How Leaders and Their Teams Can
Stop Executive Hubris
Building a culture of critical thinking and humility can spare
companies from the ravages of excessive CEO confidence.
If an organization has just one or two people whose power has gone
to their head, it can demoralize subordinates, cause valuable talent to flee,
disempower teams, and lead to foolhardy strategies. Whether you are a board
member, a CEO, a senior executive, a high-potential employee on the rise, or an
HR leader concerned about culture, you need to understand how such hubris works
so you can head off its destructive effects on careers and on your company.
It is particularly worrisome when CEOs suffer from hubris. Their
extensive power makes them both more likely to suffer from hubris and more
likely to be in a position to do a great deal of damage. The extreme
self-confidence can even destroy them and the organizations they lead. In
a survey of 150 global CEOs conducted by our firm, Heidrick &
Struggles, in partnership with the Saïd Business School at the University
of Oxford, nearly one in five CEOs said they never doubt themselves. But as one
of the participants said in the course of an in-depth interview, “If you don’t
doubt yourself in a constructive, positive way, you are borderline dangerous
for your company.”
A 2013 study of a representative sample of Fortune 500 CEOs
over a six-year period found that overconfident CEOs tend to make risky
decisions about mergers and acquisitions. (The researchers based the
determination of overconfidence on a formula that takes into account all
press reports and all of the CEO’s public statements about his or her degree of
confidence during the period of the study.) In M&As, such CEOs often target
companies outside the acquirer’s core line of business, a strategy with a very
poor track record. And they tend to pay cash instead of stock for acquisitions
because they believe their stock is undervalued.
Overweening self-confidence can be surprisingly hard to detect, at
least initially. Take, for example, a newly installed CEO of a private
equity–backed business in a global engineering company who exhibited no signs
of arrogance when he was recruited. When he decided to develop a service
offering aimed simultaneously at two of the company’s distinct market segments,
most of the executive team — and particularly the chief financial officer —
warned him that conflating the two segments would confuse the marketplace. The
private equity firm’s board representatives virtually commanded him not to do
it. He listened politely and then forged ahead. A year later, the company had
grown by only one-sixth of the goal the private equity firm had set. The CEO
and the entire executive team were replaced (each losing about US$15 million in
the value of their shares), and the company went on to prosper under new
leadership.
Hubris is not confined to
CEOs. In workshops with thousands of executives, two of our colleagues
have administered a classic “overconfidence quiz.” Subjects are
given 10 questions, such as “What is the distance from London to Tokyo by air?”
and then are asked to specify a range of distance in which they have 90 percent
confidence. They almost invariably choose ranges that are too narrow, averaging
about one or two correct judgments out of 10.
But
here’s the good news: Hubris is an acquired
trait, not a deeply rooted
personality disorder. It comes on gradually, growing as a leader’s power grows
— and it can be managed and even nipped in the bud. In the course of our firm’s
work in leadership consulting, executive assessment, and culture shaping, we
have helped leaders, teams, and organizations short-circuit hubris by taking
the following practical, concrete steps.
Focus on the causes that
can actually be addressed.
We know that the higher
someone rises in an organization, the fewer peers he or she has. Subordinates
are reluctant to speak up. Further, the ascent of successful executives is
usually powered by real skills in which they are justifiably confident — and
for which they are richly rewarded and lauded. Leaders are expected to exude
confidence, to lead the charge even in the face of overwhelming odds. The
frequent result? Hubris.
Because complex psychological dynamics are often in play in cases
of hubris, it’s tempting to put executives on the proverbial couch and
speculate on their insecurities or unresolved conflicts with parents. But we’d
be better advised to look instead at the environmental factors that feed hubris
— the things that individuals, teams, and organizations can do something
about.
Recognize characteristic
behaviors.
Numerous individual
behaviors exhibited by executives can indicate incipient hubris: blaming others
or forces beyond their control when things go wrong, micromanaging in the
belief that only they can do a job right, failing to seek feedback or
discounting it, and seeing disagreement as a personal slight. Even more
corrosive behaviors include leaders flouting rules because they don’t believe
the rules apply to them, indulging in frequent self-glorification, treating
colleagues or customers arrogantly, violating company values, and failing to
model exemplary behavior while insisting that others do so.
Whether these behaviors indicate genuine hubris or not can come
down to a matter of frequency, degree, or number. Take frequency: Everyone can
be overconfident from time to time or occasionally try to deflect blame. But
someone who consistently engages in those behaviors is in more danger of
falling into full-blown hubris than someone who sometimes lapses. As for
degree, someone who is impervious to criticism, for example, may not be as far
along on the road to full-blown hubris as someone who is openly contemptuous of
critics or, even worse, someone who punishes those critics. Hubris can also be
a matter of number, where the sheer volume of various behaviors reaches
critical mass, though no particular behavior is invariable in frequency or
degree.
The senior business leader of a global financial-services firm was
tapped to lead the $100 million transformation of the company. The company had
decided to radically alter its go-to-market strategy and the customer-facing
technology that would support it. The project entailed multiple operational,
reputational, and financial risks and was likely to be hampered by outsourcing
and technological constraints, as well as turf struggles. The business leader
had long been seen by peers as excessively image-conscious, always insisting on
receiving good news — a characteristic whose consequences were to be
greatly magnified on the much bigger stage of organization-wide transformation.
He soon created an environment that permitted no dissent, imposed impossibly
tight deadlines for various work streams, and airily dismissed the problems
of insufficient time and resources.
As the project deteriorated, the 10-member project team went from
warning him about problems to concealing them, because they feared his
withering criticism. The frequency of team meetings dwindled, and he began
communicating to the team primarily through two of its most pliable members.
When major problems emerged in early-stage implementation, business leaders
whose P&Ls depended on the success of the project voiced their concerns.
They were unable to break through the wall of happy talk around the leader.
Eventually, the dominoes began to fall: Employees disengaged, contract disputes
with the IT outsourcer erupted, costs ballooned, and customer data was
discovered to be unreliable. Ultimately, the company pulled the plug on the
project and showed the leader the door. Tens of millions of dollars and more
than a year had been wasted.
Establish mechanisms for
speaking truth to power.
Beyond subjecting
themselves to periodic, mandatory assessments such as performance reviews,
leaders should consider mechanisms as simple as the old-fashioned suggestion
box. One leader we know recently installed one outside his office and was
surprised to receive a heavy dose of harsh, anonymous feedback about his aloof
leadership style. Another executive solicits candid feedback via email from
team members on what the team could do differently, what they could continue
doing but improve, and what they should stop doing altogether. Each month he
selects the most incisive response, reads it aloud at the next team meeting,
and praises its author — a practice that encourages transparency, new
thinking, and constructive criticism.
In several organizations, we have introduced a practice we call
“the CEO letter.” Periodically, employees are invited to write a letter to the
CEO. Participants could include everyone in the organization or only the top
tiers of leadership. Their letters offer advice to the CEO and detail the one
thing in their work that they are proudest of (which encourages a spirit of
constructive and specific commentary). The experience can expose CEOs to
problems they had refused to see, provide them with perspectives that might
otherwise get filtered out, and give them a feel for the values and motivations
of their people.
Consciously harness the
power of doubt in decision making.
Although 20 percent of the
CEOs in our global study said they never doubt themselves, 71 percent not only
admitted to doubt but also indicated that they embraced it as a basis for
making better decisions. The CEOs we spoke with said that one good way to embrace
doubt is to use risk management techniques to increase the odds that what they
don’t know — or what they refuse to see — won’t hurt them. Their favored
techniques include scenario planning and contingency planning. Many also use
techniques such as wargaming or appointing a devil’s advocate at meetings to
surface contrary views and foster a culture of constructive dissent.
Teach teams the value of
humility.
When a leader’s hubris
infects a larger group, or when past successes lead to feelings of invulnerability,
teams can exhibit group hubris. The telltale signs of team hubris are an
internal focus on the group’s own processes, little diversity of thought, and
incuriosity about the outside world. Although the team may seek data or other
evidence to support a business case or an initiative, it may have no mechanisms
for acquiring and applying new knowledge. Perhaps the surest indicator of team
hubris is the team members’ distance from customers or seeming indifference to
them. At a recent leadership summit at an insurance company, we asked how many
of the 250 participants had talked to a customer within the previous 30 days.
Only about 50 hands went up.
Because team hubris lives in dynamics, the best way to address it
is to put teams through vivid experiences that change those dynamics. The
methods can be straightforward. Some teams put an empty chair representing the
customer at the table — reminding the group of the customer’s importance
and absence. At other companies, a member of the team plays the role of a
customer while other members of the team make a presentation to him or her.
Before a recent meeting of senior leaders at a professional services firm, we
removed all the tables from the meeting room. Because partners in such firms
are often isolated in separate fiefdoms, they can be especially prone to
hubris. The partners on the firm’s leadership team were at first disconcerted
by finding themselves without a familiar position from which to launch their
opinions. Given freedom of movement, however, they were soon interacting and
exchanging information in ways they hadn’t done before.
Some cases call for more elaborate methods of remediation. A CIO
had learned from a succession of jobs that he exhibited some of the behaviors
that indicate hubris. As soon as he left a company, the IT organization he had
built there quickly fell into disarray, stoking his fears that he was a
micromanager who thought he had all the answers and left little room for other
people’s views or their development. Moreover, he had come to believe that
leadership teams in IT departments were particularly prone to hubris because
many of the people they led were introverts who tended not to speak up or call
their bosses to account. Determined not to let that happen in his new job, he
created a “shadow cabinet” composed of 10 members representing a cross-section
of the IT department’s 3,500 employees, those unlikely to ever otherwise
participate in the leadership meeting. Today, the shadow cabinet observes the
deliberations of the leadership team and then offers a live critique of
members’ strategy, assumptions, and behaviors in a “fishbowl” environment
— shadow cabinet members sit in an inner circle while members of the
leadership team sit on the periphery.
Cultivate a culture that nips
hubris in the bud.
Leaders learn hubris. Their
greatest teacher is often a culture that rewards arrogance or looks the other
way when stars misbehave or trample on others. Creating a culture that
discourages such behavior can begin with a cultural diagnostic conducted with
senior leaders. Part of that diagnostic can focus on values such as openness,
collegiality, diversity of thought, and other values that run counter to
hubris. Leaders can be asked the extent to which they encounter specific,
relevant behaviors that align with those values, as well as troubling behaviors
that may need to change. For example, they may be asked to what extent they
agree with a series of descriptive statements: “The organization is open to new
ideas from whatever source.” “Disagreement is welcomed.” “All leaders are
expected to play by the same set of rules.” These statements, and others like
them, would together cover the many behaviors that signal the degree to which
hubris is present in the organization.
In responding to the diagnostic, leaders need not act as
anthropologists and analyze the rituals, unspoken norms, attitudes, and myriad
other factors that figure in culture. They need only judge the extent to which
people in the organization exhibit the behaviors that characterize certain
values and the desired culture those values frame. And it is behavior
— what people actually do — that determines the extent to which the
desired culture is a reality.
Hubris is a progressive disease. The longer it goes untreated, the
worse the disease gets. And it is notoriously difficult to reform leaders who
suffer from full-blown hubris. That’s because one of the chief characteristics
of hubris is blindness — the inability to see it in oneself, much less
admit it and do something about it. But if you intervene early and often with
individuals, teams, and the culture, you may save not only careers but also
your company.
https://www.strategy-business.com/article/How-Leaders-and-Their-Teams-Can-Stop-Executive-Hubris?gko=112ac&utm_source=itw&utm_medium=20180118&utm_campaign=resp
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