KARL MOORE – This is Karl Moore of the Desautels Faculty of Management at McGill University, talking management for The Globe and Mail. Today, I am delighted to speak to [assistant professor of business administration] Gautam Mukunda from the Harvard Business School.
You have been doing some interesting research looking at how leaders are chosen. What are some of your latest findings?
GAUTAM MUKUNDA – Sometimes a leader can take control in an organization who comes in either from the outside entirely or who, in some way, wasn’t evaluated or wasn't what I call “filtered” by this organization’s processes.
So you can imagine an outsider CEO, you can imagine a president in the United States or a prime minister in Canada who just hadn’t spent very long in politics before being elected into the highest office. In fact, in the United States this happens all the time – about half of our presidents come in essentially from a very short political background before they get elected.
In that scenario, what you could realize is that the people who are making the decision (and it’s just not about the electorate, right, but the elites – the people at the top of the situation who spend a lot of time in, sort of, smoke-filled back rooms with these people and have really gotten to know them) well, if you have an outsider, that process can’t take place. These people who are making the decision actually know surprisingly little about the person to whom they might be giving power.
Of course, the thing about giving power to someone is that once you give it, it’s very hard to take it back. They can make decisions that are not necessarily the ones that you approve of. So when you do this, when you bring in an unevaluated leader, and it’s not about experience, right, it’s someone whom we just don’t have that much data when we are making a choice about whether or not we want to give them the job – then you might get someone who does things that not only that you would not do in their situation, but that no one else would do in their situation because they are so distinctive and unique.
The surprising thing here is that it means that we should stop thinking about leaders as existing on a continuum where they have poor leaders, sort of mediocre leaders, and good leaders and great leaders. It’s not really a continuum. What you have is a group of leaders who are probably pretty good, on average, but are also pretty interchangeable; it really doesn’t matter which one you get. And then there is another group of leaders who are very different. This other group of leaders is just not normal; they are out of the ordinary, they do things that other people wouldn’t do. Sometimes they are great and sometimes they are awful. Some of these people would fail under any circumstances, right?
They are the Al Dunlap case, [former CEO of Sunbeam] who was just pathological [about cutting costs] or just a really bad manager and, because you didn’t have time to evaluate them, well, you get stuck with them and that was bad luck. But some of these people are people who, because they have certain sets of biases and certain sets of preferences that normal leaders don't have, they will fail under some certain circumstances and they will succeed in others.
So, the incredibly conservative banking executive who decides to run his or her company as if the unemployment rate is going to hit 10 per cent – well, if you hire that person in 2006, then that person looks like a genius but if you hire them 10 years earlier or 10 years later, then they might not look that good at all because they are running extremely conservatively while all of their peers are taking big risks that work out because the economy is doing okay. So is that person better, or are they just better suited for the moment they were hired and essentially they got lucky because the circumstances matched with their situation?
So when we think about this sort of high variance, worst or best, I think what this means is that we often talk about wanting the best leader for our situation, and I think one of the many things that we can learn from this approach is that language is actually betraying us. It means that there usually isn’t a best leader, what there is is a right leader.
The way I think about that is that choosing a leader is not a ranking problem but it’s a matching problem. You want to match the person to the situation, not choose the best person for all situations because that person probably doesn’t exist. It’s kind of like dating; just because someone is a great person does not mean they are the right person for you. And in this situation, right, the best leader is a different way of thinking about the problem than the right leader.