Conservatism rather than charisma is the vital characteristic of successful business leaders, claims a new study.
Research into leadership at European companies that have been in operation for over 100 years, conducted by Dr Christian Stadler, found that ‘charismatic conservatism’ is more important than charisma in driving businesses forward. Some of the firms Stadler looked at included Royal Dutch Shell, LaFarge and GlaxoSmithKline.

Stadler, who is Associate Professor of Strategic Management at Warwick Business School, said: “In our study of the leadership and strategy of 100-year-old European corporations, we found a different style of leadership was far more common among companies that have achieved enduring success — something that we call ‘intelligent conservatism’.

“This is a surer way to lead successfully rather than relying on charisma. Six out of 18 winners of Germany’s Manager of the Year award went on to make huge strategic mistakes that badly damaged their companies. The understated ‘intelligent conservative’ leader doesn’t make such big mistakes.”

Stadler said that the problem with charismatic leaders is just that – charisma. Their powers of persuasion and belief in their own paths mean there is little resistance should they be on the brink of a bad decision.

“If your company is heading in the right direction, a charismatic leader will get you there faster,” said Stadler. “Unfortunately, if you’re heading in the wrong direction, charisma will also get you there faster.”
In contrast, says Stadler, ‘intelligent conservatism’ has bred steady growth for leaders and their businesses over a long time.

Writing in MIT Sloan Management review, Stadler said: “Occasionally, charismatic leaders pop up, but for the most part, the leaders of these 100-year-old European companies have succeeded by listening to their people and relying on old-fashioned industry expertise.

“Listening takes time, and yet it ensures that an organisation is not only on board but also engages everyone in the process — producing more solid results in the long run and leading to less reckless strategic shifts. At Glaxo, for example, top executives displayed a keen interest in learning from their scientists when the company started the transition from being a producer of milk powder to becoming a drug company in the 1920s.

“The second ingredient of ‘intelligent conservatism’ is that it has an in-depth understanding of the corporation. Not surprisingly, in our study of long-lived corporations, 97 percent of CEOs were promoted from within.

“In-depth knowledge of the organisation makes it easier for the leader to form responsive networks and to find out what is going on throughout the enterprise.”

During his research, Stadler found that leaders that had started at the bottom of the rung in an organisation and worked their way to the top could often achieve the momentum to drive the firm to global heights.

“Our study suggests that, the most dramatic and successful transformations of outstanding corporations happened at a time when leaders who had spent their entire career with the company gained control,” said Stadler.

“Sir John Bond was at the helm of HSBC when the corporate colonial bank turned itself into a global financial powerhouse. John Loudon, Royal Dutch Shell’s leader in the 1950s and 1960s, helped to overhaul the entire structure of the oil giant, creating a business model that generated growth for more than 30 years. These leaders succeeded because of — not despite — their long experience in their companies.”

No leadership model is perfect but it’s interesting to see a view that challenges the traditional ‘charismatic leader’ ideal, which may not be ideal when taking into account the industry and background of the business. Executive oversight is key – if people feel they can’t, or won’t, challenge the ideas of a charismatic leaders then the benefits of shared wisdom cannot be tapped into, a disadvantage for the business as a whole.