It's rarely discussed, at least as not as much as the habits of successful CEOs, but the truth is that it takes some special personal qualities to be spectacularly unsuccessful. This author has written a best seller on the subject, and in this article he discusses how leaders can be not only instruments of success, but sometimes also architects of failure.
Sydney Finkelstein is the Steven Roth Professor of Management at the Tuck School of Business at Dartmouth College, and the author of "Why Smart Executives Fail. " This article is based on the book.
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 high flyers like 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. What's remarkable is that the individuals who possess the personal qualities that make this magnitude of destruction possible usually possess other, 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 who display personal magnetism. They are the leaders who appear on the seven habits of spectacularly unsuccessful executives covers of Fortune and Forbes.
Still, when it comes to the crunch, these people fail - and fail monumentally. What's the secret of their destructive powers? After spending six years studying more than 50 companies and conducting some 200 interviews, I found that spectacularly unsuccessful people had seven characteristics in common. 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, it celebrates them.
Here, then, are seven habits of spectacularly unsuccessful people, along with some warning signs to look out for. These habits are most destructive when a CEO exhibits them, but any manager who has these habits can do terrible harm-including you. Study them. Learn to recognize them. And try to catch these red flags before spectacular failure finds you!
Habit # 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 company try to dominate its business environment, shape the future of its markets and set the pace within them? Yes, but there's a catch. Unlike successful leaders, failed leaders who never question their dominance fail to realize they are at the mercy of changing circumstances. 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 pre-eminence: 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 execute their personal vision for the company. 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 dreamed of being in the auto business.
Warning Sign: A lack of respect.
Leaders who suffer from the illusion of personal preeminence tend to believe that their companies are indispensable to their suppliers and customers. Rather than looking to satisfy customer needs, CEOs who believe they run pre-eminent companies act as if their customers were the lucky ones. When asked how Johnson & Johnson lost its seemingly insurmountable lead in the medical stent business, cardiologists and hospital administrators pointed to the company's arrogance and lack of respect for customers' ideas. Motorola exhibited the same arrogance when it continued to build fancy analogue phones, rather than the digital variety its customers were clamouring for.
Habit #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, with their interests tightly aligned with those of the company. But digging deeper, 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 needed to nurture, failed leaders treated them as extensions of themselves. And with that, a "private empire" mentality took hold. CEOs who possess this outlook often use their companies to carry out personal ambitions. The most slippery slope of all for these executives is their tendency to use corporate funds for personal reasons. CEOs who have a long or impressive track record 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 behaviour of Dennis Kozlowski of Tyco. His pride in his company and his pride in his own extravagance seem to have reinforced each other. This is why he could sound so sincere making speeches about ethics while using corporate funds for personal purposes. Being the CEO of a sizable corporation today is probably the closest thing to being king of your own country, and that's a dangerous title to assume. Warning Sign: A question of character When it comes right down to it, the biggest warning sign of CEO failure is a question of character. We might want to believe that leaders at companies like Adelphia, Tyco and ImClone were trustworthy stewards of those companies, but their behaviour suggests otherwise. But questions about character need not be limited to dubious or unethical acts. In fact, most leaders I studied were scrupulously honest. Rather, it is denial and defensiveness that are the critical warning signs. As Tony Galban, a D underwriter at Chubb, told me, "Always listen to the analysts' calls because that gives you a sense of how an individual thinks on their feet. They give you a sense of whether they're in denial or whether they're being professional." It gets down to this: Do you really trust this person?
