Leadership 101: The Foundations of Good Leadership

concept of leadership with man walking with a red cape

Everywhere you turn there is someone talking about leadership and how to be a good leader.

And albeit there are indeed some great resources on leadership, sometimes I feel that the fundamentals of leadership are not stressed enough.

So in this article, you will learn what are the most foundational, basic rules of great leadership.

Leadership: Give & Take

Remember the model of social exchange?

It says that social relationships are exchanges where to get something, you need to give something.

Well, the same model that forms the basis of social relationships, also forms the basis of leadership.
After all, Leadership is just another form of social exchange (“service for prestige”, Price & Vugt, 2013).

And in that exchange, there are certainly major benefits for the leader.
But there should be benefits for the followers as well, otherwise many people wouldn’t line up to follow him, be influenced, and/or execute the leader’s tasks.

Leadership Failure: The Taker’s Approach

Remember the all too common “WIIFT” failure of social exchanges?

“WIIFT failure” refers to people who fail to see that, to receive, you also need to give.

Well, the same basic failure of WIIFT we saw in social exchanges also applies to leadership: poor leaders focus on what they want -often the leadership position-, and forget about what they must give to reach that position.

On the other hand, good leaders focus on what to provide their followers in order to earn the leadership position -and benefits-.

Because there are obvious benefits to leadership.
And it’s al good to want those benefits –especially if one is well-suited for that leadership role-.
Good leaders also want those benefits. But good leaders have a mindset that they must earn the leadership’s benefits.

A quick litmus test for leaders’ mindset

Ask yourself:

Does the leader candidate seek leadership for a goal is he pursuing, or for the benefits of the position?
People who put the benefits before the duty tend to make for poor leaders.


Tracy: And I volunteered for every committee. As long as I can lead it.

That’s the attitude of the benefits’ hunter -in this case, resume’s hunter-.
Those tend to make for poor leaders because they put their personal goals first, second, and third. And if the organization or people around them do badly… Too bad for them.

Value-Giving Leadership: The Best Way to Lead

Giving is part and parcel of any win-win, healthy, and stable social exchange.

And the same is true for leadership.
As a matter of fact, that’s even more important for leaders.

Why so?

Because, as a rule of thumb:

Leaders who give nothing to their followers struggle to recruit and keep followers.

There are exceptions, of course.
But these exceptions confirm the rule.

The exceptions confirming the rule: value-taking leadership

Some leaders do keep followers in a value-taking leader/follower relationship.
Many of these followers might not see or define the relationship as value-taking, though, or they wouldn’t follow their leaders in the first place.

That’s why external observers are crucial to assess leadership, and you can’t always only rely on the followers themselves.

And sure, there can be a degree of subjectivity in assessing what’s value-taking and what’s not.
But it’s not infinitely subjective.

Enter: cults.
Most people inside cults see their leaders as Gods on earth.
But most people outside of them see them as dangerous lunatics.

Albeit cults are at the extreme, the same concept applies to the whole spectrum of value-taking or value-adding leadership.

Now, some of you aspiring cult-leaders might think: “I don’t care about being value-taking or value-adding, I just want to be a leader”.
Well, OK.
But there is still a problem with that approach.

The problem is:

Who are you going to lead with a value-taking leadership?

Let’s see:

The law of the lid: leaders are the upper bound

Who would keep following a leader who is unable to add value?

Or worse, a leader who takes value, or leads people on a self-harming path?


High-quality people don’t often get stuck with value-taking leaders.
People who follow non-value-adding or value-taking leaders tend to be low-quality people.

This principle is similar to what leadership author John Maxwell calls the “law of the lid” (Maxwell, 1998).
For Maxwell, the law of the lid postulates that the effectiveness of the organization is limited by the effectiveness of the leader.
I expand Maxwell’s “law of the lid” to the type of followers a leader can get.
This expanded law of the lid states that:

 The value of the leader is the upper bound of the organization’s effectiveness, as well as the upper bound of the followers’ value

To understand concepts, sometimes it help to think in extremes.

And in extreme terms, think of it like this: a drug addict homeless would hardly get the movers and shakers of this world as his followers.
And if Bill Gates wanted to mentor new start-up entrepreneurs, you can bet that he could probably find the best and most driven entrepreneurs to listen to him.

Makes sense, right?

So, if you want to lead great people, you know what you gotta be: be a great leader.

If you want to lead great people, become a great leader.

The Power Moves
man leads other while wearing a cape

Below is a very good real-life case study of the dynamics under a value-taking leader.
Check it out as it also includes social dynamics and social strategies among groups of friends with a poor leader:

  •  Failure of leadership: the real-life story of a group of friends disbanded after poor leadership. Includes WIIFT failure, and law of the lid (subscribers only)

The Good Leader Starts With Himself & Makes People WANT to Follow

How exactly do you start on the path of becoming a great leader?

Well, a famous quote from Viktor Frankl springs to mind here:

For success, like happiness, cannot be pursued; it must ensue.

It’s the same for leadership:

Leadership cannot be pursued, it must ensue

In simple terms: you can’t be a great leader if you haven’t worked yourself up to be a great human being first.

Great leaders start from the inside out, from self-development.
Great leaders develop themselves into high-quality human beings, and then people want them to be leaders.

When you’re a high-quality human being, it also means that you’re high-value.
And that means that you have a lot to give.

Giving of course must not be exclusively material giving.
As a matter of fact, the best leaders give more than material benefits.

Which leads us to another crucially important axiom of leadership.

Power Dynamics of Leadership

Now we go back to a principle we already discussed:

Exercise your power with as little dominance and coercion as possible.

We might even argue whether or not power based on coercion is even leadership at all.

To be precise, coercion, force and threats, of course, can work and be effective.
But it’s mostly effective with powerless individuals who need you far more than you need them, who have no other options, and who are not in a position to ever walk away.

Those are not situations you are very likely to encounter in today’s world.
And especially not when dealing with other high-value folks, who tend to have plenty of personal power and plenty of options.

The other problem with coercion is that it’s resource-expensive.
It requires you to spend resources in overseeing people, and it erodes goodwill and social capital.
This is the opposite of what happens with value-adding leadership, and intrinsic motivation.
See here:

Also read:

And the same can be said for extrinsic motivation only:

To quote Haslam:

As Machiavelli observed, mercenaries make bad followers.
So do slaves.
The naked use of power is neither a badge nor a secret of a leader’s influence.

Read more here on leadership power dynamics:

The Commandments of Great Leadership

The 9 commandments of great leadership:

1. Great leadership starts with my own self-development

How exactly do you start on the path of becoming a great leader?

Well, a famous quote from Viktor Frankl springs to mind here:

For success, like happiness, cannot be pursued; it must ensue.

It’s the same for leadership:

Leadership cannot be pursued, it must ensue

In simple terms: you can’t be a great leader if you haven’t worked yourself up to be a great human being first.

Great leaders start from the inside out, from self-development.
Great leaders develop themselves into high-quality human beings, and then people want them to be leaders.

When you’re a high-quality human being, it also means that you’re high-value.
And that means that you have a lot to give.

Giving of course must not be exclusively material giving.
As a matter of fact, the best leaders give more than material benefits.

2. Win-win is possible, and preferable

This mindset ensures that the leader will not take advantage of the people around him, will not plot against them, and also that he will inspire and instill good values.

3. It’s my duty as a leader to provide value

This mindset ensures that the leader does not focus on taking and sucking the group dry for his own material benefit or for his own aggrandizement.

But it’s also a mindset great for the leader himself: most high-value people can spot an asshole, and this mindset ensures that the leader can attract and retain the best.

4. It’s my duty, as well as moral responsibility as a leader to set the example

Ideally, the top leader will also seek to be generally exemplary human beings.

5. Man shall not live by bread alone (Matthew 4)

OK, allow us a Bible quote :).

Now back to psychology, most people want to matter, and many want to know that they are contributing positively to a greater cause, doing good.


It’s the leader’s duty to also address the emotional side of leadership, make people feel good about being part of this group, make them matter and, as much as possible, to make them feel good about themselves and about life in general.
Also, the leader should fost a community where people feel good about others in the team, and happy to be part of that team.

6. I pull people up

Strong leaders know that their group is only as strong as the people in it. And pulling those people up makes the whole group stronger.
Strong leaders are confident in their top position, and that’s why they avoid social climbing, which usually happens more around the middle of the pack.

PRO Tip:
From a Machiavellian point of view, even if there might be someone challenging your leadership position, you are still better off not defending and not attacking them, as that only “officializes” their challenge. And it makes you look a lot less leader-like, since the most ideal leader wants to lead only as long as he’s the best for that job.

7. I exercise power with influence, rather than coercion

Such as, make people want, rather than coercing them.
Use the power of influence rather than the power of rank.

8. I’ll do everything possible to get the job done

Channel higher ideals into positive action, which ultimately leads to accomplishments.
If working towards a specific goal, the leader takes responsibility to make sure the goal is reached.

9. Once I set the example, provided guidance, and helped the team grow, then it’s also fair that I get the leadership benefits

Finally, once the leader has given and create a great group, it’s also fair that he gets the benefits that come with leadership.

Good leaders (must!) transcend material exchanges

We also said that the exchange model has its limits.

The exchange model, albeit it never stops being relevant, becomes less calculative when relationships grow closer.
When people grow closer and start liking each other, they also pay less attention to social accounting. One, because they trust they will probably get something back in the future or when they need something. And two, because they feel pleasure in giving to people whom they like.

Well, the same is true for leadership.

Leader-follower relationships can also transcend a more pragmatically materialistic mode.
That can happen in many ways, including:

  • People admire the leader
  • People believe in the leaders’ goals
  • People feel a sense of belonging with the group
  • People make friends with other group members

In psychology, these drivers of states and behavior are called “intrinsic motivators”.
Intrinsic motivation is crucial for leaders.

It’s important because in a purely exchange-based model motivators are based on material benefits (extrinsic motivators).
And when people are not primed to intrinsic motivators, they only take action if there is something that materially benefits them.

As we shall see, that is a huge handicap for any leader, and it disempowers them.

To quote psychologist and leadership expert Haslam:

For this reason, as a host of commentators have remarked, evidence of leaders attempting overtly to manipulate followers by means of either reward or punishment is an indicator not of their leadership’s success but of its failure.

This is not to say, of course, that environments -or people- that work better under transactional approaches don’t exist.
They do.
Intrinsic motivation might have little appeal for very cynic or very money-driven folks.

But there are plenty of people and environments that work better when we leaders can add something more than pure transactions.
We might even say that leaders that go beyond transactions are the only leaders who truly harness the human potential.

Growing beyond transactional leadership

Some leaders never move beyond a transactional model.

It’s, again, a question of mindsets.

Transactional leaders believe that human beings are motivated primarily or only by self-interest. Acting on their belief, they attempt to influence behavior with mostly or only with material rewards and punishments (Burns, 1978).

But in their belief, they miss out both on the emotional aspects of human relationships, as well as the “higher” ideals and drive.
And they are no less real than the more pragmatic and materialistic ones.

And while transactional leadership is valid in some environments, we can generally say that leaders who never move beyond the transactional nature of leadership tend to be poor leaders.
And this is especially true when they lead people who would also appreciate more emotional rewards and intrinsic motivations.
We will see examples in the next lessons.

As we shall see, when people access higher ideals, they contribute to the group or to the leader’s cause even if there is nothing practical in it for them.

Both elements are crucial for effective leadership.
Great leaders make sure to provide material benefits whenever applicable, while also influencing people to transcend the pragmatic give & take.

The rule of thumb is that, whenever you can afford it, you want to fulfill all needed and basic extrinsic motivation, and then focus more on intrinsic motivation.
In a business environment, that means that you provide as much salary as it’s needed for a comfortable life, and then focus less on material benefits, and more on the goals and values of the team.

How to Craft A Sense of “Us”

Great leaders lead great teams.

And that might be the leader’s most important task and accomplishment: to create a team, and a “sense of us”.

Haslam says that this is what a team wants from his leader to accept him as the leader of “us”:

1. The leader is “one of us”

The leader must be similar to the team so that the team can recognize him as “one of us”.
Ideally, the leader is similar in some key features.
And if the leader wants to move the team in new directions, he should positively embody those traits.

For example, in the video we saw above of a warrior wanting to lead his men into a battle, the leader should embody those values of fearlessness, and love for freedom.

A leader of a team fighting for environmental preservation should himself love and protect the environment.

Leaders Must be Similar, But Exceptional

This is a key dichotomy of leadership.

Says Haslam:

Leaders can be ahead of the group, but never so far ahead that they are out there on their own.

To represent the group, the group wants its leader to be similar to them and, in a way, like them.
Yet, they also want leaders to be exceptional.

In The Power Moves’ parlance, you want to be similar to the team you lead, but you want to be one of the highest value members of that team.
In what you want to be high value varies from team to team.
But there are a few evergreen values that matter in almost all teams, and they include:

  • personal values
  • ethics
  • ownership
  • work ethics
  • interpersonal skills / power awareness

2. The leader differentiates “us” from “not-us”

The smart leader who wants to strengthen the identity of his team differentiates what it means to be “one of us” from being outside of the group.

Being one of us in the group that fights for environmental preservation is different from people who don’t care about the environment in many ways.
For example, they say “no” to an additional shopping bag at the checkout, they drive electric cars, etc. etc.

3. The leader does it “for us”

The most beloved leaders act in a way that brings benefits to the team (we go back to the basics: value-giving).

This is where enlightened collaboration and fair marketing also apply to leadership: the smart leader will always frame his action as advancing the interests of the team.

3. The leader crafts a “sense of us” (social identity)

This is what Haslam calls “entrepreneurs of identity”.

It’s especially important when a group is forming, or when you are changing directions.
It’s about describing what you stand for, what your values are, and “what it means to be us”.

To leverage the group’s support leaders must work hard to ensure their policies and ideas are aligned with the group’s identities.
As a matter of fact, if you want to make your policies more popular, always frame them as aligning with the sense of identity.

At the same time that the social identity enables leadership, it also constrains leaders as they can’t act in opposition to the social identity and still be legitimized as leaders.

But remember that “entrepreneurship of identity” is somewhat fluid, and you can add or remove different values. Just make sure you are not too abrupt with it.


When Bush sought support for his Iraq invasion, he leveraged Americans’ identity as “standing for world good”, and “having a moral duty” to promote freedom and democracy.

4. The leader “makes us matter”

Haslam calls the leader who succeeds in this area as “embedder of reality”.

It refers to transforming plans into reality. Vision only carries people so far and eventually, leaders must show the group they can matter, impact the world, and bring about the changes they seek.

This is also where some bluster can help.
Bluster bridges the gap between vision, motivation, and reality. It promotes the successes, links them to the vision, and makes the group feel powerful, empowered, and special.

5. The leader keeps up functioning well

One of the most basic task of a leader is to develop and keep the team running well.

That starts first by understanding who are value-adding team members, and who are the takers.

Recognizing and defusing bad players might be the most important and most under-appreciated task of leadership.
A system or a group with a power-unaware leader is liable to be infiltrated and spoiled, potentially even toppled, by anti-social players who are going to use the group resources for their own gain only.

This is why we say here that “to be good, you need to be bad“: you need to be power-aware to spot and deal with the takers of life.
As a leader, that’s something you have to do for the team and the mission as well.

Learn More

This is a preview from Power University, where you can find more examples, strategies, and techniques.