So what makes a good CEO? This morning Guy Kawasaki quotes Stanford University’s Jeffrey Pfeffer saying sometimes the best leadership is less leadership, making the point that CEOs should be developing others. Yesterday’s Forbes.com quoted a new study relating CEO Narcissism to "more frequent strategy changes and larger acquisitions. Harvard University’s Bill George says CEOs should be chosen for character, substance, and integrity, but are usually chosen for charisma, image, and style. I posted here and in the Huffington Post yesterday about Whole Foods’ John Mackey’s bad behavior in pseudonymity.
George is the co-author (with Peter Sims) of True North, a study of leadership, and Authentic Leadership. He’s also former CEO at Medtronic, and current professor of marketing at Harvard. Pfeffer is author of a dozen books, most recently What Were They Thinking, which is about management mistakes.
George is eloquent about what leadership really means in the context of choosing a CEO.
"Unfortunately many boards of directors are looking for a charismatic leader to come in from the outside and save the company. Most of these people destroyed much more value than they ever created. If you choose charisma and image and style, instead of character, substance, and integrity, you’re going to get a leader that does not do the job for the long term."
George’s True North is about being true to what you believe in, despite pressures, maintaining constant values.
"An authentic leader is someone who is genuine and true to what they believe in. They understand the purpose of leadership, they lead with very consistent values, and with their heart, as well as with their head. They have courage, compassion, empathy, and qualities like that."
Guy Kawasaki asked Jeffrey Pfeffer the proper role for a CEO:
"To develop others and their talents and to create an environment in which people can do their best and want to. It is not to make all the decisions or, like some kind of "sun king," absorb all the light and the attention.
In fact, sometimes, as the Grammy-award winning Orpheus Chamber orchestra shows, the best leadership is less leadership. No seed can grow if it is dug up and examined every week, and for people to innovate and get things done, sometimes they need some time and space and resources."
The Penn State study reported by Forbes.com says companies led by narcissistic leaders didn’t perform better or worse than other companies, but had much wider swings of fortune. It quoted the authors of the study, Penn State management professor Donald Hambrick and graduate lecturer Arijit Chatterjee:
"More narcissistic CEOs gravitate to bold and highly visible choices. Thus, narcissism may be thought of as an ingredient that stimulates distinctive, extreme managerial actions.
"The greater the narcissism, the more extreme the companies’ performance will be. Big wins or big disasters."
One particularly interesting note is new evidence that ethical companies tend to perform better, cited by Small Biz Labs last week. A Goldman Sachs study found that large public firms that are considered leaders in implementing environmental, social and governance (ESG) policies have outperformed the general stock market and their peers over the last 2 years. A McKinsey study polled CEOs and find that 72% said corporate social responsibility should be embedded fully into corporate strategy and operations.
Still on the McKinsey study, here I am being skeptical about research again, as in two recent posts on this blog. The report says the McKinsey study asked CEOs, so it would be tracking what they say, not what they do. Tell me, please, if I ask you whether corporate social responsibility is important or not, would you say no?
Conclusions? Frankly, I’m biased. I believe that leadership is about maintaining values, what George calls True North, and I tend to dislike people who put charisma, image, and style over real values and real substance. I’m glad to see we have recognized experts saying things like that in leadership forums. I’m glad to see a study showing that good citizenship correlates with better stock performance. I root for a world in which good citizenship and business ethics makes for better business. I wish the Pennsylvania study had found that companies led by narcissistic CEOs performed poorer than average; but it doesn’t.