The cost of ambition

Sammy Lee’s sacking by Bolton Wanderers raises a general point - that ambition can be economically damaging as it can lead to a misallocation of resources.
It’s widely agreed that Lee was an excellent assistant manager, but a poor boss, partly - it seems - because his efforts to assert his authority backfired.
Lee’s ambition to be boss has been bad for Bolton and perhaps for him too. Both parties might have been better off if Lee had shown less ambition and more self-awareness - if he‘d known that he was a fine number two but not a boss, as Portsmouth‘s Joe Jordan seemed to realize.
I suspect the Stupid Party and William Hague made a similar error in 1997. If Hague had figured in 1997 “I’d be a poor leader as I’m insufficiently telegenic and too young; my considerable skills would be better used in other roles” the Stupid Party might have been stronger.
And of course there are countless companies which have illustrated the Peter principle, by promoting people beyond their competence.
So, why does this happen? I reckon there are at least three problems:
1. Directors (and voters?) are bad at spotting talent. A man’s over-ambition would be no problem if the people hiring the boss could spot that he wasn’t cut out for the job. But they can’t - especially, but not only, if they are football chairmen.
2. Wage differentials between top bosses and their juniors are huge.  It pays better to be a bad boss (subject to keeping your job) than an excellent worker. So people go for the boss’s job simply for the money, not because they’d be good at it.
3. Autonomy is limited. People often want to be boss simply because it’s the only way to get freedom over one’s job, to make the difference to an organization they think you can make.
It’s natural enough for people to be ambitious, and to be over-confident about their abilities. But is it really rational to have organizational structures that increase vulnerability to over-ambition?

Comments

[Igor Belanov]

But Joe Jordan was quite a successful boss at Bristol City.

[mat]

Can you please stop referring to the Conservatives as "the Stupid Party"? I happen to agree that the Conservatives are fairly stupid these days, but constantly referring to them as "the Stupid Party" just makes you look childish.

[reason]

Now I'm a great fan of the Peter Principle and an inherently unheirachical person. I decided long ago, that I function better and are happier as the "power behind the throne" rather than sitting on it myself. But I'm not sure what you think should replace heirachy.

I did once write an essay about the analogy with computing, about the move from centralised architectures to peer-to-peer systems. About how the manager in a doctors office wasn't (always) the highly paid technical expert.

But the world hasn't developed that way, it has gone the other way. Being productive puts you in competition with the rest of the world. Being a great salesman, or a figurehead makes you indispensible. The world is full of increasing returns to scale, monopolies are multiplying. It is a world I hate, but that is the way it is.

How do we get from here to there?

[reason]

And as for being bad at spotting talent, well maybe, but couldn't simple risk aversion play a big part.

Nobody will apoint a newcomer to be say manager of Liverpool (unless he happened to be a great player a la Dalgleish or Souness). Not that somebody new couldn't be good, it is just that the people who appoint him will be rubbished if it doesn't work out. If they appoint say a Souness and it doesn't work out, well nobody will blame them, they might blame Souness - even though Souness has no better credentials than the local under 16 coach.

There are probably lots of tea ladies out there who would be great CEOs, but who will ever give them charge of a multi-billion pound company?

[Mark Wadsworth]

Aah ... The Peter Principle, that was a brilliant series.

http://news.bbc.co.uk/1/hi/1839299.stm

[savanorola]

"Stupid Party" - stupid comment. Your prejudice(weak spot) is showing. Beneath you really.

[chris]

"Stupid party" is just a reference to Mill. I might drop it, on the grounds that the Tories now have such strong competition for the title.

[Matt Munro]

Isn't it also true that it's far easier to promote a pain in the arse/incompetent than it is to sack them, especially in the public sector. Sack them and you could be tied up for months in paperwork, industrial tribunals, harassement cases etc, promote them and they become someone elses problem.

[mat]

Savanorola, you assume that I'm prejudiced. I was socialist like my parents until only a few years ago, when I realized that it's wrong for the government to favour any particular group. I'm now a libertarian, prejudiced only to the extent that I'm partial to my family and friends. Sorry! I really don't understand why you think I'm prejudiced. Why would a libertarian want to defend Cameron's Conservatives?

[Planeshift]

"It pays better to be a bad boss (subject to keeping your job)"

In some cases you don't even have to keep your job. Do a bad job and you'll be rewarded with a lucrative pay off and a good post with another organisation. Example:

"Derek Wanless, 59, worked at NatWest for his entire career, working his way up to chief executive. He was jettisoned, however, in 1999 after a series of management mistakes culminating in a failed merger attempt with Legal & General. He joined the Northern Rock board in 2000." (http://business.guardian.co.uk/markets/story/0,,2172134,00.html)

[savonarola]

Mat

On reflection my use of 'prejudice' to describe your attitude seems inappropriate. However the term 'Stupid Party' does seem out of character so my use of the owrd was the best I could do. On prejudice I seem to recall that you once commented that you disliked all who attended public school. This attitude seemed to indicate 'chip on block'or prejudice and perhaps I carried this thought in my head when commenting. I very much enjoy your erudite analysis and debunking of commonly held views.