of the dangers of charismatic leadership. WorldCom’s Bernard Ebbers and Enron’s
Kenneth Lay “seemed almost a breed apart, blessed with unique visionary powers”
when their companies were increasing stock prices at phenomenal rates in the 1990s.^54
Harvard Business School professor Rakesh Khurana argues that an inordinate num-
ber of today’s chief executives have been “chosen for their ability to articulate messianic
‘visions’ for their companies; inspire employees to do whatever it takes to realize these
grand designs; and imbue investors with faith in their own talents.”^55 These traits, how-
ever, might have led to the corporate scandals that unfolded in recent years. Charismatic
leadership, by its very nature, silences criticism. Thus, employees follow the lead of
their visionary CEOs unquestioningly. Professor David Leighton, of the Richard Ivey
School of Business at the University of Western Ontario, notes that even the boards of
directors and auditors were reluctant to challenge these CEOs. He also suggests that
Canada’s “more balanced culture,” which is less likely to turn CEOs into heroes, may help
protect the country from some of the scandals that the United States faced.^56Is Charismatic Leadership Always Necessary?
A recent study of 29 companies that went from good to great (their cumulative stock
returns were all at least three times better than the general stock market over 15 years)
found that a key difference in successful charismatic leaders may be the fact that they are
not ego-driven.^57 Although the leaders of these firms were fiercely ambitious and driven,
their ambition was directed toward their company rather than themselves. They gener-
ated extraordinary results, but with little fanfare or hoopla. They took responsibility
for mistakes and poor results but gave credit for successes to other people. They also
prided themselves on developing strong leaders inside the firm who could direct the com-
pany to greater heights after they were gone. These individuals have been called level 5
leadersbecause they have four basic leadership qualities—individual capability, team
skills, managerial competence, and the ability to stimulate others to high perform-
ance—plus a fifth dimension: a paradoxical blend of personal humility and profes-
sional will. Level 5 leaders channel their ego needs away from themselves and into the
goal of building a great company. So while level 5 leaders are highly effective, they tend
to be people you have never heard of and who get little notoriety in the business press—
people like Orin Smith at Starbucks, Kristine McDivitt of Patagonia, John Whitehead of
Goldman Sachs, and Jack Brennan of Vanguard. This study is important because it con-
firms that leaders do not necessarily need to be charismatic to be effective, especially
where charisma is enmeshed in an outsized ego.
The current mood seems to be for CEOs with less vision, and more ethical and cor-
porate responsibility. It seems clear that future research on charismatic leadership will need
to provide greater insight into how this style relates to ethical and business behaviour.DISPERSED LEADERSHIP: SPREADING
LEADERSHIP THROUGHOUT THEORGANIZATION
US Army Lieutenant General Russel Honoré was perhaps the first leader to inspire calm in New
Orleans, as people struggled to get help and others struggled to help out.^58 Clear leadership,
with clear statements of what people should do, had not come from the obvious leaders in the
situation: President George W. Bush, Governor Kathleen Blanco, and Mayor Ray Nagin. While
these latter were elected politicians, chosen by their constituents to lead them, Honoré had no
direct connection to the people he was about to save. Instead, he was a no-nonsense military
man. When he arrived on the scene in New Orleans, he did not wait to find out what the
other leaders wanted him to do: He assessed the situation and made decisions about the best
way to get things under control.272 Part 4Sharing the Organizational Vision
level 5 leadersLeaders who are
fiercely ambitious and driven, but
their ambition is directed toward their
company rather than themselves.