Harvard Business Publishing

Over the past several years, Nitin Nohria and I have been studying the evolution of business leadership in the United States during the twentieth century. In our book, In Their Time: The Greatest Business Leaders of the Twentieth Century, we noted that opportunity emerges when environmental factors and individual action come together. And "come together" is the most important part.

The environmental factors that we cited created a specific and sometimes unique context for business. Within this contextual framework, some individuals envisioned new enterprises or new products and services, while others saw opportunities for maximizing or optimizing existing businesses, and still others found opportunities through reinvention or recreation of companies or technologies that were considered stagnant or declining.

For instance, in the eighties, when many industries (including telecommunications and financial services) were deregulated, certain individuals created new companies or transformed their industries. We called this awareness of and ability to adapt to the context contextual intelligence. Many great business leaders in the twentieth century possessed contextual intelligence. They were able to seize the zeitgeist of their times. Yes, business leaders need to have certain personal characteristics to be successful, but it is often the application of those characteristics within a specific context that define great success. It's not only who you are, but when and where you are.

There is far too much focus on individual characteristics of leadership and far too little focus on the situational context. By placing too much emphasis on the individual, we can easily fall prey to the cult of the CEO and believe that any individual who was successful in one setting would naturally be successful in a new setting. The list of once-successful CEOs who have failed in new business settings is long.

Bob Nardelli is a prime example. His stellar career and track record at General Electric seemed to be just what The Home Depot needed. Nardelli’s success at GE was predicated on a command-and-control leadership style that fit that company. That same style was less suited to the participatory culture of Home Depot. Nardelli failed to recognize the importance of Home Depot’s culture and was unable to survive despite certainly having the raw talent to manage the company.

The ability to succeed in multiple contexts is based on what Warren Bennis and Robert Thomas in Geeks & Geezers called adaptive capacity -- the ability to change one’s style and approach to fit the culture, context, or condition of an organization. Success in the twenty-first century will require leaders to pay attention to the evolving context. How will the context shape business leadership? What do you think is different now?

HARVARD BUSINESS ONLINE RECOMMENDS:
Leading for a Lifetime: How Defining Moments Shape Leaders of Today and Tomorrow (Paperback)
Home Depot's Blueprint for Culture Change (HBR Article)
Paths to Power: How Insiders and Outsiders Shaped American Business Leadership (Hardcover)