7 Attitudes that Lead to Executive Failure

Any discussion on what makes executives wise and why some CEOs fail has to include why some smart leaders make stupid mistakes. What leads to executive failure?

Sidney Finkelstein, author of Why Smart Executives Fail (2003), researched several spectacular CEO failures and their causes over a six year period. He found several patterns of faulty thinking that explain what went wrong.

Finkelstein identifies seven patterns of executive failure, each with a warning sign. Many of these correspond to Sternberg’s five thinking fallacies, which I’ve included here in parentheses.

He arranges these causes of CEO failures into seven habits or attitudes which are:

Habit #1: They see themselves and their companies as dominating their environment. On the positive side, this attitude is seen as highly optimistic. Optimism is a primary trait of successful leaders and it contributes to the ability to inspire and communicate vision. Carried to extreme, it causes one to lose touch with reality.

Warning sign: A lack of respect. (Unrealistic Optimism fallacy)

Habit #2: They identify too closely with the company, losing the boundary between personal and corporate interests. On the positive side, this trait means that an executive works long, hard hours over and above what is expected. However, carried to extreme, a leader gains a sense of entitlement to compensate for his or her sacrifices. It paves the way for unethical decisions.

Warning sign: A question of character. (Egocentrism fallacy)

Habit #3: They think they have all the answers. High intelligence and an ability to solve problems quickly and decisively are essential for leadership. When one forgets to ask for input or adequate information before making and acting on a decision, decisions can be inappropriate.

Warning sign: A leader without followers. (Omniscience fallacy)

Habit #4: They ruthlessly eliminate anyone who isn’t completely behind them. While knowing who to promote and who to reassign or fire is an essential responsibility of any leader, decisions based on favoritism are irresponsible and risky. When the senior team is comprised of ‘yes’ people, there isn’t enough dissention to evaluate risks appropriately.

Warning sign: Executive departures. (Egocentrism fallacy)

Habit #5: They are consummate spokespersons, obsessed with the company image. While getting press coverage is seen as good for share prices, when CEOs appear to be promoting themselves more than the company, beware.

Warning sign: Blatant attention-seeking. (Egocentrism fallacy)

Habit #6: They underestimate obstacles. Optimism is the underlying trait that works for motivating and inspiring, but carried to extreme, it can obliterate adequate risk evaluation and reality checks.

Warning sign: Excessive hype.  (Omnipotence fallacy)

Habit #7: They stubbornly rely on what worked for them in the past. The problem is, nothing stays the same. It is human nature to go back to what worked before when things get tough. But applying yesterday’s solutions to tomorrow’s problems can’t work. Knowing which problems to solve is a challenge for CEOs.

Warning sign: Constantly referring to what worked in the past. (Invulnerability fallacy)

Can you identify any of these faulty thinking habits in the organizations where you’ve worked? I’d love to hear from you.

This entry was posted in career, executive leadership, leadership and tagged , , , , , . Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

One Comment