Most businesses are run by highly intelligent people. When these businesses fail, it’s usually due to the stupid mistakes of these otherwise smart people.
Whether a product is not good enough or simply missing, the wrong decisions of intelligent people are at the heart of the problem.
There are too many examples of stupid mistakes that cost large companies dearly, but one of my favorite examples is Kodak, which was the first to develop digital photography technology but waited a long time before presenting its findings because its leaders feared that it can negatively affect the company’s core business. This mistake led the company to bankruptcy. Another good example is Xerox, the company that missed the opportunity to launch the first PC with a graphical user interface after inviting Apple employees to copy the technology and apply it to future products. We all know how this story ends.
It is easy to say that these leaders have simply not been careful enough, as this idea is reassuring and makes us think that this cannot happen to us. However, the truth is that we are talking about intelligent people with impeccable qualifications. You can be sure that they were careful in their actions. What, then, is the reason for their failures?
Sidney Finkelstein, a professor at the Tuck School of Business at Dartmouth College, has spent six years searching for an answer to this question. He and his colleagues surveyed 51 of the world’s most famous business failures, interviewing directors and managers at all levels of the hierarchy. the reason for their catastrophic decisions.
Finkelstein and his team found that the bad decisions these intelligent leaders made were sometimes intentional and other times not. But the common denominator in all cases is the existence of a clear behavioral pattern of arrogance and arrogance that can bring down even successful companies.
Here are some things Finkelstein encounters among all the leaders who have made colossal mistakes at one stage or another in their careers:
They considered themselves and their companies untouchable
It is good to have ambitious goals and a healthy sense of pride, but you should not take your success for granted. The leaders we are talking about were so obsessed with their ideas that they could not even imagine a situation in which one of their competitors would be able to catch up with them, let alone overtake them. They did not think that the current market situation could change and that companies could emerge to shake the status quo. These unrealistic expectations have made failure inevitable. That is why it is important for leaders to constantly question their every idea and thought, especially when they are at the top.
They could not distinguish their own from the company
Leaders in the Finkelstein study were obsessed with corporate image. As a result, they paid more attention to maintaining this image than to managing the company effectively. This has led to stagnation and corruption. A leader who sees his reflection in the company is more likely to cover up something that would tarnish that image, whether it’s poor sales, defective products, or bad investments.
They thought they were the smartest people in the room
Most intelligent leaders are aware of the extent of their knowledge and mental abilities. In many cases, they begin to perceive their intellect as the defining feature on which their identity is built. These leaders are so confident in their intellectual superiority that they will not consider it necessary to pay attention to other people’s opinions. They make quick decisions and refuse to give answers when asked about the reasons for making specific choices. Although they largely correspond to the television image of the strong leader, the reality shows that this behavior leads to big mistakes. You are much more likely to fail when you do not take into account the fears and anxieties of your colleagues.
They were surrounded by people who always agreed with them
Some leaders are so obsessed with the idea of loyalty that they expect unconditional support for every decision they make. This alienates the most valuable employees and silences voices of opposing views that may benefit the company. When a leader views dissent as disloyalty and any opposition as undermining his authority, there will be no one left in the company who can signal the problems it faces.
They ignored all the warning signs
Some leaders believe so strongly in their ideas and views that they are willing to tear the company to the ground, as long as it helps them achieve their goals. Unlike the above examples, these leaders accept a variety of suggestions and advice, but this does not mean that they are willing to give up their sole power over the decision-making process. Consistency and perseverance are good leadership qualities, but they should not lead to ignoring warning signs that the company is headed for the abyss.
They relied too much on things they had worked on in the past
Analyzing the successes and failures of the past can help you improve your business, but the experience should not be the main factor on which to base decisions about the future of your company. Finkelstein’s team found that many failed leaders used a key moment in their careers as a template and constantly tried to replicate it, even though past strategies no longer made sense. Customer needs, technology, and market competition are constantly changing. For this reason, successful leaders are those who know how to adapt to their environment.