Managing the Future

One of the most critical factors to consider when analyzing a company is its management. But what makes a good leader?

The question has been studied for centuries: Plato, Sun Tzu, and Machiavelli had much to say. Homer compares Achilles with Hector, and the biblical King Saul is contrasted with David.

The first thing a leader needs is passionate vision—the ability to see what hasn’t yet happened and ask, “Why not?” A business leader has to have a passion for the business and the ability to transmit that passion. Colin Powel noted that a leader gets people to follow, if only out of curiosity.

But a leader will quickly stumble if vision is not tempered by humility: recognizing that you’re not the most important person in the room. Leaders fly high when they inspire others to adopt their ideas, but they come crashing down if they begin to think that the normal rules of personal interactions don’t apply to them.

No, for a leader’s vision to be sustained, they need personal integrity. Business necessarily entails ethical dilemmas and choices. A leader has to know how to do the right thing, even when the right thing isn’t clear.

These three factors—vision, humility, and integrity—are essential to successful management. The best companies have leaders that live these out so they can go past the cash-flow statement to create value well into the next century.

Douglas R. Tengdin, CFA
Chief Investment Officer
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