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Jeffrey Gandz, a professor at the Richard Ivey School of Business at the University of Western Ontario in London, Ont.

Rosa Park for The Globe and Mail/rosa park The Globe and Mail

When it comes to business leadership, pride is the most deadly of the seven deadly sins, says Jeffrey Gandz, a professor at the Richard Ivey School of Business at the University of Western Ontario in London, Ont.

"Everybody talks about how excessive greed caused these problems in leadership and organizations" during the 2008-2009 economic recession, says Mr. Gandz. "But the one I focus on is pride, because excessive pride in what leaders have done frequently blinds them to the changing nature of the world around them and the fact that what they need to do is not necessarily what they've done in the past."

That blindness often occurs at small- and medium-sized companies, particularly when the founders are in control, because they usually have great pride in what they have done, Mr. Gandz says. Leaders have to become much more self-aware.

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"There's an old proverb of the French philosopher Michel de Montaigne who said, 'Though you occupy the most exalted throne in the world, you're still sitting on nothing except your own rear end' - although it sounds better in French."

What de Montaigne was saying, Mr. Gandz explains, is that you constantly need to remind yourself that success occurred for a number of reasons, and that success yesterday is no guarantee of success tomorrow.

"It's a good idea to stay reasonably paranoid," he says. "I'm not suggesting psychiatrically paranoid but enough to realize that things change and are always changing, so you constantly need to be looking forward."

A key danger is complacency. A company's culture must encourage constructive dissent. An environment where people can speak up when they disagree with poor business decisions is key. It's also important to emphasize character development as much as competencies for rising stars.

"Companies mainly come to me because they're interested in building a culture of leadership," says Mr. Gandz, whose research focuses on leadership in organizations. His 2010 report, Leadership on Trial: A Manifesto for Leadership Development, written with Ivey colleagues, outlines how failure in leadership was a root cause of the economic crisis.

"They want quality in the leaders coming up underneath them."





The challenge for small- and medium-sized businesses is to remain agile, able to move quickly to take opportunities as they come, but keep a tight control on overhead, he says. Also, companies should be prepared for almost anything to happen, from a double dip recession to a boom.

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The biggest danger he foresees is that consumer behaviour has fundamentally changed as a result of the financial meltdown. And since we can't depend on the American economy to bounce back quickly, he says good entrepreneurs are looking to expand globally to China, India, Vietnam and the other developing countries.

"If we can get creativity and innovation kicking into higher gear, that will be good for our economy and the country," says Mr. Gandz. "Continue to be entrepreneurial. Without you and your role in creating jobs, we're in for a bleak time."

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