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Steering clear of the sun: A new era for modesty in leadership?
Why complex environments mean that, more than ever, we need to address over-confidence and hubris
One of the many disturbing claims coming from the UK’s COVID Inquiry being held currently is that there was hubris and over-confidence in the government’s pandemic response which led to a delay in considering approaches by other nations affected at the start of the crisis. Quite what impact this had is unclear but delaying lockdowns and being hesitant about other safety measures such as social distancing and mask wearing are considered to have contributed to many fatalities.
Of course, the COVID response is not the only place where hubristic leadership has been seen to have damaging effects. Eugene Sadler-Smith has noted that hubris in businesses has been implicated in the demise of Lehman Brothers and The Deep Water Horizon oil spill in the Gulf of Mexico (estimated cost $62bn) was been attributed, at least in part, to ‘corporate hubris’.
We live in a world where we assume that those in leadership positions, occupying prestigious professional roles are ‘exceptionally talented individuals’ who rightfully ‘command superstar incomes’. But does the behavioural science evidence really support this? And what do we need to know about leadership that means leads to hubris and over-confidence? What qualities should we look for in leaders?
These are critical questions for us given we live in an increasingly unpredictable and unstable world where we are all reliant on the quality of our leaders to be making the right decisions.
How concerned should we be?
Drawing on a paper by Marc Keuschnigg and colleagues there is evidence that we tend to assume that those at the top of their professions have exceptional talents – in other words, we tend to equate extreme skill with extreme success. But do the highest earners and those with the most prestigious jobs actually have the greatest minds? This matters, argues Keuschnigg, for two reasons: first in all Western countries income distributions are hugely skewed with the 1% of earners earning 9% of the national income in Sweden and 20% in the US. In terms of any kind of notion of fairness, one would hope that this would be occupied by the most capable individuals.
A second point that Keuschnigg makes is that “those with the most prestigious jobs wield the greatest economic and political power, and the intelligence of their decisions is consequential.” We can see this in the way that those with economic power shape media agendas such as celebrities the Kardashians, top football players, business leaders such as Elon Musk. They all set trends, fashions and their political statements shape media agendas.
Whilst Keuschnigg agrees that, on average, wages and occupational prestige increase in line with cognitive ability (there is a great deal of evidence for a broad correlation ), this does not hold true at the very upper end. Instead, two other things count: family resources and luck. The class and network advantages of those with elite family backgrounds are considered instrumental for gaining access to the most sought after and best paying jobs.
The authors show, for example, that having a breadwinner parent from the upper-middle class, as opposed to the working class, makes it 6.5 times more likely that one will enter into an elite occupation. Second, rich get richer processes are assumed to allow inequalities in job success to grow between those who got a lucky break early in their career and those that did not – the so called Matthew effect. This refers to the phrase from the New Testament Bible:
"For unto everyone that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath."
The suggestion is that it is these factors, rather than the relative ability of top earners that drives success. The reason this has not been empirically supported previously is due to data restrictions, as very high net worth individuals typically don’t participate in this type of research.
To overcome this, Marc Keuschnigg had access to something that is pretty rare: a comprehensive database of the cognitive ability of a population. They were able to access the Swedish database of 59,000 men taken as part of a men-only conscription for the Swedish army. The ability test includes verbal reasoning, technical comprehension, spatial ability and logic.
Upon analysing the data, Keuschnigg and the team found that the most able Swedish men can expect to make more money than the less able others. But the magnitude of the relationship is, at best, modest as the worst scoring men still earn more than one third of the salary of the best scoring men. Past a certain threshold having a higher wage is no longer telling of cognitive ability, it plateaus at high levels of occupational success both for wages (at about €60k) and at a similar level for job prestige (differences between doctors, lawyers, professors, judges MPS and accountants is unrelated to their cognitive abilities).
In other words, there was no evidence that those with top jobs that pay extraordinary wages are more deserving than those that earn half the wages in terms of cognitive ability.
The challenge we have is that the narratives concerning capability are societally very potent – we live in world where the notion of meritocracy dominates: success is based on our own merit whether it be hard work or the skills we have got.
Perhaps this helps to explain why we all tend to consider ourselves ‘above average’ on positive characteristics. It is well known, for example, that a majority of people will rate their driving skills as above average. This so-called ‘better-than-average’ effect means we tend to attribute successful outcomes to our own actions and attribute failure to factors such as ‘bad luck’.
In a paper reviewing the research on hubris, Eugene Sadler-Smith and colleagues suggest the effect is compounded as CEOs’ estimates of their own (apparently extraordinary) abilities are often derived from comparisons to the population average (such as the ‘average’ manager) rather than the average CEO, resulting in base-rate neglect (i.e. with too little weight on the CEO base level). This, Sadler-Smith suggests, means that senior leaders are especially prone to overestimating both their own skill levels relative to others and the positivity of outcomes stemming from their personal decisions.
One way to understand hubris is the work of Nathan Hiller and Donald Hambrick and their theory of hyper-core self-evaluation (Hyper-CSE) a term used to describe how individuals consider themselves in relation to their social context in terms of:
self-efficacy: belief in one’s ability to achieve an objective,
locus of control whether or not control over one’s destiny is controlled by internal or external factors,
emotional stability: control over and levels of anxiety and stress,
and self-esteem (perceptions of self-worth and self-acceptance).
Hiller and Hambrick consider hyper-CSE to be mainly shaped by inherited biological factors during early years, but then either reinforced or diminished by long-term feedback processes, as well as being subject to adjustments in the face of recent life events.
Those who have risen to senior executive levels in organisations are often overconfident and may be prone to hyper-CSE. As Sadler-Smith points out, although hubris is considered a ‘dark-side’ trait of leaders (alongside narcissism and Machiavellianism), it can also exhibit a ‘bright’ side, enabling the bold pursuit of an ambitious vision.
For example, Tony Blair’s healthy leadership energy metamorphosed into a messianic manner manifesting as self-exaltation as in his description of the Labour Party’s 1997 election victory:
‘[we] had swept all before us, conquered with ease, strode out with abandon. Hadn’t we fought a great campaign? Hadn’t we impaled our enemies on our bayonet, like ripe fruit?’.
But all too often hubris means that legitimate leadership behaviours, tip into over-reach. For example, Sadler-Smith suggests that when Tesco was looking to grow its business internationally, the expansion into the US market with the ‘Fresh & Easy’ small format grocery store chain was quickly found to be based on overly ambitious and optimistic plans. Rather than taking a measured approach, Tesco set out to boldly create their operation from the ground up and pushed its own ‘Fresh & Easy’ branded products rather than ones familiar in the US. Not recognising their own limitations and actually understanding what would be wanted from customers is a clear example of hubristic over ambition. It ended with the closure of the entire chain of 200 stores in 2013 at a cost to Tesco £1.2billion.
What can we do about this?
One of the challenges is arguably about nurturing the right type of intelligence for the unpredictable world we inhabit. An indicator of what this looks like comes from William Deresiewicz who criticizes elite education (which many of those in leadership positions have come from) for its emphasis on a linear type of intelligence. He argues that this educational style argues prioritizes conformity and a narrow focus on achievement and success in comparison to a more creative, holistic, and independent form of intelligence.
He considers that the type of elite which he saw the results of at Harvard, (where he was a Professor), rewards students for checking off boxes and achieving specific goals without necessarily fostering genuine intellectual curiosity or the ability to think critically. Instead, he champions a more creative form of intelligence that values independent thought, exploration, and a willingness to challenge conventional wisdom. He argues that elite education should encourage students to question assumptions, engage in deep and meaningful discussions, and develop a sense of purpose and meaning in their lives. This, he believes, is essential for cultivating individuals who are not just "excellent sheep" but are capable of contributing to society in meaningful and innovative ways.
Another person that reflects this general orientation is Scott Hartley who argues that individuals with a background in the humanities and social sciences (the "Fuzzies") are crucial for the success of the tech industry (the "Techies"). He suggests that while technology and STEM (Science, Technology, Engineering, and Mathematics) skills are essential, they are incomplete without a foundation in the liberal arts. He also emphasizes the importance of critical thinking, creativity, communication, and empathy, which are nurtured through disciplines like philosophy, literature, history, and sociology.
This surely calls for a revised emphasis in the skill set of leaders than is traditionally offered, suggesting the need for a more rounded approach to ongoing professional development. This certainly chimes with people such as organisational psychologist John Amaechi who makes a strong case for introspection being key to compelling leadership and how that introspection helps builds stronger, more resilient teams
We need leaders that are able to operate effectively in a volatile, uncertain, complex and ambiguous world so their orientation to perceived and actual risk is critical. Hubristic CEOs are more prone to risk-taking behaviours, as hubris tends to warp the leader’s recognition of the possibility success and failure to such an extent the likelihood of success is significantly overestimated. Hubris also leads to overstating the perceived potential of the gain whilst downplaying the investment needed for the implementation of ambitious plans.
But it is not simply a matter of reining in a hubristic individual: in a study of over 2,790 manufacturing firms in China, Jiatao Li and Yi Tang found that CEO hubris and risk taking was strongest when (among other factors) the firm faced complex but favourable conditions, had less inertia (as in the case of younger firms). They concluded that a firm which allows too much discretion to a hubristic CEO may be prone to undue risk-taking and that it is important that firms have the necessary governance structures that are capable of monitoring and protecting firms from CEO hubris. Sadler-Smith suggests there are many examples of firms, including Vivendi, Enron, Tyco, World Com and Long Term Capital, whose boards failed in their governance function and exposed these businesses and their markets to the potentially damaging effects of CEO hubris.
Finally, there is plenty of evidence that successful leadership comes with a degree of humility: just as those at the pinnacle of their professions are not necessarily there by dint of their innate superiority, it is important to recognise that those at the other end of the spectrum are not there by virtue of their inferiority (or ‘lifestyle choice’). In a recent study by the New Leaf Project in Canada, the charitable organisation ‘Foundations for Social Change’ gave people who had been homeless for less than two years a one-time deposit of $7,500 in Canadian dollars (about US$5,600). They also received coaching and workshops about spending. Other groups received the money and workshops with no coaching, while some received the training but no cash and no resources at all. The study found that those who got the cash secured enough housing on their own to save the government $8,277 (about US$6,150) per person. Even subtracting the initial payment, the program came out ahead with a net savings of $777 (close to US$580) per person.
This reflects the work of Mullainathan and Shafir emphasize that individuals facing financial constraints frequently demonstrate remarkable skill and intelligence in making intricate trade-offs. As the authors of Sendhil Mullainathan and Eldar Shafir write in their book ‘Scarcity: Why Having Too Little Means So Much’:
"Scarcity demands that we be more skilled at making choices."
One of the key considerations of successful leadership may therefore be to recognise the skills and capabilities of the wider workforce as they may in fact have the skillset needed to navigate the complex, unpredictable world where resources needed for success are increasingly scarce.
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