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Want to be an effective business leader? Read this!

Last updated on: November 08, 2007 09:59 IST

You all know the character. He was rich, powerful, handsome and commanded the respect of even the most shrewd businessmen in the world. But that's no way to run a business in reality, at least not completely, says leading Hollywood producer and chief executive of Mandalay Entertainment, Peter Guber.

"There's a Gordon Gekko in every great businessman," Guber said of the fierce corporate raider Gordon Gekko (Michael Douglas) from the 1987 Oliver Stone film Wall Street.

"But he must be reined in and controlled and managed. That tenacity and that energy and that determination are really good, but when it's unbridled it's dangerous," he said.

Guber, 65, known for producing such silver-screen classics as Rain Man (1988) and Batman (1989), has a theory on leadership that doesn't just pertain to the movie business, but it undoubtedly stems from his love of a great script.

Guber said effective leadership must involve storytelling. That's not to say that Merrill Lynch's former chief, Stanley O'Neal, would've still had a job and not put the company in such distress had he told an anecdote to employees from time to time. It means that, in many respects, the operation should function like a movie that resonates with peoples' hearts and minds. It involves conflict, drama, action, uncertainty and risk.

"Like all good stories, if they're risk averse, they won't succeed," Guber said. "So you have to build risk into the story. It's drama. The drama of the company, the drama of the product and the drama of the people is what makes the story compelling and exciting."

Apple's top dog Steve Jobs fits Guber's mold, so does retired General Electric chief, the legendary John Francis "Jack" Welch. There are a few exemplary leaders in movies, too, though Guber admits that it's too difficult to list them when they all tend to be villains. Again, see: Gekko.

Forbes.com: Describe your theory on how storytelling is an effective technique that can be employed by business leaders big and small.

Peter Guber: The leader of the company must narrate the story of the company. He must narrate the product, the people, the information into a set of rules, tools, values and beliefs that trickle down all the way through the culture of the company.

Like all good stories, if they're risk averse, they won't succeed. So you have to build risk into the story. It's drama. The drama of the company, the drama of the product and the drama of the people is what makes the story compelling and exciting.

So the idea for the company and its leadership is that it's more than perspiring, they must inspire. Perspiring can only get you so far. You have to do hard work and you have to work at it. It's the "it" that you're working at. What is the aspiration element of the company, the product and the service that's being rendered? And if there is none, the company is going to run out of fuel very quickly.

These risks are calculated to an extent, right? You wouldn't want to make the wrong choice.

All risk has some calculation whether observed or not. In other words, the idea is if you have two eyes in the rearview mirror and you're leading your company looking at last year's product, whether it be movies or whether it be the Walkman, you don't realize that looking forward you can't see the future. You can't design it, but you have to be prepared for it. And the way you prepare for it is you have to be willing to calculate uncertainty in your decision.

When you try to be so certain, you're looking at two eyes in the rearview mirror. You have to welcome uncertainty as an ally and that means leading with fear and anxiety. For top executives, uncertainty is something they don't espouse but uncertainty is the birthright of creativity. It's the birth place of creativity. So as long as you're certain about everything, you're never going to create something new.

Who in big business is modeling this type of leadership and are they winning more than they're losing?

You never really know what someone is capable of until they've had some failure or loss and got back up and won again. Those are the most interesting characters and the most interesting stories. There are a lot of people who have taken their licks and learned and grown in business. In this public arena, it's very hard with quarter-to-quarter earnings and advance notices, the pressure on innovation in terms for repetition is always there. Investing long term into possibility and not certain probability is difficult in a public company.

On the larger scene, I would look at Steve Jobs, who has a vision. He's a vision keeper. He tells the story of his company, his products. He narrates them effectively. His feet, his tongue and his wallet go in the same direction. He's "aspirational" and not just "persperational." He's got a design platform for his company. He narrates the story and lives the story himself. His products reflect that culture and the people in the company reflect that strategy. He's innovative and yet he's disciplined. His story, his narration of his products and his people and his company and his image and his mission are consistent and yet changing. And he's also a fellow who has experience some real knocks in his life, personally and professionally.

An individual who does it completely differently would be Jack Welch while he was at General Electric. You're managing a company that has disparate elements like jet engines and medical imaging hardware. And at the same time the software of television, or movies or music or whatever he was involved in amongst many other services, including financial services.

Somehow he was--I don't want to call him an impresario because that sounds too glib--a person who could understand that he had to manage the disparate elements with a common theology, a view of the world which he took very seriously. He presented himself as the leader even though he could reach down and touch the people below him and the products below him. He chose his battles very carefully because he knew that when he fought the battle he was Spartacus, he risked the whole institution. So he was very smart how he led.

Many executives lead with their chin. Welch led with the resources of his company and his own resourcefulness.

Who in fiction, particularly movies, bears the same qualities of the leaders that you named in real-life business?

That's a harder question because with business stories in fiction the head of the company is the enemy. He's the villain. He's not the hero. He's at the top of the mountain and, therefore, the story is about how he gets knocked off or how the little guy overcomes him.

But if you think about some interesting ones, think about Mr. (Don Vito) Corleone from The Godfather (1972). Not his sons, not his protégés, but he himself managed to keep above the fray in his businesses, though illegal, creating a constant culture that other people could own and reinforce and could be understood at 60 miles per hour on a rainy night. There's no confusion about his business or his culture. And he had an identity as well.

Frank Capra's It's a Wonderful Life (1946)--a very small business person (James Stewart as George Bailey) who got lost in the trample to become successful and lost the fact that he was successful and never enjoyed it until he, at the last second, had a chance to get it back. He learned something from his failure. He was a leader and a business person who lost his way and found his way back, unlike Michael Douglas' character in Wall Street (1987).

Do you think a man's, a leader's, character is his destiny in business leadership?

Well, his life might work out but his business might not. Character is different than reputation. Reputation is what your business purpose serves--how you interface with people; how you're seen by everybody watching you; how your products behave; how your company moves. That's all important to have real results. That reputation pays out in dividends.

Character portrays a completely different thing. Character is what you do when nobody is looking. That's the unseen quality. It's the quality that doesn't look for the reward. It's in the being and the doing. That's the reward. If people have really terrific character, they will enjoy their life. They will overcome their failures. They will experience their life to its fullest. But they may not have the business reputation to match it.

One is a currency you spend. The other is a currency you keep.

Matthew Kirdahy, Forbes.com