What leaders know?

What distinguishes effective leaders from mediocre ones?

Is it their ability to make good decisions, their charismatic persuasiveness, or the clarity of their vision? And do the best leaders have these qualities naturally, or were they acquired at college?

The good news is that you can learn to be a leader, just as long as you take time to learn fundamental leadership skills. However, your effectiveness depends on how you apply these skills.

So, what do you have to learn if you want to be a better leader? And do you need to go business school to learn these things, or can you learn them on the job?

J. Sterling Livingston, a professor at Harvard Business School, attempted to answer these questions by studying the connection between formal education and successful leadership. In 1971, he published "The Myth of the Well-Educated Manager" in the Harvard Business Review.

One of Livingston's conclusions was that a formal business education, such as an MBA, was not a good predictor of long-term leadership success. This finding is much less surprising today than it was back in the early 1970s. However, his other main observation is as relevant today as it was back then – namely, that four key skills define successful leadership.

By developing your skills in these fundamental areas, he argued that you can lead people, and inspire them to change. You can also be dynamic and effective in how you tackle the challenges you face every day.

Let's look at these four skill areas in more detail.

Decision Making

Leaders need to be able to solve problems effectively and make good decisions. But decision making and problem solving skills are commonly taught – so, with all those problem solvers out there, why can good leaders be so hard to find?

According to Livingston, the difference often lies in your approach to finding solutions. If you deal with a problem believing that you have to find the "right answer," this can actually lead to failure. After all, you can analyze a problem forever, and still not be 100 percent sure that your solution is the best. The only way to assess your decision is by looking back, after the fact. Even then, there are sometimes too many variables to determine whether or not you definitely chose the right course of action.

Effective leaders use practical and responsive approaches to decision making. They know that you can't wait to make a perfect decision: when you're in the middle of a situation, you have to be confident enough to do what needs to be done right now. This means you must quickly evaluate the situation, and take an action that has a high probability of success. The decisions that these leaders make under pressure may not be perfect, but they're consistent with the desired outcome.

1. Good decision making.

2. Successful problem finding.

3. Effective opportunity finding.

4. Leadership style.

Terms reprinted by permission of Harvard Business Review. From “Myth of the Well -Educated Manager” by J.Sterling Livingston. Copyright © 1971 by the Harvard Business School Publishing Corporation; all rights reserved.

Good leaders also know that problem solving and decision making aren't entirely rational processes. We all have emotions, so completely objective decisions don't really exist.

Successful leaders therefore use critical thinking – a technique that questions every step of their thinking processes – to manage the subjective side of decision making.

Ultimately, what sets apart effective leaders is that they know how to decide. They know when to take the time to use analytical and thorough decision-making processes. They know when to engage the whole team, and when to make decisions on their own. This knowledge doesn't come from a book, but from practical experience. As a developing leader, look for opportunities to make decisions in a wide variety of situations, so that you can gain that experience.

See the Mind Tools decision-making skills section to learn a wide range of specific decision-making techniques.

Problem Finding

Leaders don't simply solve problems that people bring to them – they look for problems that may be hidden. In other words, they often recognize potential issues before they become significant.

The quicker you discover a problem, the more time you have to find a solution, and the easier it is to tackle the problem before it becomes serious. Skillful leaders are proactive, and they continuously ask questions. The 5 Whysproblem-solving technique – a tool that helps you get to the root of a problem quickly – is something that good leaders often do instinctively when they first find a problem.

Also, look for potential problems that may be caused by a proposed solution – before that solution is implemented. When they can, leaders use approaches like Failure Modes and Effects Analysis (FMEA) to spot these problems before they take action. Sometimes this happens intuitively and informally, but the objective is the same – to find problems before they develop into much larger, potentially damaging, issues.

See our problem-solving skills section for a wide variety of tools that help you find problems – including Flow Charts, Swim Lane Diagrams, Systems Diagrams, and Appreciative Inquiry.

Opportunity Finding

When you solve problems, you make sure the organization can continue on its defined path toward its goals. When you find opportunities, however, you focus on redefining – and hopefully improving – the company's overall direction.

As management expert Peter Drucker famously said, "The pertinent question is not how to do things right, but how to find the right things to do, and to concentrate resources and efforts on them."

Successful leaders find opportunities and use them effectively. In practical terms, they understand leverage, and they constantly look for ways to achieve more with the same amount of effort. Simplex is a sophisticated tool for finding problems and opportunities – and for taking action.

Our strategy tools section has many useful tools that help leaders assess strategic opportunities. Some of the most popular are PEST Analysis, SWOT Analysis, the Boston Matrix and Porter's Five Forces.

Natural Leadership Style

Finally, good leaders use effective styles of leadership. You may find all kinds of problems and opportunities, and you may make great decisions to move the organization forward – but if you can't inspire people to take action, there's little chance of success.

Livingston argued that there's no single, correct leadership style that everyone can use in all situations. He said that strong leaders recognize this, and adapt their approach as necessary. But they always use authentic styles that fit naturally with their personalities.

It's also important to be inspirational – to lead by your example, your words, and your vision. Good leaders motivate, inspire trust, have a clear vision, are trustworthy, and are committed both to their people and to making the organization better.

A large part of being an effective leader is the willingness to accept responsibility and accountability. This strengthens the integrity and trustworthiness of your actions, decisions, and motives. By committing to an open and honest relationship with your superiors, peers, and staff, you can become a leader who motivates others to work with you to achieve a common goal.

Note:

At Mind Tools, we agree with some of these points, and we disagree with others.

First of all, MBAs are useful as a way of learning skills in all of these areas, and many others, in a quick, condensed way. A good MBA will package all of the learning from many years' practical experience, plus business theory, into a one- or two-year course.

Secondly, while there is no one leadership style that suits all business situations, the "transformational leadership" style does suit very many of them. This is a style of leadership by which a leader creates an inspiring vision of the future, motivates his or her team to achieve that vision, manages implementation of the vision effectively, and coaches and develops his or her team so that individual team members are even more effective when the next team task comes up.

Mind Tools Club members can learn how to become transformational leaders by downloading 'How to Lead: Discover the Leader Within You,' the Mind Tools leadership course. This is free from the Club download center.

Key Points

Leaders aren't created overnight: leadership is something that you need to work on every day. It's more than learning how to solve problems and make decisions – you must focus on making your organization better through everything you do.

This means that you need to understand how and when to make a decision, recognize problems before they appear, constantly look for opportunities to improve, and be aware of your leadership style. When people believe in you, they'll likely trust your decisions and actions – and that's the mark of a true leader.

Apply This to Your Life

1. Challenge yourself to learn and use one new decision-making tool each week.

2. Think about the last key decision you made.

• Did you use critical thinking as part of your process? How did that impact the result?

• Did you feel pressure to make the 'right' decision? If so, how did that affect the timeliness of your decision?

3. What problems can you see right now that your company should address? How can you help influence a solution – and will you do so?

4. What opportunities can you see right now that your organization should pursue? Start creating a plan to evaluate your idea.

5. Describe your natural leadership style. Think of a time when you acted as a leader, but you weren't true to who you are – and perhaps used a style that didn't naturally fit your personality. How did you feel, and how did it impact the effectiveness of your leadership?