Fifty years ago management theorists had an expansive view of the role of general managers. The mantra was, “A manager is a manager and they can manage anything.” They believed a good general manager could move from managing a retail shoe company to functioning as the general manager in a precision auto parts manufacturing company. Management skills are infinitely portable, correct? The GM didn’t need to possess a deep understanding of the business.
Business schools focused on teaching management and the discipline rose to be revered. Notable business leaders like Robert McNamara and Donald Rumsfeld moved from industry into government, bringing along their relentless focus on analytics. This fueled the belief still further that general managers could run organizations effectively based solely on their management skills, including moving from the private sector to the public sector. All this was based on the assumption that a general manager could rely on others to have the deep knowledge of the technology underlying their firm.
Occasionally I continue to see organizations appoint leaders who don’t have depth or expertise in the particular functions they run. The rationale is that in addition to relying on subordinates for necessary technical knowledge, throwing them in the deep end of the pool will require them to quickly learn the necessary expertise they require.
But what’s different in organizations today than 50 years ago? Things have gotten substantially more complex. Technology evolves rapidly. Product life cycles diminish. Change escalates exponentially.
Can a leader with low levels of technical or financial acumen in a particular business be successful today? To answer that question my colleague Joe Folkman and I looked at a dataset of more than 57,000 leaders and measured their technical and financial acumen. We then examined how they were perceived as leaders in general. We were particularly interested in the impact of acumen on top managers. Many people continue to believe that the senior leaders in an organization don’t really need technical depth or knowledge. But the graph below demonstrates that leaders both in general and top managers who were at the bottom 10% in the technical and financial acumen were rated at only the 12th percentile in their overall leadership effectiveness. Leaders in the top 10% were rated at the 84th and 80th percentile respectively.
Acumen and high potential ratings
We then asked the question “Would effectiveness on Acumen have an impact on whether a leader is rated as having high potential in an organization?” To answer this question we looked at another dataset of performance and potential ratings on more than 1,700 leaders, along with 360 degree feedback ratings from an average of 13 others (boss, peers and subordinates) on acumen. The graph below shows the results. Surprisingly it appears that acumen is important for those in top management positions as well.
Acumen and age
We wanted to know what happens with acumen as people age. As the graph below demonstrates, there is an initial boost in acumen at an early age that peaks, on average, from 26-30. Note the initial gap between males and females, which describes males as having higher levels of acumen. After age 30, however, the difference between genders disappears. After 30 years, leaders overall have average levels of acumen. But when we look at the top quartile leaders (e.g., based on 46 items assessing leadership in general), acumen is very highly rated at or above the 90th percentile. For the best leaders, it does not appear that acumen degraded or diminished over time. In fact, for those 61 years of age and older it actually increased.
Keys to high ratings in acumen
After contemplating the above research, one question loomed large: “What are those top quartile leaders doing that gives them such high scores in acumen?”
After carefully examining our data, we identified two broad themes that appear to explain their high performance.
First, highly-rated leaders worked hard to stay up-to-date
Some people went to school and came to assume that once they graduated, the learning period was over. (That was in spite of their commencement speech that invariably talks about graduation as a beginning and not the end of learning.) One important aspect of achieving and retaining a high acumen is intellectual curiosity and the thirst for continuous learning. Because knowledge is increasing at an exponential pace, competitors are inventing new products and changes in technology come from many different directions.
Leaders need to set aside some time for their own personal development. Reading publications, listening to relevant podcasts and attending professional conferences can help. Recently, I met with a leader who had extremely high ratings in acumen. He was congratulated on his results and I commented, “You must be a real expert in this field!” He replied, “Not at all, I am new to the group and frankly, I have the least knowledge of anyone in the group.” I then asked, “How do you explain the positive ratings?” He said, “I acknowledged to everyone in the group that I needed help. I asked for input from everyone, I check all my ideas with them, and then I make sure to give them the credit. I am in school and they are my teachers, so I guess they believe I am doing okay.” His high ratings were a result of his willingness to learn and his desire to develop. At the other extreme, leaders who assume they understand and then make poor technical decisions will invariably score poorly on acumen.
Second, knowledge and intelligence are only half the battle
In the 1990’s Bell Labs was one of the most innovative research intuitions on the planet, hiring the brightest and best scientists and engineers in the world. Two researchers, Kelly and Caplan, studied the professionals in the labs, looking for the elements that differentiated the most effective people, whom they called the “Stars,” from the others. One of their key insights was this: “Since all Bell Labs engineers score at the top in IQ tests, cognitive abilities neither guarantee success nor differentiate stars from middle performers.” But Kelly and Caplan found a set of skills that were the keys in separating the “Stars” from the others.
In addition to technical and cognitive abilities, the “stars” utilized leadership behaviors such as networking and communication to magnify their expertise and intelligence. In our research 20 years later we looked at data from thousands of leaders to identify companion behaviors that differentiated those with high ratings on acumen. Our results were surprisingly consistent with those of Kelly and Caplan. The key to high performance in acumen is utilizing leadership and interpersonal skills to magnify your knowledge and intelligence. On that basis—how well do you fare?
This article was written by Jack Zenger from Forbes and was legally licensed through the NewsCred publisher network.