To be ridiculously bad leaders requires some very special personal qualities. We’re talking about people whose failures were breathtakingly gigantic, who have taken huge, world-renowned business operations and mad them almost worthless. They have caused thousands of people to lose their jobs and thousands of investors to lost their investments.
They’ve managed to destroy hundreds of millions or even billions of dollars of value.
Their destructive effects is so beyond the range of ordinary human beings that on a scale normally associated with earthquakes and hurricanes.
1. Bad Leaders see themselves and their companies dominating their environments.
Successful leaders are proactive because they know that they DON’T dominate their environment. They know that no matter how successful they have been in the past, they are always at the mercy of changing circumstances. They need to generate a constant stream of new initiatives because they can’t make things happen at will.
To be successful for more than a fleeting moment, every business venture needs to be one that customers and suppliers interact voluntarily. This means that no matter how successful the company, its overall business plan will need to be continually readjusted and renegotiated.
Leaders who see themselves and their companies dominating their environment forget these things. They vastly underestimate the extent to which they are controlling events and vastly underestimate the role of chance and circumstance in their success. They think they can dictate terms to those around them. They think they’re successful and that their company is successful because they made it happen.
To these leaders, the people they interact with are instruments to be used, materials to be molded, or audiences for the leader’s performance. When business leaders think this way, they often use intimidating or excessive behavior to dominate the people who surround them. In most cases, it is not unconscious or intentional. They want to be Larger Than Life, Legendary or Awe Inspiring!
Those leaders who succumb to this also succumb to an illusion of corporate preeminence, too. This is a belief on the part of the CEO that his or her company is absolutely central to suppliers and customers alike. Rather than looking to satisfy customer needs, the CEO who believe they run “permanent companies” often act as though their customers are the lucky ones, fortunate to be able to have their needs satisfied so effectively.
Leaders who suffer from an illusion of corporate preeminence often believe that the superiority of their company’s product makes it invulnerable. Even when competitors who offer better designs or better prices challenge the company’s products, executives who suffer from an illusion of corporate preeminence will continue to believe that their company is secure simply because of its status in the business world.
At Schwinn, managers boasted, “We don’t have competition. We’re Schwinn.”
2. Bad Leaders identify so completely with the company that there is no clear boundary between their personal interests and their corporation’s interests.
This is a habit that can be remarkably easy to slip into. CEOs are especially prone to identify too much with a company if they believe that they are personally responsible for the company’s success.
When CEOs and their employees are unable to separate the CEO from the organization, they’re well on their way to a “private empire” mentality. The CEOs begin to behave as though they own their companies, even when they don’t, and they begin to act as though they have the right to do anything they want with them, which isn’t true.
CEOs who succumb to this mentality often use the corporation to carry out personal ambitions when these are not a good way to generate profits.
Legendary automotive executive John DeLorean provides a stunning demonstration of how thoroughly identification with a company can ruin its chances of success when he tried to launch a new car company. At first, the prospects for his venture seemed excellent. But as soon as De Lorean decided to name the car he would manufacture after himself, the whole enterprise took on a different tone. He changed the design of the company’s first model from a vehicle for the middle classes to the “supercar” later featured in Back to the Future movies.
He also greatly increased the amount he was spending to build his automobile factory in Northern Ireland. Essentially, his ego demanded that everything associated with his own name be first class. This made the environment he created for his workers into a model for factories everywhere. But it also made him almost psychologically incapable of controlling costs. Later, when it became increasingly obvious that DeLorean’s car company was in serious trouble, DeLorean couldn’t bear to recognize it because it would have seemed as though he was betraying himself.
When CEOs identify too much with the company, they tend to make business choices to suit themselves, not the company.
Cabletron neglected marketing largely because cofounder Craig Benson never liked marketing. Stephen Wiggins, CEO of Oxford Health Plans, saw himself as too much of a computer expert to be running a company that would settle for mass-market software.
Perhaps the most surprising thing that happens when CEOs identify too much with their company is that they become LESS careful with the company’s assets. They take big risks with other people’s money, NOT because it’s other people’s money, but because they are treating it as their own money and they happen to be big risk takers. Very often, it’s making big bets and managing to collect on them that got the CEOs into their top jobs in the first place.
When leaders identify with their companies too much, they become increasingly likely to use corporate funds for personal reasons.Once executives are covering some of their personal expenditures with company money, it becomes increasingly difficult to keep the personal and corporate separate.
3. Bad Leaders think they have all the answers.
In a world where business conditions are constantly changing and innovations often seem to be the only constant, no one can “have all the answers” for long. Leaders who are invariably crisp and decisive tend to settle issues so quickly that they have no opportunity to grasp the ramifications. Worse, because these leaders need to feel that they already have all the answers, they have no way to learn NEW answers. Their instinct, whenever something truly important is at stake, is to push for rapid closure, allowing no periods of uncertainty, even when uncertainty is appropriate.
People around the CEO sometimes encourage this sort of “decisive behavior” because they find it reassuring. They want to follow a leader who has the answers. The fact that they are invariably following a leader who doesn’t have all the answers – even though they know logically that this has to be the case – is very frightening.
One of the critical side effects of a CEOs fixation on being right is that opposition can go underground, effectively closing down dissent. Once this happens, the entire organization will grind to a halt, whether or not these CEOs were actually right or wrong in their judgments.
Control Freak Leaders who adopt the ideal of executive competence usually try to have the final say on everything their company does.The more these leaders can control their companies, the less they feel threatened that their success depends on things outside their control. Thus, personal control for these leaders is both an extension of what they see as their executive role and protection against their own vulnerabilities.
Ultimately, executives “with all the answers” trust no one. Only they can be relied upon to make the final call on any issue where the answer isn’t obvious. This is how they put their personal imprint on every aspect of their company’s operations.
4. Bad Leaders ruthlessly eliminate anyone who isn’t 100% behind them.
Roger Smith of GM was especially successful at getting rid of any executives and board members who saw things differently than he did – sometimes by having them fired, but often by sending them to some distant outpost where they’d have no further influence at headquarters. Jill Barad at Mattel removed her senior lieutenants in relatively short order if she thought they had serious reservations about the way she was running things.
At Fruit of the Loom, an insider reported, “It almost became a badge of honor to get fired by Bill Farely. At Rubbermaid, Wolfgang Schmitt created such a threatening atmosphere that firings were often unnecessary. Ed Schwinn simply left the room when senior Schwinn executives began outlining what they saw as the problems in the company.
5. Bad Leaders are consummate company spokespersons, obsessed with the company image
The public tendency to judge a CEOs success by the current price of the company’s stock
greatly reinforces this fifth habit, because the fastest and easiest way to improve the share
price is to put on a good show for the media and for investors.
6. Bad Leaders underestimate major obstacles
CEOs who succumb to this habit tend to wave aside obstacles as though they are minor difficulties, when many of them are, in fact, major hurdles. They assume that all problems are solvable, when many problems, in fact, are either insolvable or else solvable at too great a cost.
Executives coming off a string of successes are particularly prone to underestimate obstacles.
In some cases , the habit of treating all obstacles as minor as an essential part of the leader’s personal style. Executives who employ this approach are able to glide over many obstacles through a combination of charm and momentum. They draw people into their projects, inspire them with the self-confidence to do whatever’s necessary, and let those associates scramble around to keep the enterprise rolling. By refusing to get rattled by potential setbacks, they help others to do the same.
Full steam into the abyss when CEOs find that the obstacles they had casually waved aside are proving more troublesome than they anticipated, they tend to deal with the problem by escalating their commitment.
Some CEOs feel an enormous need to be right in every important decision they make, partly for the same reasons that they feel responsible for their company’s success. If they admit to being fallible, their position as CEO seems frighteningly precarious.
Once a CEO concedes that he or she has made the wrong call on an important issue, there will always be people who’ll say that they weren’t up for the job.
The effect of these unrealistic expectations is to make it exceedingly hard for a CEO to pull back once he or she has chosen a particular course action. What’s more, if your only option is to keep going in the same direction, then your response to an obstacle can only be to push harder. This is why leaders at Motorola and Iridium kept on investing billions of dollars to launch satellites even after it had become apparent that land-based cells phones were a superior alternative. “People do not like to admit that their past decisions were incorrect,” explains a management expert who has studied the problem in detail.
“What better way to affirm the correctness of those earlier decisions than by becoming even more committed to them?
7. Bad Leaders stubbornly rely on what worked for them in the past.
In their effort to achieve stability in a world of change, they sieve on yesterday’s answer.
In their desire to make the most of what they regard as their core strengths, they cling to a static business model. Like Ed Schwinn of the bicycle company, they insist on providing a product to a market that no longer exists.
Executives often revert to harmful or inappropriate strategies as the result of a “defining moment” earlier in their careers. At one point, they chose one particular policy that resulted in their most notable success. This becomes their “defining moment”. It’s usually the one thing they are most known for, the thing that gets them their subsequent jobs, the thing that makes them special. The problem is that once people have experienced this defining moment they tend to let it define them for the rest of their careers. And if they become the CEO of a large company, they let their defining moment to some extent define their company as well.
When confronted with a crisis later in their career, these executives tend to whatever they did in their defining moment. For William Smithburg of Quaker, the defining moment had been his successful promotion of Gatorade. The problem was that he tried to repeat that behavior when it came to dealing with Snapple. For An Wang, the defining moment was probably his successful launch of a word processor with systems that well all proprietary. Unfortunately, he tried to repeat that behavior when it came to PCs.
Are you a bad leader? Dig it up. Get Real.