The Iron Triangle of Successful Leadership

The Iron Triangle of Leadership
A few months ago in Shanghai, I caught up with a friend who's now the CEO of a mid-size manufacturing company near Guangzhou. Many years prior (when I still had hair, he could fit into size 44 pants and women didn't throw up when they saw us) we met when we were consultants to a large transport firm, where we saw first hand what happened when leadership in an organization went awry. I focused on the business processes and logistics execution and he looked at the IT infrastructure and key parts of the strategy, though we did a lot of work across the streams, along with the other advisers.

When we reported our findings to the Executive, we initiated what was as close to an all-in brawl as you are ever going to get without people's teeth flying out. It started with the typical yelling and finger pointing after we finished, but things quickly went into shoving as we tried (pathetically) to keep things not personal by saying things such as "The software suite has proven to be challenging to integrate into the existing workflows", which was variously interpreted as "The !$#@^$# IT Director selected that useless package because he got a kickback from the software provider's sales girl - and I bet that's not all he got from her..." or "The Chief Logistics Officer was too lazy to put in the effort to properly remap his processes - even when he is so overstaffed because he's too stupid to do anything himself!". All the latent tensions came out during those meetings, with people immediately assigning a name and a face to everything going wrong.

We got everyone outside to cool down when things got overly heated. This process repeated at least a half dozen times over the next few weeks - definitely one of the most dysfunctional companies I have ever come across. We still ponder about the emotions and the mistakes the Executive have had to have made over a number of years that caused things to get to that stage. You had very senior, well paid and actually quite capable individuals acting like 14 year old schoolkids: it was funny, strange and disturbing to watch it play out. A clear failure of leadership.

We laughed about it over drinks and chatted for a while about other incidents afterwards - failures of management that keep people like me busy.

This led me to thinking - what actually makes a great business leader in the real world and not just in an academic paper? This question has generated countless trillions of words of analysis over the years (including at least 250,000 or so from me). But if I look at all the situations I have been in over the past 20+ years, it actually is quite simple to analyse at the highest level.

We can basically classify leadership into 3 broad expressions:
  1. Administrative Leadership
  2. Intellectual Leadership
  3. Moral Leadership
The above are aspects of leadership we have all have seen used well - and sometimes well enough to inspire us to imitation...but all too often poorly enough that the incidents have created remarkable consulting opportunities and lessons for the future (as well as topics for some highly defamatory jokes).

In my experience, too many individuals simply think that Administrative Leadership is enough, without realizing how hollow - and how false - it is without them being both the Moral and Intellectual leaders of an organization. It is the latter two that underpin Administrative leadership.

Before we delve into things, I need to state that whilst Administrative Leadership is (usually, unless you have an exceptionally dysfunctional organization) clear cut with the title and generally unambiguous, Moral and Intellectual leadership is generally more a matter of perception more than anything: people think you have it...or they don't believe you do.

Let's take a closer look...

Administrative Leadership

This is the aspect most people think about as leadership. It's essentially the title on the business card or the organization chart. General Manager, Head of Products, CEO etc...whatever the title, it denotes the level of authority. It shows itself in the organization in terms of your responsibilities, who reports to you and who you report to.

Trouble is, the title is often as far as people get. The reality is that in larger organizations with complex matrix structures, it can be pretty hard to be a true leader. You can command what is near and around you, but often your inputs are way beyond your control. And in larger organizations, I have seen so much 'filtering' (and in many cases that is a very kind word) of company data that many CEOs would not know if the floor beneath them was on fire until the boards collapsed.

You lead, but you also lean.

In order to administer effectively, you need to:
  • See what is going on
  • Be allowed to do something about it
There have been more than a few individuals I have dealt with who have had the title, but who were really Toothless Tigers. They could not really exercise true administrative control to any real degree: Common barriers to effective administrative leadership included:
  • They had to be subservient to a very active and restrictive senior management (or Board); 
  • Powerful co-workers who have a great amount of power themselves and are able to 'shadow' an individual unofficially; these co-workers may be superior, equal or subordinate. However, they influence aspects of your own function that can impair your own work by constraining the flow of information.
  • Company owners/founders, who appoint CEOs to run things, but who in reality still call the shots on way too many day-to-day matters
  • Matrix reporting lines
Administrative leadership is really the framework. But often, it's illusory. It's words on a business card, but the reality of the office is very different.

And in addition to the above, there is a higher calling of leadership. True Administrative leadership is built upon two foundations: Intellectual and Moral.

Intellectual Leadership

You'll be pleased to know that I have not met that many CEOs or senior executives in US and Western European nations who are total morons (though please note that 'not that many' is not the same as 'none').

On the downside, I have met quite a few who were clearly not the smartest individuals in the room...the problem being that they were not aware of the fact when pretty much everyone else was.


Often (and this is still a problem in too many Asian based companies) many people held titles and roles largely due to a seniority: younger, far more capable individuals were waiting in the wings, individuals who were either smarter/and more highly educated, often with very different ideas as to how things should be run. And this extends way down further in the organizational hierarchy. There are many smart people in companies - and there are some very clever people just below them.

What often happened was that these less senior but clearly smart people held different views as to management decisions...views which they made known by various means to their colleagues. When this happened, you have real disorder. People often thought "Do I follow today's foolish boss or the smarter kid...who may be tomorrow's boss?". I have seen more than a few instances of this, where staff had divided loyalties and performance of the company has brutally affected.

Intellectual leadership in an organization is tough: there are many brilliant people in many companies, and a few who are truly exceptional. In some instances these people run the others they don't. But they are there, and if they believe what you are doing is not the best option, then you may quickly find an organization pulling in very different directions.

And yes, I realize being eerily brilliant in one narrow field - and in these days of job segmentation that is very common - does not mean someone can run the entire organization. But it does mean that if that individual feels a strategic decision negatively impacting their work is wrong for them and the broader organization - and they are proven to be right - then management loses respect. And when respect is lost, things can fall apart very quickly.

Leadership is more than just about being smart: it's about harnessing the people around you who may well be smarter than you, but aligning and using their skills in such a way as to be truly great. However, these days many organizations demand more than just excellent general business sense: they demand outstanding knowledge of the business itself.

If your staff see you as doing things differently to individuals they perceive as smarter, watch out.

You don't have to be the smartest person in the department or the company to run it. But you do have to be smart enough to understand risk, opportunity and the voices of those who report to you when they disagree with what you say - they may well be right.

So you best be certain you are.

Moral Leadership

After the Arthur Andersen, Enron and Lehman Brothers scandals, you would think that most organizations would have learnt a thing or two about such abstract ideals as honesty, of trying hard, of saying what you mean and meaning what you say...and of obeying the letter and the spirit of the laws of God and man.

Sadly, nope. In the mistaken belief that ignoring morals expands profits, many organizations pay a very convincing lip service to moral behavior, yet what goes on behind the scenes is the opposite. If we all think back, most of us can up with a number of examples from our own experience...and sometimes we just need to look around us.

To be fair, it is often hard for the an organization with tens (or hundreds) of thousands of staff across the world to be completely squeaky clean: the simple law of averages means that despite psychometric screening, training and internal/external audit, some undesirable people are bound to slip through the cracks. Some will be discovered soon, some much later and some never. Also, some otherwise decent people may be put into situations where their specific weaknesses are tested to a great degree over a long time...and cave in. In other roles, these people may have thrived in an honest way.

But these cannot be excuses. Leadership is about taking the right stand, about setting an example...and true leadership is about setting an example when no one is looking, It is about reaching for an ideal in the most challenging of circumstances. If you cannot do that, then leadership is not yours.

That is what is needed in moral leadership: being seen as the conscience of the company. To embody the best of values within it, to completely adhere to the laws outside it. Without exception...because everyone will remember only the exception and all the good you have done will count for little if anything.

But there is more to it than that, and this is where it becomes a little trickier.

One of the most difficult balancing acts is being honest about your abilities and the company's whilst still being inspirational - how do you draw the line? It's indeed a fine line between a positive, can do attitude that inspires people and insulting the public's (and your own staffs') intelligence with slogans and positive statements that mask the reality of an impending disaster (Blackberry, I'm looking at you).

I have seen this played out countless times: a CEO raving about a merger that an analysis I was holding in my hands showed huge risks and uncertain benefits; a statement about a product that was less marketing spin and something approaching regulatory action...and financial outlooks that made me question if the CFO was really adhering to the strict no drinking policy in the workplace when he signed off on it...

At times moral leadership is hard to gauge. In some organizations, there is a real sense of purpose and honor in doing a job. But in many places, there exists something like a vacuum: morality is given lip service, and the private ignorance of it in pursuit of profit is rewarded. And in a few instances I have seen, there is a delineation of morality that goes something like this "If you break the rules to feather your own nest, you're gone...but if you have to do so to benefit the company...we'll take care of you as best we can if it goes public".

The problem is, where do you draw the line? A lack of morality in business is like rust: it starts off small, but grows and seeps further when the conditions are right. And before you know it, everyone is acting according to the lowest common denominator.

If staff think that their manager is a liar, a fraud or even someone who just 'bends' the rules, then that is a surefire guarantee that those staff members are going to be ripping off that organization left right and center. If they see / believe leadership says one thing but does another, that is effectively their get out of jail free card.

This is why as a leader, morality cannot be an option. The vast majority of crooks do eventually get caught - and those that get away over time can never rest easy.

And the price of being immoral? Always far too high. It creates a rolling legal and performance liability. If people cut corners in terms of morals, they will often do so in terms of performance, leaving your organization vulnerable to more truly efficient and innovative competitors.


True leadership in an organization will never be about your staff saying "The guy's an idiot and a crook, but he's the CEO, so I guess I better do as he says". That type of sentiment does not exist. More likely you will get "The guy's an idiot and a I'm going to look for something better and get a bit more of a self help bonus whilst I'm still here".

What you want is:

"This guy's smart - and he's honest - and he makes sure everyone else is. I see why he's the CEO and I'm sure that he'll lead us right".

To be recognized as smart and honest as the reason you are a leader, then that is true leadership - the perfectly supported, perfectly justified leadership that allows you to truly lead and have others follow, because they believe in your capability and righteousness of what you wish to do.

Intellectual and moral leadership - the one that gives true meaning to any title.