The Abdiding curse of Leaders Who Outstay Their Usefulness

This is an excerpt from an article by renowned Economist, John Kay, published in the Financial Times 14 February 2006, which I found insightful. The intention is to stimulate debate on business leadership.

Kays indicates that people have a well evidenced tendency to overestimate their own abilities. This characteristic, common in the population at large, is particularly marked in business and political leaders. Examples picked include George Washington who left office to spend the three remaining years of his life at Mount Vernon. In retiring, he sought to emphasise the difference between a president and a king. Thomas Jefferson, one of the ablest men to hold the presidency, refused to stand for a third term despite strong pressure.

The number of leaders that go on too long far exceeds the number that finish too soon. Gamblers often stay in the casino until they have lost. So do statesmen and chief executives, and for similar reasons. Whenever there is a component of luck, people who have performed well in the past tend to perform worse thereafter, while people who have performed badly tend to do better.

Most people leaving a job are surprised to discover that others can do it equally well. And if they do not discover that others can also do it, they are probably less than averagely honest and impartial in judgment. Such honesty and impartiality is hard to maintain in high office.

From the earliest days of hierarchy, leaders were surrounded by flattering courtiers. Few people can hear a chorus of approbation every day of their working lives without suspecting there may be some truth in it. Frequent reassurance that one’s decisions have been wise increases the confidence with which one makes decisions in future – often to dangerous levels.

And so Henry Ford, the greatest businessman of the 20th century, ended his life a sad and risible figure. He remained in charge because he owned a controlling stake in his company, but only his chief of security was sufficiently deferential to be his confidant. He railed against Jews and tobacco as he issued peremptory commands.

Jack Welch postponed retirement to enjoy the triumph of a deal with Honeywell and instead experienced the humiliation of seeing its failure. Few match the recent self-discipline of James Crosby of HBOS. Appointed as one of the youngest chief executives of a British public company, he retired from the job while still under 50 and passed the baton to an even younger successor. Jefferson shrewdly perceived that it was in the interests of the individuals concerned to take the decision out of their hands.