Proper leadership is key to running a successful business. All business leaders should have specific attributes and skill sets to gain the respect of employees and manage effectively. If you are a business leader or looking to become one the advice from this article is invaluable.
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Business leaders often suffer from what I call “moral overconfidence,” or an inflated sense of their strength of character. So moral humility may be the most important thing we can teach them. Many people view “character” as an immutable trait formed during childhood and adolescence. I believe character development is similar to the development of knowledge or wisdom—it’s a lifelong process.
Most businesses, most of the time, do what they’re supposed to do. They provide value to customers, create jobs, and are responsible members of their communities. Unfortunately, we also see spectacular failures in business responsibility. During the dot-com boom, intelligent people concluded that it was logical for companies to be worth hundreds of times projected earnings with little prospect for profitability. Enron executives were aided by lawyers, accountants, bankers, and analysts. The mortgage mess was created in no small measure by bankers and builders betting real estate prices would always go up and that it didn’t matter that people were borrowing money they could never repay.
Too many people simply set aside common sense, good judgment, and sound ethics. They could explain risk calculation models, but they either couldn’t see or ignored the fundamental risks they were taking. These people focused on the short-term opportunity to boost profit and stock prices without asking whether that opportunity might destroy long-term value by ruining companies and lives and undermining confidence in our economic system.
When I attended the Sloan School at MIT, one of the most valuable courses I took was called “Readings in Power and Responsibility.” We read literature, not business cases. These works were about power, not simply as an achievement but as an obligation to serve a greater good. We learned that the responsible exercise of power requires balancing constituents and considerations.
Business schools should teach that “going along to get along” can have disastrous consequences. They should teach CEOs to produce long-term, sustainable shareholder value by balancing the needs of customers, employees, communities, and financial backers.
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