Sunday, May 15, 2011

Continuing leadership from within - a myth?

We are always hearing how promoting from within to continue the helm from it's predecessor is better than seeking qualified and expertise from outside the organisation. It may be suggested that the long-term health of a company should be measured by whether or not it has produced and developed homegrown or in-house talent similar to developing or improving it's core business or competency. Some would argue that anybody  could buy or hire talent; only real leaders develop from it experience. It may hold truth or partially true but while it is important to build a “concrete foundation” for the successor, the truth is that, depending on the company and it's situation, it can be just as important and a need to bring in expertise from outside.

Managers or leaders may not be all “born” in the organisation; they all have to come from somewhere or develop their talent from within or from outside. And suggesting that companies are better off when every or even most executives “grow up” there is not only wholly untrue but may at times end up with wrong judgement. As with all things in business, there is no one-size-fits-all answer; it depends on the corporate needs of the company and what is it's long term strategic goal and it's core business. And more often than not, it’s not a question of either-or, but a question of balance and right choice.

Some big organisation that are famous for promoting from within - IBM, Caterpillar, and 3M, for example - however have all brought in outsiders when they needed to. After realizing that its “home-grown mentality” was hurting the company, company like Caterpillar began bringing in executive outsiders from Ford according to a Wall Street Journal story.  Also for 3M, it has hired outsiders for its last two CEOs. And we all know that bringing in former RJR Nabisco and American Express executive Lou Gerstner saved IBM.

In fact, most of America’s biggest and most respected companies - Microsoft, Apple, Google, Cisco, and Microsoft, among them - regularly hire executives from outside the company. Before joining Apple, COO and heir apparent Tim Cook was a vice president with Compaq and, before that, he spent 12 years at IBM. Ironic, considering Apple’s ancient feud with Big Blue. And Google CEO Eric Schmidt hails from Bell Labs, Zilog, Xerox, Sun, and Novell.

There could be no correlation between executives being promoted from within and the health or success of a company. As for the reason why that’s the case, it mostly comes down to this. There are indeed advantages for promoting from within, i.e. knowing the company and how it operates, growing up with the company culture, etc. But those same advantages can also be liabilities, since myopia and lack of perspective is probably the number one reason why executives and companies might have fallen into the red. The cloning effect of leadership from within may not bring new ideas or "out-of-the-box" concepts from external. Businessess have to generate new ideas to face up with competitions and myopic business acumen will kill the company in no time with short-sighted ideas within.

But what is a “leader” anyway? What does a “leader” do?
Who is better, a leader or manager ??

Some may consider the “leader” of the team as the person who formulate a working team and then got out in front of it to give direction and provide the vision for an action plan. The concept of a “leader” means that credit for what the team does goes to the leader but not the team. However the real fact is that you might see it in the lower level where leaders bloviate about leadership and try to inspire people, when in fact they’re usually just making everyone under them want to puke. What Drucker said — and most tend to agree — is that the business world doesn’t really need strong leader but better off with capable managers — people who can actually manage a team of staff especially working under tremendous work stress.  Being a great manager means being in service to the team. It means giving the team credit and making everyone else successful but himself.

Leadership and management may not go hand-in-hand or inter-related. While it could be true that there are different skill-sets, there are some intimately relationship. The truth is that good management skills make better leaders and the converse is also true. We could argue that great management requires excellent leadership skills. MBAs make better managers. You learn a lot getting an MBA - especially from a top notch school - if you aspire to be in senior management. There might be no credible evidence that it will make you or anyone else a better manager. That’s largely because management is more "art than science" as some management gurus would say. If you’re capable, you’ll become a manager but it takes a lot more than that to become a successful manager. Certain qualities and processes work better for certain people in certain organizations and industries, but that’s a far cry from a general blueprint for management success. Every so often you may about whether you should or shouldn’t get an MBA in engineering or technical field. There is no fix answer to such and it all depends on individual's aspiration and end of the day, there is zero loss should you decide to embark or spend S$50K-S$100K on an part-time or full time MBA degree. The knowledge you gain is worth every cent you had to spend.
So, as we go forward, let’s value the real managers ( so-call leader ), who actually do the hard work of making other people productive with high spirit.

Very likely scenario for most successful corporations is that they will continue to either selectively promote from within as well as taking the step to hire from outside the same time. They should do whatever they need to do to ensure the company has the necessary talent scouted and bring into the workplace new experience it required at that point in its evolution. There is simply no broad argument for choosing the leader or managers from within will be one sure success formula for any organisation. 

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