• Thu
  • Oct 2, 2014
  • Updated: 8:37am
Business
COMMENT

Room at the top for one strong leader

Even in companies helmed by two symbolic heads, everyone knows who really is the boss

PUBLISHED : Wednesday, 14 May, 2014, 1:20am
UPDATED : Wednesday, 14 May, 2014, 1:20am

Predicting the future in the business world is basically a mug's game, but one prediction was easy to make: last year's much hyped "merger of equals" between the French Publicis and the American Omnicom advertising companies was doomed to failure.

Even my battered crystal ball managed this prediction, and now it has been vindicated.

The overwhelmingly simple reason why the merger failed is that there is no such thing as a merger of equals. Nor, generally speaking, is there such a thing as co-equal leadership of a big firm.

Even if we set aside the hardly minor issue of reconciling the large egos of Omnicom's John Wren and Publicis' Maurice Levy, we are still left with the improbability that a massive firm can be led in unison by two men on different sides of the Atlantic Ocean.

The fact of the matter is that companies are not democracies (this may explain the local business community's aversion to democracy in other spheres), and they just don't work without clear leadership in the shape of a single man or woman.

You must have heard all that guff about "teamwork" and being part of "one big happy family" or even "we're all equals here", but the truth is that companies are extraordinarily dependent on the dynamism and skill of a single person.

Most great companies have been built on the back of a single person's vision and sustained by his or her determination.

That is not to say that these individuals work alone or even that they can achieve their goals without competent colleagues. However, in business, the buck has to stop somewhere, and enterprises generally only work with just one person in the driving seat.

This is not to say that the original skills of the leader will be sustained indefinitely; indeed many leading firms become reckless and immune to criticism because their bosses develop an unwarranted level of self-confidence.

So it is hardly true to say that concentrating so much power in the hands of a single individual is risk-free. The best leaders are well aware of their limitations and listen as much as they speak.

Sometimes, it is suggested that leadership can be a double act: there are, for example, instances of two brothers sharing equal responsibilities at the top, or sometimes, a couple of very long-standing friends manage this feat.

Usually, however, a double act means something else, as in the case of the Cheung Kong empire. The partnership of Li Ka-shing and Canning Fok Kin-ning is widely recognised as a key to its success, but no one doubts who's really in charge.

Similarly, there is a famous double act over at Berkshire Hathaway between Warren Buffett and Charlie Munger, with the former often saying that he defers to the judgment of the latter, but everyone knows that Buffett's many investors are precisely that: people who follow the great man. They don't flock to Omaha to listen to Mr Munger.

It is not purely charisma that propels business leadership. Many corporate leaders are rather personality-challenged while being rather good at the other things in the complex mix of competences required to run a business. Most notable among
the ingredients for success are trust, experience and luck.

In Hong Kong and other parts of Asia, even the biggest companies suffer from the delusion that leadership is a genetic issue, which means that it can be passed from generation to generation, usually exclusively through the male line and strictly in order of birth.

Thus, even the biggest companies are handed from father to oldest son in the expectation that this will work as a business strategy. Most of the available evidence shows that this is not the case, although dynastic succession sometimes works.

Usually the outgoing patriarch tries to install a strong management team to back up his son, but in companies with a tiny hierarchy, it really matters what happens at the head of the firm.

The idea is to keep the money in the family, but the net result is often a diminution of the family's wealth.

The importance of
there being a single hand on the corporate tiller also applies to smaller operations. A case can even be made for greater reliance on single personalities in smaller companies, where the boss takes on a multitude of roles and is literally to be found everywhere.

It used to be said that the age of big beast bosses would pass and give way to a new era of faceless corporations using the latest management techniques.

However, experience shows that companies lacking a clear leader quickly lose their sense of direction.

Even when ownership is detached from management, as in the case of some big banks, like HSBC, corporations need a resolute and highly visible single individual at the helm. Some of these people are complete and utter bastards, but companies take comfort from the thought that they are "our bastards".

Stephen Vines runs companies in the food sector and moonlights as a journalist and broadcaster

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