This statement is the key message in a crucial publication in HBR in June 2016, about the extremely expensive mistakes in M&A, which seem to be unstoppable! This has been going on for 40-50 years!
Do we really believe the truth when we hear it, even if it is not what we want to hear? That is strategic intelligence at its core: critical thinking, perspectives over and above facts, challenging assumptions, and determining the course of future action. On one occasion, I was presenting to one of the leading business groups in the Netherlands, and at the end, the CEO of a top-25 listed company asked us what kind of differentiating tools we use to determine the possible courses of future actions.
Most management models lead unnecessary and enormous cost increases with a large chance of hugely disastrous decisions, because top managers are hardly ever corrected, according to Gary Hamel. We need decisions based on responsibility and not on company position. CEOs and boards of management show ‘Sun-King’ behavior with too much distance from the shop-floor, leading to wrong strategic decisions.
Narcissism is widespread at the top in both private and public companies as well as in non-profit organizations and the public sector. Narcissism is a necessary element for effective leadership, but it can, however, also become a negative trait. So we may therefore speak about positive and destructive narcissism. Examples to be emulated are Steve Jobs (Apple), Michael Eisner (Walt Disney), Jack Welch (GE), Ingvard Kamprad (IKEA), Henri Ford (Ford Motor Company), Freddie Heineken (Heineken) and Richard Branson (Virgin).
In the fall of 2015, we published our book “Big Boys Big Egos and Strategic Intelligence”, the fifth book in a row on business-, competitive- and strategic intelligence since 2000. Scientific research on narcissism lies at the basis of this book, which is based on a sample of 950 CEOs of the S&P top-500 companies during the period 1992-2009.
In 2015, a high-technological corporation in the Netherlands, Royal Imtech, with some 22,000 employees, active in infrastructure, building & construction, maintenance & control, ran into financial trouble. The main causes of this bankruptcy were the inflated egos of the former CEO and CFO, who had both held positions from 2002 till February 2013, acting like ‘sun-kings’, and a lack of monitoring and control.
Black swans are large-scale unpredictable and irregular events that have a massive consequence. Examples are a tsunami, huge storms like Sandy in 2012, 9/11, Madrid 2004, and the loss of MH17. Antifragility means randomness, uncertainty, dealing with the unknown, doing things without understanding them and doing them well. However, it is easier to find out if something is fragile.
The story starts every year with the World Economic Forum in Davos, Switzerland, where the heads of the corporate world meet: CEOs, political friends and the consultancy-whisperers. They blame the politicians who are not able to solve the crisis, corporate management already has a focus on the future, and multinationals take the lead in solving the big future challenges: sustainability, growth and poverty.