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Myth #1: Leaders must develop a strategic direction—and stick boldly to it While all leaders need to set a strategic direction, it must be flexible and adaptable to rapidly changing market conditions. Business history is littered with full-speed-ahead types who resolutely ran their companies aground. Remember Webvan, the online grocer? One of the largest start-ups during the dot-com bubble, it burned through cash at an alarming rate—more than $800 million in less than three years.1 Even when it became obvious that the impossibly thin margins on groceries couldn’t support Webvan’s business model, the company forged ahead, buying HomeGrocer, which was also losing millions. Bankruptcy soon followed. An unreasonable persistence often occurs at the portfolio level as well. Top management, including CEOs and division heads, can’t bring themselves to pull the plug on their products, their markets, and the deals they have engineered. Smart leaders move on before decline sets in. Moreover, investors often reward preemptive corrections. In fact, one of the authors of this article, Roch Parayre, studied ten years’ worth of announcements by major companies indicating their intention to kill a division or a line of business. Over that span, the stock price for such companies rose, on average, 4% on the day of the announcement. Myth #2: Leaders need to manage risk and minimize failure Risk is scary; mistakes are embarrassing. But in today’s world, the winners are likely to be leaders and organizations that learn fast, fail fast, and incorporate the lessons learned into the next experiment. The following companies are doing just that: • Before Elon Musk and Space X successfully landed a Falcon 9 rocket on a drone ship in April 2016, they endured four public failures ending in explosions. • Engineers Without Borders (EWB), a non-governmental organization that works worldwide to help disadvantaged communities and people through engineering projects, accelerates learning by posting its mistake online for all to see, including especially the engineers at EWB organizations in other countries. • SurePayroll presents an annual “Best New Mistake” award, handing out cash prizes for the failed efforts that led to the most significant learning.2 Myth #3: Leaders need to be consensus builders Consensus is in fact often the enemy. A domineering leader can get a team to reach consensus on almost anything, including nonsense. There are also people who go along to get along, even when they strongly disagree. Further, when consensus is reached through compromise, you are likely to wind up with the lowest common denominator among conflicting positions. And there is the ever present danger of group think. At a large consumer-finance company where a culture of consensus reigns, challenging someone in a meeting is considered impolite. As a result, important decisions involve round after round of pre-meetings, meetings, post-meetings, and hallway lobbying. Even pressing strategic decisions are routinely deferred, escalated upward, or resolved only by default. That may have been tolerable when financial services was a largely stable industry, but not today when it is ground zero for uncertainty and change. Myth #4: A good leader is always a confident leader Certainly, when it comes to executing on a carefully deliberated decision a leader needs to move with all deliberate speed and remain calm in the face of uncertainty. But when it comes to making the decision, a little humility is in order. The problem is that most executives—and indeed most people—have a strong bias for overconfidence. In workshops we have conducted with thousands of executives, we do an exercise that quickly measures overconfidence. Fully nine out of 10 executives who undertake the exercise exhibit unwarranted confidence in their judgment. Further, in a survey of 150 global CEOs conducted in partnership with the Saïd Business School at the University of Oxford, we found that nearly one in five CEOs say they never doubt themselves.3 By contrast, forward-looking CEOs not only admit doubt but embrace it as a basis for better decisions. Some CEOs we know, for example, conduct “pre-mortems” when deliberating with their teams before starting new projects. In effect they ask, “If this project dies six months from now, what are we likely to say killed it?” The teams then brainstorm all the potentially fatal flaws, make the plans more robust, identify early warning signs of trouble, and develop contingency plans. Taken together, these four leadership myths suggest a counter-truth: In today’s turbulent world, great leaders are, above all, agile. They are able to spot opportunities and threats and adapt faster than their competitors. They are able to prepare for, withstand, and recover from setbacks quickly. They build diverse teams that generate creative friction. And they embrace change as an opportunity for continuous improvement. All vital skills to have in a business environment where the only real certainty is that certainty itself is in short supply. LE Notes 1 Greg Bensinger, “Rebuilding history’s biggest dot-com bust,” Wall Street Journal, January 12, 2015. 2 Sue Shellenbarger, “Better ideas through failure,” Wall Street Journal, September 27, 2011. 3 The CEO Report: Embracing the Paradoxes of Leadership and the Power of Doubt, Heidrick & Struggles and Saïd Business School at the University of Oxford, January 21, 2015. Leadership Today A renowned thought leader on strategic thinking, team effectiveness, and organizational agility, Steven Krupp is a partner in Heidrick & Struggles’ Philadelphia office and a member of the Leadership Consulting Practice. Connect Steve Krupp A strategist and teacher, Roch Parayre has advised organizations on five continents across a spectrum of industries, helping them grow and transform their businesses. Roch is a partner in Heidrick & Struggles’ Philadelphia office and a member of the Leadership Consulting Practice. Connect Roch Parayre Would like to Comment? Please Click Here. Leadership Excellence Essentials presented by HR.com | 09.2016 Submit your Articles 23


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