How Storytelling Builds Next-Generation Leaders: Warren Buffet - Essay Example

?Running head: leadership Warren Buffett: The Leader Leadership is a complex phenomenon that has been and is being studiedand debated by scholars for many decades now. Leaders have been identified in the past that have contributed immensely to the society, country and organizations that are now considered as the role models for future generations to come, and this process still continues. Most of these leaders are identified with certain qualities that have been the reasons for their success and contribution. These qualities are studied in the present discourse and a report on leadership qualities is prepared by taking the investment guru, Warren Buffett as an example. This report elaborates on leadership concept in general, its scope, essence and the leadership personality; further a detailed study of Buffett’s leadership qualities is performed in order to understand the qualities that resulted in his success. The paper concludes with identification of few leadership challenges. Table of Contents 1. Introduction 4 2. Why Warren Buffet? 4 3. Leadership- In general 5 3.1. Its Scope 5 3.2 Its Essence 5 3.3 The Leadership Personality 6 3.4 Leadership Qualities 6 3.5 Variables of Leadership 6 4. The Role Model: Warren Buffett and his leadership attributes 7 4.1. Constant Reflection and Learning 7 4.2. Passion and Commitment 8 4.3. Character and Principles 8 5. Pre-requisites for Leadership 9 5.1. Ownership and Responsibility 9 5.2. Communication Skills 9 5.3. Ethics and Character 10 5.4. Knowledge 10 6. Challenges in Leadership 11 6.1 Over confidence 11 6.2. Lack of knowledge to complement their skills and vice versa 11 6.3 Stress 12 7. Conclusions 12 References 1. Introduction: Leadership is a phenomenon that has been debated immensely throughout the literature concerning various aspects of management, psychology, sociology and history. Basically, leadership is the ability to serve people in order to develop them, and/or achieve a specific task. Leadership also refers to the ability to guide, coach, direct, and support people as required. According to Wiersbe (2007), leadership refers to a relationship that involves serving fellow human beings in order to help them develop by providing all required support, resources, guidance as well as supervision. A leader’s main task is to identify leadership potential in each of his/her followers and develop him/her in a manner that can achieve the desired task by utilizing his/her talent and leadership abilities in an appropriate manner. To accomplish such activities successfully, certain qualities are necessary, which in turn define the leader or make the leader. This discourse will elaborate these qualities by highlighting the most significant qualities that make a leader. In this process, an attempt will also be made to understand the essence of leadership in contemporary management by studying specific exemplary leaders, like Warren Buffett, and his qualities. 2. Why Warren Buffet? More often than not, every successful organization credits its position to its leaders, at all levels. The top leadership team actually decides the fate of the organization. The main task of a leader at that level is to develop future leaders that can lead the company in right direction. So, it is certain that the senior most leader of such a successful company be regarded as the true leader. One such leader that can be named is Warren Buffet, the CEO and Chairman of Berkshire-Hathaway, and one of the richest individuals and investors in the world, who Morio (2011) describes with qualities such as smartness, honesty, determination, innovative thinking, patience and a vivid learner. These qualities, and probably many more, are usually commonly seen in most of the successful leaders. Literature identifies various such qualities as leadership qualities. Therefore, leadership is one of the core and quintessential factors of success for any organization, group or a team. A few of these leadership qualities include honesty and integrity, focus and determination, self-confidence, communication and influencing skills, building interpersonal relationships, etc. 3. Leadership- In general 3.1 Its Scope: The scope of leadership is the widest in the frame of management and organization. This scope ranges from a leader’s awareness of self, ability and willingness to develop necessary competencies, and the ability to work in a team at various levels. Core competencies for effective leadership fall under spheres of effective communication of all types; skills necessary for coaching, feedback, supervision, appreciation, and direction; skills to work effectively in teams, effective collaboration and partnership; skills for engaging team members and aligning their individual objectives to organizational or common goals. To be effective and successful, the leader will have to deal with the nature of work, material and resources available, employee personalities and psychologies, team building, organizational policies and practices etc. 3.2. Its Essence: The essence of leadership is to provide direction, guidance, and support to the team or followers to achieve the common goals set by the organization or the leader, him/herself. The essence of leadership is also to inspire others to achieve what the leader aspires by providing all necessary support, guidance, resources, and encouragement in the most ethical, dignified and truthful manner. Dignity, integrity and honesty are core qualities for leaders in order to win trust and confidence of their followers. Warren Buffet has exemplified these qualities because of which his teachings are considered as equivalent to the ‘bible’ by investment professionals. A leader that is able to create such an ever-lasting impact is worthy of the leadership role. 3.3. The Leadership Personality: The personality of a leader is very similar to any common man; but, what makes him/her unique is certain qualities that help inspiring and influencing others through skills, behavior, knowledge and attitude. Nevertheless, different leaders adopt different styles of leading. For instance, while some display authoritative leadership and behavior, others believe in casual, informal methods, and others believe in stick and carrot approach; all in all, each style is the result of individual leader’s personality, background and other factors. The bottom line of any effective leadership journey lies in following the basic principles and having the right attitude, skills, and knowledge (Coffee & Jones, 2000). 3.4. Leadership Qualities: All successful leaders are identified with certain common qualities and few unique ones. Common qualities that make a leader effective and successful are determination, honesty, integrity, confidence, empathy, knowledge, speaking skills etc. These qualities are expressed in different forms by different leaders, and these forms make the leaders unique. This uniqueness in abilities and personality sets the leader distinct from his/her group in every setting, irrespective of any other noticeable differences. True leaders make use of their innate abilities alongside earning trust and confidence of their followers through high integrity, dignity and honesty thereby building a strong character; innate abilities such as passion and hard work, determination, visionary, and the ability to build strong interpersonal relationships help in achieving their goals. Their team-working abilities, building constructive relationships and connection with people through empathy and understanding aid in influencing others to achieve a common goal. 3.5. Variables of Leadership: Leadership is different for different people, different situations and different tasks. Hence, leadership has many factors determining its effectiveness and outcome. An appropriate mix and match between these factors and the leadership qualities will result in desired outcomes. For instance, many people believe that few effective leadership qualities include the ability to grasp an opportunity; positive attitude along with self-motivation; effective negotiation and influencing skills; achievement-orientation; self-reliant and independent thinker; and strategist. However, these qualities change with situation and for other people. Therefore, it is apt to mention that leadership is also influenced by various factors such as the individual’s innate qualities, team effort, changing circumstances and nature of change, organizational policies, procedures, and ethical standards, nature of goals etc. People management is the core aspect of leadership, which would require knowledge of people’s psychologies and personalities, group behavior, and their strengths and weaknesses; these aspects will have a deep impact on effectiveness of leadership and outcomes of team effort. 4. The Role Model: Warren Buffett and his leadership attributes The investment guru Warren Buffett is regarded as one of the role models of today’s leaders. His achievement story depicts self-belief, absolute determination, self-confidence, and courage that are required to dare and achieve something different. The style, in which Warren Buffett started his entire career and a step into stock exchange market, is an example of set of leadership skills found commonly in most of history’s prominent leaders. His innovative, courageous and daring attitude, and belief in his own abilities helped him launch something that had a promise to it. He had self- belief and the ability to transform his vision into reality. 4.1. Constant Reflection and Learning: Warren Buffett is referred to as the investment guru for his tremendous achievement in his field considering his background, his path to success and his unique prophecies. Buffett believes that a leader must be aware of him/herself thoroughly along with strengths and weaknesses; and that a constant effort has to be put in to work on weaknesses or developmental areas in order to be truly effective alongside harnessing the strengths to his or the businesses’ advantage. True leaders, including Buffett, also practice this with their followers thus creating a synergetic effect; they tend to harness the strengths of their followers and ignore or work on weaknesses so that highest outcomes are achieved. This quality is essential for leaders in team management. Buffett has been a vivid reader and learner from a very young age, like many other successful leaders. He not only read but also applied his own critique to the concepts presented in books by others, which reinforced his learning and innovative thinking from a very young age. 4.2. Passion and Commitment: Buffett owes his success to his courage to follow is passion despite the odds, and his conviction about his choice. Buffett is known for his strong determination and focus towards the task at hand. He is usually fully mindful of all stakeholders associated with the task or business. His passion for his work and business is unrelenting, which further determined his commitment and sustainability in the business that he started. A leader becomes a leader because of the followers that he/she is leading, and hence, all activities or decisions taken by the leader will have direct or indirect impact on the followers. A leader has to be mindful of the impact he/she is going to make on the stakeholders at all times. Buffett’s efforts in writing detailed annual reports to all his stakeholders, mentioning all positive and negative aspects of the business, are very popular and appreciated by the stakeholders. This gesture actually highlights many qualities, such as passion, commitment, courage, responsibility, ethics and dignity. In these letters, Buffett not only highlighted the company’s profits but also mentioned about the mistakes he and his team made, and the corrective action he would implement in order to minimize the loss or risk. 4.3. Character and Principles: To the master of the ring, the basic rules are to practice and to stick to the basics. Buffett’s personality is unique and he likes to keep things really simple. This is evident from his lifestyle even after earning billions. The only things he would like to spend his money and time are reading and thinking, as told to the CNBC and Yahoo Finance. Drucker asserts that the golden rules of managerial success will remain same and constant now, and even a century from now (Cohen, 2009). And, they are steadfastness, discipline, professionalism and integrity. All factors that are taught in the book hold true and firm for a successful managerial operation and would be true for everyone with slight adjustment in terms of the variables or factors which differ from place to place and organization to organization. 5. Pre-requisites for Leadership: 5.1. Ownership and Responsibility: Leaders are those that own the responsibility of accomplishing specific task or solving an issue without deterring; onus of responsibility of the mistakes committed is also indicative of true leadership. Leaders are humans and it is natural for them to commit mistakes. Buffett exemplifies this by not only owning his responsibilities and accomplishing them with passion and commitment, but also daringly admits his mistakes and corrects them. Buffett stated, “I am not perfect. I used to make a lot of mistakes and I will make them later, this is a kind of natural rule. I promise to you that if I make mistakes, I will correct these mistakes as soon as possible.” In the annual report of Berkshire-Hathaway Inc., written by Buffett (2012) in which he elaborated on the success and mistakes, he clearly identified various developmental plans for the mistakes of previous years, as a routine practice that he followed. To take criticism in the right sense and reflecting and improving upon the critique is the quality of true leader, which Buffett has demonstrated from the beginning. 5.2. Communication Skills: Leaders, in order to be effective, must possess or cultivate effective communication skills, written and verbal. Leaders, by virtue of their role, have to be in constant communication with many others, and should also be able to make team members communicate with each other effectively in order to accomplish desired tasks. Leaders at the top should develop and a strong communication channel that comprises of various communication media throughout the organization in order not only to communicate information and ideas but also to facilitate knowledge sharing in a passive manner. Communicating with all stakeholders, external and internal, also falls under the realm of the leader’s responsibility. Effective communication not only ensures flow of information in the right manner and to the right people but also instils respect and cordial relationships between employees at all levels and also with external stakeholders. For the leader, communicating in the right manner is essential to motivate, guide, coach and mentor, and inspire the team members. Many great leaders possessed effective story-telling and speaking abilities that have helped them in gathering followers, and achieving their vision with the help of their followers; this quality is essential for contemporary leaders too (Ready, 2002). 5.3. Ethics and Character: A leader is recognized for his/her adherence to ethical behavior and true character that displays integrity, honesty, courage, and empathy. All these qualities help leaders win the trust of their followers. Risk-taking ability is also critical to effective leadership. Leaders have to take risky decisions in order to achieve and/or perform higher. Buffett exhibits all these qualities by being open and honest with his stakeholders; admitting mistakes and correcting them; innovative thinking and implementing new measures in business; trusting his managers for doing all management-related work and not interfering with them. While Buffett openly declares his investments and also invests his own money in the market, which could be a risky proposition for his business and the stakeholders, it is also a calculated risk. This approach has actually won him many more investors than his competitors, as they were well aware of where they would be going if they were investing with Buffett. Buffett always kept his word by doing what he promised and promising only what he could do. 5.4. Knowledge: Knowledge about the work or task is necessary for any leader not only to win his followers’ trust and confidence but also to guide and coach them. The leader should also appreciate his followers for good performance and identify under performance as well as provide necessary support and coaching to improve the performance; all these activities require knowledge of the task or activity. Buffett’s keenness in learning about the market started when he was very young, which he continued to do throughout his tenure as an investor. These qualities have paid him off really well by improving his analytical as well as problem-solving abilities. His immense knowledge about investment market has now become the bible for many other new entrants throughout the world. 6. Challenges in Leadership 6.1 Over confidence: Self-motivated and achievement-focussed leaders eventually tend to develop overconfidence and self-absorbent nature, which can be harmful for their sustainability and growth of their business/organization. When confidence and motivation become excess with time, they can become the leader’s weakness. For instance, even Buffett experienced such trend during his leadership tenure with Berkshire-Hathaway. Too much of success eventually made him over confident of his policies and philosophies that they would work forever; this misconception created serious challenges for many of his colleagues when situations changed and these rules did not work the way they did in the past. Moreover, Buffett’s managers failed to understand the root cause of issues being faced when they had to take decisions based on rules set by their guru. These challenges are not the result of the leader’s qualities but they tend to erupt when the individual has been highly successful for long time in specific field (Greer, 2009). 6.2. Lack of knowledge to complement their skills and vice versa: Most of the leaders in contemporary management world hold leadership positions by virtue of their designation, rather than true abilities/skills. This could be attributed to the immense growth in businesses in all sectors and lack of time to search for true leaders. Moreover, some people that possess skills and attitudes of a leader take much longer time to acquire required knowledge, either due to lack of guidance or due to lack of resources/education. As a result, managers are hired from external sources that come with diverse experience, not necessarily with relevant knowledge; or are promoted internally to leadership positions based on merit performance though they lack necessary leadership skills and attitude. Both these issues act as obstacles to finding potential leaders in organizations. 6.3. Stress: Increasing work pressure, competition and changing attitudes of workforce also affect the effectiveness of leaders because leaders will then be forced to adopt temporary decisions that can produce short-term results, but harm long-term goals of the organization. True leaders would not adopt such means, but it is hard to appoint true leaders at all levels. Moreover, employees will tend to manipulate actions or adopt unethical or irrational practices that can affect the work outcomes thereby rendering leadership ineffective. Increasing work load and lack of leadership skills can affect the leader’s morale due to underperformance and low motivation. Nevertheless, leaders are expected to stay calm in stressful situations in order not to pass on their stress downwards, which is humanly very difficult (Yukl, 2008). 7. Conclusions: To conclude this study on leadership and taking Warren Buffet as an example, it can be said that leadership is a philosophy followed by certain individuals in the form of specific qualities, habits and attitudes that leads them to attain unimaginable success. These individuals set the path and benchmark for generations to come, and hence become the leaders to the path of achievement and success. To sum up the qualities exhibited, or rather imbibed by Buffett include honesty and integrity, passion and commitment, responsibility, continuous learning and reflection, innovative thinking, and discipline. Buffett’s strength, besides these qualities, is adherence to principles and basics, which added immense value to his business and his success as well as his stakeholders. Moreover, his continuous efforts to reflect, identify, admit and correct his mistakes have earned him great respect and trust. Challenges that leaders need to tackle include overconfidence and stress, which may lead them to make incorrect decisions or overlook critical issues; besides these, a constant need to upgrade skills and expertise that would suit the business as well as situations cannot be eliminated. References Buffett, W. 2012. Berkshire’s Corporate Performance vs the S&P 500. Berkshire-Hathaway Inc. Retrieved from http://www.berkshirehathaway.com/letters/2011ltr.pdf Cohen, W.A. 2009. Drucker on Leadership: New Lessons from the Father of Modern Management. California: John Wiley & Sons. Morio, A. 2005. Warren Buffet: An Illustrated Biography of the World’s most successful Investor. Singapore: John Wiley A Sons. Ready, D.A. 2002. How Storytelling Builds Next-Generation Leaders. MIT Sloan Management Review, 43 (4), Pp: 63-69. Wiersbe, W.W. 2007. On being a servant of God. Missouri: Baker Books. Yukl, G. 2008. Leadership in Organizations. (Ed 6). New York: Pearson Education. Read More