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February 28, 2013

Good Vs. Bad Leaders- How they can make or destroy a company

The role of leadership in the success of an organization

In an article published in the prestigious Forbes magazine, “Businesses Don't Fail - Leaders Do” author Mike Myatt has tried to assess the roles and responsibilities of a leader as far as success or failure of a business is concerned. In his article, he has concluded that the biggest factor responsible for every corporate success or failure is its leadership. He has identified many leadership traits and actions that lead to success or failure of a business. According to him, real leaders don’t necessarily take credit for success, but they surely take the blame for a failure. Though it seems to be harsh, but this is a fact.   

Ability to make decisions quickly According to another author Glenn Llopis, leadership is rarely inherited genetically, it’s learned behavior. If one keeps on pedaling it, it becomes automatic. For example, one important trait of a good leader is to make good decisions quickly. In fact, a good leader makes decisions at the time others are just busy pondering over the problem.  Their quality to make decisions promptly especially under pressure surprises many.

Ability to get the job done despite roadblocks You cannot differentiate between a good and a bad leader simply by some theoretical principles. The biggest test of a leader is his ability to accomplish things in the event of all the roadblocks and problems.  The good leaders will get the job done, whereas bad leaders would blame other factors for their failure. 

Impact of leaders upon their organizations:

How Sabeer Bhatia of hotmail.com used innovation and technical knowledge to make it a $700 million company? Another critical difference between good leaders and bad leaders is their ability to innovate and implement employee centric management strategies.  The best example of it is Sabeer Bhatia, who started from scratch and became a renowned entrepreneur. Bhatia graduated from Birla Institute of Technology and Science (BITS) in India, went to US and joined California Institute of Technology.  After that he did his MBA from Stanford University.  During this time, he met Jack Smith and an innovative idea of a free third-party e-mail service came up.  They named their company “Hotmail.com”.  They took the start up to amazing heights and later on sold it to Microsoft Corporation for $0.7 billion.  This is also a story of vision, implementation and thinking out of the box.

How Lee Iacocca revived Chrysler Corporation of US? Lee Iacocca was born in a middle class family to Italian immigrant parents in Allentown, Pennsylvania in 1924. He saw the great depression on the 1930s as a child and received a B Tech in industrial engineering. He joined Ford Motor Company as an engineer, but his passion was sales, so soon after, he switched to sales in Ford. Later on, he entered into product development in Ford. He successfully ran many sales campaigns there. Later on, he became VP in 1960 and then president of Ford in 1970. He was behind the design of Ford Mustang, Ford Escort and Mercury Cougar. After his conflict with Henry Ford II, he was fired from Ford in 1978.

He was then courted by ailing and sinking Chrysler Corporation, which was under a debt of millions of dollars. He did a complete overhaul of Chrysler firing many employees and selling the loss making overseas units. He also brought in many of his former colleagues at Ford.  He revitalized his "Mini-Max" project at Chrysler, which was rejected by Henry Ford. These restyled minivans were sold by Toyota in huge numbers at that time. It led to the successful launch of Dodge Caravan and Plymouth Voyager in 1983.

It was followed by a stream of successful launches of subcompact cars and he was able to sell more than 300,000 cars in the very first year of their launch. The government also showed confidence in the leadership of Mr Iacocca and his forceful campaigning led to the bailout of the loss making Chrysler Corporation. He successfully repaid the government debt seven years earlier than expected because of his efficient leadership and resulted successful launches of K-cars and minivans. He had such a powerful leadership stature that throughout 1980s, he appeared in TV and print commercials of Chryslers with the message, "The pride is back." His forceful marketing messages included, "If you can find a better car, buy it."            The other heroes that led to the success of their organizations through sheer leadership Another trait of a good leader is his employee centric attitude, which is exhibited by Bill Gates of Microsoft Corporation, Narayana Murthy of Infosys and Steve Jobs of Apple.  It is also the story of Akio Morita of Sony Corporation and many other Japanese companies.  A good leader also listens to his employees and maintains proper communication with them in order to share concerns and invite suggestions.  He understands the importance of coaching and training to improve the efficiency and the standard of his workforce. Richard Branson of Virgin Atlantic, Azim Premji of Wipro and Lee Iacocca of Chrysler Corp are good examples of it.

Narayana Murthy is also hailed as a successful business leader of India, who founded the first truly Indian MNC and IT company Infosys in 1981. The venture capital used to start this historical company was just $250, and that too was given to him by his wife Sudha. A carefully woven management strategy, a strong character, vision, focus on quality and competitive edge together gave rise to independent India's most successful IT company and its leader Mr Murthy was honored by the highest civilian awards of India. Anand Mahindra’s innovative drive Mahindra and Mahindra is a good example of how innovation is encouraged in an organization. They have a definite goal for the managers and according to that 20% of the turnover in their entire career must come from new launches, services and channels. Doesn’t that sound interesting?? It means every senior manager has to necessarily contribute towards some kind of innovative initiative and resulting growth of the organization.

Steve Job’s remarkable success through communication and presentation skills The successful leaders are very good at communication.  They are very good at active listening, prompt thinking and taking action when needed.  Steve Jobs, for example, was a very good communicator.  He was able to pass on his dream of a sensitive multitouch smart phone and portable tablet device successfully down to his product developers and engineers.  He was also a very good presenter and at the product launch of the first iPhone, he presented iPhone as a device, which was a combination of three products: iPod, phone, and computer.  It was cheered by the audience with a thunderous applause.  This is what we call a good business leader!

Leadership that led to failure of businesses Another critical quality of a leader is his character.  A person without any character or depth will never be able to lead an organization for long.  Such people will eventually fail, even if they possess intelligence, smartness and other qualities.  As a matter of fact, unethical behavior is doomed to destruction, and the leaders who resort to such behavior destroy the businesses.   Failure of Kingfisher Airlines A case in example is Mr Vijay Mallya’s Kingfisher Airlines. Mr. Mallya ignored all signs of failure and he didn't have the vision and courage to proactively identify the real issues facing his Airlines.  He also misinformed and cheated on his own employees and pilots.  He continued to borrow money from the banks, despite the fact that he had no real plan to revamp his nosediving business.  As a result, the Kingfisher Airlines was grounded. Satyam Computer Services scandal Satyam Computer Services, a huge IT company in India failed because of the greed, accounting-malpractices and fraud committed by its chairman Ramalinga Raju.  Nagarjuna Finance failed because they swindled crores of rupees invested by the depositors. The company has been taken over by Mahindra Group.

Daewoo Motor Co. Ltd.

A giant and ambitious upcoming motor company of Korea doomed to become extinct after the Asian financial crisis and its leadership’s blunders to expand the company, the very year everyone was downsizing led to its tragic demise.

Lehman Brothers---the failure that shook the world and triggered global recession of 2009 The once fourth largest investment bank in the US, declared bankruptcy in 2008, which led to the collapse of US and Asian markets. The bank thrived in the 80s and 90s. The management of the company was accused by the court of regularly using cosmetic accounting gimmicks to hide its shaking finances. The subprime mortgage crisis added fuel to the fire and company doomed in 2008 leading to a global financial crisis.

Conclusion So, we have seen how leadership has led to the success or failure of various organizations.  A leader can make or destroy a company. His greatest strengths are his ethics, character and honesty that can deliver him from the deepest of internal and external crises. If he doesn't possess it, his organization is destined to fail.

Tags : Leadership, good leaders, lehman brotheres, satyman computers, leadership skills, steve jobs

About Nashaat Quadri

Freelance Content Writer (Compare Infobase, New Delhi.) Ex Sr Content Writer, Western Software, New Delhi. Ex Relationship Manager, Mashreq Bank, Dubai.