The challenge of leadership is not what it used to be. For the past few decades — at least since the genre-defining book Leadership by historian James MacGregor Burns was published in 1978 — writers on business and society have understood that the quality of a leader’s character makes all the difference. Burns, for example, wrote that civilization depended on its “transforming” leaders — those who didn’t just solve the problems handed to them, but who helped to raise society as a whole to higher levels of motivation and morality. Other business writers picked up the theme: Corporations, as Warren Bennis put it, also needed leaders who could not just “do things right” but also “do the right thing.”
But what sorts of leaders could be counted on to do the right thing? Creative, experimental risk takers, like Richard Branson? Charismatic, domineering battlers like Lee Iacocca? Ruthless pursuers of performance like Jack Welch? Dedicated “servant leaders” like Herman Miller’s Max De Pree? Quiet stoics like Darwin Smith, the CEO of Kimberly-Clark whom Jim Collins lauded in Good to Great? Or simply people whose “leadership secrets” have been collected, like Attila the Hun? Each style has had its advocates and acolytes over the years. But for all the sophistication of the experts, for all the books published on the subject, there is still no definitive consensus on the most effective style of leadership.
Indeed, the quality of individual leadership matters. In case after case, in organizations and in society at large, when the single individual at the top is replaced, everything else changes — either for the better or for the worse. But the effectiveness of leaders depends, more than is generally realized, on the context around them. Over time, the leader’s capability is shaped by the top team’s quality, and by the capabilities of the full organization. These can either provide invaluable support for the changes a leader wants to make or render those changes impossible. Hence the best leaders pay a great deal of attention to the design of the elements around them: They articulate a lucid sense of purpose, create effective leadership teams, prioritize and sequence their initiatives carefully, redesign organizational structures to make good execution easier, and, most importantly, integrate all these tactics into one coherent strategy.
One prominent example of this approach to leadership is Procter & Gamble under chief executive A.G. Lafley. In 2007, Lafley was singled out for his leadership quality by such management experts as Bennis and Noel Tichy (in their book Judgment: How Winning Leaders Make Great Calls); Harvard Business School Professor Joseph L. Bower (in his book The CEO Within: How Inside-Outsiders Are the Key to Succession Planning); Ram Charan (who is coauthoring a book with Lafley called The Game-Changer, due from Crown in April 2008); and the Academy of Management, the world’s preeminent association of business academics, which named Lafley its 2007 Executive of the Year.
As Jeffrey Sonnenfeld, the associate dean for executive programs at the Yale School of Management, notes, Lafley is becoming “almost Jack Welch–like” in influencing the executive style at other companies. No doubt P&G’s stock price — which has doubled, from US$30 to $60 per share, since Lafley took office in 2001 — helps explain this CEO’s growing mystique. But neither outsiders who write about the company nor Lafley himself attributes P&G’s success primarily to a focus on financials. Instead, they single out the combined effect of P&G’s sense of purpose, the strength of its top team, and its emphasis on improving both processes and people.
“Our job — and this is particularly true for CEOs,” said the soft-spoken CEO in his Academy of Management award acceptance speech, “is to bring together the many businesses, functions, and geographies and to leverage learning, scale, and scope.” As the most critical distinctive factors in P&G’s success, he named purpose and values, goals, strategies, strengths, organizational structure and systems, innovation, leadership, and culture. He particularly emphasized the “rigorous, intentional way we approach leadership development,” including his own direct role in career planning for P&G’s top 500 people. “I review their assignment plans, assess their strengths and weaknesses, and determine where I can help them grow.”