global HQ in Seattle.
Put simply, leadership is about defining the common purpose, says Vamos. "My job is to provide clarity of vision and alignment of people to the broader cause." Yes, people need to know where they are going.
Vamos is in the frontline of corporate leadership in Australia. Schooled in the finer points of heading the pack at Harvard, he's observed the impact of leadership across large, complex organisations in a sector that has revolutionised the way we work and live. In both an industry and an era where the only certainty has been change, he's seen the notion of leadership evolve.
The new connectedness that's changing our economy and, ultimately, our world, has morphed the old iconic, heroic leader into a far more humble figure, he suggests. The accelerated pace of business means leaders no longer know all the answers. "Their role is to tap into collective know-how by creating environments that enable everyone to lead and to make a difference."
Indeed, Vamos espouses the clearest trend in 21st century leadership. As business has gathered speed and complexity, leadership roles have grown from CEO's offices and boardroom chairs to divisional, team and individual leaders. Meanwhile, the concept of leadership has devolved and become more difficult to grasp.
Following the leaders
Evidence of the quest to define what makes a truly effective leader today is all around us. Witness the library of management books and academic papers devoted to the topic. Research projects seek to nail down the vital characteristics and behaviours of successful leaders. Critical among them, say the latest, are respectfulness, fairness, compassion, spiritual respect, humility, courage, passion, wisdom, selflessness, integrity and honesty.
The habits of the world's most successful leaders in business and beyond, from Richard Branson to Jack Welch, are repeatedly scrutinised, analysed and emulated. And an abundance of courses also offer guidance. In Australia, some 40-plus institutions now offer insights into the enigma of leadership through MBA programs. Executive short courses also abound.
Pick almost any medium or large employer today - from Westpac to Woolworths - and you'll find a focus on developing and fast-tracking leaders to meet the needs of the new high velocity and quick churn of business. In tow is the growth in executive coaching and mentoring.
Indicative of the pace and nature of change are the findings of a 2006 paper, The Changing Nature of Leadership, by the Center for Creative Leadership, a US-based global research and education organisation. Of the 500 respondents who took part in the study, the paper shows 84 per cent insist that the definition of effective leadership has altered in the past five years. The rise of a new leadership skill set saw finite qualities such as resourcefulness, decisiveness and "doing whatever it takes" being supplanted by participative and change management, and building and mending relationships. A clear conclusion emerged: leadership is changing, and approaches focusing on flexibility, collaboration, crossing boundaries and collective leadership are expected to become high priority.
Leadership is no longer one thing to all people, running on the traditional model exemplified through centuries by the military and the church. There's no easily applicable set of rules or attributes.
Professor Gayle Avery of the Macquarie Graduate School of Management, author of several books on the subject, has identified four paradigms of leadership that are alive and well in our contemporary corporate landscape.
Best-known is the classical, the old command-and-control style, which involves telling others what to do, and usually depends on fear or great respect.
Familiar also is transactional leadership, which relies on performance management and contracts with employees on the terms and conditions under which they work.
High priority today is visionary or transformational leadership because it's associated with performance. "It's where many organisations are trying to shift," says Avery. "It needs a higher purpose, recognising that people don't just come to work to get a bonus." A standout example is the transformational leadership style at Insurance Australia Group where CEO Michael Hawker engages staff with a vision for sustainability.
"Transactional leadership gets the day-to-day work done, but to reach that higher level and increase performance you have to use your people and buy into their discretionary effort," Avery attests.
However, it's the last paradigm - organic leadership - that's pushing the boundaries and challenging the basis of leadership as we understand it.
The problem with traditional thinking on leadership is that it focuses on the individual, insists Avery. "We're hard-wired into thinking it's all about one person telling others what to do, but leaders are part of a system in which followers are an enormous component."
Organic leadership moves away from the all-controlling figurehead leader to shared vision, decision making and accountability. Indications are that organisations operating this way, such as manufacturer W. L. Gore, employer of some 7500 people worldwide and a consistent topper of Best Employer lists, enjoy enduring success.
Key to Gore's high performance is its "flat lattice" structure based on teamwork with no chains of command or predetermined channels of communication. Groups of 150 or more are split in two by the company so people are able to communicate and trust each other.BMW in Germany is also considered to be a trailblazer for its similar approach.
"If you design the work environment properly there's no need for leaders to be running round reminding people of the company values or having a lot of transactional processes," explains Avery. It's a point on which Vamos concurs, and it certainly buys into the collective leadership trend.
So what happens to the overall leader in this situation? "He or she lets go of control and can focus on strategy," says Avery. "The leader's role, functions and activities may be dispersed as well. At Gore, part of the CEO's role can be taken on by multiple people."
Such a concept may seem a stretch, and the organisations that are using it tend to have been set up that way, although different styles of leadership can - and do - prevail in different parts of today's organisations, Avery points out.
Long live the boss
The idea of shifting the focus entirely from the individual, however, won't sit comfortably for everyone.
Not-for-profit (NFP) organisations, for example, commonly kick-off and thrive on the strength of one person's vision, led by someone deeply passionate about creating social change, explains Jan Owen, Executive Director of Social Ventures Australia, an organisation that delivers business know-how to over 20 Australian NFPs.
Indeed the commercial sector can learn from NFPs on leadership, Owen observes. "Millions are spent to train people in the commercial sector to gain the skills that social entrepreneurs naturally bring," says Owen who cites instances where big corporates, such as AMP, have engaged NFPs to conduct training programs for senior staff to build self awareness, set up more effective teams and utilise their skill sets in a diverse range of contexts.
With the unbridled passion of the social entrepreneur comes the essential leadership skill, the ability to motivate, inspire and win others. "One thing we've lost in deep analysis and the focus on information technology is the ability to tell stories. Hardcore facts have overwhelmed the narrative. This is a skill non-profit leaders have because they work with people at a real level," she says.
The recent research of London Business School Professor Jay Conger supports this. Conger found that skilled leaders are great storytellers who can engage their staff with emotive stories that connect organisation goals with personal values. Conger also outlines the need for leaders to build relationships across their entire network, inside and outside the organisation. This connectedness enables them to know what is going on.
By necessity, social entrepreneurs have unique leadership skills for garnering resources and as relationship builders, often bringing together disparate interest groups to design new solutions to seemingly intractable problems. They solve problems in the most unlikely situations, Owen points out, and as we move through the information age and the era of the knowledge worker, this skill is becoming increasingly relevant for commercial enterprises and the public sector.
The new skills
To meet the needs of the new millennium enterprise, leaders require "flexible expertise", according to Professor Robert Wood of the Australian Graduate School of Management.
"They need to be able to think analytically and develop their language skills to talk about complex ideas in simple and compelling ways; to deliver the clarity of vision and the narrative that binds people to the cause. Leaders require high energy and self-management to engage in multiple tasks, to take risks and to learn."
Honing leaders is the hot topic. The best ones are home-grown, and well-entrenched in their organisational cultures, it seems. A study by management consultants Booz Allen Hamilton, in conjunction with the Business Council of Australia, shows performance of internally promoted leaders outstrips the efforts of external appointments.
In a perfect world, a high-flying employer holds on to its leaders. But with the "war for talent" and "retention" currently cliches, inevitably, leaders keep moving on.
So where do good leaders come from?
Certainly, some are natural born. "These people are successful because they are active thinkers who can reflect on their experiences, diagnose why things are happening and wonder: 'What if'?" suggests Wood. The good news is there's evidence that the flexible expertise that's so important for today's leaders can be refined and developed (see box, opposite).
Beyond reflection, perhaps the most powerful skill for today's leader is listening, argues Steve Vamos. "People are afraid to tell the boss what they think, or that we're wrong. In an era of more collective leadership, creating environments where people feel free to speak out - and taking criticism kindly - has become vital," he says.
Establishing channels to facilitate feedback is important. If you're about realising a vision through others, then you must hear them out, says Stephen Dunne, Managing Director, AMP Capital Investors. For the past three years, some 200 AMP managers have received feedback from their teams on one day in May. "From the points raised, they discuss and work up a development plan," Dunne says. Formalising the process gives leaders within the company a starting point for dialogue and conversation.
As a result, not only have the company's leadership "scores" improved, the overall culture has also picked up. In a global business with a diverse 800-strong workforce, creating alignment for the broader purpose is not easy. "It must be something greater than a profit motive," Dunne insists. "In our case it's about creating greater wealth for clients." Just as Vamos's earliest leadership lesson demonstrated, people need to understand where they are going.
Learning to be leaders
Are leadership skills born from experience, or can they be learned in a classroom? The latest research suggests a combined approach may be optimal.
Confronting today's talent shortage for leadership roles, Professor Robert Wood and a team of researchers at the Australian Graduate School of Management have launched the Accelerated Learning Laboratory (ALL), a program to fast-track emerging leaders. Senior executives from IAG, ANZ, Macquarie Bank and Qantas are participating in a five-year research program that is exploring ways to speed up the development of their "flexible expertise".
Wood's team is aiming to crack "the 10-year rule". Fighter pilots, elite athletes and chess players typically take a decade to produce the pattern recognition and response skills needed to become experts in their fields. "The decisions that senior managers and executives face involve even more complexity and require more sophisticated mental models," notes Wood.
In the ALL program, classes of 15 use computerised simulations to practise decision making in changeable virtual worlds. They also undertake role plays, followed by coaching in the workplace, to develop their interpersonal skills and to practice the leadership essential � "creating a binding narrative".