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Historically, political figures have defined Indonesian leadership. President Suharto, the country's most colorful and long-standing leader, typifies the haloed persona of a leader in Indonesian society. Worshipped as a living god by many, he was also widely derided as a despot and corrupt dictator by those who saw his rule as oppressive.

Megawati Sukarnoputri was another such leader. The daughter of Sukarno, Indonesia's foremost freedom fighter and himself a former dictator, she led the nation from 2001 to 2004. She was similarly revered by many even though nothing much had changed for Indonesians at the end of her term.

This dichotomy throws into stark relief the "cult of personality" that Indonesians associate with their leaders. This style of leadership, called kultus in Bahasa, is quite evident in Indonesia, and it has seeped into the country's economic and business spheres as well. Kultus, which means worship, indicates the reverence accorded to leaders who project an aura of power and inner strength. Their godlike status confers immunity from human failings -- and from being held accountable by their followers -- which ensures people will follow them despite their obvious shortcomings. Family lineage and wealth also add a certain sheen, further cementing the halo effect.

Leadership challenges: the new imperative

The era of this form of leadership may have ended, as Indonesia faces internal and external changes that demand a new kind of leadership. Indonesia is much different today than when Suharto exited in 1998 or when Megawati left in 2004. The country has emerged as an economic powerhouse with a major regional presence.

Even as Indonesia's infrastructure struggles under the weight of burgeoning growth, it's hard not to be optimistic about its economy. Indonesia weathered the global economic crisis, growing by 6% in 2008 even as the world economy shrank -- and then rebounding to growth rates of above 6% since 2010. This year, the economy is expected to grow by 5.9%. Recent 优蜜传媒research shows -- from the general state of well-being and quality-of-life ratings to satisfaction with local healthcare and education service -- all portents of continued growth.

Despite these heartening indicators, Indonesia must overcome some serious challenges before it can truly capitalize on its potential. The country, said to operate under a system of crony capitalism, is rated as having a poor business environment, failing infrastructure, and high levels of corruption. Other factors, such as the sheer size of the country, cultural diversity among its people, growing population, and wide economic disparity make solving these problems even more complicated.

From a business perspective, another pressing challenge is Indonesia's low levels of employee engagement. Indonesia has one of the lowest percentages of engaged employees in Southeast Asia: Fewer than 1 in 10 employees are engaged, while 77% are not engaged, and 15% are actively disengaged. This is quite serious because engagement is directly related to employee productivity and acts as a predictor of growth.

The ramifications are much larger than losses to national productivity, however, given the proposed unified economic zone, the ASEAN Economic Community (AEC), which is to take shape by 2015. The AEC will create tremendous business opportunities in the region, but it will also highlight shortcomings that have the potential to prevent Indonesia from fulfilling its potential of becoming one of Asia's economic superheroes.

Two diametrically opposed cultures

There is much that executives must know about Indonesia's culture if they want to improve the country's workplaces. For example, it's imperative for anyone doing business in Indonesia to understand the Javanese and the Sumatrans, two groups that comprise almost 80% of the population. These groups have diametrically opposed cultures, like the "yin and yang" of Indonesian society. For example:

• The Javanese, in general, abhor conflict and tough conversations, placing a high value on harmony. It would be considered uncultured in a Javanese company to give openly critical feedback, however sincerely intended.
• Sumatrans, on the other hand, are straightforward and direct. It is perfectly acceptable to give and receive criticism without any loss of face.

This is not to suggest that the Javanese cannot take feedback or that Sumatrans will always speak their minds. Instead, it's important to understand what might be motivating a response. Silence from someone who is Javanese doesn't necessarily mean consent, nor does opposition from a Sumatran mean outright dissent. Being aware of cultural nuances like these is crucial to improving workplace culture.

Executives should also know this about Indonesia: Its population is the fourth largest in the world, and its demographic profile is notably young: 60% of Indonesians are under 30 years of age. This would be a dream workforce for many more developed countries in the region that are struggling with falling birth rates and an older population.

Young Indonesians expect managers and leaders to provide greater focus on their development and their career than older workers do. They have a can-do attitude, but they want more training and a definite direction, a clear career path, and opportunities for growth. Companies that don't meet these expectations may fail to retain their younger workers, and the resulting brain drain will intensify the war for young talent. To counteract this trend, Indonesian leaders must make engagement and retention of key talent their top priority.

Meanwhile, as older leaders retire, the traditional practice of blindly following the leader is fading, and there is no clear leadership style among the new leaders who are replacing them. This change in leadership directly affects how companies work in the short term, and it offers new leaders a tremendous opportunity to make a difference in their organizations in the longer term. There is room at the top and push from below for a different style of leadership that allows for decentralized decision making and has better systems in place to encourage employees to take greater responsibility. This new style also recognizes and rewards outstanding performance rather than skillful flattery of the boss -- and it doesn't require a powerful sponsor who supports and promotes a given employee based on family connections or personal relationships rather than individual merit.

The trouble with valuing charisma over competence

The "cult of personality" has significant consequences in Indonesia's government, where charisma tends to be valued above competence. When leaders leave, the infrastructure and systems they built also disappear. After Suharto was ousted, for example, the systems and structure he created disappeared almost overnight, leading to turmoil.

A similar phenomenon occurs in many Indonesian companies when CEOs leave, because far too many Indonesian companies don't have a clear succession plan for leaders at all levels. In the few companies that have a plan, it is primarily used for replacement planning or to fill a void at the last minute, and it falls short of ensuring the right person gets the job. When companies lack a clear plan and a strong pipeline of leaders, turnover in top leadership results in instability and inconsistent business performance, which leads in turn to years of re-strategizing and rebuilding.

A new model: authentic leadership

As Indonesia moves away from its old model of leadership, examples abound of a new emerging model: authentic leadership. Authentic business and government leaders are consciously or unconsciously aware of their strengths, and they convert this understanding into performance gains for their organizations. This approach is a bit like standing kultus on its head. It begins with who the leader is, but that knowledge is harnessed into service to move the company or nation forward.

State Enterprises Minister Dahlan Iskan, for example, has emerged as a genuine, authentic leader. He starts from a strong belief in doing what is right and frequently rolls up his sleeves and leads by example. He has also been credited with introducing a culture of humility and authenticity -- specifically in high-ranking positions of government. Another example is Jokowi Widodo, the governor of Jakarta. He demonstrated a strong focus on action and positive results by his tenacity, perseverance, and competence during the recent Jakarta floods. In the business arena, Handry Satriago, CEO of GE Indonesia, has focused on grooming future leaders. He spends a considerable amount of time working with and coaching his people, and he demands the same from his direct reports.

In conclusion

Kultus has outlived its relevance as the dominant leadership model in Indonesia. There is more to be gained as leaders practice an authentic, strengths-based form of leadership for a new Indonesia. Much has been written here and elsewhere about Indonesia's need for authentic leaders who can help the country meet the many challenges facing it. There is a limited understanding of what authentic leadership means or the process that organizations must follow to identify and develop these leaders. Helping leaders understand their unique talents -- and helping them understand what their followers expect of them -- is a good place to start.

By 2030, Indonesia could have the seventh largest economy in the world. As the "axis of power" shifts from the West to Asia, Indonesia ignores being part of this regional momentum at its own peril. Mature, strengths-based leadership in politics and business will be a crucial factor in ensuring the country is ready to take advantage of its potential. The world will be watching Indonesia's leaders. Will they respond in time to catch the rising tide?