Leadership can mean a myriad of things depending on who you ask. To some, leadership means guiding others to complete a certain task, and for others, it means motivating members of your team to do their best. Regardless of how leadership is understood, it’s generally agreed that good leadership is integral to an organization’s success. But just how important?
For over a hundred years, experts have studied what type of person makes a good leader and how important leadership is in determining organizational performance. To date, there has been no consensus. Is corporate success determined by the right CEO, or is that only one of many important factors to determine whether an organization will be successful? To better understand the phenomenon of leadership, #LeadersatWork spoke with Bert Spector, Associate Professor of International Business and Strategy at D’Amore-McKim, about what makes organizations successful and how crucial CEOs are to corporate success.
“Even though this is fundamentally unresolved, I’m of the view that leaders are part of a larger system that determines if companies succeed or not. Steve Jobs and Apple are a great example of this debate,” explained Spector. “We use Jobs to explain Apple’s remarkable success, and there’s no question that he was remarkable. But would he have been as successful at Apple without being surrounded by many other elements that made Apple so prosperous?”
Organizations become successful when they can effectively integrate a variety of components, including strategy, structure, good products, and fueled perhaps by a bit of luck. However, to stay successful, they must have the capacity to evolve and develop these components as the environment changes.
“Sometimes leaders thrive at this, but many others are not good at evolving,” said Spector. “This is the danger of putting too much emphasis on a leader that may not be able to adapt to a changing market. Now, in Steve Jobs’ case, he was. Still, it can be difficult for an organization to evolve with the same leader over a long period of time because they can become stuck in their previous ways, confident that what worked before will continue to do so.”
For instance, take Blockbuster. For two decades, Blockbuster was the top national chain of home movie and video game rental services. At its peak in 2004, Blockbuster consisted of about 60,000 employees and over 9,000 stores worldwide. However, due to competition from Netflix (which Blockbuster had the opportunity to buy as a fledgling company in 2000) and Redbox, Blockbuster filed for bankruptcy in 2010.
“Can you ride out the initial good idea and come out with another really good idea that fits a need in the market?” explained Spector. “When I think about real innovation and business models, it doesn’t start and end with the leader. This isn’t a capacity that’s just baked into one individual. It needs to be widespread throughout the organization, with people within the company pushing to change the business model.”
When leaders encourage leadership and innovation to take place at all levels within their organization, long term success is both possible and likely.
“Another example we discuss often is Dunkin Donuts,” said Spector. “Dunkin came close to bankruptcy several times. What saved them? The Munchkin®. It brought Dunkin Donuts an entirely different market of children and parents. But the Munchkin® didn’t come from someone sitting at Dunkin Donuts’ headquarters; it came from a franchise owner tired of throwing away dough from the center of a donut.”
Innovation rarely comes from the top. That makes it much more crucial that when opportunities to innovate arise, leaders are quick to act. The leader who can embrace change and innovation, who can convey a shared understanding of the organization’s goals, and who encourages leadership throughout the entire company, will help contribute to the overall success of a company; but that success relies on the entire system, not just the CEO.
Do you think a CEO can act as a “corporate savior?” How important do you think the guidance of an organization’s leader is in determining the success of that organization?