Right Attitudes

Ideas for Impact

Icons

Beware of Key-Person Dependency Risk

By

Key-Person Dependency Risk is the threat posed by an organization or a team’s over-reliance on one or a few individuals.

The key-person has sole custody of some critical institutional knowledge, creativity, reputation, or experience that makes him indispensable to the organization’s business continuity and its future performance. If he/she should leave, the organization suffers the loss of that valued standing and expertise.

Small businesses and start-ups are especially exposed to key-person dependency risk. Tesla, for example, faces a colossal key-man risk—its fate is linked closely to the actions of founder-CEO Elon Musk, who has come under scrutiny lately.

Much of Berkshire Hathaway’s performance over the decades has been based on CEO Warren Buffett’s reputation and his ability to wring remarkable deals from companies in duress. There’s a great deal of prestige in selling one’s business to Buffett. He is irreplaceable; given his remarkable long-term record of accomplishment, it is important that much of what he has built over the years remains intact once he is gone. Buffett has built a strong culture that is likely to endure.

Key Employees are Not Only Assets, but also Large Contingent Liabilities

The most famous “key man” of all time was Apple’s Steve Jobs. Not only was he closely linked to his company’s identity, but he also played a singular role in building Apple into the global consumer-technology powerhouse that it is. Jobs had steered Apple’s culture in a desired direction and groomed his handpicked management team to sustain Apple’s inventive culture after he was gone. Tim Cook, the operations genius who became Apple’s CEO after Jobs died in 2011, has led the company to new heights.

The basic solution to key-person dependency risk is to identify and document critical knowledge of the organization. (Capturing tacit knowledge is not easy when it resides “in the key-person’s head.”) Organizations must also focus on cross-training and succession planning to identify and enable others to develop and perform the same tasks as the key-person.

Idea for Impact: No employee should be indispensable. A well-managed company is never dependent upon the performance of one or a few individuals. As well, no employee should be allowed to hoard knowledge, relationships, or resources to achieve job security.

Wondering what to read next?

  1. Creativity by Imitation: How to Steal Others’ Ideas and Innovate
  2. Risk Homeostasis and Peltzman Effect: Why Risk Mitigation and Safety Measures Become Ineffective
  3. The Dramatic Fall of Theranos & Elizabeth Holmes // Book Summary of John Carreyrou’s ‘Bad Blood’
  4. The Checkered Legacy of Jack Welch, Captain of Quarterly Capitalism
  5. Innovation Without Borders: Shatter the ‘Not Invented Here’ Mindset

Power Corrupts, and Power Attracts the Corruptible

By Leave a Comment

Picture of Statue of Demon Mahishasura atop Chamundi Hills in Mysore, India The recent sexual misconduct allegations of influential men abusing their towering positions for contemptuous behaviors provide yet another reminder that power corrupts. As the British politician and historian Lord John Dalberg-Acton famously wrote in an 1887 letter to the Anglican Bishop Mandell Creighton,

Power tends to corrupt and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority: still more when you superadd the tendency or the certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it. That is the point at which … the end learns to justify the means.

The recent scandals lay bare the three distinctive characteristics of the intoxication of power: the inflation of the self, the devaluation of the helpless, and a dreadful shortfall in self-awareness of actions and consequences.

In the case of studio executive Harvey Weinstein, the worse outrage is that, many prominent people, despite their awareness of Weinstein’s uninhibited abuse, stayed silent—and possibly benefited. Some Hollywood celebrities are said to have overlooked his transgressions. Meryl Streep, one of Hollywood’s most successful actors, who once referred to Weinstein as ‘God,’ had to contend the blame that everyone in Hollywood knew of Weinstein’s conduct. His staff sheltered him or paid off victims, many of whom chose to remain silent for fear of derailing their budding careers. Going public would have hurt them more than it would have damaged Weinstein, until those accusations reach a critical mass and suddenly everyone flipped against him.

The Intoxication of Power

The British philosopher Bertrand Russell first wrote about the “intoxication of power” in A History of Western Philosophy (1945,) and best described what develops in the minds of many people who, in all walks of life, exercise a measure of power and dominance.

The Greeks, with their dread of hubris and their belief in a Necessity or Fate superior even to Zeus, carefully avoided what would have seemed to them insolence towards the universe. The Middle Ages carried submission much further: humility towards God was a Christian’s first duty. Initiative was cramped by this attitude, and great originality was scarcely possible. The Renaissance restored human pride, but carried it to the point where it led to anarchy and disaster. … Man, formerly too humble, begins to think of himself as almost a God.

…

In all of this I feel a great danger, the danger of what might be called cosmic impiety. The concept of ‘truth’ as something dependent upon facts largely outside human control has been one of the ways in which philosophy hitherto has inculcated the necessary element of humility. When this check upon pride is removed, a further step is taken on the road towards a certain kind of madness—the intoxication of power which invaded philosophy with Fichte. I am persuaded that this intoxication is the greatest danger of our time, and that any philosophy which, however unintentionally, contributes to it is increasing the danger of vast social disaster.

Idea for Impact: People with even the smallest amount of authority can and will find ways to abuse it

People can become corrupt with power, fame, wealth, and influence, and, as I’ve written previously, they regularly get away with it. The solution, I believe, is to subject our elites (and the sycophantic supporters who are disposed to collude in self-interest) to as many restrictions, supervisions, and checks and balances as possible, and scrutinize them closely so as to spot hubristic traits and symptoms of the abuse of power.

Wondering what to read next?

  1. Power Inspires Hypocrisy
  2. The Poolguard Effect: A Little Power, A Big Ego!
  3. Shrewd Leaders Sometimes Take Liberties with the Truth to Reach Righteous Goals
  4. Why Groups Cheat: Complicity and Collusion
  5. The Enron Scandal: A Lesson on Motivated Blindness

The Cost of Leadership Incivility

By Leave a Comment


Steve Jobs’ Misguided Advice for Being a Good CEO: “Throw Tantrums!”

When Indra Nooyi became CEO of PepsiCo in 2006, she met with Steve Jobs, the famously driven but short-tempered and ruthless leader of Apple. One advice Jobs had for Nooyi on being a good leader: “throw tantrums.”

During this 2016 interview at the Stanford Business School (YouTube video), Nooyi acknowledged Job’s advice as “a valuable lesson.” She elaborated that Jobs advised, “don’t be too nice … when you really don’t get what you want and you really believe that’s the right thing for the company, it’s OK to throw a temper tantrum. Throw things around. People will talk about it, and they’ll know it’s important for you.”

During another 2016 interview, at the New York Times’ DealBook Conference (YouTube video), Nooyi recalled Jobs advise again. “If you really feel strongly about something—if you don’t like something people are doing—throw a temper tantrum. Throw things around, because people have got to know that you feel strongly about it.” Though Nooyi hasn’t gone as far as to throw things around, she disclosed, “I’m beginning to use certain words a little bit more freely and I am screaming a bit more, pounding the table … which is really not the way I was … it is effective. It shows the passion that I have for what I’m doing.”

No Need to Ape the Style of the Icon-of-The-Moment

Leadership Throw TantrumsPeople will go to extraordinary lengths for causes they believe in. Nonetheless, this advice of throwing tantrums and using “certain words a little bit more freely” to express passion is abhorrently misguided, even if it worked for Steve Jobs and Indra Nooyi!

The ultimate impact of a leader hinges on his/her enthusiasm to make the organization’s endeavors personal, to engage others openly, and to draw attention to successes as they emerge. For that reason, Nooyi’s anecdote is demonstrative of Jobs’ passion for building great products.

My primary protestation relates to the reality that leaders model the behavior they want in their organizations. Admissibly, there may be a time and a place to throw temper tantrums at Apple, PepsiCo, or at your organization. However, unchecked and unhindered outbursts of passion, and cursing and incivility are certainly counterproductive.

Steve Jobs could throw temper tantrums because he could! As I have written in previous articles, brilliant men and women can get away with fanatical pride, temper, abuse, and other disruptive behaviors because their spectacular success can and does cover many of their sins, even in the eyes of those at the receiving end of their crudeness.

Aggressive—and successful—managers and leaders can pressurize, scream, intimidate, and even terrorize their employees. They vindicate that their offensive behavior works because they “deliver the numbers.” Others rationalize their behavior by exclaiming, “Yeah, he’s tough on his people, but judge his abrasiveness in the context of everything he’s achieved.”

The Leader Sets the Tone for Workplace Culture

Workplace incivility can take many subtle forms and it is often provoked by thoughtlessness more willingly than by actual malice. A leader’s behavior tells employees what counts—and what’s rewarded and what’s punished. Leaders are role models. Therefore, others pay attention to everything they say and every move they make.

The tone at the top is the foundation upon which the culture of an organization is built. A leader is the face of an organization and the figurehead to whom employees ultimately look for vision, guidance, and leadership. When leaders throw temper tantrums, swear, or engage in appalling behavior, the message they convey within their organizations is that such behavior is acceptable.

The human brain is wired to learn by imitation. For instance, a child is wired to mimic the behaviors of higher status individuals like parents and teachers. Similarly, adults emulate the behaviors of those they deem of higher status—employees look at their boss to determine how to behave in the organization and what it takes to be promoted. In competitive work environments of the modern day, when employees see that those who have climbed the corporate ladder tolerate or embrace uncivil behavior, they’re likely to follow suit.

Postscript: Don’t blatantly imitate a hero. Those of you who worship Steve Jobs had better perceive his operative style as an anomaly rather than as a model of leadership worth imitating. Simply lifting his methods from anecdotes such as Indra Nooyi’s and the Walter Isaacson biography and imposing them on your employees will not necessarily yield Jobs-like results. As I’ve written previously, the career advice that works for the superstars is not necessarily what will work for most ordinary folks. So, don’t be misled by their “it worked for me” advice.

Wondering what to read next?

  1. Five Signs of Excessive Confidence
  2. Power Corrupts, and Power Attracts the Corruptible
  3. The Poolguard Effect: A Little Power, A Big Ego!
  4. Shrewd Leaders Sometimes Take Liberties with the Truth to Reach Righteous Goals
  5. Lessons from Tito’s Leadership of Yugoslavia