The Seven Habits of Failed Leaders

The covers of business magazines are full of their photos; stories of their exceptional leadership are in the press; their company's stock is highly sought after. They are the brightest stars, heroes, geniuses and giants in business.

However, just a few years or even months after their success, the company they led went out of business. Major businesses have ground to a halt, employees have been laid off, and the company's stock price has plummeted. After the dust settled, we found that these leaders destroyed innumerable values.

How is this possible? How did these business leaders fall so quickly? Every year, we see many examples of business failures. What is the reason for their failures?

To answer this question, we took a closer look at 51 companies and found that the reasons for their failure were few but deep-rooted. Businesses that at first glance have nothing in common have all suffered for the same reason.

These reasons include:

●There are problems with the management concept, so that the company can not correctly understand the reality.

●Blind optimism or self-deception, unable to face reality for a long time.

●The communication system used to handle urgent information has malfunctioned.

●The leadership quality of the management is not high. It never changes with the times, and goes all the way to the dark.

These leaders failed miserably not because they were incapable of doing their jobs, but because they had a special "gift" to turn a small oversight into a catastrophe.

Why? Since their shortcomings are so obvious, let's summarize them as the seven habits of losers.

1. See yourself as the master of the environment

Successful leaders change with time because they know they have no control over the environment around them. They know that no matter how successful they have been in their careers in the past, they are always subject to the ever-changing business environment. Since they can't make everything happen the way they want, they have to constantly come up with new ideas and actions to deal with new situations. No matter how successful a company is, its overall business plan must be constantly readjusted and renegotiated as circumstances change.

Some leaders don't see this. They see themselves and their company as masters of their environment, thinking they can dictate everything around them. They believe that their success and the company's success is due to their individual abilities.

Many CEOs believe that he can control all the factors that make or break a company in his own right. In their view, everyone else in the company is there to build the company he has personally conceived of.

Mossimo Giannulli also considers himself a business whiz because of his talent for capturing fashion design trends. As a result, the company's rapid growth plan was plagued by cost overruns, late deliveries, and inappropriate systems -- sending the company's stock price down 90 percent, before he finally came off the company's highs.

Top executives who feel this way about themselves often have a false sense of the company's strengths. For example, Wang An firmly believes that Wang An Computer will eventually monopolize the market because its products are the best in the industry. However, he did not change production in time according to the needs of the market, but violated the principle of computer popularization (cheap and multi-functional), and concentrated a lot of manpower and financial resources to develop high-end computers, resulting in unsalable products, loss of customers, and heavy debts. eventually bankrupt.

2. Mixing the company with the individual

Like the first habit, this habit seems to be good for the company. After all, we all want company leaders to be 100 percent committed to the company. However, we can draw inspiration from the many factors that lead to the failure of enterprises, and the failure of top managers is always too much to mix themselves with the enterprise.

If the CEO is the founder of the company or a veteran who helps the company grow, they are especially prone to confuse company achievements with personal ones. CEOs with this mentality often use the company to fulfill their personal ambitions that are not profitable for the business.

Samsung CEO Lee Kun-Hee decided to enter the auto industry because of his personal hobby of cars. As a result, Samsung Motors closed its doors after just one year of production, and finally had to sell it cheaply to Renault Motors.

If CEOs confuse themselves too much with the business, they tend to make business choices based on their own preferences rather than the interests of the company. Cabletron ignored marketing largely because its co-founder Craig Benson hated it. AMD's Jerry Sanders has a huge dislike of Intel, and has slammed it over the years. And sometimes, this attack also obviously hurt AMD itself.

3. Only oneself can make correct decisions

We are often convinced by such company leaders: he can always quickly grasp the key points of events and make decisive decisions. All along, we've been told that top managers who make quick decisions are to be admired.

However, the scenario described above is actually an illusion. Because, in today's world of ever-changing business environments, no one can guarantee that they will always know everything. Leaders who act decisively tend to solve problems so quickly that they don't have the opportunity to think about the consequences. Worse yet, because they think they know everything and will never know, there are other solutions to the problem.

These "decision role models" have another thing in common: they only learn what is a direct extension of the body of knowledge they already know. Wolfgang Schmitt is a prime example of this. John Mariotto, former head of office supplies at Rubbermaid, described Schmitt this way: "The problem with Wolfe is that he doesn't listen to anything he doesn't agree with. ---And can't listen to---others' opinions. Almost no one around him dares to disagree with him." Stanley Gault, who was the CEO of Robamate earlier, put it more simply The words pointed out Schmidt's problem: "He refused to accept any advice or suggestion."

These leaders often have a decisive say in corporate affairs. Ultimately, "all-knowing" top executives can't trust anyone. When it comes to harder problems, they think they are the only people the organization can rely on to make the final decision.

Fourth, be stubborn and eliminate dissidents

Most ambitious CEOs believe that their main job is to instill their ideal beliefs throughout the company, so that all employees in the company can achieve their goals. and struggle. For example, if a manager strays from this goal set by the CEO, those CEOs will feel that their ideals have been violated. After giving each other a short grace period, they end up giving the hesitant managers two choices: "go with the plan" or pack up and leave.

There are two drawbacks to this policy: first, it's completely unnecessary, and second, it's detrimental to the organization. As a CEO, to implement your vision across the company, you don't need to make it unconditional for every employee in the company. If you blindly exclude all dissenting opinions, you will only deprive yourself of your best chance of addressing a problem as it emerges.

Top executives who frequently make bad moves and cause disasters in their companies often mobilize or drive away those who are likely to take a critical or antagonistic attitude toward them. GM's Roger Smith is particularly good at excluding senior executives and board members who disagree with him—sometimes by firing them outright, but often by "relegating" them to a distant place. place to serve, so that they can no longer exert their influence at headquarters. Mattel's Jill Barad moved away from her top lieutenant because she thought he was dismissive of her management philosophy.

5. Too much emphasis on company image

Leaders with a fifth habit tend to be high-profile CEOs who constantly appear in public. They spend a lot of time giving public speeches, interviewing reporters, and showing off their charisma. They can inspire confidence in the company from the public, existing employees, potential new hires, and especially investors.

The problem is that, in the media halo, the management initiatives these leaders create run the risk of becoming superficial and ineffective. They put their best energy into building a public image rather than running the company. What's more, some CEOs confuse the two.

In the course of their public relations blitz, these CEOs often hand over some of the day-to-day business of the company to others. For example, Dennis Kozlowski of Tyco, who left most of the company's day-to-day operations unmanaged. Smith amazed the audience with his lavish descriptions of how precisely and beautifully computer-controlled robots can perform complex tasks. Meanwhile, real robots in one of GM's paint shops are graffiti on each other.

If CEOs make building and maintaining the company's image their top priority, they tend to encourage finance staff to produce financial statements that help to enhance the company's image. In other words, they use financial statements as a public relations tool, not a control tool. At companies such as Enron, Tyco, and Consaco, accounting fraud takes many forms.

6. Underestimating the severity of developmental obstacles

CEOs with this habit tend to dismiss the obstacles encountered in the organization's development process as trivial problems, when in fact, they are often The main difficulties faced by the organization. This type of CEO thinks that all problems can be solved easily, but many problems are either unsolvable or have to pay a huge price to solve.

C-suite executives shrouded in a halo of success are especially prone to underestimate the magnitude of these obstacles. Stephen Wiggins has successfully transformed Oxford Health Plans into the second most profitable health care organization in New York.

Wiggins applies innovative operating procedures at every stage of the company's development. He himself is very familiar with computer systems, so when he hears from employees that they have some difficulties in developing a certain software he wants, he always ignores them. He thinks that any competent programmer will should be able to cope with these problems comfortably. Growth is what matters, and nothing can slow his company's growth. However, it was the newly developed charging system that changed the company's fortunes. Improperly applied, it not only tarnished the company's good reputation, but also lost two-thirds of the company's stock market value. And Wiggins has also become a negative example of business failure caused by IT management missteps.

When CEOs find that a problem they'd otherwise dismissed is more difficult than they expected, they try to address it by investing more in it. Online grocery retailer Webvan was once the most beautiful fairy tale in the e-commerce world, but while existing businesses are incurring huge losses, its CEO George Shaheen is still busy expanding such businesses at an astonishing rate. lead to the shattering of the fairy tale.

7. Sticking to outdated successes

Many CEOs who end up in big failures try to reinstate everything they see as reliable and tried-and-true practices in their organizations, only to accelerate the company's decline. In pursuit of certainty in an unpredictable world, they rely on anachronistic historical experience.

As a century-old store in the American bicycle industry, Schwinn was once the number one bicycle brand in the world. But as competitors develop new bikes (such as mountain bikes) and market demand becomes segmented, Schwinn sticks to its legacy. Boss Ed Swin and his management team insisted on launching into a market that no longer existed, and bankruptcy was inevitable.

America's famous lingerie brand Fruit of the Loom is in decline, also because CEO William Farley ignores innovation -- because in the past, innovation was not the way to win for a company.

CEOs with this habit choose a course of action without delving into the multitude of alternatives, but instead base their decisions on what has made them successful in the past. Mattel's Ballard used the same promotional techniques that made her successful in promoting Barbie dolls to promote educational software—a product that was very different from rag dolls, both in how they were distributed and how they were consumed, and the results were predictable. Will Smithburg of Quaker had successfully marketed a Gatorade sports drink, the problem is, when Quaker bought Snapple, he wanted to do exactly the same . In fact, Snapple relies on the form of franchise sales, and the sales channels are fundamentally different from Gatorade. Smithberg was eventually fired by the board.

This text is excerpted with permission from the book Why Smart Executives Fail: And What You Can Learn from Them by Sydney Finkelstein, published by Portfolio, part of Penguin Publishing Group. The author registered copyright in 2003. Translated by Liu Yanqun.

Sydney Finkelstein is a professor at Dartmouth University's Tuck School of Business.