CEO Coaching: Are You Smarter Than Average?

The Wall Street Journal recently highlighted the correlation (which, of course, isn’t the same as causation) between excessive government regulation and low economic growth (comparing Europe with the US). Although I’m not a libertarian, I cringe at the growth of the administrative state and regulation. Of course we need some, but how much? That’s the debate, isn’t it?

In 1950, there were 9,745 pages in the Code of Federal Regulations. In 2021, there were 188,321 (George Washington University Regulatory Studies Center). Since 1981, Ronald Reagan’s administration published the fewest “economically significant rules” in a year and Trump’s administration the most.

Most of my CEO clients would argue for more restrained and thoughtful regulation. Central control, especially in the hands of unelected officials, isn’t generally thought to be a good thing.

But let’s turn the table.

Why is central control thought to stifle growth and generally frowned upon in government yet so prevalent in many management structures in business? 

Just as 65% of Americans believe they’re smarter than average, most people in positions of authority believe they’re more capable of making decisions (e.g., creating rules) than other people. On average, of course, they aren’t!

If you run a nuclear power plant or build airplanes, a lack of rules and oversight at the front line probably isn’t a good idea. Just ask Boeing. If you lead a team in most business environments, consider whether you want to be more like Europe or the US. Do you want to be more creative or more controlling? Do you really need all those sign-offs for decisions? Could you hire smart people, hold them accountable, let them make mistakes, and allow them to add the value that they’re capable of?

Have you allowed middle management to create pages of regulations that you may not be aware of? I challenge you to put your wingtips back on and go digging for bureaucracy. Fill out your own expense report. Try to get a new product approved. When you’re on the front line, run a radical idea up the flagpole that will benefit the company and see how long it takes to get approved (or more likely shot down). 

The administrative state is alive and well in Washington, D.C. Is it alive and growing in your company, or are you so much smarter than the average CEO that it doesn’t matter?

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