"Authentic Leadership?"

Bill George, professor of management practice at Harvard Business School, former chair and CEO of Medtronic, and board member of ExxonMobil, Goldman Sachs, and Novartis, wrote an article about leadership for U.S. News in November 2008, just as the financial crisis had struck. His article is titled “Failed Leadership Caused the Financial Crisis,” and in it he claims the fall off Lehman, AIG, etc. “were not caused by complex financial instruments. They result from failures in leadership.” Whereas Mr. George points to avarice and irresponsibility on the part of the financial industry’s leadership as the main cause of the economic meltdown, I think it is more prudent to say that while leadership played a role, investment strategy was most highly at fault and, moreover, it was most likely a combination of the two and not leadership alone.

So far the focus of our class has been to take in and understand the full canon of leadership theory, but – aside from Great Man theory and Distributed Leadership theory – we have rarely made value judgments on the ideas. Mr. George, however, believes the heads of the major institutions failed to exhibit proper leadership because their companies failed. What he seems to mean, however, is that the strategies implemented by these leaders were not in the best interests of the companies or their shareholders.

After a semester of studying leadership, I have come to believe that failed leadership would look more like a breakdown in communication or a poorly executed vision – not necessarily the holding of a “bad” agenda. Nearly all of the leadership theories, but especially Greenleaf’s Servant Leadership and Kelly/Roth’s Followership articles emphasize the importance of leadership as a communicative endeavor and therefore less dependent upon the leader’s vision or agenda and more related to how he or she expresses it over the long run.
Mr. George shares a list of five points describing what he calls “authentic leadership:”

1. They should be authentic leaders, focused on serving their clients and all the institution's constituents, rather than charismatic leaders seeking money, fame, and power for themselves.
2. They should place the interests of their institutions and society as a whole above their own interests.
3. They should have the integrity to tell the whole truth, admit their mistakes, and acknowledge their shortcomings. Authentic leadership is not about being perfect. It is having the courage to admit when you're wrong and to get on with solving problems, rather than covering them up.
4. They need to adapt quickly to new realities, changing themselves as well as their institutions, rather than going into denial when things don't go as intended.
5. They need the resilience to bounce back after devastating losses. Resilience enables leaders to restore trust by empowering people to create new solutions that build great institutions for the future.

I believe his theory of “authentic leadership” is overly condemning of Wall Street’s leadership. Clearly there were major strategic flaws – it was unwise to invest so heavily in mortgage-backed securities and credit default swaps created a web of vulnerability that investors continued to buy into. These were critical strategic problems. I cannot agree with Mr. George, however, that these leader’s strategic decisions represent a failure in leadership.

In ways, this discussion relates to the issue of defining leadership. Had Mr. George written that the economic crisis resulted in failed leadership (and not discussed strategic shortcomings), it would be conceivable to view his definition of leadership as one that is inclusive of strategy. Since he deliberately outlined a prescription for “authentic leadership,” though, and included discussion of strategy in his article, it is clear that he intends to criticize the moral stature and motivation of leaders – and furthermore suggests that their investment strategies were indicative of their moral failures. Mr. George’s giant leap – that bad investments evidence bad leadership does nothing but inappropriately oversimplify the situation.

Do you think leadership alone is at fault?

George, Bill. "Failed Leadership Caused the Financial Crisis - US News and World Report." US News & World Report - Breaking News, World News, Business News, and America's Best Colleges - USNews.com. Web. 30 Nov. 2009. .