Leaders for the last economy

I was thinking recently that most businesses suffer from having the wrong leader at the right time.  What I mean by that is that anyone can run a firm when the economy is going well and growing, but only certain people can be effective when the tide turns and the economy struggles.  As I see it, there are at least three leadership styles that people exhibit, and most firms have a leader that reflects the leadership style that is just currently passing out of favor.  In other words, most firms have the right leader for the last war, not the war they will be fighting next.

I'd like to note as a preface that this is just my personal observation based on years of experience and industry observation, and may overlap with an industry expert or author.  If so, no offense meant.

The first leadership style is entrepreneurial - seeking to create new things and open up new markets.  These leaders demonstrate a natural curiosity about the market, the business and are constantly open to new possibilities.  Usually these leaders are found in smaller organizations, although you can find them in larger organizations (where they simply held on to leadership from when the organization was small - like Dell or Google) or when they've skipped from the leadership of a smaller, entrepreneurial organization to a larger organization to revitalize the larger organization.  Often, these leaders don't have a lot of interest in operational or transactional issues.  They are interested in the future, new ideas and new products or markets.

The second leadership style is operational or transactional.  These are the folks who have inherited a success and don't want to screw anything up.  They are usually interested in managing costs and safe, comfortable growth of the top line.  They don't encourage a lot of new ideas or seek new products or services, but want to maintain the existing business and ensure profitability and efficiency.

The third type of leadership is a "fixer".  This is a person who is called in to replace an operational leader or entrepreneurial leader who can't or won't fix evident problems or redirect the business.  Most fixers are interested in the short-term, getting a firm back in the black and correcting problems or errors in strategy or operations.  These guys don't worry about breaking anything since they are called in to fix what was already broken.  However, they tend to lose interest once a firm is back on steady, even ground.

The real problem is that just about every business has a person who has a leadership style that is misaligned with the needs of the business that are just over the horizon.  I guess it is part of the "peter principle" at work - people reach the pinnacle just as their skill sets become obsolete.  For example, it makes me crazy to hear people in the airline industry say they were caught off-guard by the increase in fuel prices.  Really?  Was no one within the management team watching the incredible rise of India and China and anticipating the demand for fuel from those economies?  Certainly everyone recognized that very little new production has come online lately.  Where else were oil prices going to go?  Yet, the transactional and operational managers did not scan the future, did not change the business model and were caught offguard by changes in the environment.  So just when the airlines need entrepreneurial or fixer style management, they have for the most part operational and transactional management.

You can see the reverse issue in smaller companies trying to make the jump to scale up.  The original entrepreneurs usually find it difficult to step back, release the reins and allow "professional" managers to build scalable capabilities.  That does not mean the entrepreneur should go away, only that he or she should release some control to enable the business to mature. 

Right now, in most Fortune 500 firms we have a preponderance of transactional managers.  That shouldn't be a surprise, given that in a normal distribution probably 70% of the managers should be transactional, while the rest are either entrepreneurial or "fixers".  However, given the shift in the economy and the incredible increase in the pace of globalization and change, we probably need many more entrepreneurial and "fixer" style leaders right now.  In other words, we have the leadership we needed in the 90s, in the 2008 economy.

Why should we be surprised when Wachovia fires its CEO, or other senior leaders are pushed out?  Most of these managers are facing issues they aren't prepared for and temperamentally aren't suited for.  We need the RIGHT leadership style at the right time, not the person who was next in line regardless of their style or skill set.