3 Problems Solved by Leadership

You think you’re a Leader, but you’re probably a Manager.

Seth Godin explains the difference between leadership and management in this video:

Managers try to get people to what they did yesterday, but a little faster, and with fewer defects… . Leadership means embracing the failure of your people if it leads to growth. — Seth Godin

Although most universities claim that they train leaders, the fact is that most of their graduates become managers, and they’ll be happy and proud and useful in the world as a result.

Nonetheless, as an engineering professor, I’m obliged to teach leadership. Even if most of my students never become leaders, one of my explicit learning objectives is to teach my students about leadership.

There has been SO much written about leadership that it’s especially difficult for students to sort through the contradictory and confusing messages about what leadership is and how to understand it. One of the best sources is John Maxwell. In this video he describes the Five Levels of Leadership. He doesn’t make the distinction between management and leadership explicit, but you will recognize the gradual transition from management to leadership as he progresses through these levels:

  • Level 1: Positional (wields authority, dominates)
  • Level 2: Relational (receives permission)
  • Level 3: Exemplary (models productivity and effectiveness)
  • Level 4: Developmental (facilitates growth in others)
  • Level 5: Respectful (influences others through prestige)
John Maxwell describes five different levels of leadership. The first of these are most like management, and the last is most like what Seth Godin describes as leadership.

In his best-selling book, the 21 Irrefutable Laws of Leadership Maxwell describes the characteristics of effective leadership and tells personal stories that help explain how he discovered them. They are already summarized elsewhere.

While Maxwell describes how leadership works, he doesn’t describe what leadership does. One way to think of leadership is that it is a solution to certain types of problems, of which there are at least three:

Leadership is the solution to problems of competition.

There is a certain class of problem in economics that was revealed by John Nash, called non-cooperative game theory. Whereas the old way of thinking about economics was an adage attributed to Adam Smith, and dramatized by Michael Douglas in the movie Wall Street.

“Greed, for lack of a better word, is good,” claimed Gordan Gecko in the movie Wall Street.

The basic argument is based on the supposition that individuals respond to incentives, and when they are able to reap the rewards of their hard work, they will work harder.

Why is that good? When individuals works harder for themselves, they produce more, create more wealth (in terms of available goods, services, or manufactured capital), driving market prices down, and enabling greater consumption (or investment). In this way, “greedy” individuals operating in market systems can benefit all other market participants through lower prices, by acting in their own self-interest (through harder work, or innovation leading to efficiency gains). Thus, Smith’s argument for individual motivation pushes back on the simpler, Judea-Christian view that greed is a vice.

However, there is a certain class of problems involving group dynamics in which the analysis described by Adam Smith is wrong. What Nash realized is that under certain conditions, the individual competition motivated by greed will result in worse outcomes for everyone. His moment of realization was dramatized in the movie A Beautiful Mind. In this scene, the character John Nash realizes that cooperation (i.e., teamwork) results in a better outcome than individual competition.

“Adam Smith needs revision,” says John Nash. “The best result will come from everyone doing what’s best for himself AND what’s best for the group. Adam Smith was wrong.”

When confronted with problems of competition, such as the management of common resources (e.g., fisheries), actions that might seem rational at the scale of the individual can be irrational at the scale of the group. The branch of economics that studies problems of this type is called game theory. The essential characteristic of a game theoretic problem is the realization that any individual’s best decision depends upon what they expect other individuals to do. Thus, game theory is capable of modeling the interaction between individuals.

The classic example of a game theoretic problem is called the Prisoner’s Dilemma, as Sal Khan describes in this video:

The Prisoner’s Dilemma belongs to a class of game theoretic problems called non-cooperative. In this class of problems, players (decision-makers) each decide independently, without the benefit of a contract or other enforcement mechanism that can hold the other party to an agreement. The Nash Equilibrium is found where no decision-maker can improve their position unilaterally (i.e., without a change in the decisions of others).

At the Nash Equilibrium, the only way to improve the system is if the decision-makers work collectively — i.e., they have to agree to cooperate. The difficulty is that, without a punishment mechanism for enforcing the agreement, both decision-makers have an incentive to cheat, despite the fact that in an non-cooperative game-theoretic problem like the Prisoner’s Dilemma, neither player can improve their own position without damaging the position of the other.

Leadership can be thought of as exercising the influence over others that convinces them to cooperate as a team, and thus put their individual interests at risk to achieve a better outcome for the whole team. It is leadership that motivates teammates in sports to sacrifice their own performance to advance the interests of the team, and this is one of the reasons that we often look to sports coaches for examples of effective leadership.

Leadership is the solution to the problem of meaning-making.

Part of the human condition is the necessity of making meaning of events that are largely out of our control. For example, when primitive humans experiences a solar eclipse, they may have constructed collective mythologies to ascribe meaning to the eclipse (or thunderstorm, or drought, or any other shared experience). Modern humans are likely to create a different sort of meaning related to the alignment of the moon, earth, and sun. Both meanings are constructed by inventing and telling stories about the phenomenon. The mythological story does not result in empirically falsifiable predictions, whereas the second story does. So we call the first superstition and the second science. Nonetheless, meaning is always a socially constructed, intersubjective story.

The need for meaning in human organizations is so great, that without leaders to create meaning for their organizations, people will construct that meaning on their own. They will gossip and speculate about the most recent memo from the Leader. They will ask questions and makes suggestions like, “Did you see the memo? What did that mean? Are we going to be laid off, or are we going to hire?”

In this video, we see an example of the social construction of meaning by a Leader and the first few followers. That’s what is meant by social and intersubjective, which is to say that meaning is constructed by two or more people (social) who see the same thing in the same way (intersubjective).

At the beginning of the clip, the Leader is “looking ridiculous,” which is a way of ascribing meaning to the Leader’s behavior. According to the narrator, “The first follower transforms the lone nut in to a Leader.”

This transformation is a change in what the Leader’s dancing means. As the crowd grows, the risk of humiliation is replaced by the fear that bystanders would be ridiculed for not joining.

Leadership is a solution to the problem of mentorship.

In The Secret of Our Success author Joseph Henrich claims that the human race flourishes because we learn from one another, slowly accumulating knowledge from one generation to the next, by imitating the most successful individuals, cultures, or organizations in our experience. (He also describes the difference between dominance, which is characteristic of management, and prestige, which is characteristic of leadership).

One way that learning is passed between generations is through mentorship, in which an more experienced or knowledgeable individual offers to share that experience with a protege in a way that facilitates the protege’s accomplishment of their own goals.

Nevertheless, there’s a great deal of disagreement about what a Mentor is. Leadership as mentoring is not the same as technical consulting, or a source of answers to specific questions. Leaders mentor by asking questions, offering alternative perspectives, sharing wisdom and experience, but not by giving instructions.

The competition television show Project Runway created a role called Mentor for Tim Dunn, who offered expertise to the fashion design contestants.

This form of leadership might correspond to what Seth Godin describes as helping people in a “quantum way,” or John Maxwell calls “Level 5 Leadership.” In contrast to Level 1, where followers are motivated by extrinsic rewards (such as seeking payment or avoiding punishment), at Level 5 a protege (also, “mentee”) is no longer a “follower,” because the role of the Level 5 leader is to foster in the protege the intrinsic motivation to become their own leader.