Charisma carries great risk

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Recent research into the leaders of century-old European companies, such as Royal Dutch Shell, Glaxo, and LaFarge, has revealed that conservatism trumps charisma.

Dr Christian Stadler, associate professor with the Warwick Business School, said that ‘intelligent conservatism’ was much more common than charismatic leadership among European companies that enjoyed “enduring success.”

“Six out of 18 winners of Germany’s Manager of the Year award went on to make huge strategic mistakes that badly damaged their companies. The understated intelligent conservative leader doesn’t make such big mistakes,” Stadler argued.

The problem with charismatic leaders is, predictably, their charisma. The ability of charismatic leaders to persuade those around them means that they meet with little resistance when they suggest something, even when this means taking a company in the wrong direction.

“If your company is heading in the right direction, a charismatic leader will get you there faster,” Stadler said. “Unfortunately, if you’re heading in the wrong direction, charisma will also get you there faster.”

In contrast, intelligent conservatism breeds steady growth, without stifling innovation: intelligent conservative leaders also revolutionise companies. “Our study suggest that the most dramatic and successful transformations of outstanding corporations happened at a time when leaders who had spent their entire career with the company gained control,” Stadler said. As examples, he gave Sir John Bond of HSBC and John Loudon of Royal Dutch Shell

The two key ingredients of intelligent conservatism are the ability to listen and having an in-depth understanding of the corporation. “Listening … ensures that an organisation not only is on board but also engages everyone in the process – producing more solid results in the long run and leading to less reckless strategic shifts,” Stadler explained.

With reference to the second ingredient, Stadler noted that 97% of the enduring European companies that he studied had CEOs that were promoted from within. “In-depth knowledge of the organisation makes it easier for the leader to form responsive networks and to find out what is going on throughout the organisation,” he said.

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