Our traditional image of a great leader centers on his ability to inspire others to action. He has the magical skills and magnetic personality to paint an optimistic picture of success and spark action in others. The typical leader’s story is about a man leading a rag-tag group of random people to overcome a huge obstacle, navigate extreme adversity, and win the day with some form of total domination or rescue (cue the cowboy riding off into the sunset). Our media spreads this profile far and wide and our training programs are ripe with the necessary ingredients and recipes for becoming that perfect leader. This “old school” version of leadership might work for a simple world, where answers are known and success is a matter of “gritting it out” or repeating a single solution at large scale. When examined in light of 21st century needs, the heroic leader is a gender-biased and paternalistic approach with limited impact to specific situations.

The last great generation of businesses in the 20th century (e.g. General Electric & Jack Welch) were built in the manufacturing mindset that resulted in super-efficient assembly lines and quality improvement efforts like Six Sigma that honed these practices to gain competitive advantage. In that paradigm, people were generally divided into two groups: management and workers. As this model grew and matured, professional managers developed methods for “talent management” that can be summarized as cost controls. That is, how do we grow our top line with increasing sales, but lower our bottom line by controlling costs? For many businesses, human resource is one of the most expensive line items they need to manage. The combination of pay, benefits, and other “fringe” costs can easily sink a business if not properly controlled. All of this is great for the business, but not always great for the individual worker, who often ends up feeling more like a widget than a human. This leads to “disengagement” characterized by a low desire to deliver “exceptional value” or generating any kind of work that is more than what is necessary to stay employed.

Sticking to traditional views of paternalistic leaders is a limiting factor for businesses everywhere. The pace of technology and rise of consumer centricity have overwhelmed the abilities of a traditional manufacturing mindset to deliver sustainable business performance. Businesses are now fully immersed in a world characterized by volatility, uncertainty, complexity, and ambiguity (see: VUCA). Success still requires consistency at scale, but now requires excellent customer relationship management and continuous product/service innovation. Organizational agility is now overtaking scale + quality as a dominant factor in business design, and this new operating model requires a completely new leadership mindset.

Intrinsic motivators are far more effective at achieving high performance than extrinsic motivators (see Self Determination Theory, popularized by Drive and Primed to Perform). Compensation is an “extrinsic” motivator, so to be effective at driving performance it must be paired with effective management that delivers a complete employee value proposition that includes purpose, professional growth, and positive culture. Simple “pay for performance” buys short-term (mercenary) effort but rarely results in sustained or meaningful results. This is particularly true when the goals of an organization are human-centered, like delighting customers; or creative as in building software or solving medical problems.

The key to leadership in today’s economy is to create an environment where people can have freedom to own and explore their ideas, build strong relationships with others, and develop their professional expertise. Leaders need to create vision, gather resources, and provide process supports to enable this. I call this type of culture Reciprocity to replace the concept of Paternalism in as a leadership mindset. Reciprocity is about creating positive outcomes for all stakeholders by building agreements and sharing commitments. The foundation of a reciprocal environment is trust.

Trust is the defining characteristic of today’s greatest leaders because they create conditions where people feel safe enough to take risks, share their whole selves, and make mistakes that lead to learning. To enable others in these ways, a leader must do these three things:

1. Build a safe zone* for risk taking

2. Listen 3x more than they speak

3. Share benefits of performance (IP, $$$, time, opportunities)

If any of these factors are missing, it belies the leader’s desire to exert authority and maintain control. Trust is not blind, and it’s not without risk, so great leaders build agreements that anticipate downsides and care for unexpected negative outcomes. Reciprocity is a high risk/high reward type of relationship, but can be supported successfully with proper infrastructure and investment. Substantial research on high performing, highly engaged teams supports the idea that drives exceptional results in a competitive environment. This is not a Kumbaya, “hail Mary” or “everybody gets a trophy” approach to leadership. This is the answer to creating lifetime customer value and solving the most challenging, but economically rewarding problems on the planet.

*Safety includes interpersonal, psychological, financial and physical elements that can prevent full engagement. Safety may require substantial investment by the leader to ensure the performance of the team is free of personal risks that outweigh the potential rewards.