Becoming a Leader: A Positive Lesson From Failing CEOs

Some CEOs become so focused on profit that they cannot generate it. This fact is of great importance to you because it means you can acquire capacities unavailable to many executives. It means you can lead more effectively than the people above you. It means you can assure yourself of a successful leadership career.

A Sobering Message

Yesterday I received a message from a friend who has spent his life as a consultant. In his message he makes an observation about the behavior of CEOs: Having worked with CEOs from around the world for a long time, and getting to know some of them very well over time, I have found only a small handful whose decisions and behaviors are evidence of purposeful governance and leadership. Many others, yielding to pressure from board and market expectations, work as slaves to the top and bottom line. When getting into conversations about the importance of “noble purpose” in business performance, they talk about getting to “purpose” as soon as the numbers are right.

I see a frightful amount of ego in many, wishing to best others in terms of numbers in the news. Interestingly, many of these work in the financial markets. Then there are always those who inspire the world by mindful and even heroic actions, but I see the scale tipping in the direction of “profit”- minded leaders, in some cases even despite best intentions.

The Economics of Positive Leadership

Anjan Thakor and I recently wrote a paper in which we talk about the process of imbuing an organization with higher purpose. We point out that many organizations perform below their potential. They comprise self-interested people playing zero-sum games, pursuing external rewards, engaging in conflicts, and living in alienated relationships.

Yet it is possible for those same people to willingly pursue the common good, to value intrinsic rewards, live in trust, and experience high collaboration. This transformation occurs when an organization is imbued with a higher purpose. In another paper, Anjan and I provide a mathematical model demonstrating that when a leader introduces higher purpose, the human system is transformed and becomes more productive. We suggest that the mathematical model provides an economic foundation for the practice of positive leadership.

A Surprising Discovery

After building our model, we wondered how the heads of organizations think and behave regarding higher purpose. We conducted 30 interviews, but with an incorrect assumption that all organization leaders would value higher purpose. The majority told us they did not. When they first took over, many did not see the value of higher purpose; some even belittled the notion.

This taught us an interesting lesson. Executives tend to be steeped in the assumptions of microeconomics: They are busy and hunger for task completion. The belief in normal microeconomic assumptions leads to a focus on motivation through the manipulation of external rewards. In that context, creating purpose and meaning may seem like a waste of time.

Pressure may lead to the search for easy tasks with high payoffs, not the grueling task of understanding the deep needs of stakeholders and articulating a vision, believing it, living it, and communicating it over and over. The need for task completion may work against the notion of continually monitoring and revitalizing the meaning “system.”

There is a natural pull for executives, even CEOs, to be managers rather than leaders. They can become so focused on profit that they cannot generate profit because they cannot release the human commitment that lies dormant in the organization. The work force does not flourish or exceed expectations.

The Opportunity

This blindness is your opportunity. In the opening message from my friend, he suggests many CEOs yield to the very real external pressures and become narrowly focused on profit. They become ego-involved and competitive, desiring to be recognized for generating profit. Hence they have no use for higher purpose and the creation of meaning. In the search for profit, they become disconnected a powerful generator of profit, a connected and focused work force.

This dynamic becomes your opportunity as a leader. In any position, at any level, you can focus on your highest responsibility: to provide “purposeful governance and leadership.” If you dedicate yourself to learning how to imbue an organization with purpose, your chances of succeeding at every level go up. You will be able to do what many CEOs cannot.