Donald Trump fans like his top-down leadership style. To voters who don’t spend their lives in business, Trump comes off as a decisive and effective businessman, a view reinforced by his blunt, tough talk. But while Trump’s style of executive leadership might work on reality television, it doesn’t work so well in the real world. His style of business leadership is on the wane. If you look at the entrepreneurs, leaders and investors who create most of the world’s new wealth, Trump doesn’t fit. And there’s a deep reason for this.
The historical trend of business is that with each new century, a greater percentage of wealth is generated from ideas, not raw material. Decade by decade, the balance moves. A century ago, the world’s most valuable companies were in mining, manufacturing and transportation. Today the world’s second most valuable company is Alphabet, the parent of Google, which produces a web search engine. Apple, Alphabet, Microsoft, Berkshire Hathaway and Exxon Mobil make up the world’s top five richest companies. Note this key fact: The first three are mostly idea companies.
Our physical world and its physical people will always need physical products. But without fresh ideas that harness the best available technology and networks, the producer of physical products becomes a mere commodity player, dependent on economic booms and material shortages.
Why is Trump’s leadership style fading and becoming less effective by the year? Because to recruit the kind of talent needed to harness technology and build idea-centric companies, the executive leader simply cannot operate as Trump does and expect to succeed. Put another way: The last thing any talented person in Silicon Valley would want to do is work for Donald Trump or a Trump-like character.
The evolution of Steve Jobs
Now, you might protest and say that Steve Jobs, in his own California-hippie way, was Trump-like in his authoritarianism. There used to be a joke told around Silicon Valley that if Jobs hadn’t founded Apple Computer, he might have been a very good cult leader. And, indeed, the Steve Jobs of the 1970s and 1980s was like that. He talked like Trump and acted like Trump. He was rude, profane and dictatorial. He was insecure to the point that he stole credit from others. He undermined the very people he recruited. And it worked, right?
Well, yes, that old style got Apple launched. But then Apple hit a flat spot in the mid-1980s, and it wasn’t long before Jobs was out of his own company. His next company, NeXT, failed to live up to its hype. Strike two. Then Jobs invested in a computer-animation company, Pixar. He tried to implement his old, autocratic methods but hit a wall. Pixar’s two brilliant founders let him know they weren’t his slaves. They could easily walk out and start a competitor. That was a turning point for Jobs. When he returned to Apple in 1997, he became a recruiter and cheerleader for talent.
Top-down leadership is declining, and not just in creative industries like software. Even the US military has reached this conclusion. Last month in California, I interviewed onstage retired four-star general Stanley McChrystal at the Montgomery Summit.
McChrystal, who is best known for leading the Joint Special Operations Command during the mid-2000s, recalled how al Qaeda in Iraq posed a unique challenge to US forces. Led by Abu Musab al-Zarqawi, the terrorist group used technology and mobile media “to constantly morph itself into something new and unrecognisable. It was like no enemy we’d ever faced. It was like a virus”.
For three years, al-Zarqawi ran circles around the mightiest army in the world. “I realised we had to change our organisation,” McChrystal said. “If we remained top-down, we couldn’t make decisions fast enough to counter al Qaeda.”
So McChrystal pushed decision-making down to his field officers. At command central, McChrystal and his staff monitored events on videos from hovering drones. “We would share the information with the field officers and soldiers, but they made the final decisions. My role became that of a coach and mentor.”
To move fast enough in business, you need technology and talent. Technology allows you to push decision-making down the line. Trump’s top-down style of leadership is old-school and will be less effective by the year. And, to be non-partisan about this, so is Hillary Clinton’s secretive, over-controlling style. But that’s another story.
Rich Karlgaard is the publisher at Forbes
(This story appears in the 29 April, 2016 issue of Forbes India. To visit our Archives, click here.)