Forbes Magazine recently published an article by Sidney Finkelstein, the Roth Professor of Management at the Tuck School of Business at Dartmouth College. The article, “Why Smart Executives Fail” summarized some of his research on why over 50 former successful industries, including Enron, Tyco and Schwinn, had become complete failures. It turns out the senior executives at the companies all had seven habits in common. Here are the habits:
Executives see themselves and their companies as dominating their environment: Finkelstein notes this first habit may be the most insidious, since it appears to be highly desirable. The challenge is that failed leaders with this habit fail to realize they are at the mercy of changing circumstances. They vastly overestimate their ability to control events and underestimate the role of chance and circumstance in their success.
There is no clear boundary between executive’s personal interests and their corporation’s interests: Like the first habit, this seems innocuous, even beneficial. The issue is that these executive often use their companies to carry out personal ambitions. The most slippery slope of all for these executives in their tendency to use corporate funds for personal reasons.
They think they have all the answers: The image of executive competence we have been taught to admire is one of a dynamic leader making dozens of decisions a minute. The problem is that leaders who are invariably crisp and decisive tend to settle issues too quickly with no grasp of the ramifications. Worse, these leaders feel they have all the answers, so they aren’t open to learning any new ones.
Elimination of anyone not completely behind the executives: Many CEOs think their job is to instill belief in their vision and to get everyone to buy into the vision. It’s get with the plan or leave. By eliminating all dissenting and contrasting points of view, destructive CEOs cut themselves off from their best chance to seeing and correcting problems as they arise.
They are consummate spokespersons, obsessed with the company image: The challenge is that amid all the media frenzy and accolades, these leaders’ management efforts may become shallow and ineffective. Instead of actually accomplishing things, they often settle for the appearance of accomplishing things. When CEOs are obsessed with their image, they have little time for operational details.
They underestimate obstacles: When CEOs becomes so enamored of their vision, they often overlook or underestimate the difficulty of actually getting there. Some CEOs feel an enormous need to be right in every important decision they make, because if they admit to being fallible, their position as CEO might seem precarious.
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 their own careers and do the things that made them successful in the past—no matter how unrealistic or inapplicable it may be.
Bottom line: If you have several of these traits, now is the time to eliminate them from your repertoire. If your boss or several senior executives at your company exhibit several of these traits, now may be the time to polish your resume and find a new job!