Great leadership can make or break a company. Take Berkshire Hathaway (NYSE: BRK-B ) , for example. We Fools love to harp on Warren Buffett, but not because we have some kind of man-crush on the guy. (Well, maybe some of us do.)
Buffett's a living, breathing example of what great leadership can accomplish. He gives his operators room to get the job done, and only in specific cases -- Sokolgate comes to mind -- does he need to interject. He leads with values and encourages a culture of success built around a team.
Foolish favorites Costco (Nasdaq: COST ) and Whole Foods Market (Nasdaq: WFM ) are two other excellent examples of companies with great leadership. Costco co-founder/CEO Jim Sinegal attributes his company's success to the people within the company. And Whole Foods co-founder/CEO John Mackey believes that the company's philosophy of "Shared Fate" creates a self-fulfilling circle of success, where the company benefits from its people, and its people benefit from the company.
Recently, I had the great fortune to speak with Rajeev Peshawaria, author of Too Many Bosses, Too Few Leaders. I wanted to learn more about his views on leadership, and how companies ultimately benefit from great leaders. The following is a lightly edited version of our conversation.
Jason Moser: What is the difference for you between a boss and a leader?
Rajeev Peshawaria: There are actually several differences in my opinion, which is what the book lays out. The first is that leaders are clearer about their purpose, what they want to achieve and their values, how they are going to achieve it. This clarity gives them energy that is needed to stay the long course, despite the most formidable obstacles and resistance that they are most likely going to face as leaders. In contrast, bosses are reactive and unclear about their purpose and values.
Second, leaders lead with their values. Bosses command with position power.
The third is a bit unusual. Leaders understand grief, pain, and sorrow and are able to process it, and that is how they build deep bonds. Bosses typically have unresolved grief inside them, and therefore are not able to build deep bonds with other people.
Next, leaders forgive while bosses hold grudges. In addition, leaders willingly share responsibility and authority. They in fact, enlist co-leaders in their journey of leadership, whereas bosses hold power.
Finally, leaders are those who have made a successful transition from "I" to "we," and focus on creating conditions for maximizing other people's success, whereas bosses stay fixated on the "I" and create conditions to maximize their own personal success.
Moser: Interesting. So would you consider a leader to be more positively proactive and empathetic? Are those a couple of words that would apply to leaders as opposed to bosses?
Peshawaria: Absolutely. The first thing about being proactive is you have to proactively answer the questions, "What is my purpose? What are my values?" Anybody who cannot articulate what their purpose is -- that person is not proactive and therefore not a leader.
Moser: You said that leadership is a team sport. Could you shed a little bit of light on that?
Peshawaria: Well you know, in today's world, anybody who wants to create a better future cannot do it alone. Leadership is about creating a better future. In the increasing complexity around us, there is hardly anybody who has all the answers. So more than even just 10 years ago, today our leadership has become much more of a team sport. Today's leaders realize that to be able to create that better future, they are going to need some co-leaders with them. So they don't just treat their direct reports as people who work for them but rather as co-leaders, and then together with their co-leaders, they lead the rest of the organization.
Moser: It seems that globalization would be one of the byproducts of this leadership as a team sport. Does that make sense?
Peshawaria: Or vice versa even, because there is so much globalization, because your teams of people are sitting all over the world now, you need co-leaders for it to be a team sport, so the reverse is also true.
Moser: Here at The Motley Fool, we have about 250 employees. Should we be telling all of our employees that they should each aspire to be a leader? Can we have a company full of 250 leaders?
Peshawaria: Well, it depends on how you define "leadership." If you buy into my definition of leadership -- the art of harnessing human energy toward the creation of a better future -- then yes, everybody can be a leader. Anybody can close their eyes and dream of a better future for their department, for their function, for the company as a whole.
Moser: So then what role does emotional intelligence play in leadership?
Peshawaria: I sometimes go to the extent to say that "leadership" and "emotional intelligence" are the same thing. Again, leaders are those who can close their eyes and see a clear future, and you can only do so if you have tons of energy, because the moment you say, "I want to change something," a thousand people tell you in a million ways why you will fail and you will get all kinds of obstacles and all kinds of resistance. So the key to leadership is to get, is to find that inner energy, which makes you keep going despite all that resistance and despite all those obstacles. The only way to get that kind of inner energy is to be clear about your purpose and your values.
Emotional intelligence is nothing else but being clear about who you are, what you want to be, what you stand for.
Moser: The Stanford Business School Advisory Board not long ago voted that the single most important quality for great leadership is self-awareness. Is this something that you agree with?
Peshawaria: I totally agree with it 100% because again, as I said, my basic idea here is leadership cannot be learned through a competency model, through psychometric tests or through copycat role-plays. The first step in leadership is to be clear about your purpose and about your values, and that is self-awareness right there.
Moser: Now, I'm sure you know that here at The Motley Fool, we are focused on investing, finding the next great company, learning about great companies and what makes them great. How can individual investors determine whether the companies they invest in have great leadership? We can easily see on paper what these managers and executives have done and what their records show, but how can we determine whether these companies have actually great leadership or not?
Peshawaria: One thing that I would suggest would be to look at the company's stated values and then look for evidence of whether the company has stood by those values in good times as well as bad. That should be a good indicator of whether the company has good leadership or not. If a company talks a lot about integrity and honesty and then at the first available opportunity kills the goose that lays the golden eggs, you know that there is a difference between the audio and the video, so I would look there.
Stay tuned for the second part of our interview on Wednesday.