Authenticity Is the Latest Business Buzzword — But Don't Fall Into Its Trap. You Need to Balance It With This. While I see the value in leading with authenticity, my experiences as a CEO lead me to believe there is more to the story. Does being yourself guarantee success in a constantly changing market?

Why are authentic leaders so appealing? That is a question that has been discussed extensively in the business landscape over the past few years. As someone who regularly consumes business literature, I get the hype — employees are more likely to trust and follow someone honest, vulnerable and not faking their entire personality.

While I see the value in leading with genuineness, my experiences as a CEO lead me to believe there is more to the story. Does being yourself guarantee success in a constantly changing market?

Let's use this example: a leader in the mobile phone industry who is really passionate about a certain product, but finds it hard to change direction when customer needs and market trends evolve. The rise of smartphones and their resistance to this revolution leads to a loss of market share. The leader's rigidity, often disguised as a commitment to their original vision (their authenticity), restricts the company's ability to innovate. Authenticity alone will not get the job done in sectors characterized by rapid change that continuously forces leaders to adapt and make tough decisions.

There have been moments in my entrepreneurial journey when being transparent and vulnerable has worked out for me, and there have been instances when it hasn't.

While developing my payment platform, I faced a dilemma related to the business model and profitability. There was pressure to introduce hidden fees to ensure the business model was sustainable, but this was against my ideals of transparency. Hidden fees felt dishonest, but a platform that hemorrhaged money wouldn't serve anyone in the long run. So, I worked with my team to come up with a tiered pricing model with different features and fee structures. This solution has been highly effective in practice.

Related: Authentic Leadership: What Is It and Why is it Important?

The authenticity trap

Despite its popularity as a management buzzword, some perceive authentic leadership as an outdated and fashionable version of positive leadership theory. This is because it takes a very simplistic view of corporate life and ignores the complexities of effective leadership. For example, it's essential to adjust communication styles and leadership approaches depending on the audience. Romanticizing authentic leaders as one-size-fits-all role models ignores the practical challenges of navigating high-pressure environments. This can manifest in several ways:

1. Inflexibility: A rigid adherence to personal values in a dynamic environment can hinder necessary adaptations. A leader's unwillingness to change their perspectives, meet stakeholders' expectations or follow the unwritten rules of corporate etiquette in the name of authenticity might pose serious threats to their leadership journey.
2. Charisma vs. competence: There's a risk of mistaking charisma for competence. Just because someone is engaging and authentic doesn't necessarily mean they have the skills and experience to lead effectively.
3. Misinterpretation and manipulation: Transparency, a key tenet of authentic leadership, can be misused. Leaders who overshare or lack tact might unintentionally create anxiety or confusion within the team. Additionally, some skilled manipulators can put on a convincing show of authenticity to gain trust and achieve their own agendas.

Navigating the corporate landscape

Corporate orthodoxy defined by power-based leadership styles and an emphasis on control is slowly being replaced by more flexible management practices. The current climate embraces authenticity, but leaders must be prepared to face situations where personal authenticity might be at odds with organizational conformity.

Investor expectations and market pressure can stifle even companies with progressive outlooks on leadership and employee management. Pure authenticity alone doesn't drive action in such circumstances. As a leader, you have to inject strategic effectiveness into your leadership philosophy to catalyze progress. This balance is what we can call "effective authenticity." While adhering to their convictions in difficult circumstances, effective leaders also exhibit strategic thinking and a results-oriented attitude.

Related: How to Create a Thriving Workplace by Leading With Authenticity

Tenants of effective authenticity

1. The strategic navigator: Effective authenticity isn't just about the ability to adapt. Leaders should be keeping up with current industry trends and asking questions like, "What are the biggest changes happening right now and how can I prepare my organization for disruption?" Take, for instance, Satya Nadella, CEO of Microsoft. Anticipating the industry shift to cloud-based solutions and mobile technologies, Nadella charted a new course for the firm. This strategic prudence allowed Microsoft to navigate the change while staying true to the company's legacy and core values.
2. Evolving beliefs and ideas: Effective authenticity acknowledges that core values can evolve alongside circumstances. Leaders must periodically reflect on their principles and the firm's mission and how they align with the changing world around them. Consider Indra Nooyi, former CEO of PepsiCo, who prioritized both profitability and social responsibility by introducing a healthier product line. This decision demonstrates the ability to reevaluate ideals to stay relevant and achieve goals — a key aspect of effective authenticity.
3. Responsible innovation: Challenging the status quo is essential, and leveraging technology for progress is the norm. Effective authenticity lies in championing disruptive innovation while adhering to regulations and ethical practices. Conducting proper research on the impact of any new product or service on society and the environment is one solution for achieving this balance. A prime example is Tim Cook, CEO of Apple, who advocates for innovation in technology while prioritizing environmental sustainability and user privacy. Apple's use of recycled materials in their products is a step in the right direction, showcasing their commitment to responsible innovation.
4. The organizational self: While authenticity is generally desirable, effective authenticity understands that there are times when leaders may need to prioritize the organization's well-being over their personal feelings. When Starbucks was facing an economic downturn, then CEO Howard Schultz focused on stability through decisive action and strategic pivots, balancing transparency with the need for difficult decisions. Similarly, having a structured decision-making framework ensures that leaders can make difficult choices when they need to.

Related: Are You a Lost Leader? Get Back on Track By Following These 4 Tips to Lead With Strength and Conviction

Even effective authenticity isn't a magic bullet. For leaders, the most challenging part has to be dealing with the uncertainty of where many industries are headed. However, what you can do is be prepared for what lies ahead by finding the right balance between being authentic and achieving results.