Lessons from Politics & Business: 5 reasons why Leaders fail, Part-1

In our yet to be published book on learnings from political parties, one of the things we explore is why leaders fail and we found 5 common failings of both political and business leadership

1. Lack of focus towards Stakeholder Satisfaction

2. Information Gaps

3. Poor Talent Management

4. Disrespect for ethical boundaries

5. Short term focus

In this first part, I shall focus on items 1,2,4 & 5 while the second part will focus exclusively on Talent Management

1. Lack of focus towards Stakeholder Satisfaction

Numerous research papers have articulated the importance of employee and customer/citizen satisfaction. When we study organisations/parties that have failed, the first visible metric of failure is customer/citizen satisfaction. And often related to failure in customer satisfaction is poor employee satisfaction. In politics for example, re-election rates are strongly correlated to citizen satisfaction. The higher the net positive satisfaction ratings, higher the likelihood of re-election. The UPA-2 Govt for example was not re-elected because of low satisfaction. My own experience of managing businesses and working with 100s of clients is very similar, a negative trend on stakeholder satisfaction is strongly correlated to deteriorating business performance. Therefore, If these are not twin priorities of an organisation, they are set to be doomed unless they are operating in a monopolistic or commoditised environment. 

2. Information Gaps

Governments and Security forces create huge information networks to collect information about our enemies and yet many leaders both in politics and business create no such networks. The less successful ones are surrounded by coteries and working/management/executive committees that filter such information or are themselves unaware of useful and reliable information. This leads to poor decision making and poor results. Successful leaders create and access a variety of information sources to know about their organisation and people performance. This enables them to respond better and act effectively both within and outside the organisation 

4. Disrespect for ethical boundaries

The list of governments that have collapsed on account of corruption allegations is a fairly long one (UPA-2, DMK etc). But so is the list of businesses that have suffered on account of ethical transgressions. Ethical transgressions damage the reputation of the brand outside the organisation and damage the image and trust of the leadership inside the organisation. It creates a climate of anger outside the organisation and stress and anxiety inside the organisation. Some of the best organisations emphasize the red lines on ethics and not just at the lower levels but also within the senior levels including the Leader/CEO and others in the leadership team. A system that allows for senior level ethical transgressions is doomed for failure fairly quickly. As the PM of India famously said  - Na khaunga, na khane dunga (neither will I take bribe, nor will I allow anyone to take bribe). 

5. Short Term focus

In my recent article on Naveen v Badal (Click here), I pointed out to how the lower castes were catching up with the upper castes (On consumption) in Odisha and not so in Punjab leading to different electoral outcomes for both parties. Part of the reason this is happening is because the Govt in Odisha is perhaps more focussed on long term development of tribals while the Govt in Punjab is more orientated towards offering short term sops to the Scheduled Castes in Punjab. The corporate world too is full of many such examples where instead of taking a slightly longer term view of the business, businesses have taken extremely poor decisions that lead to dealing with short term goals but damaged the business in the long run.  Example: Discounting is of course one of the biggest short term tricks but long term discounting and predatory pricing (without the cash) is a cardinal sin. Long term discounting damages the business profitability and external reputation. It also damages the morale of the employees as the company attempts to recoup these discount losses by trying to save everywhere including employee investments. 

Watch out for Part-2 which covers talent management problems with leadership in great depth.