As the economic storm recedes and companies emerge to sift through the rubble and rebuild the damage done and return to normal, the realisation is dawning that we don't know what "normal" is. In order, therefore, to prevent the same crisis recurring a few years down the line, questions have been raised about the fundamentals of leadership and how they must change.

The failings of leadership

If the leaders of today take away just one lesson from the crisis that recently unfolded it should be the importance of taking a long-term approach to business and not to focus on short-term gains.

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Bill George, author and professor of management practice at Harvard Business School, says that because corporations and successful organisations are not built in a day they must be built for long-term growth and sustainability through innovation, creativity and strong leadership.

"Too many leaders focus on getting the numbers right today but they don't really focus on building their leadership for the long term," says George.

CEO of Lloyds International David Smith also believes leadership played a substantial part in what we've seen unfold in the last three of four years. "If you look at the period we've just come through, I don't think anybody in the Western world could have predicted the crash or did predict the crash," says Smith. "It came as a surprise to everybody."

Smith believes that it was attributable to a conforming culture of leadership and lack of innovation and questioning that led to a knock-on effect of bad leadership.

"What we have seen is a bit of a herd mentality and people conforming - and if we learn anything we should learn that a leader's job is to make sure we're not blind to what is ahead of us and we don't conform and create these cultures which almost become a self-believing feedback loop," he says.

It is the responsibility of leaders, he says, to have one eye on the future and to build long-term sustainable business models. "Some of the flawed business models and failed leadership were almost completely dependent on an endless supply of liquidity and capital and in hindsight you think leadership really should have been much more effective at creating models that could sustain the sort of downturn we have just seen."

Is regulation the answer?

Regulating compensation is not going to solve the problem, says George, because he believes there will be many unintended consequences that are outside the eye of the regulator.

"I think the answer is to create incentives for long-term performance not short-term performance and I would include the tax laws in that - I think tax should be high for short-term gains," he says. "That's the only way we're going to get back to an investment society. Right now we're in an instant gratification, spending society where people like making a lot of money off other people rather than creating and making it through fees.

"I would rather see this as an investment society where we invest in companies, invest in research and development, nvest in capital equipment and invest in leadership - as you know, none of these things are short term."

Who are the leaders?

Leadership, says Smith, goes right through an organisation, from the high-profile leaders in the US and the UK that have been paid millions, to the chief risk officers, the HR managers and down to divisional heads. He says that everybody has a responsibility to lead and in order for the style of leadership to change, the command and control structure must be turned on its head.

"It's quite hard for all parts of the organisation to behave like leaders if the man or woman at the top doesn't allow that information or feedback to filter up - and if you combine that with poor oversight from the board or independent directors I think you've got a recipe for disaster," he says.

"[Particularly in] those organisations that have so prominently failed - you'll find a combination of all of those factors which will show that leadership has failed."

What action can be taken now?

Now is the best time for executives to turn leadership on its head and make steps forward to being leaders of the future.

This will not mean going back to previous practices, George says, but developing new strategies and a whole new mindset as to what it means to lead a company.

First, he says, leaders need to develop themselves as leaders and this comes from experience. He emphasises the importance of dealing with a crisis as one of the best lessons in leadership.

"There is no better test," he says. "You can do all the simulation you want, you can do all the case studies, you can analyse how other leaders did - but there's nothing that substitutes doing it yourself."

George advocates the top potential leaders of the future get involved in line assignments where they have to face a crisis and perform. He believes it is only through this that they can make mistakes and learn.

The lessons George learned when he was general manager of a small firm at the age of 27 were invaluable to him when he became CEO of Medtronic 20 years later. These were learned, he explains, not because business was so great, but because of struggles such as having to recall products, dealing with safety issues and dealing with the competition.

Although they were lessons on a small scale, they became life lessons for him in leadership. "There is no substitute for learning in a crisis," he says.

The lessons for leading in a crisis on which George has based his new book, 7 Lessons of Leading in a Crisis, are universal lessons, whether personal or career-based. He says the book is not just for CEOs, but rather is about how anyone can deal with a crisis. He remains adamant, however, that all good leaders will demonstrate the ability to plan ahead while formulating policy that is positive now.

"We should promote leaders who have that long-term view of the world, long-term vision and are willing to make that long term commitment and not trying to make quick-fix solutions," he says. "If we have leaders who are just looking for a quick fix we're going to be right back in this problem in five years."

Read Part Two: The essential characteristic of today's rising leaders