RESEARCH
  • Leadership

Winning CEOs – Insider Experts or Super Managers?

Research shows that Formula One teams led by bosses who started out as drivers or mechanics win twice as many races as their rivals.



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Ferrari or Red Bull whichever takes the constructors' championship in 2012 a former racing driver will surely again head the winning team. New research by Dr Amanda Goodall, Visiting Fellow at Cass Business School and Senior Research Associate at the IZA Institute, Bonn shows that Formula One teams led by bosses who started out as drivers or mechanics win twice as many races as their rivals.

With so many recent headlines telling of leadership failure, the search for better leaders has never been more crucial. One solution much supported by management theorists in the past is to develop inspirational leaders who can succeed wherever they work - intrinsically top performers with vision and motivational skills way above the ordinary.

Fred Goodwin, former disastrous boss of the Royal Bank of Scotland was one of these and there are many other examples – good and bad.  The other approach is to appoint a career insider a boss who truly understands their industry and is respected by insiders. Bob Diamond, Barclays former CEO, was one of these as was Tony Hayward who led BP into its darkest days, and in sport Martin Johnson one of the true greats of English rugby failed dismally as a team manager. But then again don’t be surprised if the London Olympics led by former gold medallist Lord Coe turns out to be a huge success.

Clearly what is needed is more detailed research into this ‘insider v. top performer’ question. Dr Goodall’s timely research follows up on previous research she did looking at 300 US hospitals that found the better performing hospitals were those with a medical doctor in charge as opposed to a manager.

Her research certainly seems to suggest that hiring so-called 'expert leaders' - individuals who have built up years of experience on the floor - instead of general managers is the best way to go. In the case of Formula One researchers from Cass and the University of Sheffield found that the most successful team leaders are more likely to have started their careers as drivers or mechanics compared with Formula One leaders who are professional managers or engineers with degrees.

"Former top drivers, like Jean Todt, consistently turn into successful Formula One bosses, even when accounting for factors such as the resources available to each team," says Goodall, who goes on to comment "Is it important that the CEO of McKinsey was an outstanding consultant first? Should the BMW boss be an engineer? Are doctors better at running NHS hospitals? We would argue, 'yes'."

Over recent decades ‘managerialism’ has become pervasive, with major companies shifting away from hiring CEOs with technical expertise in favour of professional managers and generalists.

Goodall argues that "The swing of the pendulum has gone too far - leaders should first be experts in the core business of their organisations, whether they are bankers, hospital administrators, restaurateurs or technology innovators. Being a capable general manager alone is not sufficient,”

"We can see why comparative newcomers like Red Bull, led by ex-driver Christian Horner, and Sauber, run by former mechanic Peter Sauber, are doing so well in Formula One. These teams may not have a 50-year history like Ferrari but they are led by hands-on experts with deep intuition" she says.

Dr Goodall’s US hospital study echoes the 2008 Darzi Report, commissioned by the UK National Health Service when she says "Over the last few decades there has been a growing tendency for hospital boards to appoint managers as CEO's. These findings raise some warning signs over that trend." And continues, "I was surprised by the strength of the pattern. It seems that age-old conventions about having doctors in charge - currently an idea that is out of favour around the world - may turn out to have been right all along".

*Photos: Red Bull and Ferrarri 2012; Ferrari boss Jean Todt is his rally driving days, Portugal 1976; Red Bull chief ex-driver Christian Horner discusses tactics with Mark Webber during their winning 2011 season.

Further Information

Read more about the Formula 1 research

Read more about the US hospital research

Learn about IZA Institute, Bonn (Institute for the Study of Labour)




 
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