How to overcome the major (hidden) barriers to a “goldmine” of resources and opportunities within your organization
With Patricia O’Connell, Neil Smith has written an exceptionally thoughtful and thought-provoking book. Whereas in Sydney Finkelstein’s book, Why Smart Executives Fail: And What You Can Learn from Their Mistakes, the focus is on the performance of individuals, Smith focuses on lessons to be learned from excellent companies whose employees generally (but not always) avoid or overcome hidden (albeit “natural”) barriers. These barriers, “individually and collectively, can prevent employees from taking actions that are in the best interests if the given company. In short, the barriers are the reason the company does dumb things, not the employees themselves.”
Smith devotes a separate chapter to each of the barriers (Chapters 1-8) and then shifts his attention in Chapter 9 to “Twelve Principles for Breaking Barriers” and provides “A 100-Day Process for Breaking Barriers” in Chapter 11. I commend Smith on his skillful use of two reader-friendly devices at the conclusion of each of the first eight chapters: “Barrier in Brief” (Takeaway and Solution) and “Look at Your Organization” (Inaccurate Information and Bad Assumptions). Also, throughout his narrative, Smith also provides five mini-commentaries contributed by Richard Levak: “Why People Avoid Controversy” (Pages 22-25), “Why People Procrastinate” (38-40), “Why People Are Reluctant to Change” (50-52), “What’s Behind Management Blockers?” (85-87), and “How to Change Corporate Culture” (209-212).
As I worked my way through this book, I was reminded of passages from two recently published books. First, from Judgment Calls: Twelve Stories of Big Decisions and the Teams That Got Them Right in which Thomas Davenport and Brooke Manville explain how and why decisions made by a Great Organization tend to be much better than those made by a Great Leader. Why? While conducting rigorous and extensive research over a period of many years, they discovered – as Laurence Prusak notes in the Foreword — “that no one was looking into the workings of what we term organizational judgment – the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.”
Organizational judgment must not only be discerned but also managed. And precautions should be taken to ensure, as Prusak notes, “that the courses of action taken by organizations are more grounded in reality and a shared sense of what is right.” In recent years, the rapid emergence and development of social media enable organizations to become even more grounded in what has become an expanded reality. Only through an open and inclusive collaborative process can the use of social media enable any organization to tap the collective genius of its stakeholder constituencies.
In his latest book, Brilliant Mistakes: Finding Success on the Far Side of Failure, Paul J. H. Schoemaker asserts, ”The key question companies need to address is not ‘Should we make mistakes?’ but rather ‘ Which mistakes should we make in order to test our deeply held assumptions?’”
Excellent companies achieve and then sustain success with sound collective judgment, their management calls. Meanwhile, as Schoemaker correctly suggests, their leaders view mistakes as (potentially) valuable assets, not as “failures.” Schoemaker notes that one CEO obtained some empty L’eggs pantyhose plastic eggs, sprayed them with gold paint, and used them when awarding the “best mistake of the month.” That is, the mistake from which the most valuable information was obtained. As Thomas Edison never missed an opportunity to point out, understanding what doesn’t work — and
why — is critically important to determining what does.
What Smith offers in this book is a cohesive, comprehensive, and cost-effective process by which almost any organization (whatever its size and nature may be) can achieve its strategic objectives. How? By avoiding or overcoming “hidden” or at least unrecognized barriers such as the eight on which Neil Smith focuses. I agree with him that most organizations already possess most of what they need to succeed. It remains for their leaders to locate the “goldmine,” then allocate appropriately and supervise effectively its precious resources.
Here is an excerpt from an interview of Manfred F.R. Kets de Vries by Art Kleiner for strategy+business magazine (Mqy 10, 2010), published by Booz & Company. To read the complete interview, please click here.
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INSEAD’s expert on leadership development clarifies how self-awareness can break the destructive pattern of corporate narcissism.
Anyone who has watched a company go through a change of leadership is keenly aware of how strongly the personality of the chief executive can shape performance. Manfred F.R. Kets de Vries, the Raoul de Vitry d’Avaucourt Chaired Clinical Professor of Leadership Development at INSEAD business school, has built his career on studying this impact. Starting with his first major book, Power and the Corporate Mind: How to Use Rather Than Misuse Leadership (co-authored with influential management thinker Abraham Zaleznik; Houghton Mifflin, 1975), Kets de Vries has focused his attention, in this and more than 30 subsequent books, on the psychological realities that determine human and organizational behavior — or, as the title of his recent book calls them, Sex, Money, Happiness and Death: The Quest for Authenticity (Palgrave Macmillan, 2009).
Along the way, Kets de Vries has dedicated himself to leadership development: first for MBA students at INSEAD, and then for CEOs and other senior executives. With professor Elisabet Engellau, he founded INSEAD’s Global Leadership Center, which provides the core of the school’s leadership coaching programs. Unlike many other executive education programs, the center is explicitly dedicated to teaching decision makers to improve their performance by knowing themselves and acting on that knowledge more effectively.
Kets de Vries’s insights are particularly pertinent now, in the aftermath of economic crisis. He argues that although governance reforms may help shield companies (and the economy) from the destructive impulses of some decision makers, corporate failures and meltdowns are driven by deeply embedded attitudes. Those will not go away, no matter how strongly companies are regulated. One of the most prevalent influences is embedded narcissism: the profound self-centeredness of many high achievers, which is both a creative and a destructive force. Another is the willingness of everyone else to indulge that force.
In his 2006 book, The Leader on the Couch: A Clinical Approach to Changing People and Organizations (Wiley & Sons), Kets de Vries explains the “shadow side of leadership,” and how it keeps many companies from realizing their full potential.
But he also defends corporate leaders who explicitly merge their own search for self-improvement with the improvement of their companies’ performance.
We are publishing this interview on the occasion of the 50th anniversary of INSEAD. With campuses in Fontainebleau (outside Paris), Singapore, and Abu Dhabi, it is an independent business school, not attached to a larger university, and one of the most prominent and innovative management learning institutions. (Many of the partners and staff members of Booz & Company, the firm that publishes strategy+business, are INSEAD alumni.) Kets de Vries met with strategy+business in his Paris apartment.
In The Leader on the Couch, you blame the struggles of many companies on their tolerance for narcissistic leaders. How serious a problem is this?
The economic crisis was a reflection of narcissism and very primitive defense mechanisms (such as a complete denial of economic reality) built into the financial system. The best and brightest MBA students have been going into investment banking; many of them used their brains essentially to play casino games, and not to add much value to society.
Now, we’ve seen the result. Look at the least-admired professions in most countries over the years: telemarketers and used-car salesmen. Today, you have bankers and CEOs achieving the same low rating. Companies like Citibank — which was the brainchild of one of the most visibly narcissistic executives in the world, Sanford Weill — have essentially collapsed. They have grown too complex for the people who work there to understand. I strongly question what the different parts of Citibank have in common. No matter what kinds of regulatory reforms are initiated, more companies will collapse this way, because narcissism breeds this kind of unmanageable grandiosity.
Is that what you mean by narcissism? Grandiosity?
Not exactly. Narcissism is a clinically recognized disorder. In an oversimplified way, it can be viewed as a pathological reaction to problems concerning self-worth. It manifests itself in the need to prove to yourself that you are special, and entitled to special treatment. Other indicators include a need for constant attention and admiration, selfishness, a lack of empathy, the exploitation of others, and enviousness.
Narcissistic people may evade rules and regulations; their attitude is that these apply only to others. They may throw tantrums when they don’t get their way. Their outbursts of rage can be phenomenal. But some of their behavior can be interpreted by others as quite charismatic. And thus they often rise to lead large organizations and put a strong stamp on them.
Keep in mind that narcissism in itself isn’t a bad thing; it’s part of our makeup. It may have received a bad reputation because of the Greek myth of Narcissus, the youth who fell in love with his reflection. But in moderation, the condition is natural and even necessary. It contributes to assertiveness, self-confidence, and creativity. These are all very desirable qualities for business leaders. People who achieve things — who write books, who run companies, who oversee projects — have to be somewhat narcissistic, or they wouldn’t be motivated to excellence. Some of our most gifted leaders have evident narcissism. John Harvey-Jones, for instance, the head of Imperial Chemical Industries [ICI] during the 1980s and host of a BBC television show called Troubleshooter in the 1990s, was a charismatic individual, with wild eyes, wild ties, and wild hair. He was also a consummate, constructive narcissist.
But narcissistic people in elevated positions can be destructive. When they reach the highest echelons, given their need for positive mirroring, those who work for them start to tell them what they want to hear. They lose their sense of reality. And then their narcissism needs to be harnessed.
What kinds of situations are you thinking of?
You see it in many mergers and acquisitions. The chief executive, who is often somewhat narcissistic, gets a bit anxious or bored. Then a consulting firm comes in and says, “Listen, if you don’t take over this other company, there may be a good chance that you will be taken over yourself.” Investment bankers enter into the fray, and suddenly there’s a deal to be made. Everyone is excited. The boredom is gone. They all wave the flag of synergy while talking about the marvelous things that are going to happen due to the merger or acquisition. Of course, synergy is really a disguise for saying that they are going to cut jobs.
We know from looking at a wide range of research findings that approximately 70 percent of corporate mergers and acquisitions don’t add shareholder value. That being the case, why then do some of them happen? Usually one ingredient for successful closure is that the two companies have CEOs of different ages. The younger one comes in to run both companies, and the older one goes out with a big golden handshake. It tells you something about the influence of self-interest.
What’s more, the consultants and investment bankers don’t suffer financially. The shareholders and senior executives get a bit of money. But eventually, the expected lovefest turns sour. Value is destroyed; lives are ruined. Large numbers of employees feel alienated. And the most capable employees may leave.
I wrote about some examples in The Leader on the Couch. There is the story, for example, of Jean-Marie Messier, who was the CEO of Vivendi Universal until he was ousted in disgrace in 2002. In his glory days he went by the name “J6M” [pronounced jeeseezem], which stood for “Jean-Marie Messier: moi-même, maître du monde.” This roughly translates to “myself, master of the world.”
In 1994, after five years as an investment banker at Lazard Frères, Messier became the head of a utility group, Compagnie Générale des Eaux. It was a water and waste management company that ran sewage plants. He renamed it Vivendi, turned it into a global media and telecommunications giant, and started buying movie studios, music labels, and publishing houses. He moved to New York, living in a €20 million (US$17.5 million) apartment that Vivendi paid for, apparently lying about the company’s financial health, and racking up close to €14 billion [US$12 billion] in debt. In his early years, he condemned golden parachutes and promised never to accept one; then, when he was fired after a shareholder lawsuit, he blamed the rest of the company for not supporting his ideas and demanded a huge severance package. Billions were lost in shareholder value, and the company was destroyed, largely through vanity and greed.
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Reprint No. 10209
Art Kleiner is editor-in-chief of strategy+business and the author of The Age of Heretics (2nd ed., Jossey-Bass, 2008).