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The coming leadership revolution

7 min read


In the summer of 2012, we were still limping out of the throes of an economic Armageddon. The mood around the country was dark and gloomy. I yearned to focus on leaders with vision, values, and integrity, as the global recession was prompted by the absence of these very characteristics in key leadership positions. I longed to reaffirm that all great institutions are built by leaders at all levels who demonstrate the bedrock values of integrity and trust. I felt there could be a great comparative story of the presence or absence of leadership and its effect on the success or failure of an organization.

Implementing a new strategy requires current and emerging leaders who can drive an organization, energize its operations and inspire its people. This kind of leadership challenge is for the select few who always step up, build a competitive edge and differentiate themselves in clear and compelling ways.

This kind of leader personifies the organization’s purpose through values, thinking and character — all necessary to inspire and energize commitment to the strategy and goals of the organization and to secure the allegiances required to make any bold purpose succeed. Clearly, an essential element of leadership is trust.

High-performance leaders and organizations believe that words and deeds should match. They have the guts and intestinal fortitude to keep their promises through thick and thin. It is in translating the commitment to consistent, purposeful action, often under fire (business downturn, budget crisis, etc.) that leadership is truly tested.

Without the requisite character and integrity, the organization is built to fail and will not last. According to Edward R. Murrow:

“To be persuasive, we must be believable; To be believable, we must be credible; To be credible, we must be truthful.”

I already had a career of three decades in executive positions in Fortune 100 companies when I was recruited energetically by Countrywide Financial Corp. Countrywide was purportedly the great American company enabling realization of the American dream. At that time, founder and CEO Angelo Mozilo was well-regarded and a winner of honors for CEOs.

When I accepted an invitation to work for this rapidly growing mortgage company in 2005, I was eager for a new opportunity and envisioned years of impact, performance and the satisfaction that comes from knowing I made a difference. I was excited to help them build a broadly diversified financial services firm. They wanted me to help them build a “Goldman Sachs on the Pacific.” I served as managing director and enterprise chief leadership officer.

Unbeknownst by me, Countrywide was destined to become a profound symbol of much that is wrong on Wall Street: massive fraud, money laundering, racketeering, conspiracy, and weighty influence in Washington and beyond. Too big to fail. Too big to jail. And too connected to change.

In late summer 2007, Countrywide was headed toward insolvency and had emptied out their lines of credit. They would be insolvent in days, hours or, some said, minutes. Mozilo was extracting hundreds of millions of his own net worth out of the company. According to Fortune magazine, “Civil plaintiffs accuse Countrywide’s officers, for instance, of selling $848 million in stock during the year and a half before the company’s sale to Bank of America in January 2008, including $474 million worth sold by CEO Mozilo alone.” It is said of Mozilo, “he never showed much faith in his own company, failing to buy a single share on his own since 1987.”

Class-action suits alleged that “the defendants issued a series of materially false and misleading statements and omitted material facts concerning the Company’s lending practices and internal controls.” The SEC accused Mozilo of insider trading, market manipulation and fraud. The fine against him, $67.5 M, was the largest individual fine in history. Mozilo regularly appears on lists like Time’s “25 People to Blame for the Financial Crisis” and Portfolio’s “Worst American CEO’s of All Time.”

“It is astonishing that one single company could be responsible for overcharging more than 450,000 homeowners, which is more than 1 percent of all the mortgages in the United States,” Jon Leibowitz, then the F.T.C. chairman, told Gretchen Morgenson of the New York Times in 2011. The company’s business model was “based on deceit and corruption, and the harm they caused to American consumers is absolutely massive and extraordinary,” he added. Still there are zero indictments and no prosecution. Is that fair to the victims of this malfeasance? Here and abroad people are waiting for justice.

In fact, Mozilo criticized a Merrill Lynch analyst who downgraded the stock, claiming such an outrageous comment was equivalent to yelling “fire in a very crowded theater.” However, he forgot one thing. It was true. Nothing wrong with yelling fire in a movie theater if it is on fire.

There was a time when people would have walked through the gates of hell for Angelo Mozilo. He was revered; held in awe. He had convinced us that we were pursuing a noble goal — housing America. But the veil of this wizard was pierced. Walk behind the curtain. There wasn’t much there at all: smoke, mirrors, and a litany of “trust me” and “it will be fine” assurances. Mozilo was destined to wander the hallways of Countrywide in his final days shunned by his own employees.

A new day is dawning

The system is about to change. It must. The best leaders create trust by matching their words with their deeds and keeping their promises. Credibility is essential and is gained when the leader does what he says he will do. Credibility determines the actual ability to lead, the perceived ability to lead, and the integrity that causes others to place their trust in the leader. Integrity involves a reliability that allows the followers to know that the leader will, within reasonable boundaries, be predictable. A leader who is frequently unpredictable will soon lose followers as Mozilo did.

Many people fail in their leadership responsibilities because they have, in either a dramatic event or a series of damaging actions, lost credibility. Credibility is lost when executives put their own interests above the interests of their constituents — shareholders, employees and communities. People don’t give you their trust; they only lend it to you.

The media has widely covered leaders and institutions engaged in practices that were neither sustainable nor responsible. Clearly, the highly visible corporate, political and institutional leadership failures of recent years have deeply shaken public confidence. All too often, these leaders placed self-interest ahead of the well-being of their organizations, constituents or supporters. After the institutions got in trouble, their leaders refused to take responsibility for the harm caused to the people they were supposed to serve.

So many leaders of the recent past have failed themselves, their families, their shareholders, and their neighbors on the most important of leadership behaviors — honesty, integrity and ethical decision-making. It is time to recognize and celebrate the leaders who exemplify these qualities and expel those who don’t.

When you examine the core characteristics of what makes for great leadership, it’s not power, title, authority or even technical competency. Rather, it’s the ability to earn and keep the loyalty and trust of those whom they lead that sets them apart. If you build into those you lead, if you make them better, if you add value to their lives, then you will have earned their trust and loyalty. This bond will span positional and philosophical gaps and survive mistakes, challenges, downturns and other obstacles that will inevitably occur.

Lead by example. Always remember, people will not believe the message if they do not believe the messenger. Character counts. With it, all things are possible.

Michael G. Winston, author of “World-Class Performance,” has been named “The Whistleblower Who Conquered Countrywide,” and “Wall Street’s Greatest Enemy: The Man Who Knows Too Much.” Before becoming one of the highest-profile whistleblowers connected to the U.S. financial industry meltdown, Winston spent more than 30 years working as a business leader, change agent, and organization strategist for some of America’s most prestigious corporations. He has served as a senior executive for Lockheed, McDonnell Douglas, Motorola, Merrill Lynch and Countrywide Financial.

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