Lessons for Leaders

This article is part of our Rising Star Portfolios series. Click here to follow Jason on Twitter.

Our search for great companies has us constantly seeking out great leaders. We got an extra treat on that quest when Rajeev Peshawaria, author of the book Too Many Bosses, Too Few Leaders, visited Fool HQ. I spoke with Peshawaria about the differences between bosses and leaders -- and he identified seven traits of extraordinary leaders.

1. Find the energy to create a better future
David and Tom Gardner both love to find companies run by people who are leading the world forward. And there can be no doubt that leaders such as Amazon.com's (Nasdaq: AMZN  ) Jeff Bezos and Apple's (Nasdaq: AAPL  ) Steve Jobs are constantly striving to make the world a better place. Their tireless efforts never cease to amaze us.

2. Be clear about your purpose at all times
Great leaders tend to be great communicators, and we have no problem knowing where they want to go. Few are better at getting their message across than Ford's (NYSE: F  ) Alan Mulally. In interviews with the press, in his "Letter from Alan Mulally" in Ford's annual sustainability reports, and even when he's chatting with us Fools, this CEO is always on message and always clear about Ford's future.

3. Lead with values
I'm looking past all the companies in our Foolish universe to pull directly from our day-to-day experiences here at Fool HQ: Be collaborative, innovative, fun, honest, competitive, and motley. These are the core values we live each and every day here at The Motley Fool, and our CEO and co-founder Tom Gardner never fails to keep the light shining for us.

4. Know how to manage grief and learn from failure
Aflac
(NYSE: AFL  ) earns a majority of its business from Japan, so when the earthquake and tsunami struck earlier this year, CEO Dan Amos wasted no time in getting there to help manage the business through a difficult time. Whether it's an advertising decision involving the duck or managing risk on an international scale, Amos chooses to see mistakes as opportunities to get better.

5. Forgive and move on
Forgiveness can be a tough one; after all, only the forgiver really knows. And moving on is easier said than done. But living in the past is a major hurdle that can prevent great leaps forward. When well-known investor Whitney Tilson penned a very long and very public article calling out the number of reasons his firm was short Netflix (Nasdaq: NFLX  ) , the company's CEO, Reed Hastings, responded with a well-thought-out piece countering Tilson's position. Referring to Tilson as "a great investor and a wonderful human being," Hastings showed how crucial it is to be able to take things with a grain of salt and continue moving forward.

6. Be willing to recruit co-leaders and share authority and responsibility
This is perhaps what Berkshire Hathaway's (NYSE: BRK-B  ) founder and CEO, Warren Buffett, is best known for. He's built an empire by buying excellent companies with excellent leaders and giving them room to run the show. His logic is simple: They've been doing a great job so far, so let them continue doing it. A culture of ownership and shared responsibility is the result, and it has proved extremely successful.

7. Successfully move from "I" to "we" thinking, and create conditions to maximize collective success
Starbucks
(Nasdaq: SBUX  ) CEO Howard Schultz truly fosters the concept of teamwork and people. His fights for employee health care and stock plans helped instill a mutual trust, a belief that everyone wins when they work together as a team. Building on the collective success of the Starbucks concept will certainly help the company as it expands internationally.

More than a list
Beyond the seven traits Peshawaria identifies, here are three essential principles for leaders to be truly extraordinary:

  • First, they need to be in it for the long haul regardless of what challenges may arise.
  • Second, leadership is a team sport more than ever before, and great leaders need to be able to compile and effectively use the wisdom of their teams.
  • Finally, great leaders must be able to energize their teams and inspire them to achieve.

At The Motley Fool, we think great leaders offer companies -- and investors -- a genuine competitive advantage that can't be replicated. It's extremely difficult to find leaders with all seven traits and three principles; we know that. But we can use these criteria as a checklist and a guide as we continue to identify the market's best stocks.

Stock Advisor analyst Jason Moser owns shares of Amazon and Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway, Ford, Apple, Aflac, and Starbucks. Motley Fool newsletter services have recommended buying shares of Apple, Netflix, Amazon, Starbucks, Berkshire Hathaway, Aflac, and Ford, as well as buying puts on Netflix and creating a bull call spread position on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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