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But, what kind of leadership do we need?

Hmmm, ‘It’s a time for leaders’ I pompously posted below. I believe it is. But, what is the best kind of leadership for the current turbulence? In the UK, the leadership at the bank Lloyds TSB was, over the past few years, characterized as boring and unadventurous. That’s how other financial institutions viewed its reluctance to gorge on the new financial instruments that have emerged in recent years, making fat short-term profits from repackaging and selling on loans, for example.

The media joined in and contributed to this version of Lloyds TSB – that it was too cautious, not a place to invest in if you want big returns fast, that it was somehow getting left behind by the more adventurous financial institutions at a time when money (credit) was virtually free.

Well-run, safe but boring. That was the general consensus. So, yesterday, Lloyds TSB turns out to be the only bank in a sound enough position to say ‘yes’ to the UK government’s attempt to broker a takeover of HBOS (Halifax Bank of Scotland), the UK’s largest mortgage lender, to head off the possible need for yet another government bailout akin to Fanny & Freddie in the US, and Northern Rock (in the UK).

Sir Brian Pitman’s tenure leading Lloyds TSB helped start off the ‘safe but boring’ cliche, because his sound, unflamboyant leadership set the tone for the bank. Eric Daniels, Lloyds TSB’s chief executive of five years, is similarly known, says the FT today

“as the Quiet American because of his low profile and cautious approach…Under his stewardship Lloyds TSB has been cautious about expanding into more exotic business such as credit products rooted in subprime mortgages”.

Both Brian Pitman and Eric Daniels strike me as what Jim Collins calls Level Five leaders – longterm thinkers who are guided by an inner conviction rather than following the current trend, who are usually ego-lite and happy to stay out of the limelight, and who have a clear view on the horizon as well as the short-term. Unflappable, sometimes mild-mannered, but with the courage of their convictions.

Rene Carayol, the Leaders in London chairman, has said in the past that what characterizes great leadership is a mix of two apparent contradictions: great courage and great humility. That sounds close to Collins’ characterization of ‘the quiet leader’, the Level Five leader.

There’s some research that shows charismatic leaders who make big bold swooping decisions and adopt high risk strategies win bigger than Level 5 leaders when they are winning, but (obviously) lose bigger too. I’ll dig it out and post it here when I find it.

That research, and the contrast between those two types of leader, seem to me to be reflected in the choice of leadership we have before us now. And it seems as if the market is making the decisions for us. In a game of ‘last man standing’, or at least, of consolidation in which the genuinely strong players take over and consolidate the ones that appeared strong but turned out not to be, my suspicion is we’ll see a lot more ‘quiet leaders’ running things once the smoke clears.

Is that what we need? What kind of leadership do you want to see in your organization at the moment? And are you getting it? How about your own leadership? Where do you fall between the two ends of the spectrum mentioned above – the quiet leader at one end and the charismatic risk-taker at the other? Yes, it’s a time for leaders. But, what kind of leadership do we need?

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