Habit #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 they have no opportunity to grasp the ramifications. Worse, because their leaders need to feel they have all the answers, they aren't open to learning new ones. 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. '" Leaders who have need to have all the answers shut out other points of view. When your company or organization is run by someone like this, you'd better hope the answers he comes up with are going to be the right ones. At Rubbermaid they weren't. The company went from being Fortune's most admired company in America in 1993 to being acquired by the conglomerate Newell a few years later. Warning Sign: A leader without followers John Keogh, another big-time underwriter of D insurance, pointed out what he looks for when CEOs are being interviewed by analysts: "[Was] the management team incredibly arrogant? [Did the CEO or CFO] have all the answers and is [he or she] pretty [much] on top of his or her game?" CEOs who believe they have all the answers don't really need other people, except to do what they want them to do. One of the critical side effects of a CEO's fixation on being right is that opposition can go underground, effectively closing down dissent. As middle management begins to realize that their personal contributions aren't important, an entire organization can grind to a halt. When a leader's perspective and the management team's perspective drastically differ, take note. The difference in perception between Schmitt and his staff at Rubbermaid was striking, and was characteristic of many executives' predicament. He was a leader without followers.
Habit #4: They ruthlessly eliminate anyone who isn't completely behind them CEOs who think their job is to instill 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 unanimously endorse their vision 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 falters. At Mattel, Jill Barad removed her senior lieutenants if she thought they harboured 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 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.
Warning Sign: Executive departures A revolving door at the top is one of the strongest signals that there has been executive failure at a company. Whether executives leave under "false pretenses," or are sent to some distant outpost where they'll have no further influence at headquarters, a pattern of executive departures speaks volumes for what is going on at a company. At Mattel, along with firing senior lieutenants on a moment's notice, Jill Barad drove six direct reports to resign for "personal reasons." The same thing has happened at Sun Microsystems over the last year. A mass exodus may be an indication that the CEO is out to eliminate any contrary opinions, or it may reflect inside information senior executives are acting on. In either case, it's a powerful warning sign. Analysts and many investors regularly track insider sales of stock, but executive departures may provide an even clearer window on the company. After all, what stronger statement can an executive make than to leave his or her job and the company entirely?
Habit #5: They are consummate spokespersons, obsessed with the company image.
You know these CEOs: high-profile executives who are constantly in the public eye. 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.
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. When CEOs are obsessed with their image, they have little time for operational details. Tyco's Dennis Kozlowski sometimes intervened in remarkably minor matters, but left most of the company's day-to-day operations unsupervised. As a final negative twist, when CEOs make the company's image their top priority, they run the risk of using financial-reporting practices to promote that image. Instead of treating their financial accounts as a control tool, they treat them as a public-relations tool. The creative accounting that was apparently 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. Warning Sign: Blatant attention-seeking The types of behaviour exhibited by Napoleonic CEOs tend to be so blatant that they can't be missed. Warning signs begin with the executive lifestyle-they may start to run with a very cool crowd, buy expensive art, and hobnob with political dignitaries and celebrities. The CEO will seem to spend more time with PR personnel and making public appearances than doing something as mundane as visiting customers. Other times, a company will build a striking new headquarters, designed to serve as a corporate symbol. In more extreme cases, the CEO will try to acquire the naming rights for a new sports arena or stadium.
