Why Emotional Intelligence (EQ) Isn’t Enough for Superior Leadership | with David Burnham [Transcript]


Link to podcast episode: EL 30: Why Emotional Intelligence (EQ) Isn’t Enough for Superior Leadership | with David Burnham

JESSE LAHEY:  Welcome to the show leaders! My guest today is David Burnham, who has performed research on “what superior leaders do and how they think” for over 40 years in industry, in academics, and government and David was one of the first voices that I heard many years ago, calling for a new approach to leadership, one that focuses more on emotional intelligence and mutuality and there have been a lot of voices in recent years that have picked that up and a lot of great examples of that.  It seems like a lot of the focus has been so much on emotional intelligence that other components of superior leadership have been lost.  David, welcome to the engaging leader podcast!

DAVID BURNHAM:  Thank you, Jesse, delighted to be here.

JESSE: Can you share with us the story if how you discovered the changing dynamics of leadership a few decades ago?

DAVID:  Yes, Jesse.  For many years I worked with Dr. David McClain who was my business partner and my mentor, and who was chairman of the Psychology Social Relations department at Harvard University.   And what interested us long ago now, literally, in the 1970’s was could we differentiate or could we discover what was the difference between leaders of major divisions of large corporations and CEO’s who were consistently, over time, delivering superior performance defined as, top quartile gross in sales, revenues, EBIT, as compared to those whose performance over the same time periods was variable or even above average?

And all we discovered then, is still true today but with a very substantial change that the leaders who were vey successful delivering superior performance were and in face even today still are particularly concerned about what was the influence and impact that they were making on their customer base, on their clients and on their employees.  That is they saw themselves, they thought about being the visionary the charismatic leader who was primarily accountable for and responsible for setting directions and for delivering results and they were particularly good at getting people to follow them, which requires very high emotional intelligence.

By the late 80’s or early 1990’s men and women who had these characteristics were still going well as leaders but often they were not delivering superior performance the way they used to, so what interested me at the time was, what’s changed?  But if you look at the overall environment, what changed of course was the business and technology had changes remarkably, we couldn’t as you and I are talking, talk on Skype, we couldn’t do a podcast, now we can.  We couldn’t look at the internet, our employees couldn’t look at the internet, our customers couldn’t look at the internet and that dramatically changed which accelerated competitive advantage for people, it meant that people at every level had access to what was going on in the market place, in other companies and their customers companies and also what changed was that when we were first doing this research in the 1970 women by and large were present in large organizations only in what was then called personnel, now called12  HR.  Well, by the 1990’s women were in marketing, women were in sales omen were everywhere, manufacturing, they may not comprise a large proportion of the CEO population although is was almost maybe 2 women in the 70’s but elsewhere many more and of course the demographic basis had changed a lot and so had the nature of business, business was multinational, international, across boundaries across cultures and our cultural expectations about working changed.  No longer did most people feel that they had to stay in their companies, they had to stay in their jobs, if they weren’t getting recognized, promoted, challenging work, they voted with their fate or at least they felt they could vote with their fate, except in recessions.

So, in the early 1990’s, 1992 we initiated another study this time a very lengthy study.  We went over a 12 year performance period, 8 countries and 13 industries and we looked at leaders who over that lengthy period were delivering consistently superior performances compared to leaders who were delivering above average performance so we weren’t comparing poor, because most poor leader don’t keep their jobs, but we were comparing the good guys, the good women, the good men, with the great men.  Much as Jim Collins did, Jim Collins however was looking at secondary data, not primary data and we had access to primary data, the leaders themselves.  We measured a number of things but most importantly we measured using probably the most used psychometric instrument in the world, a test of imaginations, of the exercise of imagination, which we then coded for the innerlying thoughts, the motives which drove the behaviors of leaders, as well as the stages that drove their behavior.

JESSE: Now, just for the benefit of our audience, the exercise of imagination involves an individual being asked to write a series of six stories and then a trained professional sort of does like psychoanalysis of those stories, reading what’s subliminally there in the thinking behind the stories.

DAVID:  Well you’ve got it almost right, because it’s actually a half a dozen professionals and they’re not interpreting those stories for the psychoanalytic point of view because the data would show if you did that you’d get six different interpretations.  Rather, they’re using coding systems which were developed over decades of research, they are very specific and people can learn how to do them so that three coders code the same six stories 89% of the time, they will agree.  So there’s only a 2% difference between them, which is nothing and what their coding for are the underlying thoughts in everyday life, not clinical psychological interpretation, but what is it that in every day life the individual is thinking about?

So we know that in leadership there are three thoughts that occur most frequently.  One is, a short-term focus on competing.  Now, that’s not competing with another companies performance, the underlying unconscious thought it, “I want to compete, I want to be better” and so the behavior that drives is, “do it yourself, take over” because really you’d rather do it all yourself and one of the difficulties of being a leader with this thought is when you can’t do it yourself, you tend to be seen as very autocratic, or neglecting everything so that you can devote your time to that which you can do yourself.  Another thought is, affiliation.  “I really want people to like me” and another thought is, impact and influence, “I really want to make an impact” and that impact and influence thought was present in the 70’s.  What changed significantly both in the 70’s and in this research study, which went right through mid 2005 was leaders were very high in emotional in intelligence, effective leaders.  But some where, most above average leaders and so were most average leaders, that is high emotional intelligence got them the job, for the most part.  What it didn’t do was differentiate performance.

JESSE: Isn’t that something?

DAVID:  Yeah, we’ve become good, I think, at reading in interviewing, “does this person have high emotional intelligence?” So by and large were selecting for that relatively well.  What were not selecting for are the other characteristics, the other thoughts that really make a difference.  And first, effective leaders in the past were really great at holding people responsible.  So, here’s your job, let me lay it out for you, let me tell you exactly what to do, now go do it.  And that s still accounts for good leadership; great leaders differentiate between responsibility and accountability.  They say, “this is what you have to deliver, do you agree?”  And then they say, “This is what when we need it.  Now give me a plan as to how you’re going to get there.”   Whereas, good leaders say “let me tell you how to get there.”

Now, good leaders say the reason you have to do that is, “if you ask people for a plan they don’t know how to get there and anyway I know best.”  Great leaders say “we can discuss the plan but unless the person makes the plan, then ultimately I am now holding the bag, I’m accountable.”  If they make the plan, particularly if they make it with their team, or with the people…are going to deliver it, it is much more likely to be delivered to a high standard.

JESSE: So, it’s delegating not just the responsibility but delegating the planning and the decision-making?

DAVID:  That’s right.  The underlying thought for that is, returning the authority to others to figure out how they’re going to deliver what they’re accountable for and then to hold them accountable for execution of their plan.  So, that’s one.  Two, great leaders do not jump quickly.  That is, they don’t see things as black and white choices, so typical decision, “Should we buy, should we make?”  Often seen as a black and white decision.  “Should we invest in upgrading this system or should we throw it out and start again?  Shall we merge or shall we grow organically?”  Black and white decisions.

Good leaders in the past, great leaders, often made those decisions very quickly and usually their instincts led them to make excellent bets.  So, they kept in advance of the curve through their own intuition, through their own ability to make the bets, if you will.  Well, things weren’t moving as fast them.  Number one and number two, it took years to gain the information, years that they often had to make those bets.  Today, things move so quickly, number one.

JESSE: Oh yea, that’s right.

DAVID:  And number two, because they move so quickly, trends don’t necessarily predict the future.  Great companies have to be prepared for very uncertain futures for things that may change dramatically and when that’s true, that means not only do you need to involve others in making those bets, but you can’t see them as black and white.  You have to see the paradox that the potential exciting future that this trend predicts may disappointingly not materialize because a counter trend may appear very quickly and change that.

So, when that occurs, if you bet the farm, if you’re not poised and flexible to change things, to go in the new directions, to capitalize on it, you can be left behind very quickly.   And so great leaders think in complex terms and they think about the paradox of how even exciting and certain trends can go out the window and be very disappointing if you’ve invested in nothing else.  And so, they involve people in exploring both the need for change and the uncertain future and being prepared for multiple scenarios for multiple futures and being excited about being able to change as opposed to disappointed when the change doesn’t turn out to be the one you predicted. So, they therefore, stay on top of the trends and deliver results.

Finally, another thing that’s highly differentiating, is in the past it was enough to avoid failure, that is, go to the avoulous conference as the CEO, be prepared to say “Were going to succeed in all things” and if you did have a set back be prepared to explain it.  That still works, you can deliver good performance and a good share price that way, a good stock price.  What great leaders do is go beyond that.  There saying “this is why we exist, “ Let me tell you what our customers needs really are, how they’re changing and how keeping ahead of customer needs in this marketplace.   We have products that are working now and were prepared with products for the future that will continue to meet customers needs and were proud of that and our customers echo it, and that’s why our stock price is doing so well.”

So, they’re purpose driven as opposed to straight visionary.  The charismatic leader was visionary, “Look at me and follow me.” The great leaders today, recall that leader, the interactive leader. The great leader today is purpose driven, so they’re as high in emotional intelligence as the great leaders of the 70’s but, the great leader of the 70’s is using their emotional intelligence and the good leader today to inspire people to follow them, the great leader today is using their emotional intelligence to create the ‘we’.

We’re all in this together, our customers, our employees, our shareholders, we are in this together and we have to chart a course of the future together and so her or she is paying attention to all those constituencies consulting them regularly and including them in the decision making process, in the information loop.  Not informing them but including them.  So, what do you think Jesse?  Have I laid out the differences for you clearly enough?

JESSE: I think so.  So, you talked about four things that have been new in the past couple of decades.  The thing that’s the same among great leaders, is the overall focus on having an impact and an influence but what’s new today is, number one, this concept of return of authority and number two is, recognizing the paradox and complexity of the new world.  So, having some flexibility.  Number three is being purpose driven and having some pride about why we exist and then number four, is creating the ‘we’.  So we are in this together and we are planning and creating together.

DAVID:  Yes, well summarized, Jesse.

JESSE: I see so many organizations that are focusing their training opportunities on only one of those factors or in particular, you see a lot of training these days that is focusing on emotional intelligence.  Is that likely to prove effective, I mean, if emotional intelligence is important then shouldn’t that make a difference, or is there an actual danger there?

DAVID:  Well, I think it does make a difference particularly for the leader who has very little of it, but its not sufficient because a leader may have a lot of it and still not be delivering superior performance.  It isn’t sufficient because it’s a system, leadership, being an effective leader requires a systemic approach in fact, interesting, one of the consistent findings in our research is that average leaders are very high in mutuality.  That is, the ‘we’.  However, they are also high in achievement motivation.  Which means that they’re extremely effective with people but what their driven to do is to look inward.

That is, the focus of competition becomes inward. So, they want to compete with their colleagues at the same level, with other division heads and because the focus of competition is inwards and not on pleasing the customer, not on staying ahead of the customer curve, except as that happens to coalesce with whatever they may be thinking competitively.  Ironically, although you would think that their competitive focus would cause them to do very well, in fact they don’t.  So, its the worst possible combination because people are so thrilled with their high mutuality that they buy into these very short term focused goals that may have nothing to do with what customer needs now are or about to be, so in the end high morale and poor outcomes, or at least average outcomes.

JESSE: I could see that pitfall happening in sales departments where you have a lot of the sales managers, that have great people skills but they may have the short-term competitive focus. “I want to be the one that meets quota this month, or the sales leader for this month” and that could have an unintended consequences.

DAVID:  Yes.  It’s very interesting we often do studies within organizations and I can give you direct data that validated your hypothesis, Jesse.  So, looking at a retail bank at division managers who in a sense are also sales managers because retail bank branches of course are supposed to sell more of the product, more accounts, more mortgages, more credit cards, more deposits, more loans, and ironically those who are achievement motivated the leaders of who the branch managers report to, those who are achievement motivated but with high mutuality high people skills, most of the branch manages have pleased to report to them but their short term focus is so high.  “How did we do this month on credit cards?” that people pull out all the stops on credit cards and in order to do that, when that’s the only focus, of course your talking about the bottom of the credit rating. And when you start doing that nothing may show up for the first three months or the first six months, but a year end you’re not doing as well because you default rate does up.  Whereas, if you’re looking at “How can we help the financial future of each one of our customers?  How can we really deal with it for them?”  Then you’re establishing trusted relationships, you get a lager share of the wallet and you get a large share of the opportunity to really met their needs and because you’ve established the need base, purpose driven relationship, your profitability goes up, your revenues go up, and you’re soon at the top of the pack.

But, see the difference?  You’re focused on the customer, not on “how is the guy down the street doing with his branches?  Or that woman in Texas whose number one and how do we beat her and become number one ourselves?”

JESSE: Definitely, more purpose driven.  When you describe the paradox and the dramatic changes that are taking place today and how a great leader is more flexible within that, it seems like another pitfall that could come up is a leader who is so aware of the changing circumstances, that they don’t have an ongoing consistent focus.  That they’re changing with the wind and creating mixed messages or conflicting priorities, or just too many unfocused priorities that can confuse their team.

DAVID:  You’re absolutely right. Going with purpose, “what’s our actual work and what’s our purpose?” is also a characteristic of superior leaders to make a long term plan and then short term plans to accomplish the long term objective. What that means is that when you look at the entire landscape, the trends that may occur and then you start to plan “how are we going to prepare for an uncertain future?” you’re not changing with the wind or adding so many options that none of them could possibly be accomplished, ultimately you have to make your bets but you’re making your bets on a much more informed basis, more systemically, and you’re including many more peoples voices not as a compromise but as a collaborative in choosing what bets to make and therefore because you’re using the combined wisdom of the group, you’re more likely to make the right bets.

JESSE: That makes perfect sense.  Now, you and your firm Burnham Rosen teach these principals to large companies and organizations in industries and governments around the world?

DAVID:  We do.

JESSE: Primarily you’re doing private training for different organizations, but there are a few times a year that you make a public workshop available to the public and you have a couple that are coming up in the next few months.

DAVID:  That’s right, there’s in London in June and one in Boston in June, and typically leaders from a wide variety of organizations go to those programs and it’s always a wonderful opportunity for them to get to know leaders from other organizations to really find out how these principals would apply to themselves and to their role.  So, there always gratifying, marvelous experiences, I think for everybody.

Link to podcast episode: EL 30: Why Emotional Intelligence (EQ) Isn’t Enough for Superior Leadership | with David Burnham

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