Step up to lead the future … Leadership is about amplifying the potential of people, of organisations, of ideas and of brands. Visionary and servant, transactional and transforming, catalyst and coach.

February 26, 2024

“What it Takes” is the memoir of Steve Schwarzman, cofounder and CEO of Blackstone, one of the world’s largest investment firms.

He talks about why leaders need clarity of purpose, to dare to think big, and realise the profound impact of AI. One of his favourite sayings is that “it is just as easy to do something big as it is to do something small”.

Schwarzman grew up in an entrepreneurial family selling curtains in Philadelphia. His father was content with owning one store, but Steve was not. He had more ambition. At high school he wanted to bring the best bands to play. At college he started a dance society to meet more girls. He joined Lehman as a trainee, where he learned about finance and discovered his real strength. In 1985 he co-founded Blackstone with friend Pete Peterson, and grew it to hold over $500 billion in assets under management.

He believes that leaders in today’s complex and uncertain world need clarity of purpose, to dare to think big, and realise the profound impact of AI, saying “it is just as easy to do something big as it is to do something small”.

He believes that successful leaders must have the confidence and courage to act when the moment seems right. They accept risk when others are cautious and take action when everyone else is frozen, but they do so smartly. This trait is the mark of a leader. “To be successful you have to put yourself in situations you have no right being in. You shake your head at your stupidity, but eventually it gives you what you want.”

Stepping up to lead

  • “Leadership is lifting your vision to higher sights, raising your performance to a higher standard, building your personality beyond normal limitations” said Peter Drucker
  • “Change will not come if we wait for somebody else, or some other time. We are the ones we’ve been waiting for. We are the change that we seek” said Barack Obama
  • “Don’t be intimidated by what you don’t know. That can be your greatest strength and ensure that you do things differently from everyone else”said Sara Blakely
  • “Great entrepreneurial DNA is comprised of leadership, technological vision, frugality, and the desire to succeed” said Steve Blank
  • “Courage is not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear” said Nelson Mandela
  • “People will forget what you said, people will forget what you did, but people will never forget how you made them feel” said Maya Angelou
  • “Your time is limited, so don’t waste it living someone else’s life … Have the courage to follow your heart and intuition” said Steve Jobs
  • “Never give up. Today is hard, tomorrow will be worse, but the day after tomorrow will be sunshine” said Jack Ma

What is leadership?

3.5 billion people will make up the global workforce by 2030, around half of who are likely to be self-employed. If we assume that in organisations people typically work in teams of around 10 people, then there will be around 220 million leaders in organisations over the next decade, plus many more who lead in virtual and collaborative ways.

However most surveys say that leaders are struggling. The majority of employees believe that they can do their jobs as well, or if not better, without their supervisors and managers (80% in one Gallup study). Only 15% of people feel truly engaged in their work, and many say that managers are one of their main reasons for leaving jobs.

“Managing”, of course, is not the same thing as “leading”. Managing is typically described as using controls to achieve a task. Leading is about influencing, motivating and enabling people to contribute, and achieve more.  Managers do things right, leaders do the right things. Managers focus on methods to achieve efficiency, leaders focus on purpose to achieve effectiveness. Or managers have their heads down, leaders have their heads up.

Anyone in the organisation can be a leader. Not everyone in the business is a manager, although managers need to be leaders.

Not everyone is born a leader, but anyone can become one.

Leadership is your choice, not something which is given to you. Leadership is not a job title, a position of authority, or a magical gift.  It starts with having confidence. Having a vision that you believe in. Having the courage to step forwards. Engaging other people. And yourself, being the change you want to see in others.

  • “I think the fundamental role of a leader is to look for ways to shape the decades ahead, not just react to the present, and to help others accept the discomfort of disruptions to the status quo” says Indra Nooyi, former chairman and CEO of PepsiCo
  • “Leaders of other enterprises often define themselves as captains of the ship, but I think I’m more the ship’s architect or designer. That’s different from a captain’s role, in which the route is often fixed and the destination defined” reflects Zhang Ruimin, founder and former CEO of Haier
  • “The single most important thing I have to do as CEO is ensure that our brand continues to be relevant.” adds Chris Kempczinski, CEO of McDonald’s
  • “I think my leadership style can be called ‘collaborative command.’ You bring different opinions into the room, you allow for a really great debate, but you understand that, at the end of the day, a decision has to be made quickly” says Adena Friedman, CEO of Nasdaq
  • “We need an urgent refoundation of business and capitalism around purpose and humanity. To find new ways for all of us to lead so that we can create a better future, a more sustainable future” concludes Hubert Joly, former chairman and CEO of Best Buy.

Leaders shape the future

When writing “The Complete CEO” we found that very few CEOs could actually define leadership. They were comfortable describing their positions in organisation hierarchies, and the defined responsibilities of their roles, but few were able to say what it meant “to lead”. Eventually I got words about inspiration and influence, vision and direction, followership and alignment, but quite inconsistently.

Marissa Mayer, the previous CEO of Yahoo!, defines leadership as “helping believe in a better tomorrow, with a better outcome than you have today”.

DDI’s “Global Leadership Forecast” report says that only 42% of leaders felt that the overall quality of leadership inside their organisations was high, and only 14% of leaders felt they had a strong “bench” of next generation leaders ready to step up. Most sports teams have at least double their first team squad, as reserves ready to step up if required. Another DDI report on leadership development in 2015 said that 71% of organisations said their leaders are not ready to lead their organisations into the future.

Dave Ulrich sought to bring together all the best leadership theories, models and competencies in “The Leadership Code”  and summarising leadership as five overarching roles:

  • Strategist: Leaders shape the future
  • Executor: Leaders make things happen
  • Talent manager: Leaders engage today’s talent
  • Human capital developer: Leaders build the next generation
  • Personal proficiency: Leaders invest in their own development

I know Ulrich quite well. He even took off his tie and gave it to me, whilst we were once on stage together in Istanbul. He is probably one of the most business-oriented leadership experts around, and much of his personal work is in connecting leaders to strategy, and their impact to value creation. Yet he says himself, too many leadership ideas, and the development of leaders, is done in a vacuum, as a separate skill.

So whilst most leadership thinking tends to focus on the leadership role in the context of leading people, teams and organisation – which of course, matters –  Ulrich rightly argues that the most important question a leader needs to answer is  “Where are we going?”

In today’s world, organisations need leaders, more than ever, to look forwards.

Leaders don’t have to be strategists in the traditional sense of spending many hours analysing markets, developing rigorous plans supported by lots of commentary and financial projections. The strategic contribution of a leaders needs to be context setting – defining a clear purpose, envisioning what the future will look like, stretching mindsets of what is possible, articulating the ambitions, the big choices, and horizons to aim for.

Business performance is the measure of how well leaders do this. Warren Buffett will of course remind us that a CEO of a public company is legally responsible to deliver a return to shareholders, but he would also agree that this is more an outcome. Value creation is the framework to engage all stakeholders in progress. The challenge for leaders is not to become obsessed by financials, but to define purpose and be the moral compass of the organisation, to achieve more, in a better way.

Leaders earn their power from how they inspire people with ideas, influence people about what’s right, and the impact they have through their actions. This is quite different from the old power of leaders, which came through position, experience and expertise. Instead of leadership based on command and control, I see a leaders as a

  • Catalyst: the leader stimulates and stretches the organisation, asking the important questions, adding energy and urgency, focusing on insights and goals.
  • Communicator: the leader articulates purpose, vision and direction, listening and engaging with people, building empathy and trust, creating a better future together.
  • Connectors: the leader connects ideas, people, activities and partners; encouraging learning and collaboration; facilitating new capacity for innovation.
  • Coaches: the leader supports rather than commands; to think, act and deliver better; and encouraging them have the confidence to rise up.

I also love the definition of leaders as “amplifiers” – they amplify the potential of people. And equally of organisations and all their stakeholders. They open up new spaces to go for, and through inspiration and influence, they create a belief and confidence that it is attainable. Amplifying is about increasing the capacity to succeed, and therefore about transforming your potential, personally and organisationally.

Leaders with purpose

Danone is an organisation driven by a sense of purpose to create a healthier society, a responsibility to all stakeholders and a “B Corporation” priority for sustainability. As a result, the “how” matters as much as the “what” in what the business does, but also how its leaders lead, saying that breakthrough results can only be achieved when people dare to express and demonstrate their leadership potential.

Danone describes its unique style of leadership using “CODES”, the behaviours which bring its values and beliefs to life. These five behaviours shape everything in its culture, from recruitment to development, performance and rewards:

  • C … Create a meaningful future: challenge the status quo and generate breakthrough ideas, every day can be a fresh adventure, full of new possibilities and real excitement, demanding a sense of purpose for yourself, team and colleagues.
  • O … Open connections inside and out: open to new thinking and fresh perspective, developing networks inside and outside, interacting at all levels and building trust to understand all stakeholders, and design products of the future.
  • D … Drive for sustainable results: a culture of speed and agility, where individuals are free and express their talents, anticipating and driving progress in a way that sustains value creation for the business, consumers and the community.
  • E … Empower yourself and diverse teams: leadership not micromanagement, releasing the power of the team with the right mix of support and freedom, enabling people to express their uniqueness and foster collective performance.
  • S … Self-aware: being aware of your own strengths and development needs is essential to learn and grow, maintaining self-balance at work by recognising when to step back and when to reach out to others.

Quiet leaders, inspiring leaders

Pablo Isla, CEO of Inditex, is the humble Spanish king of fast fashion. Quiet and unassuming, like a sports coach he sees the power in his team, and his job is to make them the stars.

On first meeting, Isla might not strike you as one of the world’s leading CEOs. He is quiet and unassuming, but as leader of Spanish fashion monolith, Inditex, that is his strength. During his 12 years at Inditex, with brands from Zara to Mango, he has increased enterprise value seven times over, engaged in global expansion at a rate of on average one new store opening a day, and has made Inditex Spain’s most valuable company.

Isla’s priorities have been about achieving greater integration and efficiency. Firstly, creating an omnichannel shopping experience, that combines the best of aspects of technology and stores. Secondly, an integrated supply chain, able to quickly react to changing fashion.

The single word which most employees use to describe his style is humble. He seeks to avoid any form of hierarchy, he hates meetings, and despises ego. Instead he likes to make decisions informally as he walks around. He even avoids his own store openings, wanting the focus to be on the store and his teams.

“The strength of our company is the combination of everybody, much more than of any single person. We try to be a low-profile company, being humble, of course being very ambitious, but being humble” he told Harvard Business Review

“The core shopper dreaming of a $50 pair of affordable but high-fashion high heels from Zara wants to hear about the new store in her neighbourhood, not about how in control some privileged executive is.” Of all his staff, he highlights the role of front-line store managers who are empowered to make product selections and who he sees as the people who he is there to serve

Growing as a leader

As leaders progress in the organisation their roles changes, from technical to functional, tactical to strategic, management and leadership. With these role come changing perspectives and responsibilities:

  • Short term to long term
  • Transactional to transformational
  • Functional expert to organisational
  • Managing tasks to managing porfolios
  • Limited stakeholders to multiple stakeholders
  • Getting the job done to optimising value creation

Whilst we might think of leadership as one approach, the styles of leadership are different as we progress in an organisation. The “six passages” of leadership was developed by  Walter Mahler in the 1970s, based on leadership behaviours and successions in GE, and focuses on the “critical crossroads” that leaders face during their career.

Here are the 7 “levels” of leadership, and the 6 “passages” or transitions from one stage to the next, and the change in skills and mindsets which the transition demands:

  • Leading self: individual contributors, professional staff, driven by tasks and expertise, establishing credibility, delivering results.

>>> Transition 1: from skills to collaboration, from doing work to getting it done

  • Leading others: leaders of small teams or projects, recruiting and developing, resolving conflicts, delegating, adapting to cultural differences.

>>> Transition 2: from personal to team agendas, from organising to coaching

  • Leading managers: leaders integrate teams, managing trade-offs and politics, problem solving, negotiating and risk taking, engaging people.

>>> Transition 3: from activities to functional strategies, from tasks to complexity

  • Functional leaders: aligning resources, developing leading practices, driving and implementing change and innovation, managing dispersed teams.

>>> Transition 4: from current to future thinking, from costs centres to profit centres

  • Business leaders: developing vision, balancing short and long-term, aligning with organisation, working across functions, exploring new business models.

>>> Transition 5: from managing business, to a strategic portfolio of businesses

  • Group leaders: managing performance across businesses, for today and tomorrow, catalysts of change and innovation, exploring new ventures and renewal.

>>> Transition 6: from internal to external stakeholders, managing whole systems

  • Enterprise leaders: top executives, engage all stakeholders, set direction and build leadership team for today and future, shape culture and reputation.

In time, leaders assume greater responsibility, and leadership roles increase in their challenge, breadth, and complexity. As leaders advance, they reallocate their focus to help others to perform effectively. They learn to value the work of leadership and believe that making time for others, planning, coordinating, and coaching are imperative in their new responsibility.

One way to consider the evolution is as a “T” shape, moving up the vertical when roles are largely built around function, to the horizontal where are role are much broader and cross-functional. As the leader moves from an area of expertise to general management, they shift from needing to have all the answers, to being able to ask the right questions.

Of course, many leadership attributes, such as accountability, engagement and delivery – are common at all stages although executed in different ways.  Also as organisations shift from tall hierarchies to flatter networks, then there are less stages of leadership, from seven to maybe only three.

What’s your best leadership style?

We all tend to have a preferred or “natural style” of leadership.

Leading in a way that feels right and natural to you, is both easier for you, and more consistent and authentic for others. Whatever your style, people will engage with and trust you more, if they know that you are genuine.

At times though you may need to adapt your style, or embrace aspects of other styles for a specific purpose. Daniel Ek, CEO of Spotify, for example, found that he was too laid back for his teams when they were looking for direction and focus. He worked on making the most of his own style, while strengthening aspects that met the needs of his teams.

There are many theoretical models of leadership to take ideas from.

Kurt Lewin classified leadership styles into autocratic, participative and laissez-faire. Tannenbaum and Schmidt saw leadership as a continuum of styles, ranging from autocratic to freed, but said that the best style at any time depended upon a variety of factors, such as the leader’s personality and the situation they faced.  Daniel Goleman, who coined the phrase “emotional intelligence”  developed a framework of six different styles built on a leaders ability to emotionally engage with people in different ways – visionary, coaching, democratic, pacesetting, affiliative and commanding.

Here are some of the different approaches, grouped by their objectives:

Leading in an inspiring style … when you want to encourage people to work with you in creating a better future, providing energy and direction to move forwards:

  • Transformational … “Imagine if “… opportunity to grow, yourself and business
  • Visionary … “Come with me” … a new direction, empathetic, builds confidence
  • Pacesetting … “We can do this” … driven to achieve, energising but exhausting

Leading in an nurturing style … when you want to support people to be their best, although not necessarily about thinking about being creative or moving forwards:

  • Servant … “Here for you” … secures resources so that people can act as see fit
  • Coaching … “Try this” … empathy, supports individual needs, but less directive
  • Affiliative … “People come first” … empathy, reassures and builds the team

Leading in a more engaged style … when you want  to let people get on with their work, trusting that they have capabilities and desire to do the task:

  • Laissez-faire … “Do what you think” … entrusting people to deliver, giving space
  • Transactional … “You know what to do” … clear tasks, intervene if not delivered
  • Bureaucratic … “Follow the process” … clearly defined technical steps to follow

Leading in a commanding style … when you want to be in charge and make the decisions, often when you believe people don’t have the capabilities to decide:

  • Consultative … “Tell me what you think” … you listen and then decide yourself
  • Persuasive … “This is what, and why” … you decide then seek to persuade them
  • Autocratic … “Do what I tell you” … demotivating but can work in crisis

Knowing when and how to adapt your leadership style to different situations can have a huge impact on how your team will respond.  For example if you are trying to build capabilities within your team you may find that the coaching leadership style works best.  If you have urgent deadlines, then pacesetting. If you need to be highly structured and compliant, the bureaucratic. If you want people to work together to create a better future for all, then transformational.

Evaluating leaders

Korn Ferry, the search firm, developed a particularly useful assessment model for leadership development, in order to identify how ready and able individuals are to move to the next levels of leadership. They organise the qualities required in leaders into four distinct categories. Each dimension plays a distinct role in performance, engagement, potential, and personal career development:

  • Drivers and Traits, which describe “who you are” … drivers are the values and interests that motivate a person, traits are the natural tendencies of a person, influenced by personality and intelligence.
  • Experiences and Competencies, which describe “what you do” … experiences are projects or roles that can prepare a person for a future role, competences are the observable skills and behaviours.

Most organisations regard an individual’s “drive” as a key predictor of high potential, meaning their level of personal energy and engagement they have for their tasks. At the same time, people are more energised by roles that have a good fit with them. Leaders typically want to be leaders, they find the role of a leader interesting and the work of leading motivating. This is particularly tested as they have to allocate more time to leadership aspects of roles as they progress.

Traits also play a large role in how people develop, defining what is more natural for them and what is more of an effort. Traits endure over time, and exert a strong influence on a person’s outlook, attitudes and behaviours. Traditionally personality inventories, based on traits, have been the primary diagnostic tool for leaders.

Korn Ferry’s leadership potential model embraces these factors, and evaluates how a person will progress through the different levels of leadership, and the transitions required:

  • Drivers
    • Advancement drive: through collaboration, ambition, challenge.
    • Career planning: how narrowly or broadly focused are career goals
    • Role preferences: achieving through others vs. through self.
  • Experience
    • Core experience: what they’ve learned through day-to-day leadership.
    • Perspective: diversity of experience in many different areas.
    • Key challenges: their experience in addressing developmental challenges.
  • Awareness
    • Self-awareness: of their strengths and development needs.
    • Situational self-awareness: how events impact their performance.
  • Learning agility
    • Mental agility: to be inquisitive and mentally quick.
    • People agility: to read others and use this to enable change.
    • Change agility: to explore new possibilities, take ideas from vision to reality.
    • Results agility: to deliver outstanding results in new and tough situations.
  • Leadership traits
    • Focus: the balance between details and the big picture.
    • Persistence: the passionate pursuit of personally valued long-term goals.
    • Tolerance of ambiguity: to deal with uncertainty or confusing situations.
    • Assertiveness: willingness to assume a leader role and comfort with it.
    • Optimism: to have a positive outlook.
  • Capacity
    • Problem solving: spot trends and patterns and draw correct conclusions from confusing or ambiguous data.
  • Derailment risks
    • Volatile: a risk toward being mercurial, erratic, or unpredictable.
    • Micromanaging: a risk toward controlling the work of direct reports.
    • Closed: a risk of being closed to alternative perspectives and opportunities.

Ultimately your leadership is not measured by what you do, but the impact you have. The way you can positively effect your people, the way in which they drive the activities of organisation, and what it achieves.

IE Business School, based in Madrid, is just down the road from the Santiago Bernebéu stadium, the home of Real Madrid, the Spanish football club who are Europe’s all-time most successful soccer team.

I always take the business leaders who I teach at IE, to the stadium as part of my programs. We walk past the showcases of trophies, the photos of past successes, through the changing rooms, and out into the cauldron of competition where 80,000 fanatical spectators usually look down on the game.

I beckon them to sit down on the bench, the seats reserved for the coach and his staff, at the side of the pitch. For a few minutes they can be Zinadine Zidane, or whoever the coach is. He has spent hours on the training field with his players, sharpening fitness and skills, talking strategies and tactics, preparing for the competition. But once the match begins, his players are on their own. he entrusts all to his players. They now need to respond to whatever happens, to make their own decisions in the heat of competition. His own success is 100% entrusted in his team.

Whilst the coach can perfect his own leadership skills, how he uses them to influence others is what matters. His own success is entrusted in his people.

© Peter Fisk 2024.  Excerpt from Business Recoded by Peter Fisk

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