Should leaders be specialists or

generalists?
Amanda Goodall
Cass Business School
 How much core-business
knowledge should leaders have?
 How much core-business
knowledge should leaders have?
• How important is it that the Managing Director
of McKinsey's was an outstanding consultant?
 How much core-business
knowledge should leaders have?
• How important is it that the Managing Director
of McKinsey's was an outstanding consultant?

• Do German automobile companies perform so

well because engineers are on the shop floor
and in the boardroom?
MY KEY IDEA
 ‘Expert leaders’

Successful leaders are those who

have a deep understanding of the
core business of their organization.
Being a capable general manager
alone is not sufficient.
Studying leaders can be problematic

• There are thousands of books on

the topic.

• And many rely on personal or

anecdotal accounts.
Studying leaders can be problematic
• It can be a difficult topic to research
rigorously.

• There are problems identifying the

relationship between leadership
and performance.
The challenges of studying leaders

Unlike in scientific experiments

we cannot randomly assign a
leader to an organization.
But what if we could?
David Cameron
 David Cameron

Silvio Berlusconi
Buranovskiye Babushki
 David Cameron

Buranovskiye Babushki

Mervyn King outgoing

Retired Naturalists’ Society Governor of the Bank of England
 David Cameron

Manure Management Co.

Silvio Berlusconi
Buranovskiye Babushki

Victoria Beckam

Mervyn King outgoing

Retired Naturalists’ Society Governor of the Bank of England
Our Current paper offers a new
test of the influence of ‘expert
leaders’:
 IZA Working Paper:

EXPERT LEADERS IN A FAST-

MOVING ENVIRONMENT
Amanda Goodall & Ganna Pogrebna
 We focus on an industry

With a turnover of billions of dollars

Objectively measurable performance
Constant technological innovation
Highly skilled individuals
 Formula 1 racing
We examine the performance of
every team in the six decades of
Formula 1 championships
between 1950 and 2011.
 Formula 1 racing
After including a number of
controls, we find that the most
successful team leaders in F1
motor racing are more likely to
have started their careers as
drivers.
 How do you win in F1?

• F1 compete for championship points.

Each constructor enters two cars.
• Points are given to the first 10 cars.
• Most points awarded for podium
position (1-3).
 How does F1 make its ?

• The average annual budget of an F1

constructor team $200 million.
• Teams’ profits mostly come from
advertising revenue.
 What do F1 team principals do?

Run the team

determine strategy
control technical matters
make financial decisions
oversee driver selection
have final say on tactical decisions during
each race.
 Our research question

Can we identify the most effective kinds

of leaders in Formula 1 Grand Prix
racing?
 Our data
• The performance of every car of each
constructor in every F1 race between 1950
and 2011 (61 racing seasons).
• Total of 19,535 car entries in 858 races.
• Background information about the leaders of
all F1 teams between 1950 and 2011.
There are 4 types of
team principals
 Manager-leaders
• They move to F1 often from business.
• Little or no experience in mechanics
or driving.
• Involvement in F1 comes later in life.
 Engineer-leaders
• Are highly educated with degrees
in engineering.
• Gaining education means they
enter competitive racing relatively
late.
 Mechanic-leaders
• Have practical technical experience in
car making and repair.
• Have not driven competitively nor
obtained a degree in engineering.
• Involvement in car mechanics usually
happens quite early in life.
 Driver-leaders
• Have competitive racing experience in
F1 and other racing.
• Are often familiar with the technical and
mechanical aspects of car.
• Usually start Go-kart racing as children
and move to professional racing early
20s.
 Jenson Button
Lewis Hamilton

Michael Schumacher Michael Schumacher & Sebastian Vettel

We first separate the data into those
who have hands-on expertise
(drivers and mechanics) and those
who have less direct experience
(general managers and engineering
graduates).
Former drivers and mechanics win twice as often as other kinds of F1 leaders
Findings are robust to the inclusion of

• CIRCUIT controls
• YEAR controls
• TEAM controls
• # CARS included
What’s driving the effect?
Does the amount of
driving experience make a
difference?
Does the amount of driving experience
make a difference?
• 45 leaders out of 143 (32%) have
ever had competitive driving
experience.
• 35 are driver-leaders, 7 mechanic-
leaders, 2 engineers and 1 manager.
 Results
10 years racing experience by a
leader is associated with 16%
higher probability that the leader’s
team will gain a podium position.
- this is after controlling for the circuit,
the year, the constructor and number
of cars qualified.
 Who matters more,
the driver or the leader?
Who matters more, the driver or the leader?

We look at an interaction between

team principal’s - the leader’s -
former driving experience, and the
F1 driving experience of the current
team driver.
 Leader’s Former Driving Experience
Zero 0-5 Over 5
years years years

Over 5 AVERAGE TO
WORST BEST
years GOOD
OUTCOME OUTCOME
OUTCOME
Current
Driver’s
Years of F1 0-5 AVERAGE TO
POOR GOOD
Driving years OUTCOME
GOOD
OUTCOME
OUTCOME
Experience

AVERAGE TO
Zero POOR GOOD
GOOD
OUTCOME OUTCOME
years OUTCOME
The background to
the idea of ‘expert
leaders’
Research universities
My research
question was:
Who should lead research
universities?
Who should lead research
universities?

Good managers?

Good scholars?
 I found that

1. The best universities in the

world are led by top scholars.
 And …

1. The best universities in the

world are led by top scholars.
2. Top scholars improve the later
performance of their university.
The same result exists for
business schools
 To summarise
Presidents who were top scholars
make the best leaders of research
universities.
Current work – Chairs of US
Economics Departments
 Change in performance of US
economics departments

• We look at the change in performance

of 67 US economics departments over
14 years.
• With co-authors John McDowell and Larry
Singell.
 Change in performance of US
economics departments

We find that departments go on to

improve when they are led by top
researchers.
These findings have been
replicated, with co-
authors, in other settings.
 Hospital CEOs
• Hospitals were traditionally led by
doctors but that has changed in the UK
and US.
• Of the 6,500 hospitals in the US, only
235 (4%) are now led by physicians.
Empirical study of physician-leaders
and hospital performance in the US

• Hospital CEOs – physicians or non-MD

CEOs?
Empirical study of physician-leaders
and hospital performance in the US

• Hospital CEOs – physicians or non-MD

CEOs?
• CEOs in the top-100 hospitals in Cancer,
Digestive Disorders, and Heart & Heart
Surgery. (‘America's Best Hospitals’ 2009
U.S. News and World Report).
 Empirical study of physician-leaders
and hospital performance in the US

The higher a hospital’s performance

score, the more likely it is that its CEO
is a physician.
Mean Index of Hospital Quality (IHQ) Score of Hospitals Led by
Physician CEOs and Manager CEOs in Three Specialty Fields
Physician CEO
Manager CEO

35

30
Index of Hospital Quality (IHQ) Scores

25

20

15

10

0
CANCER DIGESTION HEART
The statistical analyses reveal that hospital
quality scores are approximately 25%
higher in physician-run hospitals than in the
average hospital.
 Professional basketball

• In longitudinal data we used

information from 15,000 basketball
games.

• We controlled for a number of factors

e.g. team budgets.
• We found that star basketball players
make better basketball coaches.
• Basketball teams in the NBA won more
games if led by coaches who were star
players or had long playing careers.
 An important caveat
Leaders’ expertise in the core
business is not a proxy for
management experience or
leadership skills.
Why might it matter if a leader is an expert
in the core business?

The transfer processes need to be

understood empirically.
Some possible explanations might
include:
 Decisions and Actions
Strategic
choices

Expert Leaders

Expertise as a signal

Theoretical model for expert leaders

 Decisions and Actions
Knowledge-based Strategic
strategy choices

Expert Leaders Create suitable

work environment

Expert Informed
knowledge in evaluation and
the core feedback
business
Standard bearers in
hiring choices
Management
& leadership
experience

Theoretical model for expert leaders

 Expert Leaders
Expert
knowledge in
the core
business
Expertise as a signal
Management To current
& leadership employees:
experience Credibility

To potential
employees:
Attractive
conditions

To stakeholders
(shareholders,
investors):
Strategic priorities

Theoretical model for expert leaders

 Decisions and Actions
Strategic
choices

Expert Leaders

Expertise as a signal

Theoretical model for expert leaders

 Potential weaknesses of expert
leaders
 Can be prone to hubris.

 People who are outstanding experts and

professionals may overemphasize their abilities
in other areas.
 Posibles debilidades de Líderes expertos

 Puede ser propenso a la arrogancia.

 Las personas que son excelentes expertos y

profesionales pueden exagerar sus habilidades
en otras áreas.
 Potential weaknesses of expert
leaders
 In addition to good management and
leadership skills, the best-performing expert
leaders may be those who show humility (a
capability to listen to others) instead of hubris
(expressed as over self-confidence).
Posibles debilidades de Líderes expertos

 Además de una buena gestión y habilidades

de liderazgo, los líderes expertos con mejor
desempeño pueden ser aquellos que
muestran humildad (capacidad de escuchar
a los demás) en lugar de arrogancia
(expresada como exceso de confianza).
 Future research needs to address

1. What are the boundaries of expert

leadership?
 Future research needs to address

1. What are the boundaries of expert

leadership?
2. Is it only applicable to knowledge-
intensive organizations , professional
service firms and also high skill
settings?
3. Or does it have wider relevance?
Thank you
My work is available at:
www.amandagoodall.com