It's Not About Empty Suits

By Jack and Suzy Welch

Does a leader have to have charisma? — Peter Wengryn, Mahwah, N.J.

You ask an age-old question that never seems to lose relevance. When we hear your question on the road, there's often some panic mixed in since the person asking has usually been accused of getting ahead on sheer personality or falling behind due to a lack of it. Indeed, almost everyone wonders at some point in his or her career how big a role charisma plays in success. So how big is it? In the short term, very. In the long term, very again--but not alone.

Now, we're obviously not talking here about "bad" charisma, exuded without brains, vision, and character. That trait is useless, and even dangerous. In business, wow personalities with less-than-wow minds are called empty suits for good reason. Too many of these individuals manage to ho-ho-ho their way to the top, even to the CEO's office, but most self-destruct after looking great for a couple of years while achieving little. On a larger scale, darkly charismatic leaders have the power to wreck lives and nations. And even though history warns us of their dangers, these types persistently emerge. Witness the recent hate speech by Venezuelan President Hugo Chávez at the U.N. He's a charismatic leader--too bad!

But good charismatic leaders are everywhere, too, leading with magnetism plus integrity and intelligence. And for them, charisma just makes the job a whole lot easier. Why? Because leaders have always had to energize their people. But in today's fiercely competitive global economy, they need to energize them more than ever. They have to pump up their people to tackle unscalable heights and make them understand why change is constantly necessary, passionately explaining what's in it for the companyand employees. All that can be done without charisma, using reasoning instead, but that approach takes a lot more of what global companies don't have anymore: time.

There are, of course, leaders who succeed without charisma. Alan Greenspan, former chairman of the Federal Reserve, has won legions of followers by the depth of his thinking. But much more commonly, you find smart, capable people stalled because they lack the innate ability to win hearts and minds. Yes, innate, because charisma, for better or worse, seems to be inborn. It can't really be trained into someone, and it certainly can't be faked for long. So where does that leave people without it? Definitely not off the leadership track--just in a slower, more challenging lane.

Why can't the U.S. car industry get it together? — Joseph Lahoud, Foxborough, Mass.

The answer to your question could fill a book, but here's a 30,000-foot take on the problem.

The U.S. automotive supply chain starts in coal mines, moves to steel mills, and ends in the factories of Detroit. For a long time, this was a neat, airtight system. Every negotiating cycle, organized labor at each step asked for more, management eventually acquiesced, and costs were passed on to captive consumers.

Then foreign competition arrived, and American consumers responded exactly as you'd expect. Result: first coal and then steel went through bankruptcies and restructurings. The process was painful, but the industries have become competitive.

Meanwhile, the automotive industry has struggled. Yes, its manufacturing has become more productive and the quality has improved, but major cost disadvantages remain, most notably the widely cited $2,000-to-$3,000 that each car carries to pay for retiree benefits.

What will happen? A slew of "Gotta Have It" new cars would help, but they'd just prolong the death-by-a-thousand-cuts. No, our experience says that when an industry is in a downward cycle, its leaders almost never see how bad things could get. Bottoms-up revenue forecasts that are too optimistic and the assumption that competitors will stand still while you improve are just two of the several "mindset errors" that put off the draconian steps required.

Today, the car industry can counter that dynamic, but it will take enormous courage. For example, if it's four plants a company is considering closing, the number probably should be closer to eight. If it's two car models that might be eliminated, it needs to think about four. If it's a pay freeze under consideration, the right move is probably more like a 30% pay cut.

Now, we recognize that it is a lot easier for appointed managers to announce such brutal changes than elected labor leaders to push them through. What choice is there, though? Neither side created this problem: They inherited it. But if they don't accept joint ownership of the drastic solution, the past already tells us the future. The fate of coal and steel industries awaits them.

Jack and Suzy Welch look forward to answering your questions about business, company, or career challenges. Please e-mail them at For their podcast discussion of this column, go to

Before it's here, it's on the Bloomberg Terminal.