Great Leaders Know When to Forgive

Great Leaders Know When to Forgive

by Rosabeth Moss Kanter  |   8:00 AM February 26, 2013

Leaders must be firm and foster accountability, but they also must know when to forgive past wrongs in the service of building a brighter future. One of the most courageous acts of leadership is to forgo the temptation to take revenge on those on the other side of an issue or those who opposed the leader’s rise to power.

Instead of settling scores, great leaders make gestures of reconciliation that heal wounds and get on with business. This is essential for turnarounds or to prevent mergers from turning into rebellions against acquirers who act like conquering armies.

Nelson Mandela famously forgave his oppressors. After the end of apartheid, which had fostered racial separation and kept blacks impoverished, Mandela became South Africa’s first democratically elected President. Some in his political party clamored for revenge against members of the previous regime or perhaps even all privileged white people. Instead, to avoid violence, stabilize and unite the nation, and attract investment in the economy, Mandela appointed a racially integrated cabinet, visited the widow of one of the top apartheid leaders, and created the Truth and Reconciliation Commission that would clear the air and permit moving forward.

Forgiveness can be costly, like the massive amounts of debt forgiveness toward countries like Greece to help create a stable foundation for restoring growth to Europe. Forgiveness can sometimes mean investing in groups that have done something negative — a counterintuitive but often very effective strategy. A striking example, which I recount in my book SuperCorp, occurred in South Korea, not a country known for being kinder and gentler, and yet forgiveness and seeking harmony were at the heart of a major business success.

Shinhan Bank, a fairly new entrepreneurial bank, was set to acquire Chohung Bank, a larger, much older establishment-oriented bank that had hit hard times, when Chohung employees staged an embarrassing action. To protest the takeover, 3,500 men shaved their heads and piled the hair in front of Shinhan’s headquarters in downtown Seoul. Shinhan signed an agreement with Chohung’s union that astonished some observers. Far from taking revenge for the protest (or walking away from the deal), Shinhan agreed to raise wages, promise no layoffs, have equal representation of both banks on key committees, and wait three years for full integration. These and other investments in the future generated a significant payoff. Within a year, shareholder value had increased (it decreases in a majority of mergers) and employees from both banks were informally integrating, with the union neutralized. Within three years, Shinhan Financial Group was outperforming not only the industry but the entire South Korean stock market.

“Revenge is not justice,” says General Douglas MacArthur, as played by Tommy Lee Jones in Emperor, an engrossing new feature film about the surrender of the Japanese to American troops at the end of World War II. Like the hit movie Lincoln, the movie Emperor dramatizes a turning point in history replete with leadership lessons. (The movie will be released March 8; I saw an early screening thanks to producer Gary Foster, a personal friend.) The question requiring leadership judgment is whether to hang Japan’s Emperor Hirohito for war crimes. There’s pressure from Washington and his fellow officers to punish the emperor, but General MacArthur, seeing that Japan teeters on civil unrest and reveres its emperor, refuses to give in. He instead uses his power for reconciliation. The emperor remains in place, though stripped of his divinity. In a gesture of contrition, Hirohito leaves the palace to go to American headquarters for the first time. In the mesmerizing final scene, MacArthur and Hirohito pose side by side for a photograph. As we know from history, the rebuilding of war-torn Japan was an economic and social triumph.

If revenge is not justice, it is not strategy either. The founder of a second-tier computer company was pushed out a few years after the company went public. I watched him gather investors and regain control with something to prove — that they were wrong to push him out. Once back at the helm, he had no clear alternative direction. The company foundered and was sold at a low valuation. Let’s hope that revenge against critics isn’t the motivation for Michael Dell to take Dell private or the founder of Best Buy to attempt a takeover.

Anger and blame are unproductive emotions that tie up energy in destroying rather than creating. People who want to save a marriage, for example, must let go of the desire to hurt a partner the way they think the partner has hurt them and instead make a gesture of reconciliation.

Those whose main motivation is to settle scores and get payback — to obstruct rather than construct — are on the wrong side of history. Their legacy is not rebuilding, but rubble. From (ahem) members of Congress to leaders in any turnaround situation, it’s a lesson worth remembering: Taking revenge can destroy countries, companies, and relationships. Forgiveness can rebuild them.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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