As stated in the article, this is an interesting take on the current economic situation. Much has been written about the mistakes that have been made, about how we got to where we are now, etc. Little has been made of the learning from those mistakes or how to best lead an organization in less-than-rosy times. Here are the lessons:

Confront Reality Always question whether the “halo effect” of a business or business situation is blinding you to what lies on the horizon. —Herbert Henkel, chairman and CEO of Ingersoll Rand

At Board Meetings, Put Strategy Center Stage The board has been heavily involved in strategy formulation with me, and we have a better strategy because if it. —Bill Nuti, chairman and CEO of NCR

Be Transparent With Employees The only way to address uncertainty is to communicate and communicate. And when you think you’ve just about got to everybody, then communicate some more. —Terry Lundgren, chairman, president, and CEO of Macy’s

Be Transparent With Investors Our policy is: “If in doubt, communicate.” We always want to conduct our business with integrity and forthrightness. —Ron Sugar, chairman and CEO of Northrop Grumman

Build And Protect The Culture Stay focused on culture, people, and values: it’s the area most likely to get compromised in this environment. —Eric Foss, chairman and CEO of Pepsi Bottling Group

Keep Faith With The Future If you don’t invest in the future and don’t plan for the future, there won’t be one. —George Buckley, chairman, president, and CEO of 3M

While there is much to be learned from each of these lessons or principles, a subset of them resonated the most with me. First is the notion of transparency and communication. Especially in touch times (but at all times, really) there is ample opportunity for rumor and innuendo to take over. Communication (even over-communication) with stakeholders is critical to pushing forth an agenda and keeping the team with their eye firmly on the ball. Yes, it’s difficult to remain focused on the task at hand if I’m worried about losing my job. But communications from leadership of the organization about what’s going on can go a long way towards making me comfortable about the situation and about the folks who are leading the company through the challenging environment.

Another favorite is the confronting of reality. Addressing head-on the challenges of the day, whatever they may be, is not only more efficient but also more effective. I’ve been in corporate situations where the reality of the day (the forest) has been ignored (or perhaps set aside) while management focuses on something else (the trees) and the results have been more painful than needed. Especially in tough times, leaders need to take a good hard look at what’s in front of them and confront that reality however different, unexpected, or chaotic it may be. Only then can the organization truly begin charting its course through the situation.

Last is the point about the culture. In difficult economic times, it can be easy to throw out elements of company culture, reject company values, and lose sight of the people as you seek to swiftly control costs, for example. These short-term-focused actions, however, will have a profound effect on the company long term. A company is not just its balance sheet and income statement. In fact, a company is its people, the values that bind them together, and the culture in which they thrive. Short-changing that in difficult times will do much harm and impede the very recovery that management is trying to effect.

Instead of talking about how good leaders lead, or focusing on what makes great leaders, or anything like that, they looked at the opposite. Based on two research studies on executives and leaders, they examined those who failed and developed a list of the ten things most commonly missing in bad leaders. As they write, “every bad leader had at least one, and most had several.”

According to their work, the worst leaders:

• Lack energy and enthusiasm
• Accept their own mediocre performance
• Lack clear vision and direction
• Have poor judgment
• Don’t collaborate
• Don’t walk the talk
• Resist new ideas
• Don’t learn from mistakes
• Lack interpersonal skills
• Fail to develop others

The authors further note that the bad leaders they studies often were unaware of these behaviors.

This is interesting because the vast majority of the literature on leadership has been focused on the positive traits and behaviors of good leaders. This look at the flip side of the coin provides fresh perspective (even though some of the factors outlined above might seem somewhat obvious).

Being a good leader might be as much about exhibiting the good traits and behaviors as it is about not displaying the bad ones. Read the full article for the details.

The authors submit that some companies produce a steady supply of strong managers because instead of focusing on building up the strengths of individual people, they concentrate on developing a “broad organizational leadership capability.” That’s what they call a Leadership Brand.

Firms that have leadership brands use an “outside-in” approach to develop their executives. That is, they look outside at what they want to be known for by clients and customers and then link that with required management skills for their executives. For example, Lexus takes it “The pursuit of perfection” tagline and translates it into an expectation that its leaders excel at managing quality processes. The outside-in approach helps companies develop a reputation for high-quality leaders whom clients can trust to deliver on the company’s promises.

The authors looked at 150 companies with reputations for strong leadership and found that those organizations follow five strategies. Those strategies are:

• Ensure managers master the basics of leadership—for example, setting strategy and developing talent.
• Ensure that leaders internalize the’ high expectations of clients.
• Incorporate client feedback into evaluations of executives.
• Invest in programs that help managers hone the right skills by tapping clients to participate in them.
• Track the success of efforts to build leadership bench strength over the long term.

What results, the authors conclude, is “outstanding management” that persists even when individual executives leave the company. In fact, companies with the strongest leadership brands often become “leader feeders” and generate executives who go on to head other companies. Examples of these firms are GE, PepsiCo, P&G, Disney, Toyota, and Kraft, among others.

The authors actually provide a list of companies that they consider leadership brand companies and their P/E ratio compared to their category (they used the past ten years’ worth of data). The chart below shows that consistently a leadership brand is correlated with higher P/E ratios versus the category.

How do you rate? The following graphic shows a short assessment test that will help leaders determine their company’s leadership branding capability.

24 or less: Start working on the fundamentals of leadership. 25 to 34: Select one or two dimensions where you’re not yet strong and focus on improving them. 35 to 44: You are well on your way to becoming a leadership brand company. 45 or higher: You’re sitting pretty, pat yourself on the back.

In the article, Bossidy discusses that, while the success of a leadership team depends heavily on the relationships the boss has with his or her direct reports, precious little has been written about the expectations of those relationships (on either side). He suggests the following list of behaviors that should be expected from both the boss and the subordinates, a sort of Leader’s Covenant.

These behaviors resonate with me from both the boss and the direct report perspective. I encourage others in leadership positions or who are direct reports of senior management to take a good look at these.

What Direct Reports Should Do

• Know when a situation calls for them to get involved.
• Generate ideas (remembering that some of the best may sound crazy at first).
• Be willing to collaborate, putting the long term objectives of the company above their (or their department’s/division’s) short term goals.
• Step up to lead initiatives, even if their outcome is uncertain.
• Develop leaders among their people, especially through direct involvement in performance evaluations.
• Stay current on world and industry/market events and developments.
• Anticipate how those events/developments may affect the company and the competition.
• Drive their own growth by exposing themselves to new people and ideas and by accepting demanding assignments.
• Sustain these behaviors in bad times as well as good.

What the Boss Should Do

• Provide clear direction.
• Set goals and objectives.
• Give frequent, specific, and prompt feedback.
• Be decisive and timely.
• Demonstrate honesty and candor.
• Offer and equitable compensation plan.