Such an approach is of vital importance in rapidly growing emerging markets, where one seemingly trivial commitment often triggers an overwhelming demand for myriad additional resources.

Unfortunately, the strategists in the headquarters of multinational companies often underestimate the leadership and management capacity that is required to develop sustainable businesses in emerging markets, and consequently fail to make adequate provisions. In many cases, they commission a few enthusiastic trailblazers and send them to these challenging turfs. The spearhead troops usually are quick to call for reinforcement at all levels, which frequently cannot be supplied immediately by the unprepared center.

It is noteworthy that with increased scale, both more expatriates and local talent will be needed in absolute terms, while the proportion of expatriates required is likely to decrease when the local operations expand. Since executives in most multinational enterprises are facing the problem described above, they ultimately feel compelled to engage in a war for talent, which is similar to a zero sum game where players compete for one pie and lose in proportion to how much others gain.

One solution to this problem of insufficient leadership and management capacity at all hierarchical levels is to increase the supply of talent, preferably ahead of demand. To ensure that the gains are not offset by losses of valuable human resources, the company's chief must craft golden chains locking competent employees to the organization.

This approach is likely to be very costly, though, since it usually requires constant external fuelling of efforts, oftentimes through material incentives. Since many companies mostly use monetary rewards for this purpose, their employees often feel and act like mercenaries who only execute orders as long as they are paid.

The competition for scarce human resources in many regions of China has lead to a salary explosion, quickly eroding their positions as geographic cost leadership platforms. Besides, retaining talent is difficult in many emerging markets where turnover rates often are high because many employees do not hesitate to leave their employer to take on better paying jobs or set up their own enterprises as soon as an enticing opportunity arises.

Another overlooked yet highly effective strategy for dealing with the talent crunch is to reduce the demand for certain activities exclusively performed by one formal leader through the creation of what I call "management surrogates".

Since they reduce the administrative load of movers and shakers, they free up invaluable leadership bandwidth.

Torchbearers thus can spend more time on strategic leadership tasks, such as interfacing with a variety of powerful constituencies, making sense of the environment and shaping it in innovative ways, identifying opportunities and threats, charting novel courses for the organization, and mobilizing the collective. Helmsmen even can develop what I call "headship surrogates", which are replacements for some of these sophisticated activities, further increasing the leader's specialization in the functions that constitute his true calling and sharpening his focus on what matters most.

Interestingly, a combination of these surrogates can also be used to decrease the impact of a bad leader, since they can be designed in a way that removes his discretion and degrees of freedom. This can be very helpful, for instance, when it is difficult to remove and replace a leader at short notice.

Here are examples of mutually reinforcing, multi-level headship surrogates and management surrogates that prove to be very effective.

1. Embedded intangibles

At the outset of his mission, an effective leader should espouse a worthy purpose, noble values and an inspiring vision. When these precious intangibles are firmly rooted in followers' heart and minds, they guide them even when the chief cannot communicate with them.

For example, such psychologically anchored surrogates can help the leader of a resistance movement waging a guerilla war against a dictatorial regime. After the initial group forming stage, he often minimizes direct contact with his followers, in order to reduce the risk of being exposed. But the embedded intangibles enable the paladin to keep his flame burning without his direct intervention.

If a company operates in dispersed, far-flung places in emerging markets, these surrogates are very useful, too. Even after the leader's death, the invisible legacy can be powerful. For instance, the values of the late Japanese industrialist Konosuke Matsushita, which are deeply embedded in the culture of his corporation, still guide the behavior of its managers in emerging markets and elsewhere.

The actual experience or mere expectation of pride in individual or collective achievements can also act as a spur for followers and thus make external kindling by a formal leader unnecessary. For example, pioneers in multinational companies, who introduce innovative products in new markets, may look forward to being celebrated in an ego-enhancing ticker-tape parade at home after they have successfully completed the product launch abroad. Depending on their motives, this expectation alone can act as potent motivating force.

2. Halo of role model

A man of premier rank can also serve as exemplar of desired behavior and establish strong emotional bonds with followers, especially when he possesses an awe-inspiring quality. Even when he does not interact with them anymore, they are likely to emulate his actions, because they regard him as their hero, feel spellbound by his mystique, are swayed by his nimbus, and are truly committed to making him happy by satisfying even his unexpressed wishes at all cost. A good example of this form of social capital is the filial relationship between certain religious believers and their spiritual leader.

The former often act like children who are eager to please their father without his prompting, ideally because they love him, not because they fear him.

The influence of a leader can continue long after his death through the spontaneous transmission of legendary stories about the heroic champion and paragon of chivalry from one generation to the next, possibly complemented by a carefully cultivated personality cult.

To succeed in emerging markets, a company needs to develop senior leaders who model effective entrepreneurial action in complex and volatile situations.

Ideally, they are endowed with a halo, such as that of a battle-hardened veteran, and an aura of authority. Then, followers are likely to revere them, easily connect with them, emulate their behavior and feel an urge to serve them full-heartedly without needing a reminder or incentive.

Grave crises, which are no rarity in emerging markets, provide a great opportunity for top leaders to gain what I call "charisma points". This is because followers tend to give a highly exposed leader more credit and consequently attribute more special qualities to him when he succeeds against the odds with dramatic, highly visible and tangible, innovative and ingenious action. In times of great upheavals, followers are more likely to accept radical and novel solutions, since they have a sense of urgency often bordering on despair.

This makes them willing to endure great sacrifices in the hope of betterment.

In most cases, leaders will actually need to spend more efforts at the outset to create headship surrogates and management surrogates. The development of new ventures in emerging markets increases this initial burden. But once a helmsman has put in place effective surrogates for some of the activities he previously performed, he is likely to reap exponential returns on the extra investment. Having lightened his yoke, a leader can focus on creating value that is commensurate with his compensation, instead of being paralyzed by administrative chores and constantly defending himself against allegations that he is overpaid!

(To be continued)

"Prof. Kai on Strategic Leadership" Column Number 38. Kai-Alexander Schlevogt (D.Phil. Oxford), a professor of strategy and leadership at the National University of Singapore (NUS) Business School, is the author of The Innovation Honeymoon and The Art of Chinese Management. Email: schlevogt@schlevogt.com; website: www.schlevogt.com.

Popular

Gerindra politician says bigger cabinet would benefit Indonesia

Asia shares rise on rate cut bets; RBA seen turning hawkish

PDI-P considering Anies, Ahok as Jakarta gubernatorial candidates