What makes even the brightest people sometimes squander their gifts in amazing, breathtaking acts of stupidity? Consider the following rear-view mirror assessments of the 2008 market meltdown:
- “What the hell were we thinking? These things were way too complicated!”
– Jamie Dimon, CEO, J.P. Morgan Chase, October, 2008 - “I am in shocked disbelief at our economy’s collapse.”
– Allan Greenspan, architect of America’s meticulously crafted economy - “What happened was not in my range of realistic scenarios.”
– Ken Griffen, CEO, Citadel Insurance Group ($15 billion fund), December, 2008.
The research on failed business decisions indicates clearly that the key decision makers knew their world was changing yet chose not to respond in a timely fashion … and sometimes not at all. Leader after leader, when faced with severe and daunting challenges, chose not to “think through” their new reality.
Sydney Finkelstein, in his 2004 analysis of why smart executives fail, found that precipitous business failures are caused by four destructive patterns of behaviour that set in, without anyone noticing them, well before a business goes under. These four syndromes involve:
- Flawed executive mind-sets that throw off their perceptions of reality;
- Delusional attitudes that keep this reality in place;
- Breakdowns in communications systems developed to handle potentially urgent information; and
- Leadership qualities that keep them from correcting their course.
The normally assumed reasons for business failures – that leaders are stupid, couldn’t have known what was coming, weren’t trying hard enough, lacked the necessary resources or were simply a bunch of crooks – are not supported by the evidence. Rather, Finkelstein suggests that “Most of the great destroyers of (corporate) value are people of unusual intelligence and remarkable talent. They are almost always capable of being irresistibly charming, exercising great personal magnetism and inspiring others. Yet when it comes to the crunch, these people fail monumentally.”
Why is this so? Madeline Van Hecke (Blind Spots: Why Smart People Do Dumb Things, Prometheus, 2007) has some answers worthy of reflection. She advises that it is our hard-wired “blind spots” that prevent us from understanding perspectives that don’t fit normal expectations. And, in a complex, exponentially changing, discontinuous business environment, these are surely becoming the norm. If we don’t know what these mental barriers are, how can we compensate for them?
Van Hecke claims that “People who achieve Nobel Prizes do so not because their work involves a high level of abstraction but because they overcame blind spots. They saw possibilities others rejected out of hand or grasped a perspective no one else had considered.” In other words, they chose to take a different course than did their colleagues – simply in stopping to think, for a long time, about phenomenon that others seemingly took for granted.
And what are some of these blind spots or mental traps?
- Not stopping to think. It is remarkable how little we actually think. While this is a neurological coping strategy, we especially don’t think when we are emotionally distressed, fatigued, have too much information to process or are lulled by routines. (And one’s intelligence has little to do with the ability to think.)
- Thinking you “know” the answer. Leaders need to embrace their ignorance as an opportunity and acknowledge the reality that no one can know everything.
- Filtering out the familiar. We habituate to our normal sensory stimulation – when we get used to something, we no longer see, hear or smell it. Therefore we fail to notice exceptions and extraordinary data. And these can prove to be either lost opportunities or the cause of inordinate troubles.
- Lack of self-knowledge or a failure to see ourselves as we really are. Wisdom comes when we allow our experiences to transform us rather than merely inform us.
- An inability to shift focus and manage multiple perspectives. Our “default setting” is to view the world from our own unique vantage point even after acknowledging opposing positions.
- Evaluating evidence subjectively. When we really want to believe that something causes something, we can easily find a way to do so. We accept simplistic explanations rather than examining multiple causation. The mind also has a difficult time accepting flukes, coincidences and randomness.
- Missing the big(ger) picture. The inability to take a systems perspective too often prevents us from seeing the forest for the trees.
There are, of course, other blind spots, but these are sufficient to demonstrate the point. So, as a consequence, when leaders fail, it is likely because they:
- See themselves and their organizations as dominant and therefore immune to the attendant risks of an uncertain business environment;
- Think they have all the answers (borne of allegedly impeccable internal experts) and thus often dazzle others with their decisiveness;
- Make sure everyone on their team is loyal and fully supportive of their ideas and directions, ruthlessly eliminating anyone who might undermine their decisions;
- Treat intimidatingly difficult obstacles as simply temporary impediments that can be easily overcome; or
- Never hesitate to return to the strategies and tactics that made them successful in the first place.
Leadership is a long process of self-development and self-discovery. For genius to succeed, it must listen, truly listen, without pre-conceived notions or premature judgment, to an inner voice that acknowledges and reconciles (vs. rationalizes) the mental barriers that plague us all as human beings. True genius – the readiness to find or draw novel distinctions, explore new and often contrary perspectives and display a keen sensitivity to context and nuance – is reconciling the necessity for superior confidence with the requirement of profound humility. That is the only talent that can enable leaders to survive and thrive when others fall victim to their own certitude.