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The 3 Financial Styles of Very Successful Leaders

 
11/7/2005

This book raises an interesting thesis: One way to evaluate leaders is to consider how they handle their finances and manage the financial dealings of their company. This feature on its own may not portend an executive’s success or failure, however. As author E. Ted Prince puts it, “A leader’s financial style is at least as important as the company’s product, marketing, pricing strategies, technology, strategic plan, and so on.”

Prince, founder of the Perth Leadership Institute, comes to the subject with twenty years of practical experience leading private and public companies. His institute has studied many CEOs, and one result of this research is the concept of financial style and its impact. He explains it here in a workbook format and provides self-development exercises at the end of each chapter to help readers determine their own financial style.

As Prince explains, a leader expresses his or her financial style by two traits: Is there a propensity to add value to products and services? Is there a propensity to use more or fewer resources? Drawing on various expressions of these traits, the author then describes nine financial signatures that represent different financial strategies that leaders may follow. For instance, missions that are intrinsically profitable represent “Surplus Styles,” and include Profiteer, Buccaneer, and Arbitrageur. Missions that are intrinsically unprofitable are “Deficit Styles” and include Trader, Discounter, and Venture Capitalist. “Puzzler Styles” are intrinsically inconsistent; executives with puzzler styles are Conglomerators, Consolidators, or Mercantilists.

Famous business leaders supply practical examples of the financial signature concept and its impact on success. Rupert Murdoch is called an adept Arbitrageur and Bill Gates a Buccaneer. Steve Case’s Venture Capitalist traits, however, in light of the situation he confronted at AOL, proved a handicap. Bernie Ebbers is depicted as a Discounter who failed miserably, while another Discounter, Sam Walton, has done very well.

Prince also describes how top management teams can analyze these characteristics to better understand how they interact and approach their work as a group. In the rest of the book he elucidates further on how leaders can create value or failure in a company according to the situation. Each characteristic, writes Prince, “reflects different choices, choices that lead to different financial performance patterns.”