I’ve been thinking about the word “leverage.” The inter-woven leveraging of financial products has made many people rich. In the past few months, it has also made many people a lot less wealthy than they were a year ago. The word has gotten a bad rap the past few days as we’ve watched highly leveraged Wall Street companies implode amid panic and fear of further credit meltdowns. It is clear that financial leverage will be much more tightly regulated in the future. Exactly how, we’ll see.
But “leverage” is still one of the most important things a leader can do. If a leader tries to do everything alone, you get what I call the “genius with a thousand helpers.” Those kinds of leaders don’t empower others; they don’t hire highly capable people. Instead, they need to be everywhere, all the time, doing everything, making every decision. That is the opposite of leverage.
The leveraged leader, on the other hand, pushes decisions downward. Leveraged leaders instill trust. They expect people to make decisions on their own. They support those decisions once they’re made. It’s a lot more fun to work for these kinds of leaders. You can grow. You can learn. You can make mistakes without fear of retaliation. After all, the leveraged leader doesn’t pretend to be a genius. He or she genuinely understands that the organization is stronger because many people are assuming responsibility as “owners” of the company.
My recent musings about the “leveraged leader” have been about how to achieve the optimum balance. If Wall Street serves as an example – perish the thought! – then it serves to remind us that leverage can go too far. Leverage needs to be balanced with regulation. Leveraged leaders need to instill in the people around them clear operating rules. How are decisions going to be made? When do I make the final call? When is the decision someone else’s to make? Those operating principles are at the heart of being a balanced, leveraged leader. Given the fact that I teach the principles and art of decision making to groups, it puts the value of those workshops in context. For without that balancing, minus a clear understanding of the rules and boundaries of decision making, leveraged leaders will eventually implode.
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