2010/01/15

Classical Virtues and Modern Leadership

“It is character through which leadership is exercised“
Peter Drucker

Introduction

The question of effective leadership has never been as challenging as it is today. The Western world on both sides of the Atlantic is still struggling to come to terms with the aftermath of the financial crisis. Main Street folks blame greedy Wall Street bosses for the mess and their suffering, while experts crucify the Federal Reserve for the deregulation of fiscal policies. Both approaches seem reasonable.


Despite the hysteria, the “crisis”, not every bank on Wall Street went bankrupt. In a free country and a free market economy, one acts freely according to one’s reason. Flaws in a system do not oblige the actors on stage to behave irrationally or commit irreversible mistakes. In the final analysis, responsibility lies not with the system but with the individuals, the ones in the position to decide and act. Failure, essentially, can be traced to failure of individuals to judge and act rightly.

Richard Fuld, the former CEO of Lehman brothers, in his last memo for his personnel wrote: "The past several months have been extraordinarily challenging, culminating in our bankruptcy filing … This has been very painful on all of you, both personally and financially. For this, I feel horrible.” This meant that there was no hope for employees to continue with their jobs and that a seemingly confident and, until recently, blind giant has come to a sorrowful end.

So why didn’t Richard Fuld convince The Bank of America to buy his bank rather than Merrill Lynch or the Fed to redeem Fuld’s wrongs? Why did the splendid career of the unbeatable pilot of the Air Force One of Wall Street banking have to end in such a shame? Maybe Fuld became the Fed’s viciously chosen scapegoat? Or, rather, perhaps he was too arrogant to come begging on Wall Street? Too arrogant to appear poor? We don’t know and cannot judge for sure. But certainly, the judgement and its failure was his. Now Lehman brothers passes into history and takes residence besides Enron Corp., WorldCom and other similar poor cases of the decade.

What are the reasons behind these failures? I believe that the quality of leadership here comes into question.

In this article I will try to raise the issue of the quality of leadership from the perspective of the Western leadership tradition. I will not provide a comparative study but will rather attempt to respond to growing exigencies and challenges for leaders in the changing realities of today‘s business world.  

The question of effective leadership

Literature on leadership has been soaring since the middle of the 20th century. There are many theoretical approaches to high quality leadership and all sorts of gurus’ practical recipes. However, reality provides its own answers on the basis of which theories of leadership are being built, and then often corrected alongside the logic of change in the reality itself. In my opinion, the quest for high quality leadership should begin not so much with a theoretical paradigm but rather with the search for a practical criterion of effectiveness.

In principle, effectiveness or, rather, aptness of leadership can only be proven via factual endurance of achieved results. The longer a newly established order of things persists, the more effective it is and the greater leadership is proven. It is the sustained welfare of a community that is both the object of leadership and the proof of its effectiveness.

We are led to conclude that no diverse positive qualities constitute high quality leadership without it resulting in an enduring order of things willingly maintained and perpetuated by a community of humans. So, what might be the necessary precondition of effectiveness in leadership and its sustainable results in reality? What makes judgement solid and action vigorous when leading others for the sake of their enduring good?

John Adair, the world’s first Professor of Leadership Studies at the University of Surrey and the founder of the Action-Centred Leadership Model, encapsulates his most valuable insights on leadership in his late book How to grow leaders. Adair ponders on the state of mind of a strategic leader (Adair, John. (2005). How to grow leaders. London, p.50):

˝As one reaches the top of an organization one has to deal with a greater level of complexity than at team or operational level. Complexity is both intellectually demanding and stressful, and it is not uncommon to discover that some individuals promoted to be chief executives just cannot handle it: they have risen to the level of their incompetence. In particular, they lack the kind of mind that an effective strategic leader needs”. 

The complexity a strategic leader deals with consists of manifold factors in objective reality. These factors, in turn, affect the decision-making process. Therefore, the necessary precondition for a decision and its correct implementation is the correct understanding of these factors.   That is to say, the factors of objective reality have to be reflected in the mind of an admittedly subjective perceiver in the most objective, i.e. truthful, way possible. Inadequate understanding of the reality invites misjudgement and misguided action.

An innately passionate impetus to create a wonderful and comfortable world of one’s own might not only distort the objective view of reality but also tends to result in the destruction of the reality itself. For instance, greed easily gives rise to false expectation and mistaken judgement. In one’s mind, a greedy premise proceeds like this: I am to get this thing at all hazards, for this thing must belong to me in order to constitute my valuable self. The passion of greed, on the one hand, convinces the intellect of the value of the thing to possess and to become a part of the value of my self, and, on the other hand, ignites the will to seek a coveted thing, be it a million dollars or a pretty woman. 

The misjudgement occurs not only because a reflected cognition of what really constitutes the value of my human self has not been performed in principle. Also, it is wrong on the basis of the factual order of things. There might be others to whom the coveted thing already belongs or would belong by virtue of an established fact or powerful supremacy. Logically, the greedy premise – I am to have this at all costs – is a mistake, because it contradicts the factual order of things. Despite the order, the passion of greed and subsequent misjudgement forces the will to act by virtue of the mistaken belief of what constitutes the value of my self.

And if the objectively wrong premise triggers the intellect to scheme and the will to act in order to acquire the coveted object, this action will necessarily result in failure because a wished order of things contradicts the existing factual one. Consequently, a deficit of objectivity occurring in misjudging reality results in the deficit of the good of reality itself, both in the life of the acting individual and, to a larger extent, in the community affected by the individual’s action. As communitarian value is measured by finances, so the lack of the good of the reality in the affected community becomes evident in the deficit of its public budget. This is what happened in the recent financial crisis.

John Adair continues pondering on the strategic mind: “From ancient Athens I have borrowed the Greek word phronesis to describe the mind needed” (ibid.). Adair translates the Greek word phronesis as practical wisdom – thus avoiding the mere moral connotation of the degraded English word ‘prudence’ (prudentia in Latin).

”So practical wisdom, as opposed to sophia – the wisdom sought by the old philosophers – is the wisdom of leaders relating to practice: what way to go, what to do next, when to do it, how to do it and with whom to do it. These are questions and issues that cannot be solved like mathematical problems or puzzles: they call for the exercise of judgement. What equips a person with good judgement?” says John Adair (ibid.).

According to Adair, phronesis or prudentia, the intellectual virtue known already by our Greek and Latin spiritual forefathers, is an indispensable guarantee of sound judgment – it is a must for a strategic leader who deals with complex realities. Adair encourages us to learn from the Ancients the basics of strategic leadership (Adair, 51): “We are only on the threshold of the study of phronesis, practical wisdom, in the context of leadership, and so I cannot tell you much more about it”. In line with this imperative for leadership studies, I will attempt to explore the classical virtues in the light of the modern need for effective and high quality strategic leadership. 

Mindaugas Kubilius