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Are you a successful leader? How would you know? Probably even more importantly, how would others know? These are questions every leader needs to answer. Before becoming dean of London Business School I worked on performance measurement issues, one of which was on successful leadership.
What I found was that there was a lot in the literature about what you need to do to be a good leader but very little about measuring success. So I used historic figures such as Julius Caesar, Simón Bolívar and Napoleon. I also used modern politicians such as Nelson Mandela, Margaret Thatcher and Vladimir Putin and business leaders such as Bill Gates, Carlos Slim and Li Ka-shing.
Faced with these questions about such people, the problems become clear. The first is, success for whom? Julius Caesar wasn’t a success for the tribes he conquered, or Margaret Thatcher for those put out of work through her policies. Next, what is success? A successful leader is successful in relative, not absolute, terms. That means measuring against stated objectives. Lee Kuan Yew, first prime minister of Singapore, had clear objectives about transforming the country – and did so. Some leaders don’t tell us what their objectives are, so it is difficult to know whether they have succeeded.
Relative success is also measured against others. This is reasonably straightforward for companies, as long as there is a similar enough organisation. It is more complex for politicians, but for all leaders it is also a question of what might have happened but did not. Not easy to get the facts here, since leaders are in charge of the information. To paraphrase Joseph Stalin, “it’s not who votes that counts, it’s who counts the votes”. Only after a leader steps down is it clear what opportunities have been taken or lost as well as what has actually happened – witness the depressingly regular discovery of ex-presidents’ offshore bank accounts.
There is also a danger of confusing success with luck. A rising tide lifts all boats and enhances all leaders. It is easy to make a great property deal in a booming property market, but successful leadership in property is managing through the slump as well as the boom.
Measuring success has to overcome, or at least mitigate, these challenges. Doing so starts with acknowledging that successful leaders are defined not by what they do or by the success of the organisations they lead, but by three key comparisons.
One is with relevant peers. Jeff Bezos of Amazon and Jack Ma of Alibaba are successful because at the time they started there were many companies aspiring to the dominance these two have achieved. They have outstripped their peers. But this comparison is not enough to define success. Many leaders have set themselves, or been set, objectives to measure their success. John Browne’s was to take BP into the league of top oil majors. This was realised through a series of huge takeovers.
The third key comparison is about the handling of opportunities. This is usually identifiable only after the leader has left, though there are exceptions. Ingvar Kamprad, the founder of Ikea, is one. He revolutionised his industry by developing a radically different business model. Most leaders don’t have such a clear track record. Indeed it may be the opposite, with success coming from the opportunities that were wisely turned down. Better for Hank Greenberg at AIG not to have hired those hotshot Drexel Burnham Lambert derivative specialists and for Fred Goodwin of RBS not to have paid cash for ABN Amro.
So what should you do to show that you are a successful leader? Make sure there are clear comparisons with others. Coming first in a race with one competitor isn’t all that impressive. Then set out your objectives clearly. It is riskier than keeping quiet about them, but if you do the latter, nobody will know what you want to do, never mind whether you have succeeded. Finally, make clear the basis of the key choices you make. Life is full of possibilities. As a leader you will want to show how you have made the key choices and why.
Now, going back to the questions at the beginning, who would you vote for among the good and the great of history, politics and business? For me, Nelson Mandela can be taken for granted; my other votes go to Winston Churchill (war years only) and, in the business category, Herb Kelleher of Southwest Airlines (who transformed a whole industry). Now try the question on your friends.
Professor Sir Andrew Likierman is dean of London Business School
Photographs: Charlie Bibby; Georgias/Dreamstime; PA; Daniel Acker and Chris Goodney/Bloomberg; AFP/Getty Images