Everything You Think About Business Leadership Is Changing

Quick. Picture a business leader.

The one that traditionally comes to mind is that of a Jack-Welchian type “taking the hill,” “gaining share,” “beating the competition,” “cutting losses,” operating through “command and control.” War, sports and gambling analogies abound.

In this world, size matters. And this has been in part because having many customers also meant having better insights into their behavior, a significant competitive advantage. (I recognized that the weekly client surveys we conducted at Merrill Lynch gave us a HUGE advantage over our wealth management competitors, who didn't have similar resources.) And even if large companies didn’t always really “listen to their customers,” as they’ve said they did, their sheer might and resources could often shape their industry in a certain direction, regardless. (“Any color as long as it’s black” worked back in the day.)

But this is changing. Technology and social media today are enabling almost anyone to tap into what consumers want… by simply asking. And these same resources are also allowing customers to “talk back” to companies, and in some cases to mobilize their reaction to company actions.

I've heard a number of thought leaders (like the super-smart Nilofer Merchant) point out that this dramatic shift of the “rules of engagement” with customers was exemplified by Bank of America’s debit card fee roll-out. It is clear that the bank did not fully engage with its customers on what they valued, or how they would react to the shift; the bank instead bet that its might as an industry leader would serve as a forcing mechanism, expecting competitors to fall in line. Negative customer reaction was swift and dramatic, in a way it couldn’t have been a decade ago, and the bank reversed course.

Thus, the prototypical leader of the future will shift from the steely-eyed command-and-control type to one who is more open to feedback….one who specializes in communication, collaboration and co-ordination.

I gained a first-hand preview of this when I led Smith Barney and Merrill Lynch. A number of leaders of those businesses over the years had approached the job with a “follow me” mentality… and the Financial Advisors just sat back and watched them with bemused smiles. By taking several months to engage them instead in a discussion of what they observed from clients, what was working, what wasn’t working, where we were spinning our wheels – and what our business strategy should be – we saved an enormous amount of time and resources, and had their buy-in on strategic moves. And I found that the great ideas were as likely (or more likely) to come from the 200th Advisor whose hand I shook at a get-together as from our strategic planning department.

While this approach may not lead to Steve-Jobs-type innovation, it can certainly help companies of all sizes understand what consumers value. Thus, the most successful CEOs of their future will view customers not in a paternalistic way (at best) or as sales targets, but instead as partners… whose buy-in to a course of action will be the key component of their success.

And, yes, this does make me more optimistic about the progress of women in business and the value we place on their leadership qualities.


(Photo: Flickr, mattcba) 
Posted by:
 Sallie Krawcheck