The Training Table: What’s at the Heart of Great and/or Gruesome Leadership? Part 1 of 3.

Leadership in word tag cloud on whiteWelcome to the Training Table where you can depend on some spiritually-nourishing chow, carefully prepared, to help you run the Godly and good race! For what good is a good race, unless it’s a Godly race (2 Timothy 4:7; 1 Corinthians 9:24)?

As you fine folks who have been supplementing your spiritual diet here at The Feast of the Heart Training Table for a while know, I’m way passionate about the topic of leadership: a) the absolute necessity of it, b) the spectacular lack thereof, c) what’s at the heart of it, and d) the hope that whoever might want to break out and intentionally pursue the principles of leadership and grow as a leader will do so… like ASAP… or sooner!

I’ve had the greatest pleasure… challenges, successes, failures, high’s, low’s, in’s and out’s… of having numerous iterations of careers and working with leaders and on leadership for a long while. My inspiration to move from the marketing agency world to leadership consulting came one day when a couple of decades of the marketing and communications work flew through my mind like a high-speed film. Then it all slowed to a slow-mo speed and, strangely enough, the helm of the Titanic came to mind: “That’s where I’d love to be! At the helm. Not “down here where it seems like rearranging the chairs” too many times… I want to help keep the entire ship on course!

So that’s where I focused all my time, talent, and treasure for the next stage of my career: Leadership coaching, organizational effectiveness, and strategic planning. It’s like anything in life that represents a “high leverage opportunity”: Even relatively small gains can have an hunormous impact on one’s life—and other lives… on an exponentially big scale! Leadership is everything.

For the next three menus on leadership at The Training Table, we WILL be chewing our food well, right? Really, my beloved and courageous fellow marathoners for Christ: Being involved in SOME way, shape, or form in the ramping up of great-to-greater leadership is something we ALL have to be involved in—each and every day. People, entire civilizations, perish for the lack of God-honoring, people-blessing leadership.

So here’s the plan: January 147 Habits of Spectacularly Unsuccessful Executives; January 21Leadership: When and How Did It All Go Wrong?January 28Leadership: It’s an Inside-Out Job. So Let’s Get It Right!

I will be praying that you will be working up an appetite for change in the coming New Year—one God-given, faith-empowered, and other-loving… day at a time (Psalm 95:7-8).

Enjoy. Employ. Deploy—no knowledge, growth, Godness or goodness is for us alone (Romans 15:1-2)!


7 Habits of Spectacularly Unsuccessful Executives, by, Sydney Finkelstein
It’s not easy to become as disastrous a boss as Dennis Kozlowski, Jean-Marie Messier, or Jill Barad — but you can, if you work at it. And here’s the best part: Each of the qualities that you need to be a spectacular failure is widely admired in today’s business world.

The past few years have witnessed some admirable business successes — and some exceptional failures. Among the companies that have hit hard times are a few of the most storied names in business — think Arthur Andersen, Rubbermaid, and Schwinn Bicycle — as well as a collection of former highfliers — think Enron, Tyco, and WorldCom. Behind each of these failures stands a towering figure: a CEO or business leader who will long be remembered for being spectacularly unsuccessful.

The truth is, it takes some special personal qualities to be spectacularly unsuccessful. I’m talking about people who took world-renowned business operations and made them almost worthless. People who destroyed billions of dollars of value. People whose destructive capacities go far beyond the scope of ordinary human beings.

What’s amazing is not that such people exist, or even that they rise to positions of authority. What’s remarkable is that the personal qualities that make this magnitude of destruction possible are regularly found in conjunction with genuinely admirable qualities. It makes sense: Hardly anyone gets a chance to destroy so much value without demonstrating the potential for creating it. Most of the great destroyers of value are people of unusual intelligence and talent. They show personal magnetism and often inspire others. They are the men and women whose faces appear on the covers of Fortune and Forbes .

Yet when it comes to the crunch, these people fail — and fail monumentally. The list of leaders who have failed spectacularly isn’t a list of people who merely weren’t up for the job. It’s a list of people who had a special gift for taking what could have been a modest failure and turning it into a gigantic one. (See “Big-Time Failures,” page 88.)

What’s the secret of their destructive powers? Seven habits characterize spectacularly unsuccessful people. Nearly all of the leaders who preside over major business failures exhibit four or five of these habits. The truly gifted ones exhibit all seven. But here’s what’s really remarkable: Each of these seven habits represents a quality that is widely admired in the business world. Business not only tolerates the qualities that make these leaders spectacularly unsuccessful; business celebrates them.

Here, then, are seven habits of spectacularly unsuccessful people. Study them. Learn to recognize them. These habits are most destructive when a CEO exhibits them, but any manager who has these habits can do terrible harm — including you.

#1 They see themselves and their companies as dominating their environment.

This first habit may be the most insidious, since it appears to be highly desirable. Shouldn’t a CEO be ambitious? Shouldn’t the company try to dominate its business environment, shape the future of its markets, and set the pace within them?

The answer to all of these questions is yes — but there’s a catch. Successful leaders try to shape the future precisely because they know that they can’t dominate the environment. They know that no matter how successful they’ve been in the past, they’re at the mercy of changing circumstances. Leaders who think that they and their companies dominate their environment tend to forget this. They vastly overestimate the extent to which they actually control events and vastly underestimate the role of chance and circumstance in their success.

CEOs who fall prey to this belief suffer from the illusion of personal preeminence: Like certain film directors, they see themselves as the auteurs of their companies. As far as they’re concerned, everyone else in the company is there to carry out their personal conception of what the company should be. CEOs who do, in fact, exhibit a degree of business genius tend to think that it’s transferable from business to business. Samsung’s CEO Kun-Hee Lee was so successful with electronics that he thought he could repeat this success with automobiles. He invested $5 billion in an already oversaturated auto market. Why? There was no business case. Lee simply loved cars and had always wanted to be in the auto business.

One symptom of leaders who suffer from the illusion of personal preeminence: They tend to see people as instruments to be used, as materials to be molded, or as audiences for their performances. Just as frequently, they tend to believe that their companies are central to suppliers and customers. Rather than looking to satisfy customer needs, CEOs who believe that they run preeminent companies act as if their customers were the lucky ones. And that is a prescription for a spectacular failure.

#2 They identify so completely with the company that there is no clear boundary between their personal interests and their corporation’s interests.

Like the first habit, this one seems innocuous, perhaps even beneficial. We want business leaders to be completely committed to their companies. We want their interests to be tightly joined. But when you examine spectacular failures, you find that failed executives weren’t identifying too little with the company, but rather too much. Instead of treating companies as enterprises that they need to nurture, spectacular failures treat them as extensions of themselves. They start to have a “private empire” mentality. They begin to behave as if they own their companies, and they begin to act as if they have the right to do anything they want with them.

CEOs who succumb to this mentality often use their companies to carry out personal ambitions. Once they launch a project, such leaders often invest in it with no sense of proportion or restraint, because they feel that betting on the project is betting on themselves. 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.

The most slippery slope of all for these executives is their tendency to use corporate funds for personal reasons. CEOs who have been on the job for a long time or who have overseen a period of rapid growth may come to feel that they’ve made so much money for the company that the expenditures they make on themselves, even if extravagant, are trivial by comparison.

This twisted logic seems to have been one of the factors that shaped the behavior of Dennis Kozlowski of Tyco. His pride in his company and his pride in his own extravagance weren’t in conflict. They seem, in fact, to have reinforced each other — which is why he could sound so sincere making speeches about ethics while using corporate funds for personal purposes. Being CEO of a sizable corporation today is probably the closest thing to being king of your own country — and that’s a dangerous, and sometimes self-destructive, title to assume.

#3 They think they have all the answers.

Here’s the image of executive competence that we’ve been taught to admire for decades: a dynamic leader, making a dozen decisions a minute, dealing with many crises simultaneously, and taking only seconds to size up situations that have stumped everyone else for days.

The problem with this picture is that it’s a fraud. 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 have all the answers, they have no way to learn new answers. Their instinct, whenever something truly important is at stake, is to allow no uncertainty — even when uncertainty is appropriate.

One of the special pleasures of having all the answers is the performance that executives can give, where they summon underlings and make a point of making snap decisions. CEO Wolfgang Schmitt of Rubbermaid was fond of demonstrating his ability to sort out difficult issues in a flash. A former colleague remembers that under Schmitt, “the joke went, ‘Wolf knows everything about everything.’ In one discussion, where we were talking about a particularly complex acquisition we made in Europe, Wolf, without hearing different points of view, just said, ‘Well, this is what we are going to do.’ ” But that kind of arrogance has real consequences. Rubbermaid went from being Fortune’s most admired company in America in 1993 to being acquired by the conglomerate Newell a few years later.

#4 They ruthlessly eliminate anyone who isn’t 100% behind them.

CEOs who think that their job is to instill a belief in their vision also think that it is their job to get everyone to buy into it. Anyone who doesn’t rally to the cause is undermining the vision. Hesitant managers have a choice: Get with the plan, or leave.

The problem with this approach is that it’s both unnecessary and destructive. CEOs don’t need to have everyone endorse their vision without reservation to have it carried out successfully. In fact, by eliminating all dissenting and contrasting viewpoints, destructive CEOs cut themselves off from their best chance of seeing and correcting problems as they arise. Sometimes CEOs who seek to stifle dissent only drive it underground. Once this happens, the entire organization grinds to a halt — regardless of whether the CEOs were right or wrong in their judgments.

Executives who have presided over major business disasters have regularly removed or ousted anyone likely to take a critical or contrasting position. General Motors’ Roger Smith was especially successful at getting rid of any executives or board members who happened to see things differently than he did — sometimes by having them fired, but often by sending them to distant outposts where they could have no influence on what happened at headquarters.

At Mattel, Jill Barad removed her senior lieutenants in short order if she thought they harbored serious reservations about the way that she was running things. Schmitt created such a threatening atmosphere at Rubbermaid that firings were often unnecessary. When new executives who had been brought in to effect change realized that they’d get no support from the CEO, many of them left almost as fast as they’d come on board.

Eventually, these CEOs had everyone on their staff completely behind them. But where they were headed was toward disaster. And no one was left to warn them.

#5 They are consummate spokespersons, obsessed with the company image.

You know these CEOs: high-profile executives who are constantly in the public eye. They spend a lot of time giving speeches, appearing on television, and being interviewed by journalists. They regularly perform with remarkable charisma and aplomb. Their public persona inspires confidence among employees, potential new recruits, the public at large, and, especially, investors.

The problem is that amid all the media frenzy and accolades, these leaders’ management efforts become shallow and ineffective. Instead of actually accomplishing things, they often settle for the appearance of accomplishing things. In extreme cases, they can no longer tell the difference: A meeting where they give a good performance seems as valuable as a meeting where something actually gets done.

Behind these media darlings is a simple fact of executive life: CEOs don’t achieve a high level of media attention without devoting themselves assiduously to public relations. Samuel Waksal, the former CEO of ImClone who pleaded guilty to insider-trading charges, was a master at drumming up media interest in his company’s cancer drug Erbitux.

Consumed as they are by their public-relations efforts, these CEOs often leave the mundane details of their business affairs to others. Tyco’s Kozlowski sometimes intervened in remarkably minor matters but left most of the company’s day-to-day operations unsupervised. When CEOs are obsessed with their image, they have little time for operational details.

As a final negative twist, when CEOs make the company’s image their top priority, they tend to encourage financial-reporting practices that promote that image. In other words, instead of treating their financial accounts as a control tool, they treat them as a public-relations tool. The creative accounting that is practiced by such executives as Enron’s Jeffrey Skilling or Tyco’s Kozlowski is as much or more an attempt to promote the company’s image as it is to deceive the public: In their eyes, everything that the company does is public relations.

#6 They underestimate obstacles.

Part of the allure of being a CEO is the opportunity to espouse a vision. What happens next is predictable: CEOs become so enamored with their vision of what they want to achieve that they overlook or underestimate the difficulty of actually getting there. And when it turns out that certain obstacles that they casually waved aside are more troublesome than they anticipated, these CEOs have a habit of plunging full steam into the abyss.

For example, when Webvan’s existing operations were racking up huge losses, CEO George Shaheen was busy expanding those operations at an awesome rate. While Tyco was struggling to maintain profitability in many of its divisions, Kozlowski responded to every setback by simply increasing the pace of his acquisitions — earning himself the nickname “Deal-a-Month Dennis.”

Why don’t CEOs in this situation reevaluate their course of action, or at least hold back for a while until it becomes clearer whether their policies will work? Some feel an enormous need to be right in every important decision they make, partly for the same reason that they think they are responsible for their company’s success. If they admit to being fallible, their position as CEO seems highly precarious. Their employees, business journalists, and the investment community all want the company to be run by someone with the almost-magical ability to get things right. Once a CEO admits that he or she made the wrong call on an important issue, there will always be people who say that that CEO wasn’t up for the job.

All of these unrealistic expectations make it exceedingly hard for a CEO to pull back from any chosen course of action. What’s more, if the only option available to you is to keep going in the same direction, then your response to an obstacle can only be to push that much harder. That’s why leaders at Iridium and Motorola kept investing billions of dollars to launch satellites even after it had become apparent that land-based cell phones were a better alternative. After each succeeding round of investment, it becomes more difficult to change direction.

It’s almost impossible for the person in charge to recognize when an escalating commitment is getting out of hand. Most leaders want recognition for their determination and for their persistence. Take the case of Quaker Oats’ acquisition of Snapple in 1994. Quaker’s CEO, William Smithburg, paid $1.7 billion for Snapple, assuming mistakenly that the drink would be another smash hit like Gatorade — and without analyzing the real differences between the products. When Snapple started to tank, Smithburg stood his ground, publicly stating that he would never give up on Snapple because, as he put it, “I’ve never run away from a challenge, and I’m not running away from this one.” In 1997, Quaker sold Snapple for a paltry $300 million.

We’re all taught to admire courage in the face of adversity. In the case of Quaker’s acquisition of Snapple, however, the longer that Smithburg held fast to his resolve, the more damage was done, both to Snapple and to its parent company.

#7 They stubbornly rely on what worked for them in the past.

Many CEOs on their way to becoming spectacularly unsuccessful accelerate their company’s decline by reverting to what they regard as tried-and-true methods. In their desire to make the most of what they regard as their core strengths, they cling to a static business model. They insist on providing a product to a market that no longer exists, or they fail to consider innovations in areas other than those that made the company successful in the past. Instead of considering a range of options that fit new circumstances, they use their own careers as the only point of reference and do the things that made them successful in the past.

When Jill Barad was trying to promote educational software for Mattel, she used the promotional techniques that had been effective for her when she was promoting Barbie dolls — despite the fact that software is not distributed or consumed the way that dolls are.

Frequently, CEOs who fall prey to this habit owe their careers to some “defining moment” — a critical decision or policy choice that resulted in their most notable success. It’s usually the one thing that they’re most known for, the thing that gets them all of their subsequent jobs, the thing that makes them special.

The problem is that after people have had the experience of that defining moment, they tend to let themselves be defined by it for the rest of their careers. And if they become the CEO of a large company, they allow their defining moment to define the company as well. The sad irony is that CEOs who get caught in an endless repetition of their defining moment fail not because they can’t learn. They fail because they learned one particular lesson all too well.

Sidebar: Big-Time Failures
Welcome to the CEO Hall of Shame. Here are six leaders who were spectacularly unsuccessful, the habits that help explain their particular failures, descriptions of the craters they left, and executive summaries of their core (in)competencies.

William Smithburg : Quaker Oats
Habits: 3, 4, 6, 7
Failure: Acquired Snapple for $1.7 billion in 1994 and wound up having to unload Snapple just three years later for a paltry $300 million.
Diagnosis: Missed numerous warning signs during the due-diligence process; never really knew what made the Snapple brand successful; assumed that he and his colleagues at Quaker knew Snapple better than Snapple knew Snapple.

Dennis Kozlowski : Tyco
Habits: 1, 2, 3, 5, 6, 7
Failure: Company lost almost 90% of its market value in less than a year.
Diagnosis: Took the company on an acquisition binge, which brought it straight up, then straight down; led Tyco during its era of questionable accounting and expenditures; was accused of spending company funds for personal use.

George Shaheen : Webvan
Habits: 1, 3, 5, 6, 7
Failure: Gave up millions to take a CEO job in a company that ended up losing billions.
Diagnosis: Adopted a business plan that was flawed; hired to bring credibility but ended up as chief operating officer fighting fires; cheerleader for first-mover advantage that never came.

Jean-Marie Messier : Vivendi Universal
Habits: 1, 2, 3, 5, 6
Failure: His hubris cost shareholders billions of dollars.
Diagnosis: Transformed company from water utility to media giant but didn’t stop to consider how to make money in the process; spent a lot of time blaming others for what went wrong; let the trappings of leadership dominate him.

Jill Barad : Mattel
Habits: 4, 5, 7
Failure: Branding genius, promoted to top job, decimated earnings and morale.
Diagnosis: Vastly overpaid for Learning Company acquisition and then let its failure dominate her tenure; consistently missed earnings estimates but kept promising that next quarter would be better; her intransigence drove away most of her top lieutenants.

Samuel Waksal : ImClone
Habits: 2, 3, 5, 6, 7
Failure: Fast-and-loose stewardship of company ate up 80% of its market cap, with continuing earnings restatements.
Diagnosis: Played the industry like a hustler, hyping the cancer drug Erbitux until he and the company lost credibility; reveled in his celebrity while ImClone foundered; copped a plea on a variety of insider-trading charges.

Sydney Finkelstein is the Steven Roth Professor of Management at the Tuck School at Dartmouth College. Read about his book on the Web ( Why Smart Executives Fail, by Sydney Finkelstein.

Copyright © Sydney Finkelstein, 2003. Reprinted by arrangement with Portfolio, a member of Penguin Group (USA) Inc.

Copyright © 2003 Gruner + Jahr USA Publishing. All rights reserved.
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