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Why CEOs Fail
Sorry about the obsession with this issue. You probably all think that I've got CEO's failing on me right and left. Actually nothing could be farther than the truth at this moment in time. I've seen a lot of failure over the years though and for some reason, I am thinking about it these days.
My good friend Dr. Dana Ardi (remember her column from The Industry Standard?) suggested a good book to me called Why CEOs Fail.
Here are the eleven reasons
Arrogance— you think that you're right, and everyone else is wrong.
Melodrama— you need to be the center of attention.
Volatility— you're subject to mood swings.
Excessive Caution— you're afraid to make decisions.
Habitual Distrust— you focus on the negatives.
Aloofness — you're disengaged and disconnected.
Mischievousness— you believe that rules are made to be broken.
Eccentricity— you try to be different just for the sake of it.
Passive Resistance— what you say is not what you really believe.
Perfectionism— you get the little things right and the big things wrong.
Eagerness to Please— you try to win the popularity contest.
I haven't read the book and can't recommend it, but these reasons ring true to me. I sure spend a lot of time and effort trying to avoid these behaviors myself.
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Tracked on Feb 13, 2004 9:02:41 AM
Posted January 21, 2004 in Venture Capital and TechnologyComments
Ugggh! I read that list of the dreaded 11 and I can remember times when each of them could be applied to me. I think Fred et al are right in pointing out that there is only one first time as a ceo and that it is a lonely place a lot of the tiime.
The aspect of the job I found most challenging was recognizing that you are neither wholly in management's nor the board's camps. At times you must represent one side to the apparent or perceived detriment of the other. Oddly, the CEO in some ways has everyone and no one as his/her constituencies.
This is a challenging position to be in because it is hard to build trust in both camps which is essential to success. Of course, the "right" solution to this connundrum is to always look out for the best interests of the company. However, this is a glib and non-specific solution as "right" means different things to different people at different times and over different time horizons.
In any event, I tried to define "right", ultimately, as what was best for the shareholders long term which sometimes meant making decisions management did not like and sometimes going up against the board which is never easy.
Having been a CEO once, I am confident about a couple of things:
* next time, I will avoid many of the now obvious mistakes I made the first time around. Although every company is different, companies are similar enough in their development that it is possible to identify and overcome some "classic" start-up developmental challenges. In other words, diligence, vigilence, and a bit of foresight ought to help me avoid making the same mistakes twice.
* I will surely make new mistakes but I will take less time to identify those mistakes. I think the experience of being a CEO and running a company provides a perspective on how executive decisions impact organizational development that cannot be learned from any other vantage point in the company. Once you get a sense of how a decision is impact the company, you can then determine if you erred and take corrective action more quickly. In other words, I think I have learned how to "fail faster" so I can get to the right solution if I don't nail it the first time.
GRG
Posted by: gordon | Jan 21, 2004 8:40:56 PM
Fred--thanks for these good posting on this (very) interesting topic.
Posted by: Susan Mernit | Jan 21, 2004 9:20:59 PM
Thanks for the post, Fed. I'm suspecting that the subject of failure is much on your mind because the tech economy is heating up again, things are starting to buzz, and you don't want the insanity of "Dotcom '99" to rear its ugly head a second time. All symptoms of well-justified caution etc.
Posted by: hugh macleod | Jan 22, 2004 8:05:19 AM
Fred - interesting post. Having been CEO twice now (once at 20 and the next time at 28) it has been humbling and a bit amusing to see where and how I've grown. I think getting married and having kids changed me in many positive ways. Now that I'm running a P&L in a large company, I've been applying some of Drucker's approaches to actually track my performance (for my personal growth, nothing official) instead of just relying on introspection.
I would add a twelfth reason: trying to do the right thing in the wrong ways. Most entrepreneurs don't think of or aren't adept at "selling" their point of view to the board or managment team once their company gets beyond the garage stage.
Posted by: Omar Javaid | Jan 24, 2004 5:43:24 PM
Great post... as Gordon can attest I've been all of those things at least six times a day. You could actually list all of those as stregths if you took them from the extreme... it seems that when these things get too intense that they are take over and have a negative impact. It certainly is a fine line, and I have to say that your other post about being a second time CEO is spot on. Weblogs, Inc. is going so well thanks to all the times we tripped over each other at SAR.... which was mostly my fault as CEO.
Posted by: Jason McCabe Calacanis | Jan 28, 2004 1:21:03 PM
Why CEO Fail:
People. As simple as that.
Fortune did an aricle with this very title a few years back. I still keep the issue on my bookshelf.
It said:
"So how do CEOs blow it? More than any other way, by failure to put the right people in the right jobs - and the related failure to fix people problems in time."
This will resonate with anyone that's been a CEO before.
Posted by: EdSnate | Feb 18, 2004 9:13:19 PM
Avoiding generic, overly broad traits can't map a path to success.
Posted by: rickb | Mar 9, 2004 1:48:43 PM
rickb, what do you mean? (Your comment is kinda generic .)
Posted by: EdSnate | Mar 13, 2004 12:37:38 PM
There's supposed to be a smiley/winky face after the "generic" comment. ;)
Posted by: EdSnate | Mar 13, 2004 12:39:28 PM
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Q. How does a CEO fix his company’s technology problems?
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Posted by: deborah russellbrown | Mar 16, 2004 7:47:40 PM
The Manager : Arrogance - Yes, I think that is the first reason but the family can change you in many positive ways "hugh macleod" comment.
Posted by: The Manager | Aug 12, 2004 3:29:58 PM
Just over two years in a dot com, and what I learnt can be distilled into this: Companies (read CEO's) fail due to two things - greed & arrogance. Address these two issues and the rest will take care of themselves (kinda like Pareto analysis).
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I was doing some research and found this list. I cannot disagree with it. It is accurate and insightful. As a CEO, I have faced failure and experienced success. In most cases, my success and failure came down to my own personal frailties. Most items on this list represent extreme behavior and are often linked to personal insecurity. It is interesting to link insecurity to a CEO but take a look around, many CEOs are just that. Leaders, (some CEOs) have a clear sense of self. That is one way they are capable of leading. People can sense shaky character and pick up when a leader (CEO) is disingenuous. Most of this list describes actions that are disingenous to what we expect from a leader (CEO).
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