Below, Jared Diamond shares five key insights from his new book, Profits, Prophets, Coaches, and Kings: (When) Do Leaders Matter?.
Jared is a professor of geography at the University of California, Los Angeles. He is author of the internationally bestselling (over seven million copies) book Guns, Germs, and Steel, and the recipient of numerous awards, such as the US National Medal of Science, Tyler Prize for Environmental Achievement, and election to the US National Academy of Sciences, among many other honors.
What’s the Big Idea?
We tend to give leaders too much credit when things go well and too much blame when they go badly. Leadership matters, but not always in the ways we assume. By looking carefully at what separates successful leaders from unsuccessful ones, we can better understand how much difference an individual leader really makes.
Listen to the audio version of this Book Bite—read by Jared himself—in the Next Big Idea App, or buy the book.
1. The importance of timing.
No matter how skilled a leader is, they can only make a difference at the right time, in the right place. Some leaders are able to recognize when the timing is perfect, and they seize the moment by taking action. For instance, Bill Gates wanted to make small personal computers. For a long time, he postponed trying because he could tell that the time wasn’t right. Then, in January 1975, he read about Intel’s new fast chip. He told his friend Paul Allen, “Now it’s finally feasible for us to make a personal computer. We have to act fast.” So, they quickly launched Microsoft.
At times, there are leaders who recognize perfect timing, but they don’t have much of a choice. Instead, the opportunity does or doesn’t fall into their lap. When Germany invaded France in 1940, one result was that Winston Churchill became England’s wartime prime minister. Churchill recognized that this was the perfect time for him to be prime minister, but he had no control over the timing of those external events that benefited his election.
Finally, there are cases like Mark Zuckberg, who launched Facebook in 2004. It was the perfect time to launch a new social media platform because the internet had just become powerful enough, but Mark didn’t know his timing was perfect, and he couldn’t choose it. Instead, he happened to have been born in 1984. He didn’t choose that birth year, but it meant he was a Harvard sophomore in 2004, and that was the perfect time and place to launch Facebook.
2. The importance of power.
For a leader to make a difference, the leader needs the power to make key decisions. Some situations give the leader a lot of power, other situations don’t. In the business world, companies where the CEO has a lot of decision-making power include computer companies, perfume companies, soap companies, restaurants, and teenage t-shirt companies. One friend of mine who runs a teenage t-shirt company is brilliant at figuring out what will be the next craze in teenage t-shirts, and he has become rich as a result. But other companies give the CEO little power to make decisions, like public utility companies, railroads, blast furnace companies, and electric motor companies. Public utilities are tightly regulated by the government. There are only a few ways to make a blast furnace or an electric motor, and a railroad CEO can’t quickly redesign the railroad’s network of tracks.
“If you are a business CEO looking for a new job, choose your company carefully.”
CEOs of companies who have much power can get rich if the company does well, but risk getting fired if the company doesn’t do well. So if you are a business CEO looking for a new job, choose your company carefully. If you want to become a billionaire and are not afraid of getting fired, choose to become CEO of a perfume company or a T-shirt company. If you are satisfied with being a millionaire and want job security, choose to become CEO of a public utility or blast furnace.
Leaders’ power also varies in other spheres of life. College sports coaches have more power than professional sports coaches. Dictators have more power than leaders of democracies.
3. Sports coaches.
Coaches are decision-making leaders of sports teams, just as CEOs and prime ministers are decision-making leaders of businesses and countries.
Coaches try to manage many aspects of their players’ performance. But which of those aspects differ most among coaches and contribute most to winning games? In football, I had naively assumed coaches would vary widely in their preference for telling their quarterback to pass or run. I supposed that variation in this highly visible tactical choice would be a major factor in winning games. Surprisingly, football coaches don’t vary much in their use of passing versus running, perhaps because most coaches converge on the same optimal strategy.
However, statistical comparisons by business school professors show that football coaches do differ a lot in how they manage two other aspects of their players’ behavior: fumbling the ball and committing penalties. Long passes and runs heroically score points and excite fans, while fumbles and penalties unheroically help one’s opponents score instead. Some coaches are much better than others at training their players not to fumble or commit penalties. And that’s how football coaches win games, just as picking an appealing teenage t-shirt is how a t-shirt company CEO helps the company beat the competition.
All who watched the Argentina versus Spain final of the recent FIFA World Cup recognized that same lesson in soccer. Why did Argentina lose to Spain? Because Argentina’s coach hadn’t trained his players not to commit fouls. Argentina’s players kept committing bad fouls and received all of the yellow cards. Spain received none.
“Argentina’s coach hadn’t trained his players not to commit fouls.”
Finally, Argentina’s Enzo Fernandez got two yellow cards and was sent off. That put Argentina down by one player and allowed Spain to score the only goal of the game. If the Argentine coach had read my book, Argentina wouldn’t have accumulated those yellow cards. The score would have been 0-0 at the end of regulation time, and Argentina would’ve won by penalty kicks because of their great goalie.
4. Learning from natural experiments.
The usual rigorous method by which laboratory scientists, like chemists and molecular biologists, answer questions is by conducting experiments. A classic experimental setup looks like this: two identical test tubes, adding a special chemical to one but not the other, and observing the different outcomes. How decisive and elegant. We social scientists could make equally decisive discoveries if we performed similar experiments on people.
Suppose we want to know whether presidents affect the economy. We could take the presidents of 50 countries, kill 25 of them, leave the other 25 alive, and observe whether the economy differed or remained the same between the two groups of countries. How decisive and how elegant? Alas, that experiment would be impractical, immoral, and illegal, but nature often performs that experiment for us. Presidents sometimes do die of natural causes.
Globally, between 1945 and 2000, 57 presidents died natural deaths during their term. Economists found that when a college-educated president dies and is succeeded by a president without a college education, the economy declines. That natural experiment yielded two conclusions: on average, presidents do affect the economy, and a college education improves a president’s performance.
That’s an example of a natural experiment. Social scientists have used similar natural experiments to answer many other questions, such as whether kings with high IQs do better than kings with low IQs? Yes, they do better. Whether firing a sports coach because of a losing record improves the team’s performance? No, it usually doesn’t. And do ministers affect church turnouts and donations? Yes, they do.
5. Using natural experiments to learn about business leaders.
CEOs claim that they make a difference. If a company has annual profits of billions of dollars, the CEO says that outcome is due to his or her unique skills, so he or she surely deserves an annual salary of $1 billion. Is that salary justified? Does the CEO really make a difference?
“Alas, that experiment would be impractical, immoral, and illegal, but nature often performs that experiment for us.”
If we were a laboratory scientist, we could settle that question quickly by throwing a wrench into the CEO’s life that would effectively distract them from their work. If CEOs really do affect company profits, distracting them from doing their job should decrease profits. But if CEOs don’t make a difference, that distraction won’t lead to decreased profits. Psychologists tell us that the biggest distraction is the death of a spouse or child. The next biggest distraction is the death of a brother or sister. Next biggest is the death of a parent, and the smallest distraction is the death of a parent-in-law.
Alas, social scientists aren’t permitted to orchestrate a death-in-the-CEO’s-family experiment, but CEO’s relatives do die natural deaths, of their own accord. Do those situations in a CEO’s life affect company profits?
Business school professors analyzed all 5,000 deaths of close relatives of all of Denmark’s 75,000 CEOs for eight years. It turned out that those deaths did decrease company profits. The biggest drop in company profits was for the death of a CEO’s spouse or child—especially the death of an only child—and the smallest effect was for the death of a CEO’s parent. The effect was much bigger for women CEOs than for men CEOs. The only family death that improved company profits was the death of a mother-in-law, but that effect was small and not statistically significant.
Enjoy our full library of Book Bites—read by the authors!—in the Next Big Idea App:
