Why Many Big Time CEO's Failed

When I was traveling a few years ago to Washington D.C., I stopped into one of those magazine stores at the airport to find something I could read during my  flight.   The headline from the June 21, 1999 issue of  Fortune Magazine jumped off the rack.  Since then this article has been one of my  favorites to share with friends, associates, and clients.  I've also found the entire article on-line, and highly recommend that you read it at  Why CEO's Fail

“It’s rarely for lack of smarts or vision.  Most unsuccessful CEO’s stumble because of one simple, fatal shortcoming.”  This was the headline from the article in Fortune Magazine that jumped out at me from the magazine rack at the airport.  What I read during my flight was a very insightful article written by Ram Charan and Geoffrey Colvin.

Charan and Colvin studied over 40 failed CEO’s from Fortune 500 companies to see what went wrong.  The fatal flaw of these failed CEO’s was pretty simple.  It was execution. 

But the reason they failed in their execution came down to something familiar to many of us in leadership and management.  

People problems. 

That’s right, these captains of industry were toppled because of people problems, as in not having the right person in the right job, holding on to them too long, and not holding them accountable for the important things.  As the article states, the majority also shared another flaw connected to their people problems:  Ignoring the voice inside that said “you have a problem, move on it now”.  Instead they replaced that voice with “I can coach them”, “He’s/She’s my guy/gal”, “They’re so talented they just need more time”, or “I don’t want to start over with someone new (head in the sand)”. 

As the article explains, these unsuccessful CEO’s/Managers lacked emotional strength when it came down to personnel decisions.  In short, the fatal flaw of "failure to execute" was due to bad personnel decisions, which came from not having the emotional strength to do what was needed to be done in the area of people problems.  

How do you avoid this yourself?  In my opinion, you do it by performing personnel evaluations on a consistent business level no matter what.  You also do this by keeping the hiring process as a “just business” proposition and continue to keep it that way through proper and fair appraisals of performance.  If it’s time for a change, act upon it before it’s too late while keeping it all business. 

It's very much like the way stockbrokers approach a stock:  we'll sell once we go below this mark for whatever reason.  It’s a discipline, or better still, it’s a behavior that does not falter.

Leaders need certain qualities to succeed, and there is a distinct difference between management behaviors and manager qualities.  For example, management behaviors include execution, decisiveness, follow-through, and delivering on commitments.  In comparison manager qualities include integrity, maturity, energy, business/people/organizational acumen, intellectual capacity, superior judgment, drive, the motivation to grow, and the ability to convert learning into practice.  

The power of a managers qualities will predict how well they can execute the behaviors with the required emotional strength.

Is strategy, market strength, and timing important?  Sure.  But to a business nothing is more important than having the right person in the right job, period.  That is why CEO’s and managers need to regularly inspect how they recruit, who they hire, how they evaluate performance, and have emotional strength to follow-through with what is required when people problems arise. 

One final point to consider.  Hiring is the single best/worst thing you can do for your company.  Hire people as if your job depends on it, because in reality it does.

Charan and Colvin summarized their article this way, “They were all smart people who worried deeply about a lot of things.  They just weren’t worrying enough about the right things:  execution, decisiveness, follow-through, delivering on commitments. 

Are you?”

Bill Grady
About the Author, Bill Grady

Bill Grady has over 35 years of marketing and advertising creation, sales,
and management experience.

He began selling advertising at age 20, became a radio station General
Manager at the age of 23, and has personally sold millions of dollars in
local advertising over his career.

Bill is a former President of the Iowa Broadcasters Association and his
stations were recipients of multiple National Association of Broadcasters
awards for excellence.

Since 2002, Bill has brought his marketing and advertising knowledge to
thousands of small business owners in Iowa, Minnesota, South Dakota,
Nebraska, Kansas and Oklahoma.

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