Friday, October 19, 2012

Are Leaders Really in Control? - Eric McNulty - Harvard Business Review

HBR Blog Network

The rambunctious, topsy-turvy U.S. Presidential campaign took its latest turn on Tuesday night. From jobs to gas prices to world events, central to the arguments advanced by both candidates was the idea of exerting control. Governor Romney, in particular, has criticized President Obama for "leading from behind" rather than using U.S. power to direct the evolution of events such as the Arab Spring. Early in his term, President Obama pledged to bring the unemployment rate to below 8%. Mitt Romney has promised to create 12 million jobs if elected. Should we take either candidate at his literal word?

While charges and counter-charges elicit cheers or jeers from supporters of the respective candidates, they are spun from the same non-partisan myth of leader control.

We live our lives enmeshed in complex adaptive systems. Our economy is just one example. Two fundamental properties of complex adaptive systems are that no single person or entity can exercise control over them and that their reaction to stimuli are largely unpredictable. Witness the self-immolation of a fruit vendor in Tunisia that set off revolutions that toppled governments across the Middle East. The previous president, George W. Bush, predicted that victory in Iraq would usher in friendly democracies across the region. No one predicted that a single merchant would be the match that lit the fire rather than the shock and awe of the U.S. military. Once alight, no one could write the script for where movement would go. Yet we readily expect our leaders to assert control and assure outcomes.

Our thirst for leader control arises from a need to believe that someone has a firm hand on the tiller. We usually know that it isn't us and so we look to someone in whom we perceive greater wisdom or power. The adulation of the master-of-the-universe CEO springs from the same well.

Politicians are not elected based on pledges to try really, really hard; candidates triumph through bold promises to deliver whatever it is voters seek: I will create millions of jobs. I will prevent Iran from acquiring a nuclear weapon. I will tame the deficit without cutting key programs or raising taxes. We believe that if we grant them the authority, they will exert benign control. This in the face of ample evidence that luck plays at least as big a role in success as anything the leader might do. We followers love to have a hero out front. We look for someone we think can make sense of a complex and confusing world.

When the news is good, leaders are more than happy to take the credit. When the Berlin Wall fell, President Reagan was happy if we believed that he personally shoved it over. CEOs are photographed for magazine covers, and collect big bonuses, based on the increased shareholder value attributed to them.

President Obama has learned (as have all past Presidents, no doubt) that that there is only so much that even the President can do to control a complex adaptive system. Admitting as much has his critics declaring him weak. Obama discovered that he couldn't control the economy as both stimuli and monetary policy moves failed to reduce the unemployment rate below 8% until just recently.

In making definitive pronouncements about future outcomes, Mitt Romney is making the same mistake that Obama did about unemployment. We watched him do it on Tuesday night. One example was his pledge to lower gasoline prices. Oil and gas are global commodities. U.S. policy has some influence on prices, but global supply and demand, including disruptions such as Hurricane Isaac wrought in the Gulf of Mexico this year are far more consequential to price fluctuation.

Politicians are not alone in over-estimating their control. In his book, Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs, Harvard Business School's Rakesh Khurana showed that a company's success or failure is dependent less upon the characteristics of the CEO than on general industry or economic trends. The same is likely true of whoever occupies the White House. What is required is someone who can navigate adeptly through the twists and turns of turbulent times; a leader who can make the most of what is thrown at him.

A basic truth about leading in complexity is that you always control less than you think and you can always influence far more than you realize. Trying to exercise control over what you do not have power over only leads to wasted effort, frustration, and failure.

So what is a leader to do? Here are a few observations:

  • The first thing is to back away from omnipotence. Admit that there are limits to your power and control. Speak of how you are working to create conditions for success without guaranteeing it when it is beyond your control. CEOs who are rethinking providing analysts with quarterly earning guidance are taking a step in this direction.

  • Second, set expectations — but with room to revise. If Obama had said about unemployment that his goal was to get it below 8%, that if conditions improved faster than expected he'd shoot for 7.5%, but that if there were unexpected turns in the economy we might have to accept 8.5%, he would have left himself space to maneuver.

  • Third, delegate responsibility where appropriate and then be ready to share the credit. Among the more grating statements of CEOs and politicians are those that refer to "I" when it clearly is a case of "we." A leader needs the energy, commitment, and cooperation of followers. You get that when you give people responsibility to achieve a shared goal and are ready to spread the accolades. Remember the inspirational St. Crispin's Day speech from Henry V: "We few, we happy few, band of brothers..." Think of Churchill's famous words from World War II, "This is our finest hour." Not I, but we.

Listen to the debates and remember: leaders who fail to understand the bounds of what they control do so at their peril — and sometimes ours.

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