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Indicators of Leadership Potential

Indicators of Leadership Potential

March 11, 2008

In my many years of observing leaders, I have noticed a number of signs that a person has high potential for corporate leadership. A wide cognitive “bandwidth”, the capacity and inclination to see things in a broader context, is an earmark of a CEO who anticipates how changes in the external environment will affect the business or of a marketing vice president who sees how marketing relates to overall company direction. Leaders aren’t born with the phenomenal breadth and scope of thinking that characterizes successful leaders of big companies, but those with a drive to constantly search for more information and see things from a broader view have the potential for it. Some young leaders exhibit a conceptual ability to rise above the details, to see a broader context than their peers and to place themselves and their immediate accomplishments within that broader context.

Sees the Bigger Picture

Look for actions that reveal such thinking. I know of one instance in which a high-potential executive was asked to add two more divisions to her portfolio of responsibilities. She demurred, pointing out to her boss that while she would welcome the additional responsibilities, the two divisions would be better placed with one of her colleagues, because they were complementary to businesses already under him. Her willingness to put the company’s interests above her own ego reflected not just a great personality trait but also her ability to think strategically and from the viewpoint of the overall business.

Drive and aggression are common criteria for identifying leaders and are conveniently easy to observe even in very young people. What boss wouldn’t notice the young sales rep who pushes hard to win more and more business and outshines his seasoned peers in hitting targets? But a rep who does her job to a T and also seems to have a handle on what her sales manager does, and even what the regional sales director does, is demonstrating something more than drive: A desire and ability to see the bigger picture.

Finds Clarity Amid Ambiguity

Leaders must also be able to make sense of all they take in and set a clear course of action. After gathering information from multiple sources and shaping several alternatives, they have to be able to sort out what is important, make a decision and act on it. Even at lower levels, information is often muddled and the right path is often unclear, but leaders with high potential find clarity and act decisively despite the uncertainty and ambiguity that stymies others. They take disparate facts and observations and connect the dots to create a clear view of what they think is likely to happen before it actually does. Because they see the hazy outlines of change coming before others do, they put their businesses on the offensive.

Most high-potential leaders will show an uncommon ability to analyze and synthesize large amounts of data and make a decision based not only on the data but also on intuition. They have a way of clearing the fog. They frequently use the “80-20 rule,” which states that 20 percent of factors account for 80 percent of value. They sift, sort and select information based not only on its content but also on its source. They think in second, third and fourth orders of consequence, are extremely clear about goals and constraints, develop alternative paths and have a backup plan in the event a decision proves wrong.

Business leaders make judgment calls on a daily basis as they balance the inherent tensions between the short term versus the long term, between shareholders and customers and employees and external constituencies, and between opportunities and aspirations versus real-world realities and constraints. Some people are simply not decisive or tough enough to lead the business. They let opportunities slip away, powerful personalities dominate and other people set the course. These people are not leaders, regardless of the depth of their thinking.

Desires to Grow

Another sure sign of leadership potential, and one that is especially important in today’s environment of tumultuous change, is the leader’s passionate quest to continually learn and grow. High potentials seize the opportunity to take “stretch” assignments that tax their abilities precisely, because they are stimulated by the challenge and the opportunity to increase their knowledge base about the business, people and the external world. They are intellectually honest and have the self-confidence to acknowledge when they don’t have the answers, knowing they can find them. They are dissatisfied with incremental progress and the status quo. They continually search for new ideas and different ways of seeing things. This insatiable thirst for learning tends to make them more contemporary than their bosses, more aware of leading-edge technologies and trends.

Does the Right Thing

Don’t forget to look at integrity and drive to screen out those who fall short. Leaders must tell the truth at all times fearlessly and without weighing the consequences. When confronted with a moral or legal quandary, they must always choose the ethical course of action. Leaders must also radiate a sense of urgency. In the course of being tested, over the years a high-potential individual will be given increasingly broad and difficult jobs. Without relentless drive and near-total immersion, he will find it difficult to maintain the endurance necessary to master tasks.

_Ram Charan is the author or coauthor of many bestselling business books, such as Execution. For more than 35 years, he has worked behind the scenes at Fortune 100 companies, such as GE, Bank of America, DuPont, Thomson Financial, Honeywell and Home Depot, to help senior executives develop and implement strategic plans.

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