Personal Model of an Effective Leader
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Personal Model of an Effective Leader“A leader is someone who knows the way, goes the way, and shows the way.” (John C. Maxwell)My personal model of an effective business leaderAmong the several definitions of leadership, the reported quote from John C. Maxwell best synthetizes my personal point of view on effective business leadership. A leader should master the skills which are required to solve a business problem, should take decisions in a proactive way and thoughtfully assess the risks of his actions, and should motivate and inspire people around him. In my opinion, a true leader cannot lack any of these features. In the next subsections, I will elaborate more on these three aspects. The infographic below provides a snapshot of my model of an effective leader as well as my current position relative to it. [pic 1]Know the wayI strongly believe that hard skills and deep knowledge are the building blocks of an effective leadership. Could Albert Einstein develop the Theory of Relativity without his unique talent for Physics and Mathematics? Or could Bill Gates create an exceptional company such as Microsoft without excelling in Computer Science? Relatedly, would sick people ever seek treatment from somebody who is not a Doctor of Medical Science? My answer to all these questions is no. More generally, how can someone be a pioneer in a new field (or, from a business perspective, a new market) without an outstanding knowledge of the current market infrastructure? Let me be more specific. I believe it is very important for an effective business leader to have a holistic knowledge of the business he runs. This implies knowing not only the industry and the competitors very well, but also having a deep understanding of the dynamics inside the firm he manages. Of course, we are all well aware that perfect information can only exist in economic models. In the real world, however, decision makers face problems under uncertainty and need to use a logical approach to problem solving. The analysis of Gino, Bazerman, and Schonk (2016) is particularly relevant for the kind of homo oeconomicus I am describing. An analytical decision maker should largely base his decisions on System 2 thinking (method of processing information which is slow, effortful, and logical), and refrain from using System 1 (which is fast, automatic, and intuitive). On top of this, whenever using System 2 thinking an effective manager should be aware of the many biases which could affect his conclusions, by thinking twice and being open minded. For example, people tend to answer a question differently based on the way in which it is asked (framing), look for and notice what confirms their belief and ignore information that contradicts them (confirmation trap), take a biased approach to estimating the probability of an outcome based on how easily the outcome comes to mind (availability heuristics) or rely too heavily on information received earlier (anchoring effect).
Are hard skills and analytical thinking enough to be an effective business leader? Certainly not. The profile I just outlined is the one of an expert in his field (i.e. a scientist, a researcher, a tenured professor), but not necessarily the one of a leader. Relatedly, I found inspiring the case discussion about Melissa McSherry and the statistician rock star. This is a good example of mastering hard skills may not be sufficient to reach a desired business outcome, in particular if disjointed from communication skills. Let us now build on this and see how experts can get things done. Go the way I will now take my model one step further and discuss how hard knowledge can be put in practice to attain a desired business outcome. Let me start with a personal example. During my past job I had been working with some very knowledgeable colleagues (actually, one of them was me), which were led by less-knowledgeable managers. How could this happened? Does this imply a failure in our corporate hierarchy? I do not believe so. An effective manager needs more (or different) skills than an expert. First, a manager is required to put ideas into practice and take action. While this might sound trivial, actually it is not. An expert is free to merely criticize on the basis of his knowledge, without proposing constructive alternatives. Differently, a good manager knows that criticism is not useful per se. A good manager takes criticism one step further, by elaborating on it and creating a better business decision. Second, a business manager should carefully gauge the risks of his decisions, run appropriate what-if analysis to assess all the possible outcomes of his decisions, and learn from past errors. Darling, Parry, and Moore (2005) propose an excellent framework – taken from the U.S. Army’s standing enemy brigade – to evaluate and correct past errors in business decision-making. Essentially, after the outcome of a business action has materialized, a thorough after-action review should be run, and the ensuing results should feed back into future decisions.  Lastly, social and networking skills are essential. Decision making is a cooperative process in all successful corporations, and managers are required to positively interact horizontally with other managers and vertically with their subordinates. On the one hand, an effective manager should be able to build relationships with peers, from whom he can share knowledge and draw when necessary. On the other hand, an effective manager should exercise his delegating authority and assign the right task to the right subordinate based on skills. Show the way Mastering the hard skills and knowing how to get things done in an efficient manner make you a good manager, not yet a leader. While both a manager and a leader can accomplish business goals, I believe the main difference, is not what they do, but how they do it. While a number of attributes can help make a distinction between a traditional manager and a leader, I will mention the ones I deem most relevant. First, while a manager runs an established apparatus according to rules he accepts and does not wish to modify, a leader thinks out of the box, and drives a change in the rules of the game when necessary. Said differently, a manager is reactive to circumstances, a leader is proactive and anticipates circumstances.