Why you should avoid charismatic leaders

(MoneyWatch) I've written about the perils of narcissistic leaders. They're dangerous because they want the applause that ensues after big dramatic gestures and that inclines them to heroic strategies that make their companies far more volatile. But what about charismatic leaders -- doesn't every company want to find its own Steve Jobs?

No, at least not according to Christian Stadler, writing in MIT's Sloan management review. I like Stadler's work because, as you might expect of a European, his sense of history is more than a week long and he's interested in the patterns and lessons it can offer. Surveying 100 years of European business leaders, he found that leaders of high-performing companies were not charismatic -- at least not as charismatic as the leaders of companies that did worse. He argues that the problem with charisma is that you can persuade just about anyone to do anything -- even when it's crazy.

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Poster child for the perils of charisma is Michael Frenzel, Chief Executive of TUI AG, Europe's largest travel agency. When he got the top job, the company main business lay in commodities and steel. But this was too boring for Frenzel who divested himself of those "old economy" businesses and instead went pell-mell into the travel business. The timing was wrong, the strategy was flawed and in 15 years, TUI shares lost almost 60 percent of their value.

This reminds me of Jean Marie Messier, known to many of his erstwhile followers as J6M -- the 6 Ms standing for Marie Messier Moi Meme Maitre du Monde, or Messier myself master of the universe. His brilliant idea was to turn his water company into an global multimedia business, something he knew nothing about. But he had the charisma to persuade his board, his shareholders and the French government that his was visionary leadership -- until the day it wasn't.

How do you spot a charismatic leader? Most people will say you know them when you see them but if in doubt, go looking for award winners or the CEOs most frequently decorating the covers of magazines. According to Stadler, six out of the last 18 Chief Executives who won the title "Manager of the Year" in Germany presided over huge strategic blunders. By contrast, he says, you can spot the "intelligent conservatives" who are the better bet. They're most likely to be insiders who know the company from top to bottom. And in a meeting, they always stand out because they're the ones doing all the listening.

[Storyweaving]

This is an insightful summaries about organizational leadership, innovation and business practices that work and don't work. It punctures punctures a few myths about our Western culture's fascination with persuasive risk-takers. Visionaries can be wonderful — unless they become narcissistic and forget the purpose of leadership. Stadler and Daly affirm with their data what a lot of us leadership folks are saying, that the best leaders are listeners. These ideas about "intelligent conservatism" are a persuasive antidote for the hyper-individualism that hampers our organizational effectiveness. (Thanks for the inspiration! I reblogged this post w/commentary on leadershipspirit.wordpress.com)

[ChristianStadler]

Hi Robbin,
I am the author of the Sloan Management Review article. Thanks for the comment. You raise a very interesting question. While I agree with you that it is difficult to separate position and charisma entirely I would not take such a black and white view on it. So for example I would expect that prior to becoming CEO in a corporation the candidates are already in very senior positions which allows the Board to make a judgement on whether this person will rely heavily on charisma and maybe less on co-operation and inside experience. Let me give you an example of one of the leaders we studied. Edzard Reuter became the CEO of Daimler after he introduced a bold vision of a integrated technology conglomerate.He was the CFO at the time but had spent much of his career in Bertelsmann. It was very clear at the time he became CEO that he is a charismatic leader. I also met Edzard Reuter (long after his failure at Daimler). He is still a charismatic person - although in no position today.

[gilsaints888]

This is why I personally favor intelligent conservative versus charismatic leaders. oftentimes people are swayed on an idea because the person pushing it is charismatic and not because of the merits of the idea itself. I assume that's what happened to the failure at Daimler. And one more thing, charismatic leaders tend to think what will be popular to other people and capitalize on those rather than on the unpopular right thing.

There is a saying a great leader will take his people to the right even if it's not what the people want.

But it is a dilemma right now because most people right now will only be swayed by charismatic leaders and not really "investigate" or think about the facts.

Thus, any government/leader is just a reflection of its people. Until the time comes that the people don't care about a leader's charisma and instead see through the leader then everything's just for show.

[robbinsp100]

This article implies that leaders are either charismatic or not, that it is a sort of property that they use. It is the fact that they gain positions of power that they become charismatic. If you consider Hitler he did not start out as charismatic. He became charismatic by creating a vision of a better world they all wanted. He gained followers when he started to deliver on those promises. It is not possible to predict who will become charismatic until they are in positions of power. It is too late then to remove them until they fail badly as Hitler did.

[robbinsp100]

PR

[gilsaints888]

Hitler is an intelligent conservative. Being charismatic was just a bonus. He wouldn't have gone far without strategy and just charisma.
Thus as the article states, it's still intelligence that should matter, but if the intelligent leader has both then well and good. As intelligent as they are (the leaders) they surely will often realize they'll need to work on their charisma.

Now, the article is head on the fact that some people only have charisma. This is the danger. Because (like in the government elections) most people will be swayed just by charisma and not really "investigate" and think about the facts.