By Sydney Finkelstein Welcome to CEO Network! I’m looking forward to opening your conference and sharing some of the lessons I’ve learned from studying why smart executives fail. As a preview, here are highlights from an article I wrote for the Winter 2003 issue of the London Business School’s Business Strategy Review: “Seven Habits of Spectacularly Unsuccessful People”: To be spectacularly unsuccessful requires some very special personal qualities. We’re talking about people who have taken huge, world-renowned business operations and made them almost worthless. Their destructive effect is so beyond the range of ordinary human beings that it’s on a scale normally associated only with earthquakes and hurricanes. The personal qualities that make this awesome scale of destruction possible are all the more fascinating because they are regularly found in conjunction with truly admirable qualities. After all, hardly anyone gets a chance to destroy so much value without also demonstrating a potential to create it. Yet when it comes to the crunch, these people … have a special gift for taking what could have been a modest failure and turning it into a gigantic one. How do they do it? Remarkably enough, it’s possible to identify seven habits that characterize spectacularly unsuccessful people. Nearly all the leaders who preside over major business failures exhibit five or six of these habits. Many of them exhibit all seven. Even more remarkable, each of these habits represents a quality that is widely admired in today’s business world. As a society, we don’t just tolerate the qualities that make leaders spectacularly unsuccessful; we encourage them. Habit #1: They see themselves and their companies as dominating their environments. Successful leaders, on the other hand, are proactive because they know 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. This means no matter how successful the company, its overall business plan will need to be continually re-adjusted and renegotiated. Leaders who see themselves and their companies as dominating their environments … vastly overestimate 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 … because they made it happen. Habit #2: They identify so completely with the company that there is no clear boundary between their personal interests and their corporation’s interests. Identifying too much with the company encourages CEOs to make unwise decisions. Instead of treating the company as something they need to care for, nurture, and protect, CEOs who identify too much with their company treat the company as an extension of themselves. They cause the company to do things that would make sense for a person, but do not make sense for a company. Habit #3: They 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 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. Habit #4: They ruthlessly eliminate anyone who isn’t 100% behind them. CEOs with a vision believe that a major part of their job is to instill a belief in their vision throughout their company, getting everyone working together to achieve the goals they’ve set out. If a manager, for instance, doesn’t rally around the cause, these CEOs feel their vision is being undermined. After a short grace period, these CEOs will ultimately confront hesitant managers with the choice of “getting with the plan” or leaving. The drawback of this policy is that it’s both unnecessary and destructive. CEOs don’t need to have everyone in the company unreservedly endorse their vision to have the company carry it out successfully. By eliminating all dissenting and contrasting viewpoints, they cut themselves off from their best chance of correcting problems as they arise. Habit #5: They are consummate company spokespersons. Leaders who adopt this fifth habit become the sort of high-profile CEOs that are constantly in the public eye. The problem is that … these leaders risk allowing their management efforts to become shallow and ineffective. Their best energies and attention go into crafting a public image, rather than into running the company. In fact, in extreme cases, they can no longer tell the difference. A meeting where they turn in a great performance seems as good as a meeting that actually gets something done. Habit #6: They underestimate major obstacles. CEOs who succumb to this sixth habit … become so enamored with their vision of what they want to achieve that they overlook the difficulty of actually getting there. They assume all problems are solvable, when many problems, in fact, are either insolvable or else solvable at too great a cost. Often it seems that the more fully a CEO can visualize the way he wants his company to look in the future, the less fully he can visualize the obstacles along the way. Habit #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 simply by reverting to what they regard as the tried and tested. Like Ed Schwinn of the bicycle company, they insist on providing a product to a market that no longer exists. Like William Farley of Fruit of the Loom, they fail to consider innovations in things like sourcing because that’s not what made their company successful in the past. Psychotherapy for the CEO? What can be done about these Seven Habits of Spectacularly Unsuccessful People? There are many opportunities for CEOs themselves to stop and question their own behavior if they notice themselves slipping into one of these habits. It would also help enormously if those reporting to CEOs realized that these habits shouldn’t be admired or accepted as normal. Instead, wherever a CEO falls too conspicuously into one of these habits, they should be met with raised eyebrows and, whenever possible, a warning. Finally, whenever these habits begin having too great an influence on the CEO’s behavior and on the direction of the company, it is the corporate board’s job to intervene. The Seven Habits of Spectacularly Unsuccessful People are too dangerous to be left unchecked. This piece and the Business Strategy Review article are edited excerpts from Sydney Finkelstein’s Why Smart Executives Fail: And What You Can Learn From Their Mistakes.
