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 / Second Quarter 2002 / Issue 27(originally published by Booz & Company)


Yellow-Light Leadership: How the World’s Best Companies Manage Uncertainty

Effective leaders change what they do, not who they are, and people trust them because their behavior is consistent. In all situations, they are active listeners, they involve others in decision making where appropriate, and, above all, they show respect for followers by telling them the truth. That’s because all organizations need empowered, informed leaders at all levels, regardless of economic conditions.

There is nothing wrong with the characteristics of green-light leadership identified by the experts — the problem is the necessary attributes the experts leave out. Scholars in the 1990s omitted analytical and strategic activities from the other necessary aspects of leadership. They did so probably because they were focused on what leaders were saying in their bullish annual reports and public speeches, instead of observing what they were actually doing on the job. In so divorcing analytical from behavioral aspects of leadership, the experts distorted perceptions about the role of leadership in good times, in bad times, and in between.

In truth, most companies, most of the time, find themselves near the middle of the continuum, and seldom at the extremes. From what we’ve seen, all leaders at all times ought to do more of the things effective leaders do when the yellow light is flashing: build their skills relating to reading the environment, diagnose the health of their organizations, maintain flexibility to meet the continuing challenge of change, and, above all, resist the temptation to bask in their own success. We believe leaders won’t go wrong if they learn to behave as if green lights were always yellow.

Reprint No. 02208

Bruce A. Pasternack, [email protected]
Bruce A. Pasternack is a senior vice president with Booz Allen Hamilton in San Francisco. He is the coauthor, with Albert J. Viscio, of The Centerless Corporation: A New Model for Transforming Your Organization for Growth and Profit (Simon & Shuster, 1998).

James O’Toole, [email protected]
James O’Toole is research professor in the Center for Effective Organizations at the University of Southern California. His research and writings have been in the areas of political philosophy, planning, corporate culture, and leadership. He has written 13 books, including Leading Change: Overcoming the Ideology of Comfort and the Tyranny of Custom (Jossey-Bass Inc., 1995).
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  1. Bruce A. Pasternack, “Leadership: Dreamers with Deadlines,” s+b, Fourth Quarter 2001 Click here.
  2. Gary Hamel, “What CEOs Can Learn from America,” Fortune, November 12, 2001 Click here.
  3. Jerry Useem, “What It Takes,” Fortune, November 12, 2001 Click here.
  4. James O’Toole, Leadership A to Z: A Guide for the Appropriately Ambitious (Jossey-Bass Inc., 1999)
  5. Alec Levenson, Leveraging Adversity for Strategic Advantage, Working Paper, March 2002, Center for Effective Organizations, Marshall School of Business, University of Southern California
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