I receive a weekly financial update from my financial adviser and the one I read this week started me thinking about leadership skills and the leaders who weather downturns better than others.

The article talked about an investor who anticipated the housing blow up before it hit and made himself and his clients millions of dollars. He went on to write a book about his experience and has another ‘prediction’ regarding gold in the works. The article went on to explain that there will always be investors who hit ‘hot streaks’ and begs the question: are  ‘hot streaks’ Luck or Skill?

From the article:

“THERE IS A DIFFERENCE BETWEEN LUCK AND SKILL and knowing when you are just lucky and when you are successful due to skill is of paramount importance as an investor.” My addition is to use Leader instead of Investor.”

That concept, Luck or Skill, resonated with me on several levels.

One: Leadership is a skill. But many leaders simply rely on luck — they were in the right place at the right time.

Two: Anyone can run a business in good times. When times get tough, a leader who simply relies on luck can have a negative impact on many lives when layoffs occur.

Three: It’s a proven fact that leaders have more trouble than anyone else when it comes to receiving candid feedback, particularly about how they are doing as leaders.

The article made me think about this phenomenon we call Luck and Skill and how it related to Leadership. There are companies who might be struggling but are still around. They are still keeping the majority of their employees. The leaders of those companies continue to hone their own skills and by doing so, they have better weathered this economic tsunami.

I cite this because I continue to interact with hundreds of CEOs as I deliver business topics to business audiences. And there are success stories out there.

We don’t hear about them because our media tends to focus on all the negative stories that further fan our fears. However, I believe there are literally thousands of companies that are weathering the downturn and they are successfully doing that because of the skill of their leadership. Luck can and does work when times are good. I’m less inclined to believe luck can persevere when the going gets tough.

The article goes on to say:

“With millions of investors, odds are that some of them will make winning investments numerous times in a row. If these winning investors were, in reality, just lucky, but they think they were actually skillful, then that is when the situation turns problematic. The lucky investor may start to think they are infallible and get stubborn when the market turns against them. Eventually, when the lucky streak ends, it will likely mean serious losses for the investor.”

Again, insert the word Leader for Investor and it makes a worthwhile point.

Leaders who think their success is based on skill not luck may decide they don’t need to hone their skills, i.e., learn how to delegate, learn how to handle conflict, learn how to build relationships, learn how to build an aligned team, learn how to trust — and that myopic view creates problematic situations for the people who work for them.

Successful leaders are learning leaders who are willing to admit they don’t have all the answers and are willing to turn to the people they have hired and truly utilize all the intelligence of that organization to help successfully navigate good times and bad.

“If we become increasingly humble about how little we know, we may be more eager to search.”

– John Templeton

Article attributes courtesy of Lawrence Finch CPA, Priniciple, G5 Financial Group, Inc.