Leadership Bubbles Need Some Fresh Air

Everyone’s eyes were on the senior executive as he stood in front of the boardroom and presented his case. He was advocating for our company to make its first acquisition. It was a pretty good pitch. Lots of slides with cool charts and graphs and all that.

The only problem was that it made no sense.

The chairman of the board -- a famous VC and former executive who had backed the company since day one -- was the first to speak. He said, “How can you even begin to decide if this is the right move when I don’t think you folks have really come to agreement on your corporate strategy yet?”

Took the words right out of my mouth. While I couldn’t have been more pleased to see our chairman speak so decisively, I had mixed feelings about the interlude. The original proposal was such a rookie mistake for a top executive of a public company I began wondering what I’d gotten myself into.

Nevertheless, the CEO and I took the management team through a strategic planning process. By engaging key employees, customers, board directors, and research analysts in the process, we were able to come up with an entirely objective view of the company’s situation and ultimately devise the right direction for the company. It was a great success.

Sounds like a piece of cake, right? Not exactly. It was an uphill battle the whole way. It took a tremendous amount of effort, time, and energy to engage the management team and get them to essentially open up to something new. The idea that they couldn’t do it alone in a vacuum was entirely foreign to these folks.

Months into the process, when reality hit them right between the eyes and they finally “got it,” it was like a giant light bulb went on in the room. Still, the obstacles to get there were way bigger than they had to be. They were nearly insurmountable.

And therein lies the rub. The biggest problem in corporate America -- or any company, for that matter -- is that executives and business leaders have a natural tendency to live in a vacuum, a bubble of their own making. And let me tell you, the air gets pretty stale in there, that’s for sure.

I’ve seen it over and over again. It’s even true of small businesses and startups. It’s hands-down the number one failure mode for any company, big or small. There are a number of reasons for that. Unfortunately, not a single one of them is legitimate. They’re all myths.

Myth 1: Success breeds success. There’s an old saying on Wall Street: past performance is not indicative of future results. That is, without a doubt, one of the most powerful axioms in all of business. It’s an absolute truth. And the idea that past success puts you in a special category where your probability of being right is higher than everyone else’s is a complete and total myth. God knows, I’ve seen dozens of highly accomplished executives make really boneheaded mistakes. Close up and personal.

Myth 2: Executive teams are exclusive clubs. Why did famed management consultant Peter Drucker meet so much resistance trying to teach corporate America how to think of employees as assets, not expenses? Because that’s not what they wanted to believe. They wanted to be in an exclusive club, sitting around a table making important decisions that others weren’t capable of making. They couldn’t let just anyone in the room.

Myth 3: The need for confidentiality. Yes, if you’re a public company there are fair disclosure rules. And no, you don’t want to drag your customers through the mud or get your employees all riled up and insecure that change is in the works. But guess what? There are very simple and straightforward ways to solicit qualitative and quantitative feedback from your stakeholders without making a mess of things. And the idea that you can’t is just a self-serving smokescreen to support the other two myths.

Yes, I know that executive management teams can and often do bring all sorts of different perspectives to the boardroom. But here’s the thing: The groupthink and insular behavior that often occurs inside a management bubble can be extremely dysfunctional. And its tendency to reinforce the status quo is equally powerful.

If you’re going to be a top dog with huge responsibility that affects the lives, livelihoods, and investment portfolios of thousands of people, then you should be held accountable. And the one duty that corporate officers and directors are absolutely not held accountable for is the duty to not insulate themselves in a bubble, breathing their own fumes. That destroys companies, jobs, and shareholder value. Period.

Look. I once knew a CEO who had been driving the public company he ran into the ground for many years. He approached me -- not as a consultant -- but to join his executive team. I told him I couldn’t do that but would love to help him turn the company around for a lot less than it would cost him to hire me.

He wouldn’t do it, said he had a thing about not hiring consultants. Want to know what I think? I think he had a thing about wanting to control his domain. Want to know how that turned out? That company no longer exists. Sadly, it didn’t have to be that way.

I’m pretty sure all those companies that let Peter Drucker in to advise them back in the day -- Coca-Cola (NYSE:KO), GE (NYSE:GE), IBM (NYSE:IBM), Intel (NASDAQ:INTC), Toyota (NYSE:TM), to name a few -- faired pretty well. Why? They got some fresh air into their management bubbles.

Think maybe the folks running Sony, Hewlett-Packard (NYSE:HPQ), BlackBerry (NASDAQ:BBRY), Nokia (NYSE:NOK), Sprint (NYSE:S), Bank of America (NYSE:BAC), and Radio Shack (NYSE:RSH) could use some of that?