What makes a leader?

Sometimes it feels like our leaders are cut from a different cloth than the rest of us. They are frequently tall and good-looking, always smartly dressed and knowledgeable. They project these characteristics with confidence; this is how you know who is in charge when you walk into a room.

A myth has grown up around our political and business leaders that they have the most experience, they are the most knowledgeable and have the most creative ways of tackling problems. Why else would they be in charge? The rest of us have to have faith that the people in charge know what they are doing. We believe that our leaders are creative, innovative and original thinkers and that the incentive system rewards creative, innovative and original thinking. In reality our leaders are none of these things.

Professor Aeron Davis has specialized in studying our leaders, the elite or the 1%. He has talked to powerful people in the worlds of business, finance and government, including CEOs, venture capitalists, senior civil servants, politicians and policy advisers. Last Tuesday, in a lecture at Goldsmiths University, he shared some insights into what he has discovered about the people who control our lives.

The first thing that Professor Davis discovered is that leadership is like speed dating. This may seem like a strange comparison, but when you consider speed dating is a lot of people hopping from table to table quickly, then this is quite an accurate analogy for leadership. In his research, Davis discovered that a third of CEOs had been in their current positions for less than 2 years, and two thirds had been in their job for less than 5 years. One-year contracts for top executives are becoming more common. Top executives move in, work briefly in a senior position and then move on to another one at a speed that is completely alien to most people’s career progression.

The same is true of top positions in the government. Davis discovered that most cabinet ministers hold their job for less than two years. Senior civil servants and advisers are also moved from role to role every few years. In the world of finance, the average time a share is owned before being traded has dropped to 22 seconds. All of this makes me wonder how CEOs, investors or ministers can have any knowledge of what they own or run? The simple answer is that they do not. Often our leaders have no experience or understanding of what they lead. How can they when their tenures are so short?

Leaders many not understand the government department or company which they are running, but they understand the problems they are trying to solve, right? Surely in our modern competitive world, you can only get ahead by providing a solution to a need or want experienced by a large number of people? Not according to Professor Davis, who said that the lives of CEOs are a never-ending conveyor belt of fast-paced meetings. Their understanding of the needs or wants of our lives are limited.

Most senior business leaders or politicians only associate with each other in environments from which ordinary people are excluded. A good example is the arcane customs of parliament, which make outsiders feel unwelcome but send subtle signs to elites that they are in their own space. During the documentary Inside the Commons, David Cameron remarked that parliament looked like a cross between a church and a school. My school, a state run prefabricated modernist structure, did not look remotely like the neo-gothic pomposity of the Palace of Westminster, but parliament is not a place for people like me, it is a place for people like David Cameron.

We have an image of leaders - especially in business - as brilliant iconoclasts, people who think differently and create new products or ideas. Steve Jobs, for example, was someone who created a dazzling array of new consumer goods and conquered the technology market. Never mind that Jobs did not invent the computer, MP3 player, smart phone or tablet, most leaders are not even original enough to refine a product that someone else has invented. Due to their short contracts, leaders are quite risk-averse and creating something new is risky.

If doing something new it goes wrong, then a CEO can wave goodbye to the extremely high-paid speed-leadership scene and go back to living like the rest of us. CEOs would rather not risk it. Following what other companies are doing is much easier. Apple can popularise the tablet and then every other company can follow them into that market. It is safer that way. Maybe this is why we have a huge number of smart phones on the market but no flying cars.

Jokes aside, the image of the freethinking innovative business leader is a myth. Professor Davis claimed that leaders are more like lemmings, blindly following each other in the same direction. This is as true for politicians as it is for CEOs. Thatcher brought in neo-liberalism, and Labour followed suit. Blair had his army of spin-doctors and media-trained professional politicians, and now the Tories have the same. Original ideas are too risky. This is why every economy in the world liberalised their financial sector and transferred enormous power to their banks. Finding a different economic model was too risky, even when the risk of financial meltdown was high. This is why we have not had banking reform even after the 2008 financial crash.

The final one of Professor Davis’s insights into our leaders is the culture of targets. He said many of the CEOs and financiers that he met told them that neo-liberalism is a superior economic model to socialism or a mixed economy, but in application they did not see how free markets worked any better than state intervention. What works is targets. Targets set by leaders and then implemented by everyone else.

CEOs or government ministers are very good at gaming this system of targets to their own advantage, mainly because they set the targets. This has led to everyone else’s work becoming part of a giant computerised accounting system, where we are all compared to how efficiently we achieve our targets. The long-term effects of this have been wage stagnation and insecure employment, but also rapid economic growth and spiraling rewards for those at the top. Most people think the financial incentive system is set up to encourage effective leaderships, whereas in reality it is exploited by our leaders for their own financial advantage.

The leaders of business, finance, the civil service and politics live in a world isolated from everyone else, where they set their own short-term targets, follow what everyone else is doing, see a short-term uptick, and then rapidly move on to a better-paid position somewhere else. We have to complete their targets and have faith that our leaders know what is best for us. Over time, inequality has worsened, living standards have fallen and our leaders have become more remote from us. The net result of all this is that the world belongs to the 1%, and the rest of us just live in it.