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What’s In A Leader

Recent focus on board activism and chief executive turnover would have you believe that these are particularly difficult times for …

Recent focus on board activism and chief executive turnover would have you believe that these are particularly difficult times for CEOs and that the job of a CEO is more challenging than it has ever been. The fact is, the job of a CEO has always been a highly complex task.

In our over 30 years of experience in dealing with leadership issues and education, we have always emphasized the importance of innovative and flexible leadership that is adept at adjusting to changing times and circumstances. As such, over the years, we’ve selected and awarded leaders based on their ability to take calculated risks and alter an industry, all the while delivering continued shareholder value, built on a strong ethical foundation. Good CEO leaders have operated like this for years.

In 1989, Donald Petersen, CEO, of Ford Motor (nyse: F – news – people ) (1981-1990), received Chief Executive magazine’s CEO of the Year Award for exactly these reasons. Typical of the standard-bearer of the ’80s-style combative leadership, Peterson transformed a whole industry by launching the first-ever SUV while achieving record low-cost production techniques and beating the intense Japanese competition.

We are of the belief that great leaders are those that are able to exercise the right leadership traits at the right time to realize the best results. Fred Smith started Federal Express (nyse: FDX – news – people ) in 1971 on a premise that was found to be highly improbable by one of his business school professors. Foreseeing the business need for reliable overnight delivery in a computerized information age, he went ahead with his idea regardless.

In its first two years, his company lost $27 million and soon after was on the verge of bankruptcy. Smith took a legendary gamble when he went to Las Vegas and bet the payroll to win more capital to keep his fledgling company going. While this kind of decision might seem unthinkable today, CEOs regularly face major risk choices. Smith was the winner of our 2004 CEO of the Year award for his exemplary courage, hands-on management style, and continuous commitment to employee and customer satisfaction.

As leaders, we all know that there are times when we need to take risks, and there are times that we ought to avoid risks. Then, there are times we have to be firm and lead with conviction, and there are times when we need to be a team player. Great leaders know when to balance these traits based on company circumstances.

One of the most well-known traits of Jack Welch, former chairman and CEO (1981-2001) of General Electric (nyse: GE – news – people ), was his no-nonsense style, which won him a reputation for ruthlessness. Yet Welch, also a winner of the CEO of the Year Award (1993), turned an otherwise ordinary conglomerate into an overachieving growth engine. As the visionary leader that he was, Welch recognized the need to demand top performance from every division and every manager if he was to streamline and reinvent a global giant. As a result, his ethic of constant change and “boundarylessness” became a model for every company.

Contrast Welch’s style with this year’s CEO of the Year winner, Bob Ulrich, CEO of Target (nyse: TGT – news – people ), and you get the picture that there is no single trait that makes great leaders. Ulrich received our award for reinventing the norms of the discount retailer industry by playing behind the scenes and giving his team the chance to shine and thrive. As such, despite his 40 years at Target, he is representative of a new generation of team-oriented leaders who are more cognizant of their employees’ and their stakeholders’ needs.

At the same time, Ulrich has had predecessor “game changing” leaders who also have kept our economy robust. The economic realities of the ’80s and ’90s, and intense international competition, required a visionary leadership and cult-like personality. However, the positive changes in the economic environment and the advent of the Internet age in the mid-’90s prompted changes in the nature of leadership itself. Organizational leadership came to be revered as an art form in which innovative, entrepreneurial guidance inspired employees.

Bill Gates could arguably be considered the poster child of this era’s maverick leadership. Not only did Gates’ foresight and innovative vision on personal computing alter the way we work today, but his active involvement in key management and strategic decisions, as well as his devotion to customers and employees, has also earned him genuine respect from employees, customers and the public alike.

These days, stakeholder relations, business ethics and corporate social responsibility are top of mind. However, those of us who have been in the business long enough know that personal accountability and brand reputation have always been vital leadership concerns. As such, there’s never been a time where ethical leadership was not a part of our evaluation criteria.

Today’s activist boards are often blamed for the high CEO turnover. The fact is, today’s boards are doing what they should have been doing all along: identifying the right leadership for the right times and spotting problems before they can damage the company. We believe that the reason there is more CEO turnover today–while CEOs are more than ever aware of their keen ethical responsibilities–lies in the fact that boards are more attentive to the other traits of leadership required.

For instance, in times of trouble, a company needs a leader who has the courage and the conviction to make some hard decision–and make it quickly. This means that leaders sometimes have to act on their own without necessarily building consensus. Yet in other circumstances it is that very consensus-building that is key to success. The skill is in knowing the difference.

We believe that being a great leader does not necessarily mean you embody all the leadership traits listed here. Being a great leader means that you have the strategic vision to reinvent yourself and your business depending on what the times require.

At the end, in business, there is only one constant and that is performance. It is the archetype of successful leadership and the main criterion we use when evaluating candidates for the CEO of the Year Award.

There may be a lot of pressure on today’s leaders, but that has always been the case and is how it should be. CEOs who have stood the test of time prove that great leadership requires resilience, integrity, strong values and a relentless commitment to all stakeholders.

Each year, as we go through the exercise of selecting the honorees for our awards, we are once again amazed by the pool of incredibly talented business leaders our nation generates. As we celebrate this year’s winner, Bob Ulrich, we are confident that American business can continue to grow many more world-class leaders for decades to come.

Ed Kopko is chairman and CEO of Butler International and CEO and publisher of Chief Executive magazine. Jeffrey Sonnenfeld is senior associate dean of the Yale School of Management and CEO of The Chief Executive Leadership Institute at the Yale School of Management.

Both Kopko and Sonnenfeld were on the judging panel of this year’s CEO of the Year Award.

This article was published on Forbes.com on August 07, 2007.

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