In the next two posts I would like to comment on a couple of Mitchell's challenging hypotheses. One, that while the ideological underpinning of the political system (e.g., communism or socialism versus capitalism) should on the face of it matter, the realpolitik suggests otherwise. Two, that narcissism in corporate and political leaders distorts and harms our capacity to solve large, multi-stakeholder problems (a key example of which is anthropogenic -- man-made -- climate change). This is the order in which Mitchell treated these issues, but my reply will be in the reverse order. Today I will discuss the idea of narcissism and how it relates to the theme of this blog.
As Mitchell noted in his post, my graduate course in Failures and Crises, which is drawn from the managerial, technological and problem solving research literatures, did not attend to the important idea of narcissism in our business and political leaders. (The course will include narcissism the next time it is taught.) Narcissism is important on a number of levels, and is as relevant to this discussion of altruism as it is to a theory of failure.
First for a useful definition: Narcissists suffer from overconfidence bias; that is, they believe that they perform better than objective measures of their success indicate they do in fact perform. Most of us suffer from some degree of overconfidence bias (the exceptions appear to be people who actually do perform especially well -- they often underestimate their capacities), but narcissists dangerously combine overconfidence bias with a desire for power and a lack of empathy or concern for perspectives and well-being of others. Narcissists are clearly not altruists; they function as self-centered, self-advancing agents in their interactions with others.
If narcissists were transparent to the rest of us, we might safely harbor them among us, but they are far from innocuous. In fact, it might be said that the main problem with narcissists is that they take a disproportionate share of leadership roles in business, education and politics. In fact, cognitive psychological research has shown that in a variety of settings people who score high on measures of narcissism both seek out and successfully achieve leadership roles. It is not merely that they invest heavily in self-advancing promotions, either. The rest of us are complicit, too, and fall prey to the narcissist's self-serving positive attributions and help them advance to such leadership roles. See this popular Science Daily online piece describing at least three such studies: http://www.sciencedaily.com/releases/2008/10/081007155100.htm . As this survey of the research adds, even though we consistently help narcissists advance to leadership, narcissists are not better than the rest of us at leading (although they believe they are and convince us of this clearly controvertible view). Why we keep falling for them is a question for which I have no good answer (but would like to hear from readers who think they may know.)
Further, I would argue that narcissists are often less effective at leading us, and this is seems especially important when the decisions to be made require an open-mindedness to changes in the decision environment or to the possibility that they were wrong in their earlier assessments of a situation. Narcissists should also be expected to be particularly poor at seeing beyond narrow self-interest and embracing, for example, community and other stakeholder positions or interests or needs. (Community service will seem midguided to a narcissist, and s/he would need to rationalize such spending or energy in terms of self-serving gains through, for example, improvements in PR.) Narcissists should be expected to be less able to tolerate organizational gadflies who disagree with them -- those modern-day Socrates our business and political organizations so desperately need to remind us to confront Groupthink and question intuitive but false organizational rhetoric before they develop momentum and do us harm. Narcissists hate being told they may be wrong. See Gladwell's "Cocksure," the New Yorker piece cited by Mitchell Belgin, for a poignant reminder of just how vociferous and even vulgur a high powered executive can become when confronted.
As a former strategy consultant, I worked with over fifty presidents and chief executives of corporations, cooperatives and other organizations, and I witnessed such narcissism far too often (although certainly not always). My major role with one client evolved into the job of interrupting the bright but overly powerful CEO and forcing him to politely listen to the concerned opinions of his senior executive team. (As the outsider, I could afford to be the gadfly who need not worry about his long-term survival.) In other organizations, it became vividly clear to me (as it was to all those who paid attention, frankly) that the organizational leader was selected for overconfidence bias, if not for full blown narcissism. One president with whom I became painfully involved was a personally neat fellow, never a hair out of place, and the hottest day of the year could not provoke him to loosen his tie, and to the chagrin of his organization it became his mission to tidy up his organization on every level. His obsession did the organization some harm before he jumped ship, taking over the reins of another place presumably in even greater need of tidying up.
How does this happen? Let me digress briefly and remind my readers of the concept of The Winner's Curse. You may perform the following experiment if you like (it has been performed many times before). Take a big jar full of pennies and show it to your class -- or to any reasonably large gathering. Ask them to guess the number of pennies -- that is, guess the value of the contents of the jar. Here's the wrinkle: the person who guesses highest (places the highest value) buys the jar for the price of his or her guess. If, say, a class of students guess, and those guesses range from $4.82 (482 pennies) to $9.77 (977 pennies), then the student who guessed 977 pays $9.77 and gets the jar. Unless the jar itself has non-trivial value, it can be said without further ado that the student who bought the jar most likely overpaid for it. He or she fell victim to the Winner's Curse. The distribution of guesses surely ranged from below its real value to above its real value. This is a general principle that bears out far more often that it fails.
And it doesn't just work for students and penny jars. It applies to multi-million dollar investment projects, too. If many vendors bid for a public project, the winner is very likely to overbid, suffer the Winner's Curse, and lose money (unless the contract allows rectification later). In Pankaj Ghemawat's terrific 1984 Journal of Industrial Economics paper on DuPont and the Titanium Dioxide industry (I cannot remember further details, but will provide them later),** Ghemawat showed that the entry decision making process of even very sophisticated industrial rivals fell prey to a Winner's Curse. In this case, each rival would essentially "bid" on building the next plant (and thus taking that market share) by announcing a start date. The earlier the start, the longer the period of losses before the plant turned a profit. Everyone would like to wait until demand truly justified the plant's additional production, but waiting meant risking that a rival would jump in and take that share. So the rivals consistently bid for share by building plants ahead of need -- and the end result was that virtually every entry investment made in the industry over a long period of time was so early that it was a money loser. Even DuPont was consistently victim of the Winner's Curse.
So what does this have to do with our theme? I would argue that candidates for senior executive positions also "bid" for their jobs during the interview process. The interview team sits back and the candidates bid in this way. The first candidate shows a lot of excitement for the potential of the organization and claims that he can add three development projects and grow the business by 10%. The next candidate ups the ante and offers four projects and a 12% growth. A third throws in some re-engineering with a 20% cost savings on top of the growth value. Whether or not they are internal candidates, the interview team is biased by the overconfidence of the candidates (whether real or postured for the sake of getting the job). In the end, the most optimistic candidate often sells the hiring team -- at least long enough to get the job. When the job is for the chief executive's office, the candidate who has not only promised the most but also presumed the most -- jumping to "solutions" far too early, before having spent a single day on the job actually analyzing the problem -- often not only gets the job, but is then held to his promises in the sense that he needs to push this premature, rushed vision onto the organization. And many people who could have informed the strategy are passed over in the process.
Our political leaders do much the same. Last October, when the economy finally gave way and the market tanked, the presidential candidates (in an ideal world) would have stepped forward and announced "All bets are off. Forget all those promises I made. It is obvious that I will be far more constrained than anyone realized, so I must go back to my priorities and figure out what can be done now, and what may have to wait, and what may never get done." Instead, our candidates rushed forward to tell us that they were the right candidate to "solve" the impossible set of challenges ahead. And voters wanted (over)confidence -- I do not believe a candidate who showed humility and caution would have seized the attention of the US voting public.
There was a time in American politics when it was the convention that a candidate did not seek out the office, but the office sought him out, instead. When told (in writing!) of his nomination, Polk replied (also in writing): "It has been well observed that the office of President of the United States should neither be sought nor declined. I have never sought it, nor should I feel at liberty to decline it, if conferred upon me by the voluntary suffrages of my Fellow Citizens." As in so many other cases, it appears our Founding Fathers were on to something: if you let candidates seek out the office, you will need to sort the humble and capable leaders from the narcissists, and you are not likely to succeed. In fact, by a form of Gresham's Law* of politicians, narcissistic politicans will drive out the good ones, and all you will have left to choose among are narcissists. (What person without a drive to power and overconfidence could withstand the race for the presidency today?)
Many climate change and poverty policy researchers are of the public view that the George W. Bush administration threw away absolutely critical time and resources needed to stem anthropogenic climate change. Many who were still hopeful in 1999 have given up hope. See Sachs (Common Wealth) for a sober critique of the price we have paid for egoistic unilateralism, military excesses, and denial of the need for and our responsibility to address climate change. This was narcissism of a high order, which ultimately encompassed an utter disregard for responsibility not only for others around the world who did not look and talk and worship as we do, but a disregard for the well being of our own grandchildren. We have to hope that Obama and his vastly improved multilateral skills can help reverse this course, as the US is a necessary but not sufficient player in the solution. His focus on health care reform, while commendable, may ultimately prove problematic, as we are losing still more time and he may be dissipating political capital needed to forge multi-lateral solutions to climate change and to other global problems.
To those I will turn next time, when I address Mitchell's theme of political ideologies, systems and the realpolitik of global problem solving.
_____
* Gresham's Law: Bad money drives out good. Sir Thomas Gresham was a financial advisor to Queen Elizabeth. He argued that multiple forms of currency, some with intrinsic commodity value (say coins made of precious metals) and others of no commodity value (say coin made of less expensive metals) could not co-exist for long, as the former (the good money) would be taken out of circulation for their alternative value and only the bad money would remain. Narcissists are thus, by analogy, silver-coated copper coins, while the leaders we need are pure silver -- gone but not forgotten.
** Here is the full cite: Ghemawat, Pankaj, Capacity Expansion in the Titanium Dioxide Industry, Journal of Industrial Economics, December 1984. I am happy to discover that this fine paper is still being taught in graduate programs.
No comments:
Post a Comment