Businesses are valued on many hard numbers, such as turnover, profit and cash flow, to name only a few. However, there is another, much less tangible dimension, which, if absent, can have a debilitating impact on the long-term success of any organization.

That factor is wisdom – i.e., the capacity of leaders to make wise judgements. For many people, wisdom seems to be far too abstract a quality on which to place a hard number, yet in many organizations, it is wisdom that is frequently the defining element of success.

So what is this concept that we associate with flowing robes, beards and old men?

It can help to think of leadership as a way of behaving and wisdom as a way of thinking. For example, an individual might have been trained in a wide variety of leadership skills and might even be exceptionally talented in applying those skills. However, without the overarching operating system of wisdom, they apply them in a manner solely focused on achieving the task at hand.

There’s an interesting phenomenon whereby people struggle to define wisdom but have no difficulty identifying leaders they know to be wise. This process of “reverse engineering” shows a remarkable consistency in characteristics shared by these wise leaders. Over a 20-year period, it has been possible to distil and refine these characteristics into a list of 10. The first three characteristics of wise leadership help to give an indication of the direction of the list.

1. Looking at issues from a variety of perspectives

It was Henry Ford who said, “If you only do what you’ve always done, you’ll only get what you’ve always got.” This saying can be adapted to read, “If you only look as you’ve always looked, you’ll only see what you’ve always seen.”

The wise leader has that capacity to inhabit different perspectives on issues rather than being stuck in a singular and self-limiting point of view. That’s why we are drawn to wise leaders who help us to see things in a broader light instead of our own one-dimensional perspective.

2. Knowing that they don’t need to know everything

Many leaders confuse knowledge with power and consequently seek to know everything that happens in their business. The wise leader takes a leaf out of Donald Rumsfeld’s playbook, whereby there “are known knowns, known unknowns and unknown unknowns.”

The unwise leader only tolerates the idea of known knowns; in other words, they believe they should know everything. Of course, in modern large businesses, this is impossible, but that doesn’t stop them from wrapping the cloak of infallibility around them. Such a persona creates a force field whereby those around them cannot challenge or break through in any meaningful way.

The all-knowing leader is subsequently divorced from any opinion other than their own – with all the tragic consequences that this failure can generate.

On the other hand, the wise leader knows that they neither can, nor need, to know everything. Such leaders are comfortable for others to know more than they do about something and don’t see it as a sign of weakness. The wise leader therefore capitalizes on the collective intellect of their colleagues and in so doing creates a powerful and sustainable dynamic for change.

3. Consistently and courageously doing the right thing

The “right thing” is shorthand for ethical behavior, whereby the way the person lives and makes decisions that are all underpinned by a commitment to honest, fair and principled behavior.

Note here that we are talking about behavior, not speech. There are legions of leaders who all say the right thing about the importance of values, but when there is pressure, their actual behavior directly contradicts those espoused values.

The wise leader realizes that their own example and behavior are critical in setting the ethical tone for their organization. Such is their commitment to doing the right thing that they live that out in a consistent and courageous manner – even if that is sometimes to the detriment of the organization’s own interests in the short-term.

Where leaders behave in such a manner, those who follow them are much more likely to be inspired to live up to similar values and be a positive influence on everything that happens in that organization.

In conclusion, the wise leader looks at things from a variety of perspectives; they know that they don’t know everything, and they courageously and consistently do the right thing.

No less a person than Thomas Jefferson got to the core of these principles when he wrote, “Do you want to know who you are? Don’t ask. Act! Action will delineate and define you.”