straight-up cure for CEO hubris
By Al Lewis, Staff Columnist
Friday, January 19, 2007
This week it was Walter Forbes,
former chairman of Cendant Corp., sentenced to prison for
fraud. Forbes follows Enron's Jeff Skilling, WorldCom's Bernie
Ebbers, Tyco's Dennis Kozlowski and Adelphia's John Rigas. In
March, former Qwest chief executive Joe Nacchio stands trial.
"It's the same story," said Mathew Hayward, an assistant
professor at the Leeds School of Business at the University of
Colorado at Boulder. "All of these guys were tremendously
successful, and yet they still had this desperate need to
purport to be something they were not."
Hayward is the author of a newly released book, "Ego Check: Why
Executive Hubris is Wrecking Companies and Careers and How to
Avoid the Trap."
Anyone who is handsomely paid to make judgments or predictions
should read this book. It's filled with examples of how hubris
can kill otherwise charmed careers, from Hewlett-Packard's Carly
Fiorina to America International Group's Hank Greenberg.
Hayward has been a student of destructive egos since the 1980s,
when he worked as an investment banker and then a venture
capital investor in Australia, advising high-profile CEOs on
mergers and acquisitions. He has battled this problem in making
his own decisions.
"The best deals we ever made were when our egos were in check,"
Hayward said. "The worst were when our egos were out of
This is the paradox of success: The very traits that launch
people to the top -- supreme confidence and unabashed
salesmanship -- can also send them tumbling to the bottom, which
in some recent cases has included prison cells.
"Overconfidence is rife in corporate America," Hayward said.
"It's the most fundamental error of judgment that any executive
It takes overconfidence just to be in business. History shows
that most startup enterprises flop and that as many as 80
percent of all mergers and acquisitions fail to deliver on their
promises of higher value. But the people involved in these
pursuits never make mention of these probabilities. Instead,
they focus on the slim chances of success.
This overconfidence becomes insidious when it is based on
falsehoods. Too often, corporate executives are surrounded by
praise just because they are the boss. The worst CEOs simply
start to believe their own press releases and dismiss any
information to the contrary.
"There's a tremendously fine line between being supremely
confident and having an out-of-control ego," Hayward said. "And
you can cross that line at any minute of any day in a way that
can destroy the reputation of your company."
Here are four things Hayward recommends to avoid crossing the
Leaders need introspection to be sure they are not getting too
full of themselves. They should not be motivated by a need for
incessant praise or validation. This isn't as easy as it
sounds, with all the suck-ups that surround a top executive:
"The more successful and powerful you become, the harder it is
to have a good sense of yourself," Hayward said.
Leaders need trusted advisers, not sycophants. "Warren Buffett
won't make an investment decision without running it by (his
associate) Charlie Munger," Hayward said. "Steve Balmer (of
Microsoft) always gets Bill Gates to buy in."
Leaders must constantly gather and respond to new information,
or they risk kidding themselves about their situation. In his
book, Hayward discusses how Merck mishandled allegations
regarding the safety of arthritis drug Vioxx, ignoring feedback
that could have prevented billions in claims.
Leaders must manage the possibility that their actions may have
undesirable consequences. Only the arrogant believe they can
predict the future. Wise leaders try to anticipate all possible
It's not likely Hayward's book will change the world. I say
this because people with big egos don't recognize their often
fatal flaws. They are like alcoholics who do not believe they
have a drinking problem -- and don't want to read about it,
"I've written the book in the hopes that some people will try,"
If nothing else, it makes a great gift ... for the boss.
Al Lewis' column appears
Sundays, Tuesdays and Fridays. Respond to Lewis at
denverpostbloghouse.com/lewis, 303-954-1967 or