Rock Stars and Transformers

Of all the ingredients of a successful company, I believe that good leadership is the most critical and also the most scarce. That said, leadership is situational and can take many forms. One organization’s visionary leader may very well be another’s jackass.

One of the challenges organizations inevitably face is type of leader(s) they want within their organization. There is enormous research to suggest that transformational leaders (I am using the academic definition here) are the most successful in the long run. The key tenant of transformational leadership is that the focus should be on the team rather than the leader. The leader’s job is to build a team, support, coach, and mentor it and ultimately unlock the potential of the team. It sounds great and it works wonderfully, but there is a problem. Companies, especially early-stage ones, must attract the attention of investors, politicians, reporters, and other outside parties. We live in a world fascinated by tabloids and fame, and unfortunately companies must operate in this celebrity-obsessed environment. Organizations with transformational leadership models are often challenged in this respect. With leadership and capability diffused across a team, no one individual stands out and as a result it is often difficult for such organizations to garner critical outside attention. Enter the Rock Star leader – somebody whose star is so bright that it draws the attention. It is not surprising that attention-seeking companies will recruit a ‘rock star’ persona to head their organization. But as with anything, there is a price for such fame. Rock stars often have ego issues, and so while they draw the gaze and attention of outsiders, that attention is often on the individual rather than where it ought to be - the company, its products and its business model. This focus on the one key individual tends to slowly erode the team cohesiveness, and hence the price of a rock star leader is a less effective broader team. We are thus left with a dilemma: we need transformational leaders to build effective organizations, but the outside attention we seek often necessitates a rock star leader.

There are a few commonly employed of solutions to the dilemma. The ideal is to find a transformational rock star. My experience however is that such a combination in a single individual is rare to the extreme. The more common approach is to surround the rock star with one or more transformational leaders. You will often see this in a CEO-COO or Co-CEO partnership (think Jobs & Wozniak in the early days of Apple, or Basillie & Lazaridis at RIM), where one is the outside symbol of the company and the other is the person that actually makes things happen. Sustainability of this model is however a challenge. It takes a special kind of partnership for this to work – a partnership where both understand and respect the strengths, weaknesses and ego needs of each other. The internal leader(s) must be comfortable living in the shadow of the rock star’s fame, and the rock star must be comfortable staying out of the kitchen. The issue of recognition and compensation must also be managed carefully. The rock star may be the face of the organization, but they are likely not the heart and soul of it and so making sure there is fairness with respect to compensation is essential.

The daunting task of getting the right leadership model in place is the purview of the board. The board must own the business strategy and that includes deciding what the leadership must look like to execute that strategy. Some say on the topic of leadership that role of the board should be limited to hiring and firing the CEO. I disagree. Ultimately leadership is not about the leader, but rather about the organization. A board that decides they want/need a rock star must go in with eyes wide open about the costs of such an approach.