How your bad boss can become a great leader

Can leadership be taught to someone who’s already in charge? Fortune recently spoke with Deloitte CEO Jim Quigley to discuss his concept of leadership and his outlook on American competitiveness.

Interview by Scott Olster, associate editor

What makes a leader effective? How can a leader adapt to a changing environment? And what do you do when the people you are expected to manage have no interest in cooperating? Deloitte Touche Tohmatsu CEO Jim Quigley and Mehrdad Baghai recently published As One: Individual Action, Collective Leadership, which argues that leaders can take several different approaches to their craft, with the goal of inspiring collective action.

As One sidesteps the concept that a leader can either be a dictator or a representative of the people and nothing in between. Instead, the book offers eight models of leadership, using professional relationships like conductor-orchestra, landlord-tenant, and architect-builders, to illustrate different management styles. Fortune recently sat down with Quigley to discuss his concept of leadership and his outlook on American competitiveness.

Fortune: Why publish this book now? Is there something about the current American work environment that convinced you to publish this book?

Quigley: There have been any number of surveys, whether it’s the Gallup survey or the Synotac, and what they found is the degree of engagement of the workforce is declining. So a higher percentage of your workforce year after year is coming to work but they are not really bringing their very best, they are not bringing their passion to what it is they are trying to achieve. They’re just simply disengaged. They’re bringing their arms and legs but their heart and mind is staying behind. And if you can obtain that passion from your team, you’re going to win.

How do you convince a leader that it’s time to change the way they have been managing?

You sit down in the conference room and you put the facts right in front of them. And so will clients be in denial if we come to them and suggest that they have a leader and follower mismatch? They might spend a few minutes in denial. But if you put the facts in front of them and the results of a survey of people they selected, they can’t stay in denial.

As a manager, how do you convince your staff, your company, that it’s time to make a painful change?

The most common, and sometimes the most effective [approach] is the classic burning platform. If you want to get your team to move from platform A to platform B, the most effective way to do that is convince them that platform A is on fire. And as soon as they think they’re on that burning platform, they’re going to move.

The harder change to drive is to take a successful organization and then convince them with aspirational language to move to platform C. They’re on platform B and they’re pretty comfortable. Now you challenge your team to change aspirationally. Changing a successful organization, that is the biggest challenge.

Can you actually teach someone to be a great leader or manager?

The environment in which some of us are born just gives us enormous advantages over some others. But the reason I am so passionate about leadership is I think it can be learned. And I think leaders have the opportunity to decide that they are going to change how they lead and how they behave.

Why do we think the way we do about leaders from GE (GE)? Is it because they were successful at hiring a bunch of people who had strong leadership attributes? Or do we actually think the leadership development model at GE actually produces some pretty talented people? Was Jeff Immelt born as a leader? Or did he develop as a leader as he came through GE? I think it was largely the latter.

There’s a lot of talk that the younger generation is unwilling to accept traditional leadership models. What’s your take?

Jim Quigley, CEO of Deloitte Touche Tohmatsu Limited

I think there’s definitely some truth in that. But the thing that I reject is that they are unwilling to accept any one of these leadership models. I do think they are disengaged, if they feel that no one really cares about them and their ideas. And that’s where moving that [employee] engagement number up becomes so critical.

If you were a CEO of a financial institution, what model would you use to try to drive regulatory compliance? Could you actually afford anything other than a zero-defects approach? Because a regulator could shut you down. And so if you were a Gen X’er or Gen Y’er inside that financial institution, when it came to regulatory compliance, I think you’d expect quite a directive [leadership] model and accountability built around that.

What’s most concerning to you when it comes to the future of American management?

The ability for leaders broadly to be able to adjust to the environment that we are now competing in. To really, truly understand the significance of those shifts. Whether that’s simply the availability of knowledge workers and the scale of the number of working age adults, that’s going to have a significant impact on how business is done and how businesses are able to succeed.

I also think that another significant shift that has occurred is the relationship between the public and private sectors. And I think success is going to require a constructive public-private partnership.

Are markets like Korea or China, are they able to produce those science and math education results alone? Is it the private sector that’s doing that? Is it the public sector? Or is there a private-public partnership that is committed to education?

That’s what I think we need to do in the United States. When you look at the fundamental competitiveness of any economy, the winning edge is going to be obtained by talent-driven innovation and the ability to create the jobs and wealth that go with that.