Why Smart Executives Fail

I'm just reading the book about failures in the business world. It's called why smart executives fail. It deals with the question how can executives that were chosen based on an outstanding track record blunder, in the hundreds-of-millions dollars.

Anyway, one of the points that caught my attention was that one of the reasons of the mistakes is the executive's misconception of reality. In essence they don't understand the world around them. He mentions some reasons. One, they don't want to understand. Another is they can't understand.

They don't want to understand because they are more loyal to their egos than to the truth. For example, a company like Rubbermaid built a self image of being a highly prolific company in terms of product innovation and roll out. At its heyday, producing about 360 NEW products a year, it was yielding huge profits mainly because of its rapid rollout of products resulting in a monopoly in many product categories. Times changed and competitors were catching on. Soon they were playing an entirely different game (i.e. new reality), the only problem is they didn't realize it. They kept doing what they did best, but no body cared. The new game was competitive prices, not new products. Prior, Rubbermaid could afford to hype the prices because retailers were buying from them; later similar quality with lesser prices was the norm.

Anyway, they didn't cope. They didn't have to; they were Rubbermaid! It all seems so straight forward now, but I have to realize that at the time, with so much conditioning of corporate culture their choices made sense.

The other branch, being they really couldn't know has to do the culture that is instilled and the system that is installed in a company. In a culture where truth is suppressed with heavy direct or indirect penalties, it is difficult to stand up and express your thought especially if they contradict or hold a consequence with the superiors. The culture has to be that of a celebration of truth and the people who are brave enough and smart enough to point it out. That might mean that the company creates systems that make expressing the fact and truth in the best interest of the worker and the supervisor.

To be honest, I couldn't help but feel that the central trait that would remedy this problem outright is humbleness. The thing that leads to humbleness, to my mind, is knowing yourself.

Knowing yourself will help you realize all the fantastic things that you can do and all the things that you can not. It will highlight your strengths and your weaknesses. Embracing this fact will lead to synergy because you'll start asking others for their insight in a way egocentric people won't, indeed can't.

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