Have we forgotten what leadership is?

Recent weeks have brought with them further depressing news regarding the abilities of certain corners of our world to abdicate responsibility for leadership positions.

In the United States, John Stumpf, CEO of Wells Fargo, has appeared before a congressional panel after the company was fined $190m for opening two million fake accounts. Carrie Tolstedt, the individual responsible for the division, which fired over 5,000 employees in recent years over the scandal, is set for a retirement payout of $124m at the end of this year.

In the UK, retailer Sports Direct has come under intense scrutiny for its practice of employing workers on ‘zero-hour’ contracts (i.e. those for which no level of work or remuneration is guaranteed) and for a number of serious governance issues of which CEO Mike Ashley appears to know too little. Such is the firm’s malaise that its largest investor has called for an independent review of the company.

What these cases highlight, once more, is that while every firm is managed, there are those which are not led. And this brings us back to the very source of leadership – leading. That may sound obvious, but repeated corporate failings demonstrate that many leaders themselves simply do not understand that fact.

Leadership is about leading. It is about taking a position, it is about going first, it is about conviction. Leadership is an inherently values-based activity, and values are not temporary. Leadership involves having the courage to do what is right regardless of pressure or cost, so that the leader sets an example to employees. It comes from a purpose, and is a great way of simultaneously protecting and enhancing a firm’s reputation, safeguarding and creating value.

Stumpf and Ashley, though doing business school ethics professors a small favour, continue a worryingly long list of leadership failures. Trust in business is low, and it is not hard to see why when basic failures such as those demonstrated at Wells Fargo and Sports Direct seem forever to be in the news. Volkswagen (and, it turns out, much of the rest of the automotive industry), Tesco, and others announce with alarming regularity to the general public that the commercial world is short-sighted and unethical, and yet businesses complain about regulation. If we successfully regulated ourselves there would be no need for intervention! We have not and, it seems, we cannot.

There is clearly a need for leadership. Companies such as Unilever have demonstrated that decisions founded on strong values can be commercially successful, and that regard for employees, communities, and the environment does not mean sacrificing returns – far from it, in fact.

As another wave of corporate scandals smashes into the eroding cliff face of commercial trustworthiness, business needs to come together and demonstrate that its behaviour does not threaten any or all of the wider world. It needs to show that it is capable of delivering for society. It needs to show a collective self-awareness that has been lacking.

All this, however, will require leadership, and in some quarters that is disappointingly hard to find.

The good news is that leadership is not the preserve of managers and executives. As professionals and as consumers we can demonstrate behaviours that drive positivity and encourage others to follow. Our enterprises are all very different, but in their own ways each one is capable of being led in differing ways by a wide range of people.

More encouraging still is that companies like Unilever are showing the world that a firm that exhibits leadership can create competitive advantage, positioning itself as an example for others to follow. As some give chase, a race to the top ensues from which we can all benefit.

Leadership is not about managing people or executing strategy or telling people what to do, although in various measures these are all aspects of it. Leadership is about leading, and we can all do that.