Why You Must Invest in Exceptional Leadership (Especially When Business is Good)

Most anyone who has ever had bottom-line, P&L responsibilities for a business knows that managing success can be as difficult as managing failure. You relentlessly aim for success, always knowing that the rewards you earn are for avoiding failure. It seems that almost anyone can fail famously, but success is far more elusive and comparatively rare. That is why it is so much more valuable.

What divides our efforts into successes and failures? Clearly it is not just one thing. Success and failure are always conditional upon the dynamics of manageable and unmanageable conditions; with some things you can learn to control and other things that will always be impossible to manage.

Leadership is the factor that determines how you handle the things that you cannot control or manage. Leadership contributes consistently and favorably to most all human endeavors, from how you choose to lead your life to how you enrich the lives of others – and even how you might influence change in the world. While not everyone has the potential to be an exceptional leader, you can take control of increasing your leadership capacity and effectiveness and take control of outcomes that would otherwise simply be left to chance – or someone else’s direction. 

In the realm of business the absence of effective leadership is reliable predictor of the organization’s performance. Without competent leadership your organization is more likely to be mediocre at best or among those that struggle to survive and don’t. Thriving businesses are the product of many needs that must be met. These include the necessary capital and resources, attracting and retaining the talent you need. It also requires having systems that effectively and efficiently support the utilization of your capital which includes your hard assets, your people and your reputation. As the ubiquitous Dr. Phil, the television psychologist would say, “how’s that working for you?”

“If things are working well – and your company is thriving – it’s a good indicator of effective leadership. And if you can improve in any of these areas, the one thing you can best invest in would be leadership.”

If you have discovered your ability to accomplish what matters most – in your business or in your life – you have no doubt found it necessary to guide or influence the behavior and performance of others you would have discovered that you cannot manage people.

You can and must manage things – but have you noticed that people resist being deprived of their free will? Influencing others comes down to your ability to lead them. Without leadership people either tend to underperform or not perform at all. They are more likely to work against your efforts than support them.

Exceptional Leaders are Better at Managing the Things that Matter Most

“Great leaders must be good managers. The best leaders I have known don’t actually manage much themselves, but effectively lead the mangers who do.”

Good managers also need to be good leaders. It is unlikely that you can ever manage “things” without having to engage with other people to be effective at doing so. And even in the rare cases where it is only things you deal with – how you choose to lead yourself will inform how you perform your duties. The conscientiousness and grit exhibited by all top performers are products of leadership – either coming from within – or from someone else.

The Point Where Management and Leadership Intersect

Business is very much about management. A company headed by poor or ineffective leadership may struggle and never realize its greatest potential, but a poorly managed company will almost surely fail.

In larger and certainly in more complex organizations it is necessary that leaders delegate much of the management of day-to-day things to others. This allows leaders to focus on things that cannot or should not be handed-off to someone else. These might include responsibilities for how assets are ultimately utilized – and decisions as to principal strategies. In smaller organizations leaders typically divide their focus between managing things and leading people.

Micromanagement is what occurs when people in leadership roles are unable or unwilling to effectively delegate. It might be that you are unwilling to trust people or want to always be seen in the spotlight and deserving the credit for the organization’s accomplishments. This of course is foolishness. Or it may be that you are unable to delegate because you have not made the effort to develop your team into competent people who can function as effectively – or ideally, even more effectively than you can. This is beyond foolish.

One thing that leaders must take responsibility for is to ensure that the organization you lead has what it needs to maintain a sustainable competitive advantage.

This means that the enterprise is relevant in what it aims to accomplish and provisioned to do so. Whether the organization you lead is principally profit-motivated or is mission-driven, it must have the means to do whatever it was built for. The threat to this basic need can come from internal dysfunction or external competition. Such risks are an inherent reality for any business enterprise. It is the job of leadership to ensure that the risks are managed.

“Success for any business enterprise, large or small, operating in a free-market environment boils down to a basic function of effectively managing risk.”

A business leverages the risk of the market in which it operates against its available capital: it’s access to cash, the performance of its people and the durability of its reputation. Having luck, talent and even a pedigree experience will not take risk out of the equation, and in truth, people who are most expected not to fail do as much as people who no one would bet on to succeed do.

Like any market-based investment, the aim of business success is yield and a return that is worth the level of risk you elect to engage. The basic law of investing dictates the relationship between risk and reward. Low risk investments exchange safety for a lower yield. Big wins are the product of taking equally big risks. In your business, without risk there is no profit: the most standard measure of every business’s success.

“Success rarely comes easily, but failure unfortunately does.”

There is a fine line that separates a business that is doing well and its potential for a disastrous demise. There are many factors that tilt the balance one way or the other, but none is more important than the effectiveness of an enterprise’s leadership. Good management is critical. And it is exceptional leadership that ensures the necessary level of execution and management rises to the level of the risks you undertake.

The avoidance if failure, especially an impending failure, can be a compelling source of motivation for a leader who is both capable and prepared to guide an organization’s success. But rarely is it a sufficient purpose for doing so. Being human means that you have competing hard-wired survival instincts that drive you clear of pain and in pursuit of pleasure.

The satisfaction of accomplishing things that are significant and meaningful tends to be a more useful and productive source of motivation. And experiencing more real joy as a result of what you pursue and accomplish is a better measure of your success than profits. Successful organizations realize a sustainable competitive advantage and are rewarded with profits when they create opportunities for real moments of overwhelming joy in the lives of the people they impact. These stakeholders include customers, employees, supply partners, the industry you are in and the people in your community – who may not be among any of the above. Successful companies serve the physical and material needs of people while also elevating the human spirit.

What gets in the way of finding the success you might be able to achieve?

Thousands of self-help books have been written on the subject, along with an equal number of business management and leadership books. They may be popular because it allows those seeking advice to remain anonymous.

We expect that most people would ask for help when they are struggling or in trouble. At the same time, asking for help is often viewed as a sign of weakness, which of course it is not. The problem may be that your ego might be bruised and intercede. Or else the years of formal education that has trained you to believe that it is always safer to have the right answers given the constant punishment administered for getting answers wrong.

The dysfunction and incompetence we find in so many organizations tends to multiply when leadership is weak or absent, increasing the odds of failure and undermining the possibility of successfully accomplishing what matters most. And it is in the absence of meaningful accomplishment that you experience the worst consequences of mediocrity.

Why are we so accepting of mediocrity? It may be that we have been taught to lower our standards and our expectations for the way people (and things) perform. Or have things become so complex that we no longer feel we can understand why thing work? Certainly we elevated the performance of things to the point where we might believe that it is no longer necessary to have people perform well – because machines and devices can do what we need done better than we do. Have we become complacent – or perhaps even lazy as a result? But what happens to these things – without competent people to build and maintain them?

The degree by which our lives seem to be made easier by the advanced technologies imbedded in the things we use every day actually increases our overall sense of anxiety – as we lose more and more control of our environment when we can no longer understand how things work. Just as having too many choices makes choosing difficult and tends to make people feel less satisfied with the choices they do make, when you feel that your devices are doing things for you that you would otherwise do yourself, you lose the satisfaction of accomplishment you would otherwise feel.

In business there are natural consequences for not accomplishing what you must. Beyond the need to satisfy the expectations of others, accomplishing things that matter provides sustenance to the human spirit. When you fail to provide value in what you contribute through your efforts, those you serve through what you do suffer and so does how you experience what you do.

It is not that there is no joy in failing; it is entirely possible to experience great satisfaction in providing your best effort against a more capable opponent. But that joy comes from accomplishing something meaningful and significant in pursuit of your aims. Many great discoveries were the result of failing to achieve what was being sought. Satisfaction is a self-referring experience. It is based on the meaning you make of what you accomplish – not necessarily the expectations of others.

Lack of satisfaction from what you do practically guarantees the absence of joy in what you do – and an increase in stress. If you are the chief executive of a small or medium-size business, chances are your level of personal stress rises and your MoJo – or moments of joy decrease or disappear when business is bad.

A business failure may likely threaten your family’s income, wellbeing and stability. It unravels the lives of people who depend on you for their family’s welfare. It may also challenge your ego of people who define their sense of personal worth by the success of their personal performance. Stress not only robs you of your joy – it is threatens your physical wellbeing.

"Business success can actually be even more debilitating than a business failing."

Your focus and attention – or so-called life balance is dictated by business demands that compete with the priorities driven by family needs and even your health. A rise in your level of success will often provide an equivalent degree of anxiety over maintaining that success. Worse still, while failure invariably resolves itself into a crash you will generally survive –the stress of success can be virtually unending.

You Do Have a Choice – And This is Where We Make the Case for Investing in Leadership

"You might elect to normalize the chaos in your life and get used to the dysfunction around you. But you always pay a hefty price for this."

Alternatively, you could learn to manage your stress and modulate the demands on your life, taking charge of how you lead your life. This is the foundation of all leadership – and it may even amount to being the ultimate need and reason for developing yourself into an effective leader. 

"When things are going well, the need for competent leadership comes more squarely into focus."

It may seem counterintuitive at first, but it is actually undeniable. Think of what it takes to pilot a passenger airliner from New York to Paris. The avionics systems on today’s aircraft combined with the situational supervision provided by traffic controllers makes it entirely possible for the plane to fly itself. A child could occupy the first officer’s seat in the cockpit and you would very likely not only arrive safely at your destination, but you could conceivably never know the difference.

That would be unless something out of the ordinary were to occur. Things, for instance, like the flock of geese that Captain Chas Sullenberger encountered on the flight that became famously known as The Miracle on The Hudson. All 179 souls on board were saved that day thanks to his leadership.

The experts on the ground in the control tower could not have achieved that (that was well proven in the follow up investigation). It is highly unlikely that the co-pilot would have accomplished the same outcome even with the exact same view of the situation and the same controls at his disposal. It was not just Sullenberger’s vast experience and skills – or the fact that he was talented pilot. It was surely not his credentials that altered the trajectory of all those lives that day. So how do you explain what produced the extraordinary outcome that day?

You can argue that he was lucky – and without doubt, that is true. But it was how he was able to employ all of the competencies required of any credentialed commercial airline pilot to beat the odds and actually accomplish what he did.

You don’t hire pilots based on their ability to fly a plane – you train pilots to get you out of trouble. If all you needed was someone capable of guiding a plane under normal, meaning good if not optimal conditions, the standards could be much lower.

The same is true for guiding your business. The time to prepare for difficulties is when you are not in the midst of them. You may not perceive a need for stronger or better leadership today, but what will happen when something unexpected hits you? Are you prepared to safely navigate your business through the next recession? Or if some new technology comes along that disrupts your company – or your entire industry?

The fact is, leadership adds tangible value to your enterprise. Not having a strong bench – or leadership team, constrains the ability to provide a smooth transition or succession of ownership. A concentration of leadership has the same implications on the valuation of an enterprise as does a concentration of your customer base or supply chain. These are weaknesses that drive your value down.

It is clear that strong leadership is what drives high-performance. You cannot generate sustainable profitable growth without people who are working to their potential. Profits are the result of your company outperforming your competition.

“Most people realize that performance will suffer from poor management, but few people understand that poor management becomes the status quo without strong leadership.”

Leadership may be the single most important thing you can invest in. It is what elevates the value of all other investments you make in your business. No investment in tools, systems, machines, facilities or teams of people will perform to their fullest potential unless you commit to performing at your greatest potential as a leader.

Finally, a wise investment in leadership is not just spending money on leadership development. Leadership cannot be developed by reading books, attending seminars or acquiring a business degree from even the most prestigious universities.

“Leadership is learned but really cannot be taught. It is not what you do – it is who you are in the face of what must be accomplished.

You can learn management, and you can learn the competencies required to become an effective leader. But leadership demands full-competence. It is not good enough to know what to do, or even to be able to do it. Leadership is measured by what you accomplish – or not. This is why leadership development – whether your own – or your team’s – requires an investment of more than dollars: it requires an investment of time and attention.