by Sydney Finkelstein
Pity the tortoise in the 21st century. Stolid, careful, slowly-but-surely… the ways of the tortoise seem quaint in the face of an onslaught of hares running amok, whether creating new businesses (Facebook, Amazon, Alibaba) or disrupting old ones (Uber, Roku, Coursera).
But remember, in the classic Aesop’s fable it is the plodding tortoise, and not the speedy hare, that crossed the finish line first.
Is it possible that the tortoise could still win today? And what of the hare — so quick but impulsive and unschooled, calling to mind the ‘all-nighter’ young executives at the helm of companies today? How important is experience, and even age, to successful leadership in an era where speed has become a business goal in and of itself? The answers may surprise you.
There’s no denying the need for speed. Start-ups spend more time on “pivots,” a fancy word for changing direction or business strategy, than ever before, while incremental improvements are probably the best we’ll ever see from more bureaucratic companies. But the devaluation of experience — and that means age, too — has gone so far that wisdom has fallen out of the very definition of business intelligence.
The arrival of the Internet era has meant youth has never been more highly valued by the business community. Silicon Valley companies — every second one seemingly started by a Harvard University dropout (Microsoft founder Bill Gates; Facebook founder Mark Zuckerberg) — are not only reinventing how businesses are run, they are also leveraging their success to breathe new life into how philanthropies are run and how governments should be run.
After all, when Zuckerberg calls US President Barack Obama to lecture him on the abuses of the US National Security Agency — never mind the irony of this coming from the creator of a company wholly-dependent on people revealing private information about themselves to public audiences — all bets are off. The hares are surely running away with it.
The danger of generalising
Except for one little, but very important sleight of mind.
One of the most enduring human biases is that we tend to generalise from very small sample sizes. So there’s Zuckerberg, Gates, the Google guys, Jack Ma of soon-to-IPO Alibaba, and a bunch of other successful entrepreneurs who made it big in their twenties. But what about the tens of thousands, maybe hundreds of thousands, of other twenty-somethings that have failed as business builders?
Don’t believe me? The crowdsourcing fundraiser Kickstarter helped raise money for more than 19,000 business ideas in 2013, the majority of which were set up by people in their twenties and thirties. But how many actually created going concerns, let alone became profitable? Venture capitalists have built an industry on the premise that they only need to win big in one out of every 10 investments. Even TV shows like Dragons’ Den or Shark Tank demonstrate how few young entrepreneurs can really make it.
The new business failure rate in the US is so high — 50% fail within 5 years, according to the US Bureau of Labor Statistics — that organisational sociologists have been calling the phenomenon “the liability of newness” for decades. Not all businesses are started by young entrepreneurs, of course, but that’s what most people believe. Even venture capitalists prefer younger founders.
So, youth dominates in entrepreneurship as it does in the wider culture. Does it also influence the decisions big companies make on talent? That’s not a rhetorical question.
It’s not a good thing to be over 50 years old and working in a big company. When redundancies come, you’re often first in line to go because you’re more expensive. Ironically, one of the reasons there’s been an upswing in start-ups from entrepreneurs in their fifties is that they didn’t have a choice. Once you’re unemployable, you have to figure it out for yourself.
Experience counts, really
I think it’s time we counted up the real losses that arise from the devaluation of experience, not just for older workers and managers caught up in the societal meme but for the businesses that are left behind, required to fend for themselves with one hand effectively tied behind their back.
Experience may not bring speed, but it does bring a greater ability to reflect and put into perspective what is happening around you. And yes, it does bring deeper compassion for the people we live among, at work and at home. Some people call that wisdom.
Once you’ve lived a little, the illusion of perfection has long gone. In fact, you’ve seen how the perfectionists you once worked with have moved on, unable to adapt to the messiness of everyday business.
Once you’ve lived a little, it becomes harder to go about your work without paying closer attention to colleagues and empathising with those around you. More likely, you can’t help but see the nuances and subtleties of work that less-experienced managers do not see. As a result, you’re better able to motivate others because you know what makes them tick. And you’re better able to influence others when you don’t have direct authority over them. That’s the hallmark of the effective leader.
Once you’ve lived a little, you’ve seen bear markets and not just bull markets, and you’ve been forced to navigate around geopolitical events that periodically disrupt business plans.
In fact, your skill set is exactly what inexperienced entrepreneurs need, yet so often don’t value.
Of course, experienced leaders don’t automatically make the right calls, but they’ve got perspective and they use it. And they can be bold when opportunities arise. Surely we would all say that about Larry Ellison, the CEO of Oracle who has generated more than a 25% annual return on shareholder equity over a 40-year career at the top. And is there anyone out there who doubts 83-year-old Berkshire Hathaway CEO Warren Buffet’s ability to outthink the competition as he adds year after year to his legend as one of the world’s greatest investors?
So yes, leaders can get better with age. The youthful hare may talk a good game, but my money’s on the tortoise.
Sydney Finkelstein is the Steven Roth Professor of Management, and Associate Dean for Executive Education, at the Tuck School of Business at Dartmouth College, where he teaches courses on Leadership and Strategy. He holds degrees from Concordia University, the London School of Economics, and a Ph.D. from Columbia University. Professor Finkelstein has published 17 books and 75 articles, including the #1 bestseller Why Smart Executives Fail. Professor Finkelstein is a Fellow of the Academy of Management and on the global Thinkers 50 list of top management gurus. His research focuses on strategic leadership, corporate governance, and creating top talent. He is an active consultant and speaker to executives and boards around the world. He can be contacted on twitter: @sydfinkelstein.