By José Luis Álvarez. Vice-Dean at Instituto de Empresa
18 July 2003
A look at leadership in a social-sciences and psychological context, one going back to man’s origins.
Company management is a high-risk activity. The death rate among startups is considerable - nearly 90 percent. With rare exceptions, company governance of even consolidated firms is perilous, as demonstrated by the growing number of CEOs fired after disappointing results – though this is not yet the case in Spain (see separate article). Contexts and factors that have a bearing on success are constantly multiplying and changing. It is hard to say which factor produces which result (organizations are overdetermined and there is always a multiplicity of causes), and which actions ought to be taken for good discharge of duty. That is why it is said that organizations are “equifinal,” or that the same target can be achieved in different ways.
Top executives have to accept uncertainty, ambiguity and imperfection. Uncertainty, because all the data needed to understand cause-effect relations are not always available. Ambiguity, since available data can be interpreted in different ways; and imperfection, as we can never be certain of how the environment is going to respond to our actions.
It is not easy to accept a world such as ours, because psychologically we need adequate explanations, causal univocality, a sensation of dominating the environment, and consistency between values and actions. As these psychological needs do not easily harmonize with reality, it is not surprising that, to compensate, to relieve the tensions reality brings and maintain an illusion of control, we are witness to an abundant production of fantastical ideas on company management, or, at best, serious ideas treated without the necessary rigor.Of the latter, one of the most widespread and exaggerated is that of leadership, a concept almost impossible to define (definitions exist to suit all tastes). Precisely for this reason, nobody is shy about using it and many delight in pontificating on it.
Reams have been written on leadership, mostly containing baseless affirmations, with anecdotes deified as databases with, above all, texts that preach and exhort, converting the hope of executive leadership into a faith that cannot be rationally demonstrated. With exceptions, it is an atavistic throwback to primitive thinking, in an activity, such as corporate management, that needs to be eminently rational.
[*D We possess an inherited cognitive bias, which makes us spontaneously prefer an individual and heroic narrative over one that is social and conduct-based *]
Behind the proliferation and overexploitation of leadership as word and idea lies one of the most well-known and persistent cognitive biases, the “fundamental attribution fallacy.” This consists of attributing to specific individuals results that derive from social structure and collective action. Expressed another way, humans possess an inherited cognitive bias, which, unless we establish deliberate controls in our cognitive processes, makes us spontaneously prefer an individual, heroic and character-based narrative over one that is social, modest and conduct-based.
Where has this fallacy come from? It has the same origin as we all do. Mankind descended from a group of hominids that, some 45,000 years ago, existed in the African savannah as nomadic collector and hunter tribes of 150 persons. In that tribal environment, life “à la Hobbes” - miserable, sad, solitary and brief, with disputes over territory and confrontations with wild animals - was obviously functional (survival of the fittest), with strong reliance on the head of the group - the coordinator of collective action - which went beyond the objective evaluation of his competence.
This belief in the special skills of a leader gives comfort, security and optimism. In psychological terms, it internalizes the “locus of control,” increases self-esteem and self-efficiency. It is more comforting to think that leadership works than to believe what’s most important is good luck, and it is cognitively more attractive to believe in the strength of one person’s leadership than in anonymous collective action. And the harder the environment the more this is true. We all carry the genes of some functional visionaries.
Many years later, this genetic selection in favor of the belief in leadership, blind but effective, transmitted from one generation to the next, surfaced in the ‘90s with its general glorification of chief executive officers as stars of the business world, thanks to change processes some of them brought about. They have been aided in this enthronement by business-school professors, the media and headhunters, as Rakesh Khurana of Harvard Business School recounts in his book Searching for a Corporate Saviour: The Irrational Quest for Charismatic CEOs, which I recommend you read.
Does all this mean that conduct deserving of being called leadership does not exist or is unimportant? Or that people are only marginally responsible for their results? Not at all. It merely suggests that, like everything else that is good, leadership is scarce and that, in this as in other aspects of management, more attention to contribution of the social sciences, such as cognitive psychology, would avoid uncalled-for enthusiasms (directors as heroes of change) and excessive deceptions (directors as opportunists at odds with the interests of shareholders).
It would likewise save time, sparing us from having to read texts on leadership that pretend to be scientific but which are fictional, or mere gossip when trying to be profound. At this stage of evolution, both human and organizational, we ought by now to be trying to work rationally, controlling our atavistic impulses and harboring dreams without necessarily being dreamers.