Why do organizations fail? That is a question that business school professors use to provoke students to investigate reasons why companies did not fulfill expectations. One reason that noted author and global consultant Ram Charan gives, and has written extensively about it, is a failure of execution. Companies dream big, but the rest of the organization never embraces that dream and it fails.
While execution is a prime reason, I believe there is another, perhaps deeper, reason-one that is more encompassing: ego. Put more bluntly, outsized ego.
Let's look at two examples. Former Secretary of Defense Donald Rumsfeld used his power and sense of entitlement to manage the war in Iraq. Under his tenure dissent was quashed, generals were cowed and strategic changes were never implemented. As result, he was forced out in November 2006 after the Republicans lost control of Congress. Meanwhile, the war rages on.
Similarly Citigroup, one of the world's leading financial institutions, has lurched from crisis to crisis. As reported by Fortune magazine, some problems were provoked by the missteps of its CEOs, from Walter Wriston through John Reed and Sandy Weill. Each of these CEOs was a talented senior manager, but each overreached and stretched for a goal too far. As a result, Citigroup suffered.
Rumsfeld and the Citi CEOs put their egos in front of more prudent management. While ego is necessary to good leadership, it should not be the basis for it. Senior leaders are always under pressure to perform. Sometimes the pressure to act overrides rationality.
Taking time to reflect before making critical decisions may avoid some egregious decisions and mistakes. So before acting, ask yourself the three following questions:
Why am I doing this? Leaders want to put their stamp on the organization. They want to make their leadership felt. This is fine, but sometimes this pressure can lead them to make decisions that are more about themselves than about the company. They are more eager to see their name on the cover of a business periodical than to practice sound management. The late president of Turkmenistan, Saparmurat Niyazov, ordered that the months of the calendar be renamed in honor of him and his family. Out-of-control ego can be expensive and so it is wise to ask why before acting. Doing something for the sake of your ego is unacceptable.
What will be the outcomes? Pushing for growth or to make a new acquisition can stretch the company beyond its capacity to deliver. It can cripple the company's ability to remain competitive. Therefore, senior leaders need to think about whether the goal or the outcome is achievable as well as sustainable. From time to time we learn of companies stretching themselves to achieve jumps in market share. Everything becomes geared to volume rather than to profits; extra resources are applied to drive the market share skyward. While share may rise, the cost in marketing dollars-as well as extra resources and manpower-is often too high to justify the increase in volume.
How will people support it? Here is the part that many leaders get wrong. For the best of reasons they point their companies toward new ventures without checking two things. First, do we have the people in place to make it happen? And will our team support this extra effort? Getting the right people in place is one part of the equation; it may require training and development as well as hiring new people. Gaining buy-in is often presumed rather than groomed. If employees do not understand the reasons why they should do something new or different, they will not do it. Resistance can doom many initiatives to failure. IT leaders know the price of change more than most since they are the ones charged with implementing system upgrades that many employees may find onerous.
Make no mistake: Ego is a vital component of leadership. Ego puts steel into the spine; it is fundamental to getting up and making things happen. Ego is critical to self-definition. Without it the leader would defer to others because he would believe that they could do the job better. Therefore, ego is essential.
At the same time, ego can also be that inner voice of wisdom that says, "Hold on a minute. Why are you doing this?" Paying attention to the answer especially when it bucks the expectations of others-or even your own expectations-is vitally important. Listening to and acting on that voice is also one of the hallmarks of leadership.
John Baldoni is a leadership communications consultant who works with Fortune 500 companies as well as with nonprofits, including the University of Michigan. He is a frequent keynote and workshop speaker, and author of six books on leadership, the most recent being How Great Leaders Get Great Results. Visit his leadership resource website at www.johnbaldoni.com.
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