The law of the Lid shows considerable bias towards only the most successful leaders, and breaks down in analyzing unsuccessful ones. My reading of business history is that there are many successful leadership models, and a good proportion of them involve leaders who first failed at other ventures before becoming successful. In fact, that dynamic is frequently shown as a strength of American business style, as opposed to say Japan, where your first failure “tracks” you to the bottom.
What is misunderstood in lauding “exceptional” business leaders is that good business leaders are rarely successful because they are efficient, innovative, or even charismatic, but because the businesses over which they preside are inherently, massively, profitable. Most major businesses are so profitable that corporations (and their leadership) are able to waste these profits on an enormous scale before the company’s viability as a going concern is affected. When it is, CEO’s are sometimes fired (but often they are not). Either way, major restructuring of the company is rare, and returning profits result in the succeeding leader looking at the best ways to channel the profits to keep everybody happy. Their “leadership” consists of convincing everyone that this state of affairs is due to their leadership.
At best, great CEO’s are great salesmen. Why salesmen, as opposed to other important business archetypes, tend to rise to the top, has to do with salesmanship being applied to increasing the demand for salesmen.
As for startups like McDonalds, or Microsoft, Facebook, etc. Most successful startups are helmed by leaders who learned by failing in several other businesses first. The genius who gets it right first time off is infinitesimally rare. The Law of the Lid is not a law in my understanding of the word. More like the Anecdote of the Lid.
In the case of Ray Kroc, for instance, the limitation on McDonalds was the lack of a salesman (not necessarily a leader). But the salesman who came along eventually led the company, because he was the best at convincing everybody he could lead.
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