Why You Need Charisma

The emerging leaders and rising entrepreneurs on whom I place my bets have one thing in common besides a promising idea: a lot of charisma.

"Paul Lee" (not his real name) is particularly adept at attracting people to his visions and engendering trust. A tireless networker because of his great interest in people, he can spend thirty minutes on a commuter plane and disembark with new friends. He approaches potential investors and also top figures in sports and entertainment based on sheer charm and willingness to do personal things for them, like get tickets to a game for the kids or make introductions, immediately on his mobile. His magnetism isn't in the stories he tells; it comes from the intense way he listens to other people's stories and then draws them into an activity connected to that story. Within a two years after leaving an established firm, Lee built a mini-conglomerate in New York and Los Angeles. He attracts capital, celebrity endorsements, and money for philanthropy based on talking people into joining him and constantly nurturing those relationships.

Lee's business model involves building a core marketing company and surrounding it with satellite investments that can draw on the capabilities of the core to realize their growth potential. His leadership model involves making sure all feel that they are special and will have their particular needs met, yet also feeling that they are all in it together, drawing strength from association. At charity events Lee and his wife host for causes he cares about, CEOs mingle with his childhood friends and rock singers. Lee's world is appealing because it is highly positive; it's hard to find a hint of rivalries or enmities (even though I know he could demonize a rival if he wished).

Charisma isn't oratory or rhetoric; Lee is not a polished speaker or writer. Charisma isn't devoid of substance, either. Lee's numbers must look good — which they do, because he can entice the best people and that entices others. Lee is just at the beginning of his leadership journey, but people have faith in him — more accurately, faith in the groups he can assemble because of his magnetism. That's the essence of charisma.

Charisma has been getting a bad rap recently. The trend among leadership gurus is to discredit the "great man" theory of leadership (there aren't enough women leaders yet for a "great woman" theory to discredit), and emphasize instead the ideas of multiple leaders, followership, distributed leadership, and teams. It is true that no single individual succeeds by himself or herself. Even so-called "water walkers" (named after a religious figure, and one of my favorite images from my book Confidence) have stones holding them up while they walk on the water — that is, support systems just below the surface. It is also true that the religious tinge associated with charisma conjures up images of blind faith, whether leading people to drink the lethal kool-aid or invoking the false hope that a new CEO can rescue a failing corporation all by herself. But rejecting charisma as a factor goes overboard, missing the personal appeal that makes someone a leader.

Similarly, U.S. Presidential elections have been criticized for emphasizing personality over substance. Social psychologists have turned likeability and competence into distinct variables, as though leaders can't have both. In election season, the likeability factor is measured but simultaneously discredited by pundits who caricature it as a choice of beer-drinking companions. I come down on the other side: I think people should choose the more charismatic candidate, all other things being roughly equal, because a leader that can charm us and lead us into a movement reflecting our better selves is also the most likely to use that appeal to get things done in a contentious political environment. Both Bill Clinton and Ronald Reagan had charisma in abundance. Leaders can hire for spreadsheet skills, but they can't outsource relationship skills.

Some people, like President Clinton or my young friend Lee, seem naturally high in charisma, but there are ingredients that can be cultivated: A genuine interest in people. Listening to their needs and concerns, and showing that you will help them achieve their goals. Treating people as though each is special and deserves attention. Remembering details about them.

In today's troubled world, entrepreneurship is sometimes treated as the new religion that will save the economy and build world peace. The analogy to religion is appropriate, because there's always an element of faith in innovation and entrepreneurship. That's why venture capitalists' rule of thumb is to bet on the leader, not the idea. Charisma can be a decisive factor.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.