In Asian firms, political ties and family influence are more widespread than in the United States. Moreover, according to HBS professor D. Quinn Mills, American CEOs often use one of five Leadership Style Between America and Asia: directive, participatory, empowering, charismatic, or famous. Which styles have Asian business leaders previously embraced, and which are most likely to be successful in the future?
Mills discussed the contrasts and similarities in Leadership Style Between America and Asia at a discussion in Kuala Lumpur on June 15 at the request of The Star/BizWeek newspaper and the Harvard Club of Malaysia. The text of his discussion, “Leadership Styles in the United States: How Different Are They from Asia?” is available below.
Asia’s fast economic expansion in recent decades is one of history’s most significant occurrences. This progress is still being made today, and there is every reason to believe that it will continue forever unless slowed by conceivable but improbable international wars. The managers and entrepreneurs who maintain and establish Asian enterprises are at the heart of Asian economic progress. Do they have the same Leadership Style Between America and Asia as top Western executives?
There are significant variances. Are the variations due to various cultures or phases of corporate development?
But first, what exactly are we discussing?
Organizational roles include more than simply leadership. It is helpful, but not yet widespread in business literature and conversation, to differentiate between leadership, management, and administration. They are, in reality, extremely different; each is important and has a purpose. In a nutshell, leadership is the capacity to inspire people to pursue a vision of the future. Management is about producing outcomes in an efficient manner that generates a financial return or surplus.
The administration is about rules and processes and whether or not they are being followed. These differences are critical for clear communication among us about how organizations are governed; if they are not made, we become quite confused, as is most of the debate around our issue.
In a nutshell, efficient organizational management entails:
Today’s topic is Leadership Style Between America and Asia: how a CEO establishes direction and motivates his team to follow that path. This is suitable since management methods spread quickly via imitation, adoption, and MBA education. Administrative procedures were widely adopted around the globe decades ago. So what is significantly different today is leadership.
Political and familial ties
Cultural variations are significant Leadership Style Between America and Asia, but only in terms of focus. For example, family leadership of business businesses, including huge corporations, exists in both [regions] but is more prevalent in Asia.
For example, Li Ka-shing [of the Hong Kong-based Hutchison Whampoa and Cheung Kong holding group] carefully manages his businesses and intends to hand over control to his two sons. Similarly, the presidents of several of America’s major corporations, both public and private, are descended from the families who created them.
In America, CEOs and boards have less flexibility of action than in Asia.
Leadership Style Between America and Asia, Firms operated by professional managers who are replaced by other professional managers are increasingly prevalent in America, either as a result of retirement or by the firm’s board of directors. The best firms have comprehensive programs for training executives inside the company and usually pick the future CEO from among them. American CEOs work for their companies for an average of thirty years and control less than 4% of the company’s stock.
There are a few businesses that employ CEOs immediately from outside, with no prior experience with the company. Some firms get a lot of press and hence seem to be more prevalent than they are. These CEOs are motivated by a desire to excel in a competitive environment (they want to win), and they insist that money is less important to them than professional achievement; however, given the enormous inflation of top executive compensation packages in America over the last decade, this is difficult to believe.
Many American enterprises, notably most of the major ones, are more reliant on capital markets for their money (stock and debt) and hence pay far more attention to Wall Street than is currently usual in Asia. Wall Street has great expectations regarding the conduct and performance of CEOs and succession. In America, CEOs and boards have less flexibility in action than in Asia. this is the main difference in Leadership Style Between America and Asia
In Asia, succession is often handed down via siblings. In Li’s case, he is passing it on to his two kids, while Jack Welch created a talent factory to nurture General Electric Executives.
To a large extent, large American firms are further along in their development than many Asian firms, having transitioned from founders’ family leadership to professional management and capital obtained from capital markets (rather than from government—directly or indirectly—or from family fortunes). Throughout this transformation, they have developed certain Leadership Style Between America and Asia that are sensitive to boards (typically headed by outside directors) and Wall Street.
Asian enterprises may follow this developmental route, but this is not certain. Political ties are vital for top corporate executives in Asia, whether in democracies or one-party governments, but they are far less significant in the United States. It is a trait of Asian top executives that they have such ties that are vital to their enterprises. In America, the CEOs of huge corporations often have almost no direct contact with senior politicians—the government is kept at arm’s length and commerce is conducted by business people. Of course, there are exceptions, and substantial political participation is still a path to commercial success in America, but it is much less prevalent than in Asia.
Leadership Styles in the United States
Leadership Style Between America and Asia now are more diverse than in Asia. There are five in the United States:
Charismatic, Directive, Participative, Empowering, Celebrity (superstar)
Leadership Style Between America and Asia, The first four indicate how an executive works with subordinates in the organization; the last one is intended for persons outside the corporation.
In America, directive leadership is widely recognized, although it is becoming less common. It emphasizes the guidance supplied by executives to others in the organization. The leader is in complete control. This fashion is quite popular in Asia.
1. Participatory leadership
Participatory Leadership Style Between America and Asia, which entails close collaboration with others, is more frequent in Europe, where it is often mandated by legislation (as in northern Europe, particularly Germany), than in the United States. It’s also popular in a variation influenced by national cultural standards, such as in Japan.
2. Empowering leadership
Empowering Leadership Style Between America and Asia is a modern concept that emphasizes the distribution of responsibilities to subordinates. This leadership style is used by American corporations with mostly independent departments. This technique is currently being advocated by a few younger Asian business executives (for example, the CEO of Banyan Tree Resorts).
The capacity to inspire employees is at the heart of empowering leadership. “You may be a wonderful manager, but unless you can motivate other people, you are of little use to General Electric as a leader,” Jack Welch said. Energizing others is at the heart of America’s new leadership.
In Asia and Europe, adaptability is… less prevalent and less respected. That will be required everywhere shortly.
3. Charismatic Leadership
A charismatic Leadership Style Between America and Asia is a leader who seems to be a leader. People follow such a leader because of who he is, rather than because of strong management or even commercial success, or because [the people] are provided involvement, collaboration, or empowerment. Human magnetism is the thing, and it varies greatly between country cultures. What seems to Americans as a charismatic leader may appear to folks from other cultures to be very different.
4. Celebrity leadership
Celebrity Leadership Style Between America and Asia is not the same as ordinary leadership. It considers the influence on others, such as consumers and investors, outside of the organization. The CEO becomes a celebrity and is sought after by the media in the same way that a movie star is. Good appearance, a theatrical flair, and the ability to deal well with the media are usually required.
The United States is now in a downturn owing to corporate financial reporting issues, which have focused emphasis on CEOs with the capacity to get things done properly in the corporation; nevertheless, celebrity leadership will rebound. Boards seeking top executives to reinvigorate a company search for superstars with outgoing personalities.
5. Directive leadership
In the West, corporate governance includes scrutiny from regulators, boards of directors, and even institutional shareholders. Although Asia already has most of these institutions, they are generally not as well established and not as relevant in the opinion of senior executives. Asia is plagued by government corruption that extends into business. America has less of this, although it does have significant financial reporting fraud. Both are very harmful to the economies of the countries concerned.
Corruption tends to devastate an economy by first weakening the confidence essential for transactions to take place, and then by distorting the economic equation that underpins sound corporate choices. Graft is destroying the national political unit as it continues. A long-established graft is a way of life that is very difficult to eradicate. Politicians pledge to get rid of it, but they are unable or unwilling to do so.
The role models for business leadership accessible in many parts of the globe are crucial. The corporate CEO is the most easily accessible role model for the head of a corporation in America, with its lengthy experience with professional business Leadership Style Between America and Asia. It is the head of the family in China and Chinese-related enterprises. It is still the military general in France. It is the consensus builder in Japan. Now, it is the coalition builder in Germany.
According to studies, there are nine main attributes that people look for in a successful leader:
- Emotional Fortitude
- Resonance Emotional
Emotionalism associated with a passion is more prevalent in America than elsewhere. Europeans see it as a kind of corporate evangelicalism and are wary of it. Effective CEOs in all nations are decisive: European and Japanese top executives are the most consensus-oriented, while Chinese and American top executives are more inclined to make choices individually and with personal responsibility.
Everyone has a sense of conviction.
Integrity is a multifaceted attribute very much influenced by country cultures. What is true in one civilization may not be true in another, and vice versa.
Adaptability is a noticeable quality of American leadership generally. In Asia and Europe, it is less frequent and respected. That will be required everywhere shortly.
All great CEOs have emotional fortitude; Leadership Style Between America and Asia, Americans spend more time trying not to exhibit it.
Strong political participation is still a path to commercial success in the United States, although it is much less prevalent than it is in Asia.
Emotional resonance, or the capacity to understand what drives people and successfully appeal to it, is particularly crucial in the United States and Europe at the moment. It will grow more significant in Asia as living standards rise, knowledge workers become more valuable, professional management becomes more sought after, and CEOs fight for managerial talent.
Self-awareness is essential for avoiding the kind of overreach that is so typical in America; it is a less common virtue in America than in Asia, and it is a strength of the Asian CEO.
Humility is a rare quality in an American CEO. It is sometimes seen throughout Asia. That is typically a characteristic of the most successful leaders, as it was in Abraham Lincoln, the most admired of all American political leaders. While the Union side was losing the Civil War, a high-ranking officer advised that the country get rid of Lincoln and replace him with a dictator. Lincoln overheard the remark. Lincoln still elevated the general to the top leadership of the army and informed him, “I am putting you to command despite, not because, of what you said. Deliver us victory, and I’ll put the dictatorship on the line.”