Mastery vs Ego: Why Great Leaders Know When to Quit | Sebastien Page, T. Rowe Price CIO

As you go up the ladder in an organization, it's much less about you. It's much more about your ability to empower others to do great things. And it's way more about listening than talking. And that took me years to realize. And I've only come to realize that in recent years. We also have this view of the leader who never quits. You know, they're so resilient. They don't give up. She's, you know, she's amazing because in the face of all adversity, she kept the organization going. The best leadership skill you can develop that's the most underrated is knowing when to quit.

Thank you, Jeremy. I'm super excited to do this. We're recording this early in the new year, so time for good resolutions. One being, let's do great podcast content.

Yes, absolutely. I'm super excited. Just came back from vacation.

We went to Newport Beach where we tend to stay because we used to live there, and then Utah for ski. We had pretty bad snow, but we made the most of it.

I live in Maryland in Howard County.

Yeah, it's always interesting to pack for ski and California weather at the same time. It's an optimization problem and we have a science-oriented audience.

I'm chief investment officer at T. Rowe Price. I've been in the rough and tumble world of money management for about 25 years. And a few years ago, I was pretty stressed at work. And not only was I stressed at work, but I was stressing about stressing. So, I started looking into sports psychology. I talked to a sports psychologist. I discovered positive psychology, got completely hooked on the research because I'm a research nerd. I like to read papers and I like to write. And a few years later here we are with the book The Psychology of Leadership, which talks about not money management, actually talks about principles of positive psychology.

So this person, his name is Dr. Daniel Zimmit, lives around where I am in Maryland and he's a super interesting person and I wanted to talk to him because you know not only is he a sports psychologist, well the short answer by the way is there are lots of analogies between sports and investing but this particular sports psychologist Daniel Zimmit is a fascinating person he's also a top athlete he has 40 national titles in the sport of handball. Now, for our audience, handball is kind of like squash, but you're whacking the ball with your hands. It's a niche sport. You often see this in movies. People play handball in prison for some reason. I would tease Dr. Zimmit like, 'Did you go to prison? Is that where you learned handball?' For the record, that's not where he learned handball. But he has 40 national titles in the sport. So, clearly, he's mastered the mental game as well as the physical game. And as a sports psychologist, I just really wanted to talk to him about my stress. And Jeremy, the first time we sit down, he wanted to introduce me to the mindset behind sports psychology, which really applies to investing and in fact to many areas of life. He starts telling me the story of the best handball match he's ever played. It's fascinating because he's emotional and the match took place 10 years prior. He remembers everything about it. He's telling me the ball hit this wall at that point in the match and then at some point he's telling the story about how he was on his knees and made an extreme shot and made the point. But then it's the biggest letdown ever because very nonchalant, he finishes the story by saying, 'And then I lost the next two points.' And I interrupt and go, 'You lost your best handball match ever.' And that was the point for him. It was his best handball match ever. Because as a sports psychologist, it was about mastery. It was not about ego. The score did not matter. He realized that day as he was playing a much stronger opponent that he had seen a step change in his ability to play the game. So he starts talking about the mastery orientation versus the ego orientation which is a big part of sports psychology. And that's how I got into it. I got completely hooked. I started reading the papers. I've published many papers in financial economics, but I started reading in sports psychology and then in positive and then in personality psychology and became just absolutely fascinated by this research and that's how I started writing about it because to me it's super interesting because I'm not a consultant or an academic. I'm a leader. I'm chief investment officer. I go to work every day. I need to lead teams in difficult environments and deal with stress and resilience. At the same time, I'm super interested in research and I love to write. So, I think I have this unique combination to eventually what led to The Psychology of Leadership.

I appreciate that.

It's absolutely part of the mastery mindset. But if you think about it, I think everybody in our audience will agree with that, right? You're only competing with the prior version of yourself. Improvement is only what matters. But what happens in real life? Like we actually care and it's okay to care and we should care and we should want to win and we should be competitive. However, it's much easier to approach it from a mastery perspective. Mastery means I'm excited because I'm getting better at what I do for the sake of getting better. In the literature, there's an example that authors like to use. It's golfing. And I got to say, Jeremy, for the record, I cannot play golf to save my life. This is just research. When they talk about mastery versus ego orientation, they compare two golfers. The ego-oriented golfer looks at the score, wants to win the trophy, is devastated if they lose the match. The mastery-oriented golfer clearly is also very competitive because that mastery orientation is seen in some of the top athletes in the world. But the mastery-oriented player gets excited about improving their swing. Like, 'My swing got better today. This is awesome.' That's a mastery mindset. Now take this to leading teams anywhere. Doesn't have to be sports. At work, in my business in money management, I'm going to think about are we getting better at gathering information that helps us make investment decisions. Not did we make money today or yesterday. Oh, our process got better. We got a new source of information. Or just simple stuff like are we getting better at running meetings where we get the best out of everybody, the introverts and the extroverts, and where we have sort of a team dynamic that uncovers insights that makes us better forecasters and ultimately better investors. These are all mastery questions. And when business leaders set goals at the beginning of the year, rightfully, okay, they tend to focus on KPIs, key performance indicators. And they want them to be measurable. I do that too. It has to be measurable. It has to be a stretch goal. But we all forget to set mastery goals. And that's vastly underrated in how to drive your business to the next level. Just like Dr. Zimmit on the court saying, 'I don't care. I lost. This was my best match. I played way above my ability. I knew I was a better handball player after that match.' That's the mastery versus ego because the ego is probably bruised because he lost. And there's just so many applications of it.

But you can generalize this very easily. When you think about your life, are you looking to get better at what you do for the sake of getting better? Or are you wrapped up in the ego of am I making more money? Can I buy a better car? Which this is all fine by the way. I'm not like, you know, I'm not one to say like don't pursue traditional measures of success, but if you want to live in a high-performing world and if you want to lead a high-performing team, if you want to be a high-performing individual in a way that you're not miserable, you got to work on ego versus mastery. And most of us just don't have enough of the mastery mindset. And golf is a phenomenal example because it's frustrating. You know, I went to play golf with my friends. I only tried a couple times and then I gave up. I just this is not for me. And one of the reasons why I gave up, I remember that day it was raining actually. The club literally slipped out of my hands at one point. Like this was the most embarrassing golf experience you can imagine. But my friend played next to me. He's a really good golf player. And you know what? He was frustrated about 90% of the time. His ego was wrapped into it and he wasn't playing to the best of his ability. And instead of thinking, okay, can I like get better through learning from my mistakes, which sounds trite but is really important for a mastery mindset. And that's why I'm not a golfer because I just looked at these really talented golfers and they were struggling. At that time, I didn't know anything about mastery versus ego, but the very passionate golfers, I think a lot of them, if not most of them, have more of a mastery orientation.

You know, annual goals are super important. And yes, it's better to make them measurable, but you also need to include mastery goals, getting better at uncovering insights from the research. In our case, finding new sources of insights, all the way to mundane stuff that you can not measure, but that's super important like running meetings better, collaborating better so that we generate better insights amongst ourselves. But I would add something, Jeremy, to this. I would add a life goal. Because here's the thing is we don't really think as much as we should about very long-term goals. So for an organization it's like we want this company to be top two in the world at XYZ and you might currently be top 25, right? That's more of a lifetime goal or a 10-year goal or 25-year goal for a company but for an individual it's the same thing. And the problem is if you look at surveys when you ask for example millennials what is your life goal what do you think they say Jeremy they say 80% of them say I want to become rich which is fine look it's fine I mean go for it 50% say I want to become famous those are goals that are fine but positive psychology reveals through the Harvard study that if you look at people over their lifetime and ask them to self-report happiness, those two factors, wealth or prestige or being famous. In fact, physical health, in fact, social like climbing the ladder, they had in these surveys in the Harvard, they had people went to prison, they had people had cancer, they had like all sorts of outcomes, right? and they couldn't find anything that was actually positively and significantly correlated with self-reported measures of happiness. That's such a fascinating study when you think about it. Like 80% millennials are just banking their life goal on I want to become rich, 50% on I want to become famous. And all the research you can read in positive psychology is going to say, you know, it's going to help if you're above the poverty line for sure. And there's a little bit of an academic controversy where your happiness might improve a little bit as you make more money, but it's still kind of a pretty well-known result that yeah, it definitely flattens out. And for our audience, Jeremy went sideways with his hand, so reminded this is also an audio podcast. So it flattens out. The question is, what is the number one factor that came out of the Harvard study? The current creator is Robert Waldinger. He's got a book out that I highly recommend, The Good Life. The number one factor, Jeremy, drum roll, of people's self-reported happiness in their life is the quality of their relationships. It's positive human relationships. So, we're talking about goals. It's early in the year. We're setting annual goals. We're making them measurable. Fine, fine, fine. But think about a long-term life goal of fostering positive relationships in your life. That might be the number one thing you can do for your long-term ability to thrive. It's not the type of goal we think about at the turn of the year. We think about I got to lose weight. I'm thinking about right now I've never done this. I'm pretty good at watching what I eat, but this year I want to try to actually count my macros. Not count like in detail, but be more careful about the macro. I eat more protein basically like how I split my diet. I know I'm not going to do it perfectly. Okay, that's a typical turn of the year goal, but the goal I want to put in everybody's head right now that everybody think about this, foster positive relationships in your life. Don't, you know, just be nice for the sake of being nice. Positive relationships sometimes mean honesty and having difficult conversations. It's not about being just agreeable. But if you think about that goal, and I've thought about this a lot with my family over the holidays. I was so happy to have the family together and spend time together on the ski slopes, right? That's a real meaningful goal that we don't think about enough or talk about enough.

And you know the crazy thing if you read research for example by Arthur C. Brooks he's a Harvard professor and did you know that they teach a class on happiness at Harvard?

Apparently it's oversubscribed like 450 students on the waitlist.

But he will say and also Shawn Achor who's got a book on this. It's not that being rich will make you happy. It's actually the opposite. Happy people tend to succeed. You have to reverse that equation. I have a chapter on this in The Psychology of Leadership. I like to talk about Agassi because it's one of the best memoirs of all time. Open. He talks about his career as a tennis player. He was miserable. He hated playing tennis. He hated the game. He hated tennis. But he was rich and successful. And so why is that? Right? And there's something called goal-induced blindness that's very well documented in the literature and psychology where you're so obsessed with your measurable goal that you lose sight of everything else that might matter in your life. Anyways, Jeremy, I kind of jumped in. I think you were going to say a little bit more.