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The Myth of General Leadership Skills

Why success as a CEO of a car company is not a guarantee of success elsewhere.

There is a pervasive myth in the corporate world that leading a big company is a transferable skilll: Once you learn how to be a successful boss, you can shift between various different companies and you will always succeed. The general idea is that if you are a successful CEO, this must mean that besides being good at the specifics of what your company does, you are also good at being in charge of a large team and getting the best out of them. Being a successful CEO requires leadership skills, and once you have them, you can lead any company.

This issue is very much in everyone’s mind now as we are seeing some evidence that running a car company successfully is not a guarantee that one can run a social media firm very well. Of course, this is not the first occasion where we have encountered this myth. When high-flying CEOs from various companies are parachuted into university administration, for example, it rarely goes well. And of course, much of the appeal of a certain presidential candidate six years ago was that he knew how to run a business, so he must know how to run a country.

As it turns out, there is more than just anecdotal evidence against the myth of general leadership skills. A recent study examined how successful CEOs perform when they are transported to a different job. This study was not drawing its conclusion on the basis of one or two high-profile cases, like the ones I mentioned above, but on a remarkably large sample of 1300 subjects. And the results show that only those CEOs who transferred to a new job that was sufficiently similar to their old job did well. So being a successful CEO of a tech company makes it more likely that you could be successful as the CEO of another tech company. But being a successful CEO of a department store chain does not make it more likely that you would be a successful CEO of a tech company; in fact, it makes it less likely.

In light of this, nobody should be surprised by what has been going on at the leadership level of Twitter. There is no shortage of theories about the mismatch of the success of Tesla and the not-so-successful recent weeks at Twitter. Maybe Elon Musk was actually not as good as was widely believed as CEO of Tesla, or maybe whatever he is doing at Twitter he is doing intentionally and deliberately (possible, but not very likely). But there is a much simpler explanation: Twitter is as dissimilar to Tesla as it gets within the corporate spectrum. Just to mention the most salient fact: Tesla sold no advertising, whereas 90% of Twitter’s revenue is from advertising. Being good at running the former has little to do with being good at running the latter.

There is a more general lesson here. In fact, there are two. The first lesson is that a company is a fragile and delicately balanced microsystem. And every company is a different kind of microsystem with very different strengths, weaknesses, spaces to maneuver, and microcultures. Just because you figured out how one microsystem works doesn’t mean you know how all of them work.

The second lesson is about hubris. Pretty much all of us think we are better than average at pretty much everything. For example, 93% of drivers think that they are better than average at driving. That is, 43% of us are delusional. And it is not just driving: More than 90% of university professors think their teaching is better than average. (I think so myself!) And 85% of teenagers think that they get on well with others better than average; in fact, 25% of them think that they are in the top 1% in this respect. And there are many more findings of this kind. If you are good at one thing, it is very tempting to think you are good at other things, too. But this is just false. Not just for CEOs, but, regrettably, for all of us.

More from Bence Nanay Ph.D.
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