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March/April 2012 Bonus


Editor’s Note: What follows are some additional leadership profiles from Tim Cardinal and Jin Li, authors of “Follow the Leader.”

As was the case with the leaders mentioned in “Follow the Leader” (March/April 2012 Contingencies), the following individuals also displayed traits and styles of leadership that a chief risk officer would do well to emulate. They delegated responsibility, but didn’t blame their failures on subordinates. To gather information first hand, they demanded honest assessments from their staff and created a culture that promoted and valued—rather than prohibited—dissenting views. They took the course they believed to be the right one, but were flexible. And they led by example.

Abraham Lincoln
Abraham Lincoln once said that “the leading rule for the lawyer, as for the man, of every calling is diligence.” Lincoln persuaded by degrees. He was a compelling story-teller who used humor and humility to make his point. Lincoln preferred to suggest rather than order and to visit rather than summon. He greeted legislators in their homes and he inspected fortifications and met with military leaders in the field. Lincoln held a strong vision (epitomized in his classic Gettysburg Address) and was quick to give credit to others who shared and implemented that vision. But he shouldered the responsibility for any failures. The subject of criticism and personal ridicule, Lincoln was caricatured as a second-rate country lawyer incapable of handling the presidency. Members of his cabinet initially considered him a figurehead whom they could control. Yet he created a high-involvement culture among his advisors, encouraging communication and alternative viewpoints. Pragmatic in his viewpoints, Lincoln famously modified a letter from Secretary of State William H. Seward to the British so as to allow room for negotiations rather than draw a line in the sand. Seward accepted the changes and achieved the hoped-for results. Policies, unlike principles, are situational and therefore must be adaptive and contextually flexible, rather than rigid. This requires people in authority to exercise judgment in their decisions. Lincoln’s motto was, “My policy is to have no policy.”He wrote, “I shall try to correct errors when shown to be errors; and I shall adopt new views so fast as they shall appear to be true views.” He said, “You were right, and I was wrong.” He also said, “I found I could not make an argument that would satisfy my own mind, and that proved to me your ground was the right one.” In another instance, Lincoln is quoted saying, “If Stanton said I was a damned fool, then I must be one, for he is nearly always right and generally says what he means. I will step over and see him.” Lincoln also displayed great courage. Even allies believed that the speech in which he declared “a house divided against itself cannot stand,” was too radical. Lincoln held fast. As the historian Leonard Swett observed, “He saw it was an abstract truth, but standing by the speech would ultimately find him in the right place.”

Jack Welch
Jack Welch is a perfect example of the transformational business leader. He faced reality and acted decisively to reduce GE’s corporate bureaucracy. He created his “workout initiative” based on the belief that those who actually did the work had ideas on how things could be done better. This created an environment in which employees felt free to recommend changes to their bosses. Welch believed that bureaucratic layers slow down a company and make it less entrepreneurial. He thought that the best way to run a company was for a leader to convince himself/herself that he/she doesn’t have all the answers. He adopted Toyota and Motorola’s approach to involving suppliers and customers in product design. He empowered employees by giving them full access to vital information and encouraging their participation in the making of decisions. He said, “My job is to put the best people on the biggest opportunities and the best allocation of dollars in the right places. That’s about it.”

Sam Walton
While Sam Walton’s success could be measured in dollars (he was named Forbes richest man in America in 1985), his simple lifestyle and humility belied his wealth. He was industrious and work for him was more than a job—it was his passion. While building his retail empire, Walton encountered ridicule and skepticism, first from local and later from regional and national competitors, suppliers, and investors. Walton went to the scene, visiting stores when his competitors did not. Walton wrote, “the folks on the front lines—the ones who actually talk to the customer—are the only ones who really know what’s going on out there.” And he had the courage to admit when he was wrong. Walton valued people, delegating broadly, and he gave his associates the resources to succeed. He said, “The bigger we get as a company, the more important it becomes for us to shift responsibility and authority toward the front lines, toward the department manager who’s stocking the shelves and talking to the customer. … Again, this only works because we decided a long time ago to share so much information about the company with our associates rather keep everything secretive.”

Winston Churchill
Winston Churchill was candid and direct, for which he was criticized, resented, and ridiculed. Churchill was decisive, overcoming resistance to change and organizational inertia. A critic of perfectionism, he is credited with the familiar axiom, “do not let the better be the enemy of good.” Churchill learned through self-criticism yet exuded self-confidence. He was assured in his vision and his convictions, recognizing emerging risks as secretary of the Navy before World War I and the rise of Hitler in the 1930s. Before the end of World War II, he was adamant about saving Greece and the race to Berlin. He coined the terms Iron Curtain and Cold War. A transformational leader, Churchill oversaw innovation and organizational refinements in each of ten different government ministries. Yet, with clear direction, he was happy to delegate. He wrote, “It is my practice to leave the Chiefs of Staff alone to do their own work subject to my general supervision, suggestions, and guidance.” Churchill sought full critical value from subordinates. Sir Leslie Rowland wrote, “Provided you told the truth and had some real conviction about and basis for your views, you had a fair hearing, and he was open to argument.” He never overruled the service chiefs of staff even when he strenuously disagreed with their decisions. He was willing to change his mind, especially about means rather than ends, based on new facts, famously saying, “I would rather be right than consistent.” He discerned immediately what changes were implied by new facts and how policy should be adapted. Based on his experiences with the ill-fated battle of Gallipoli in World War I, Churchill knew that responsibility must be combined with authority (and resources). He espoused five decision-making principles:

  • Full authority;
  • Reasonable prospect of success;
  • Greater interest;
  • Preparation;
  • Rigor and determination shown in execution.

Questions of leadership are ultimately questions of character and moral purpose. Writing about Churchill, the historian John Keegan noted, “It is the moral rather than the intellectual content of his judgment that dominates.”

Elizabeth I
During her 44-year reign, Elizabeth I navigated contentious issues of economic difficulties, war and trade, domestic and foreign politics, and religious turmoil. She brilliantly distributed limited resources to the widest possible number in such a way as to maximize the crown. The historian Paul Johnson wrote, “Elizabeth had a healthy regard for the possession of power: she did not allow power to possess her. She never shrank from sharing or delegating it, when prudent. Her self-confidence allowed her to select an extraordinary range of talents for employment in the public service; and most of her leading ministers were not only able, but men of strong convictions, tenaciously held and frequently expressed, often in opposition to her own.” Upon becoming queen, Elizabeth sought “the deep consent of all great men.” All men wanted access; but not all had her ear. Elizabeth I preferred frank and insightful feedback. Johnson wrote, “It was one of her greatest qualities that she was not afraid to employ strong-minded men, and subject herself to the full force of their intellects.” Elizabeth’s favorite method of taking counsel was to hold individual interviews with her chief ministers, assemble them together the next day, and hear them again collectively. Elizabeth was a woman of action who looked for the welfare of her people. She was disgusted by “the niceness of those precise fellows who in words would do great things but in deed perform nothing.” Despising the extravagance that drove up prices, she changed the bureaucracy.

Alexander Hamilton
Alexander Hamilton was born poor and without social status. He objected to a system that failed to reward industry and self-reliance. Though Americans praised the virtue of hard work, he said, “[they] labour less now than any civilized nation of Europe.” He was ambitious but tempered his dreams with regular habits, reliable behavior, systematic and persistent application, and constant attention to self-improvement. The historian Forrest McDonald wrote, “He managed things through an artful mixture of action, example and illusion. But these were only techniques. The genius of his system lay far deeper, in his idea of establishing the procedures by which people interacted, rather than attempting to ordain what they should do. … For routine activities that lent themselves to standardized procedures he prescribed uniform procedures and devised forms … to prevent standardization from degenerating into bureaucratic stupidity in which mindless form-filling is substituted for substance he employed a number of techniques … granted a measure of discretion to the more intelligent and better informed officers when he knew the collector to be honest and responsible. He provided for an efficient two-way flow of information … also asked to be told of complaints … which always merit attention but by no means infallible indications of defects.” Hamilton was persuasive. His report to Congress on the matter of public credit, for instance, analyzed the problem, proposed a plan of action, offered an argument designed both to induce Congress to enact his proposal and convince public creditors that it was fair and would work. Hamilton used candor, good will, and good sense too build relationships and win other’s confidence. According to McDonald, Hamilton believed that a great finance minister must exhibit five attributes: genius, regularity, prudence, firmness, and breadth of knowledge.

Margaret Thatcher
Margaret Thatcher was highly educated, intellectually disciplined, clear thinking, and methodical. She read precociously at an early age. While preparing for a major economic speech, an assistant reportedly read her an Abraham Lincoln quote, “You cannot strengthen the weak by weakening the strong. You cannot bring about prosperity by discouraging thrift. You cannot help the wage-earner by pulling down the wage-payer.” Thatcher produced from her handbag a piece of yellowing newsprint containing the same lines, saying, “It goes wherever I go.” Thatcher’s gender was a huge disadvantage throughout her political career, yet she learned first-hand through experience in numerous ministry and cabinet positions. As education secretary she found a department with an entrenched culture and its own set agenda. Thatcher dominated because she prepared thoroughly. She was a good listener when she respected an individual’s expertise. Even as a junior minister she always wanted the fullest possible briefing. She once observed they offered advice to a new minister they would not have dared to offer his predecessor because they knew he would not take it. “I decided then and there that when I was in charge of a department I would insist on an absolutely frank assessment of all the options from any civil servants who would report to me.” Thatcher said the most important lesson her father taught her was to follow her own convictions. She valued the British system of opposition, which insured an alternative leader and “an alternative policy and a whole alternative government ready to take office.” She dismissed consensus as an attempt to satisfy people holding no particular views about anything. It was more important to have a philosophy and policy that—because they are good—appeal to sufficient people to secure a majority. Thatcher understood the importance of ideas. As prime minister she developed an informal think tank to advise her. She personally visited every department, questioning civil servants’ attitudes and challenging their assumptions.

Additional Resources
Campbell, John, The Iron Lady, New York: Penguin, 2011.
Johnson, Paul, Elizabeth I, New York: Holt, Rinehart and Winston, 1974.


American Academy of Actuaries