BBH: How can the CEO in a family business take a step back and re-evaluate what is required of a leadership position when there is a generational transfer?
KS: Some of the very traits that lead to a founder being successful can also create some of the challenges that a business experiences years later, when that founder is nearing retirement. Some founders have a great deal of trouble letting go, and there are many complicated psychological reasons for that. So much of their identity and self-esteem is wrapped up in the company that they sometimes feel that nobody can possibly succeed them and run the business.
Talking about mortality is an unpleasant topic, but it’s necessary for founders to come to terms with the idea that they’re not going to be around forever and that if they really care about leaving a legacy, it may be their primary responsibility as they near retirement to consciously help choose a successor and let go. Because these people have such large personalities, sometimes letting go means really letting go, so that they don’t overshadow and undermine the new leader. Even if they’re retired, they still wield a lot of moral authority within the company.
BBH: Are there biases often at play in succession and choosing a new leader? How do you overcome those in selecting the most qualified person?
KS: Yes, there are absolutely biases. One is the idea that the successor needs to be just like the founder. It’s a natural assumption to make, but it isn’t true. No one can be like the founder, and the business may be in a very different place in its life cycle compared with the early days when the founder was doing it all. You may need somebody with a different skill set and personality to run the business successfully in the next phase.
On the other hand, sometimes founders and boards can lean too far in the other direction. Seeing that the company has grown and become more corporate, they may pick someone who is really more of a manager than a leader, and you wind up with a bureaucratic, overly process-driven person who can destroy the business.
There is no formula for this. Every business is a living organism that is different, and every family, if it’s a family business, is different. Each situation needs to be looked at uniquely based on the business context and the qualifications of the family members, with the ultimate goal of finding the right person for that time and for where the business is heading in the future.
BBH: Our society tends to be increasingly focused on leadership. Why is followership just as essential as leadership?
KS: We so overvalue leaders in our society that there is this popular idea that everybody needs to be a leader. Taken to its logical conclusion, if everybody were a leader, we’d have absolute bedlam. The role of leaders is to inspire followers, so what we need are a few really good leaders. We also need to normalize the idea of good followership. It’s not something that’s inferior to leadership – it’s actually necessary. Leaders are not leaders without followers.
BBH: How can leaders avoid the inherent isolation that comes with being at the top?
KS: I don’t know that it can be avoided altogether, but it needs to be acknowledged and responded to accordingly. There are many virtues to being at the top of an organization, but the nature of power dynamics is such that it inhibits the flow of information and of people coming to the leader from deeper down in the organization, especially with bad news. Leaders can make that better or worse. They can make it worse by not recognizing it or by being arrogant, autocratic or regal, which shuts down communication even more. Or, in recognizing the inherent isolation, leaders can be more active in making it safe for people who work for them to come to them with any news – both good and bad.
Having an open door policy is great, but even the term alone suggests it’s too passive – leaving your door open suggests you’re waiting for people to walk through it, but you actually have to walk out of it and go to people throughout the organization and make yourself a little vulnerable. Ask for feedback, and make it clear that when you get feedback, especially critical feedback, that you are accepting of it without a punitive or retributive response. That’s a way to bring people in and make them feel safe telling you what you need to know.
Leaders also need to recognize that in addition to being isolated, they’re under constant scrutiny by virtue of their role. That is not necessarily a bad thing. In fact, it can be a force for good if leaders recognize that how they behave and treat others is being closely watched, and it’s an opportunity to model how they want others to treat their co-workers. Getting leaders to recognize the emotional power of their role is important.
BBH: Speaking of how you treat others, why are business leaders today increasingly finding themselves needing to take moral leadership stances?
KS: I have been thinking about that a lot recently. Some of the best business leaders throughout modern business history have done this, so I don’t want to suggest that this is an entirely new phenomenon, but the state of the world today is increasingly polarized. No matter what side of the political spectrum you’re on, there’s a general sense that politics is more divisive than representative, and there’s a sense that in some government offices, there’s a failure of moral leadership. It’s against that backdrop that some business leaders feel drawn to take moral leadership stances that transcend what might otherwise be seen as the normal boundaries of their role. Employees don’t necessarily want their leaders to take overt political stances, but they often want them to speak out on the issues that matter to their businesses, particularly global issues, such as trade policy, immigration and climate change. For leaders to address some of those issues and to use their role to get involved at a higher level is not only good for their business, but also inspiring to many employees.
BBH: Does being a leader at one company mean that someone is destined to be a good leader at another company or in another context, such as politics?
KS: Not necessarily. Some leaders can successfully make the transition, but that is not always the case. Leadership is highly contextual. Forget about going from business to politics, even when going from one business to another, where the culture could be different, there’s no guarantee that somebody will be successful in making that transition.
BBH: How does one become a leader? Are they born or created?
KS: There is no singular path to leadership. It is not simple, and given that leadership is so personal and psychological, it would be naïve to think that one becomes a leader simply by going to business school or reading the latest best-seller on leadership, though those are both good things to do.
The roots of the best leaders that I’ve seen can be traced back much earlier in their lives to the crucible of childhood experience. Some leaders, for instance, underwent some particularly difficult experiences in childhood and were drawn into a precocious leadership role in their family structures first, long before they ever became a CEO. Those are very formative experiences that then get carried into adulthood.
BBH: Are there certain qualities in leaders that tend to have a correlation with success?
KS: Leaders are all different from one another, but there are some common denominators that I’ve seen in the best. These include a passionate sense of purpose and vision for where they’re going and a deeply rooted sense of morality and values. Another quality is intelligence. That doesn’t necessarily mean getting good grades, but being intelligent in a broader sense. The capacity for empathy is also vital in the best leaders, both empathy for the people who they are leading and empathy directed outward toward customers and other stakeholders. Another is a sense of drive and resilience – the best leaders I know find obstacles are challenges to be surmounted rather than get them down. Self-awareness is also important – having some sense of how one is perceived and what one’s limitations and weaknesses may be.