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How Out of Control Ego Caused the Economic Crisis

By January 16, 2017Ego

Wall Street is in the tank. Detroit is teetering on the edge. How did these pillars of American business come tumbling down? There are various points of view on what happened in corporate America, but it’s instructive to take a look at who was at the helm of these companies when the ship ran aground.

When it became evident things were going badly, more than one thousand CEO’s jumped ship or were given the boot. Most left without being held accountable for their failures – and astonishingly, many were handsomely rewarded for failing dismally.

So here’s what I don’t get. We hire leaders for their superior leadership traits and capabilities. It’s their job to formulate a vision of success, devise strategies to achieve the vision, and inspire others to work together toward that goal. Along the way, leaders are supposed to assess the positive and negative implications of their strategic decisions, balance the risks and rewards, and maintain a long and short-term focus.

You have to wonder how the handpicked executives of AIG, Washington Mutual, Lehman Brothers, or General Motors, to name just a few, didn’t see or couldn’t stop the massive losses that occurred while they were in charge. What were they doing? It seems obvious they were taking care of themselves; feeding their egos and their personal bank balances.

When the chief executive officers of Ford, Chrysler and General Motors headed to Washington to plead their case for a government bail out they seemed genuinely stunned at the public uproar that came from their mode of transportation. Rep. Gary Ackerman, D-New York, called it a “delicious irony” to see the men arriving separately, each by private, luxury jet “with tin cups in their hands.” He then asked them, “Couldn’t you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it.” I believe it never even crossed their minds that taking jets to Washington was a bad idea. Why? Because their egos are bigger than their brains.

Leaders with unmanaged and out of control egos lack sensitivity and perception – unless something pertains to their needs and desires. Their focus isn’t on company goals, it’s on Me, My, and I! And why doesn’t anyone else in the company point out the problems? Ego-driven leaders don’t invite advice and input from others so they don’t get the feedback they need. They foster an atmosphere where underlings don’t dare offer information or perspectives they know their bosses don’t want to hear.

Howard Schultz of Starbucks is a perfect example of a leader who recognizes and manages his ego. Notice the lack of ego, the authenticity and the humility in the message Schultz gave his executive team recently when addressing the growth challenges Starbucks is experiencing. “I have said for 20 years that our success is not an entitlement and now it’s proving to be a reality. Let’s be smarter about how we are spending our time, money and resources. Let’s get back to the core. Push for innovation and do the things necessary to once again differentiate Starbucks from all others. We source and buy the highest quality coffee. We have built the most trusted brand in coffee in the world, and we have an enormous responsibility to both the people who have come before us and the 150,000 partners and their families who are relying on our stewardship.”

The shocking state of our current economy could have been avoided if more leaders of major organizations had displayed this kind of genuine leadership thinking and behavior. True leadership traits come from being authentic, real and having a collaborative spirit. Unfortunately, it seems many leaders in corporate America believe having humility is a weakness, when in fact it’s a competitive advantage and an asset.

The overblown egos of the leaders at AIG, Lehman Brothers, Washington Mutual and elsewhere are to blame for their miserable performance and failure. In today’s economic environment the companies that will survive and even thrive, will be led by authentic, spirited leaders who care about the long term implications of their decisions and strategies for the organization, their employees, the shareholders and the economy.

So what’s to become of this breed of ego-centric American corporate leader? They’re obsolete. They have become poster children for the message that unmanaged egos are a serious corporate liability. I can only hope they’re identified and fired as quickly as possible so a new era of corporate leadership can begin. When choosing replacements for these self-serving dinosaurs let’s focus on identifying, recruiting and promoting people with a strong spirit of authenticity, collaboration and humility. They’ll bring fresh vision, passion, and a new, spirited culture into the boardrooms of America and beyond.