Restraint makes the best of fallible leaders

One common theme shared by all leaders is that absolute, untrammelled leadership tends to be dysfunctional.

by Business Strategy Review
Last Updated: 23 Jul 2013

The worst outcome of such absolute leadership was seen in the catastrophic errors made by the 20th century's most wicked dictators Hitler and Stalin. Unchecked they were allowed to proceed with their ideas no matter how terrible or mistaken.

In contrast, Winston Churchill, who deserves the right to be regarded as the greatest leader of the 20th century for holding out against the threat of fascism when Britain stood alone, operated within a system of restraints.

As such, Churchill's worst impulses were checked by other figures in the political and military system. This form of restrained or collective leadership is proven to work in business too. The hugely successful Rothschild family firm was governed by a partnership system in which one pre-eminent partner led (the smartest, not necessarily the oldest) whilst the other partners acted as a restraint.

Intriguingly, Siegmund Warburg, one of the City's most successful bankers, created a system to restrain himself. He was a charismatic and charming man, but sometimes a bully, and knew that he needed a system of checks and balances. As such, all of his correspondence was circulated to the bank's senior executives who met with Warburg every morning to make collective decisions.

Warburg also encouraged an open door policy and expected junior executives to articulate their opinions about the business. Good leaders generally understand that they are fallible and that the world is chaotic. They understand their vulnerability, recognise the need to work extremely hard and plan for all possible scenarios.

Source:
Business History - interview with Niall Ferguson
By Des Dearlove
Business Strategy Review, Summer 2007
Review by Morice Mendoza

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