The 6 Deadly Blind Spots of CEOs
Editors Corner | The CEO Show | The CEO Magazine
Life’s Blind Spots
The presence of blind spots is not limited to driving; they are present in many spheres of our lives, personal, social and professional. We are not aware of them because we are so close to them and only another individual can point out our blind spots. Think about a friend or relative who has an annoying, or bad habit that drives people away. Maybe she is very dominating or excessively critical, you know her closely, and are aware that in reality she is a very sweet and caring person. Her dominant or critical tendencies may simply be a self-protective childhood habit, but once you come to know her closely, her sweet nature more than makes up for her annoying habits. However, she is not aware of her annoying habits because she has spent her life with them and hence cannot see how when she doesn’t mean any harm, people seem to avoid her after meeting her once or twice. She is not aware of her blind spots, maybe if you told her about it in a way she can understand and accept, she would be able to make changes and have more friends.
Now picture a CEO who is obsessed with cost-cutting, this frequently leads him to make unpopular, and even damaging decisions as he forces cost-cutting measures even when they are not required. Those who know him since a long time may be aware that he spent his childhood in extreme poverty and hence the need to cut cost is ingrained deep within him. He may not be aware of his behavior, viewing his decisions as being in the interests of his company. Hence, he cannot understand why he is being criticized for doing the right things. The thing is he is being driven by deep-seated impulses that are hidden in his blind spot, if he is made aware of the same in a way that he accepts the behavior as an error that needs to be corrected, then probably he would make amends and start functioning in a balanced manner.
Every individual has blind spots that could create trouble for him/her. It depends upon the kind of blind spots each individual has, and the environment within which he or she functions that determines how disastrous they can be. If the CEO mentioned above continued to be poor, or was leading his company through a major financial crisis, then his blind spots would in fact create positive effects on his life. But considering the existing circumstances, his penchant for cost cutting is damaging the prospects of his organization, as well as his own career? What he needs is an informed adviser who knows how and where CEOs can go wrong and can devise strategies that fix the source of errors hidden in blind spots. Most people may not be able to remove their blind spots, even if they are presented with the facts, because it’s a deep-seated behavioral problem which needs to be worked upon strategically, gradually replacing erroneous behaviors with corrective measures.
The most common CEO behavioral problems that have their roots in blind spots include -
I. God Complex - Bob Nardelli whose dreams of playing professional football were dashed because of his short height decided to prove his mettle in the world of business. He joined GE where he tackled the toughest turnarounds, he worked extremely hard and was called the best operating executives by the then GE CEO Jack Welch. He was also nicknamed Little Jack and was expected to succeed Welch but that never happened. Nardelli then joined Home Depot as CEO where his primary responsibility was to control the company’s rapid uncontrolled expansion. He went about it like a bulldozer with no regards to interpersonal relationships cutting full time jobs, capping wages etc. This lead to a rapid decline in staff morale and collapse in customer service, although earnings went up, the company’s stock went down. Nardelli took over Home Depot’s happy-go-lucky personality, he functioned like a dictator, was intolerant to mistakes and imperfections, and always had to get things done his way. That was not all; he did not welcome or respond to criticism. So although a highly capable individual he would not make a good leader because with his arrogance and dictatorial attitude he would not be able to inspire the people he leads.
II. Selective Perception - We human beings are exposed to a huge amount of information every minute of our lives and am not talking about the information explosion resulting from the internet, 24/7 connectivity, multiple mobile devices and the like. I am talking about regular day to day living. Whether we talk about today, or go back a hundred, or even a thousand years back; receiving information from all our senses, at all times, is an integral part of living. It is not possible to be conscious of everything that’s in our environment and provide a reasonable amount of attention or thought to all of it, including people. This is why we tend to generalize, to develop a set of unconscious principles that influence our perceptions, our judgments and our behavior. Selective perception actually helps us by processing information efficiently and automatically. But at the same time, it can also lead to tunnel vision. So this leaves us in a Catch-22 situation, we have a natural tendency for selective perception that comes from the sum of our experiences, beliefs and education. It is useful but also a limitation. So how do we manage it in such a way so as to minimize the limitations? The answer lies in the form of an expert adviser or a team of experts who can point out when and where our automatic perceptions are erring and supply us with reliable data that would help us take the right decisions.
III. Greed - You cannot have more than what you or your efforts deserve, when something like that happens, it’s not going to last long and eventually the normal state of affairs will be established again. There are numerous instances where extremely smart and competent people (Kenneth Lay and Jeffrey Skilling of Enron, Ramalinga Raju of Satyam Computers and many others) have cheated their way to extraordinary wealth and power only to be caught, disgraced and lose their achievements and credibility. Why do such astute and intelligent people get involved in schemes that are inevitably going to spell their doom – the answer is unbridled Greed combined with God Complex, greed pushes them to get more by investing less, and God Complex blinds their thinking to the inevitability of getting caught.
IV. Working with Blinders On – Most of us possess some sense or preference for how specific things should be done. How strongly we believe in the rightness of our approach varies among individuals. Some may accept that they do something thing a certain way because that’s convenient for them and it’s all right for others to do it in a different way. However, some may believe in the absolute rightness of their way, they cannot accept any other approach. We call this ‘working with blinders on’ because such people resemble racehorses that can only see the track in front of them and are trained to follow only that. But the world of business is not as simple, in order to be successful you need to consider a number of different ‘tracks’ and chose to run on that which is most suitable for your business and your organization. Durk Jager, the CEO of Procter and Gamble did the opposite. Jager was focused on innovation and strongly believed that quick restructuring and cultural change were necessary to free innovation from bureaucracy, although he was right, the way he went about achieving his goals couldn’t have been anymore erroneous. He took several drastic steps like slashing 13% of the work force within nine months of stepping in as the CEO, shifting important responsibilities and people recklessly to serve his vision of innovation. The results of his efforts were highly damaging for the company, since the products introduced by him were commercial failures, and because he had focused much of the company’s resources to produce the next great innovation, existing brands suffered. He missed earning projections and led the company’s share to decline by 52%. Eventually, he was forced to resign within 17 months of taking up the top job.
V. Lack of Specialized Knowledge – You cannot do something effectively if the knowhow lies beyond the range of your knowledge - this sounds similar to our description of blind spots at the beginning of this article. But here we are referring to a problem of a different nature. Blind spots are personal limitations/errors that operate from below an individual’s conscious awareness, while lack of specific knowledge is a gap that is easier to see and correct, compared to blind spots. Take the case of a top-notch engineer who becomes the CEO of a company that manufactures electronic gadgets. She lacks knowledge of the market or resists it, and continues to push products/designs that she finds excellent rather than what the market needs or is ready for. The result is her products fail to appeal to majority of the company’s customers. She is working with the right intention but her efforts are fail to hit their target because she lacks knowledge about the target.
VI. Focus on Self – CEOs are leaders who are responsible for the success of their organization. The nature of their job is such that in order to be successful they have to keep the interests of their organization before their own. That does not mean in any way that they need to sacrifice their careers for the sake of the organization, in fact by consistently working for the best interests of their organization, they would increase the likelihood of its success and automatically add to their own reputation. However, personal gains can be highly tempting and CEOs get too many opportunities to make “hay only for themselves while the sun shines”. Such an attitude ultimately snowballs into larger problems that are visible to everyone but the CEO. It happened in the case of former HP CEO Carleton Fiona. Fiona was given the top job at HP to get the company out of a very long financial slump. However it was not long before HP insiders started developing a growing awareness that Fiona’s efforts where geared more towards promoting herself than the company. Although the board did not want to fire her, it wanted to create a better system of working by shifting some of her responsibilities that would be beneficial to the company and help her succeed in her objectives. But Fiona resisted the board’s efforts, she was someone who was quick at identifying shortcomings in others but could not see them in herself, eventually she was asked to resign by the board.
The Role of the Coach
The concept of coaches is not new, great individuals across history have relied upon the advice of coaches, Aristotle coached Alexander The Great, similarly other kings as well as commoners, have relied upon coaches in the form of ministers, teachers, friends and so on. We are familiar with the requirement for coaches in the sporting world. In fact, a professional sportsperson without a coach is an anomaly. There have been coaches like Angelo Dundee who is widely acknowledged as being the chief driving force behind Muhammad Ali’s legendary career, many experts believe that without him Ali wouldn’t have even come close to the glories he ultimately achieved. Then there is Bob Woolmer, the cricket coach, who took the South African cricket team that started playing after more than two decades of staying banned from International Cricket, and helped them defeat powerful cricket teams with excellent success records. In both cases, the coaches themselves did not have a personal history of stupendous performance in the fields they coached. What they had was wisdom and talent to understand what worked in their field and what didn’t. They understood the physical and mental strengths and weakness of their protégées and that of their competitors, and could use that knowledge to help their protégées always stay several steps ahead of their competitors.
Awareness of the Self and Environment
Leading a business in today’s rapidly changing world is a very complex job. It’s just not possible for a CEO to be aware of, and account for all the important factors that are influencing his business while making decisions. Combine that with personal limitations in the form of ‘selective perception’ and ‘blind spots’ and you have CEOs who are always walking on a thin edge – failed decisions shouldn’t be surprising but expected given the circumstances. In order to take correct decisions consistently, they need to be aware of their own self, as well as the environment and they cannot do that on their own. They need someone who can help manage all this information, and apply it appropriately through solid decisions. They need a personal coach.
Qualities required in a Coach
Although our friends and relatives best understand our personal side, and our long-term colleagues our professional side, they are not suitable coach material as they are limited by their own interests. The emotional ties they share with us limit relatives and friends, while shared interests in the company limit colleagues. As a CEO, you may not be able to get your wife, or parent, or best friend, to be your blind spot/selective perception manager, as they might not understand how it affects your business. More than that their advice maybe influenced by their own interests and beliefs in what is right for you. Complete awareness requires objectivity, and that can only come from an outsider. She wouldn’t be limited by thoughts that limit friend/relative - “he (the protégée has always been like this, even though it’s not right, it does not make him bad” or colleague – “we’ve always done things this way, the last time it did not work out, but that doesn’t mean it won’t work out in this situation”. A coach needs to assess the CEO and his environment, clinically, accurately and quickly, and that can only come from a professional, somebody who has trained to evaluate people and situations quickly and accurately and suggest appropriate solutions.