HARD LESSONS OF THE EGO

EPISODE #252 TRANSCRIPT

The German Chancellor, Otto von Bismarck, once famously said,

"Laws are like sausages. It's best you don't see them being made."

Bismarck knew that there are some things that should remain behind closed doors. Having too much insight into the mechanics of how things are done wouldn’t be helpful. Instead of inspiring greater confidence in the process by having visibility of what happens behind the scenes, it would actually have the opposite effect.

So, why do some of the top leaders in business not learn from this 19th century wisdom? Ego and hubris are responsible for many shortsighted and ill-advised decisions, and many leaders are still not learning from the past.

The recent expose of CNN Chief Executive Chris Licht in The Atlantic, is a classic example of having too much visibility into how the sausages are made. Tim Alberta's article, which was published on 2nd June, led to a chain reaction that culminated in Licht's resignation only a few days later. But this is by no means the first time that a senior executive showcasing their company's performance in the public domain has ended in tears.

WHAT HAPPENED WITH BRITISH STEEL?

In the 1970s, the steel industry in the UK was going through a period of significant turmoil, and there were many factors at play. After the re-nationalization of the industry in 1967, the British Steel Corporation was formed as a government-owned entity, but there was an ever-increasing array of problems: complacency with the existing equipment; plants operating below full capacity; poor quality assets; outdated technology; government price controls; high coal and oil costs; protracted industrial disputes; lack of funds for capital improvement; and increasing competition in the world market.

Because British Steel Corporation was the largest employer in some of the more depressed areas of England and Scotland, the government chose to prop up employment, running many of its assets at a loss.

In fact, until Margaret Thatcher decided to modernize the steel industry in the late 1970s and early 1980s, British Steel was losing £1.8 billion per annum. Let's just put this into perspective. That's about £10 billion per annum in today's terms, which is over USD $12 billion a year. You can imagine how much bad press there would've been around this.

Enter: Sir Monte Finniston, a highly respected industrialist, businessman, and government confidant. He was appointed as Chairman of British Steel in 1973 and was knighted in the same year. To restore pride in British industrial dominance, Sir Monty (or someone close to him) decided to invite a BBC documentary film crew inside British Steel. Supposedly this would result in a PR piece that would showcase the best of British leadership, and the strength and dominance of the British steel industry. But it didn't quite work out the way they expected.

At the time of the British Steel documentary, the management team was looking to build a new plant at Hunterston in Scotland. I became aware of this when I read a case study at Harvard Business School many years ago. German supplier, Korf tendered to build a single production plant for £26 million, and then they re-submitted their offer later to build two plants on the same location for only £43 million.

Who doesn't love a bargain, right!? If you buy the first plant for £26 million, the second one only costs you £17 million: twice the capacity for 80% of the cost (on a price per unit basis).

But this was a significant investment which required a huge amount of analysis and scenario planning. And, to be sure, it required a complex decision-making process, which relied on a number of macro assumptions with potentially huge swings.

For example: the future global demand for steel; the price of fuel inputs like oil and gas; production levels from other steel making countries like the US; even retirement of other plants in the British Steel portfolio. These were complex, non-trivial, long-range assumptions.

The documentary team followed the main characters in this process. As they went through what should have been an analytical business process that demonstrated the rigor and discipline with which the British Steel team approached the problem, they found something altogether more interesting: a culture of strong arm tactics and coercion, that in today's corporate world would likely constitute bullying; behind the scenes conversations with the supplier at senior levels that largely overrode the fact-based analysis of the expert team assigned to build the business case; a strong hint of impropriety in the dealings in general, although without any evidence of course; and the long reach of government politics and union unrest into what should have been a largely commercial decision.

In the end, the decision was made to build two plants at Hunterston. And, although the construction was completed, the plants were never commissioned. Apparently, the cost of the natural gas that drove the plant, combined with the soft demand for the pelletized steel it would've produced, made the plant economically unviable before it could even begin, and it never operated a single day.

Unfortunately, I couldn't get my hands on the documentary to re-watch it, but what started as an opportunity to showcase the excellence of British Steel turned into a debacle. And the result of this egotistical folly? British Steel was exposed as having a dreadful culture, awful leadership, and a bunch of hapless ‘yes men’ trying to please a senior team that ignored their advice. And yes, in 1976, long before the Hunterston plants were built, sir Monty was forced to resign.

THE CNN TURNAROUND FAIL

The British Steel case study is pretty well-known, having been originally written by John Kotter, one of the rockstar academics of our time. One would imagine that such a cautionary tale of the ego would serve as a deterrent to others who might think about opening up the kimono to showcase their leadership prowess.

But apparently, Chris Licht didn't get the memo. Brought in to run CNN about a year ago, Licht was tasked with rebuilding the flagging network's fortunes. Not long after his tenure began, he agreed to an in-depth interview with Tim Alberta, a journalist writing for The Atlantic.

Alberta was given wide-ranging access to the CNN talent, longstanding CNN production staff, and of course, Licht himself, over a period of several months. Here's a man trying to reinvent the network amid the background of a shrinking audience, a declining revenue base, and with the very business model of cable TV in a precarious position.

What was supposed to showcase the glorious turnaround of the iconic CNN brand under its new leadership was, instead, a litany of failure.

Alberta's sweeping article uncovered deep unrest within the ranks at CNN. Many disagreed with the direction Licht was taking the company. Employee morale was rock bottom--many resented his lack of respect for the past. Even Licht's supporters questioned some of his key decisions, not least of which was the decision to invite former President Trump to a town hall interview moderated by one of CNN's rising stars, Kaitlan Collins. That disaster unfolded like a slow motion car crash not long before The Atlantic dropped the article.

Licht, as a leader, was aloof and arrogant. He wasn't visible and he didn't connect well with the team. He frequently made disparaging remarks about his predecessor, Jeff Zucker, and the way the CNN journalistic team--the team which, incidentally, he still had to lead--had performed in the years prior to his arrival.

He talked a big vision, but he couldn't rally his team to execute. And then, of course, there were the almost caricature-like scenes of Licht demonstrating his own arrogance, in everything from his gym workouts to his leadership philosophy (which could well have been plagiarized from an episode of The Office). This ego-driven moment in the spotlight cost Licht his job, and it irreparably damaged his personal reputation.

And the share price of CNN's parent, Warner Bros Discovery Inc, languishes at around half the price that the shares traded when the entity was created only 14 months ago.

WHAT DRIVES HUBRIS, AND HOW CAN YOU RECOGNIZE IT?

There's no doubt that, to be a successful leader or business person, you need to have a relatively strong and healthy ego. If you don't, you'll struggle to withstand the inevitable criticism and judgment that every successful person encounters.

But ego is also responsible for many shortsighted and ill-advised decisions… like inviting a film crew or journalist in to chronicle your brilliance. What are the key drivers that turn an otherwise healthy ego into destructive self-aggrandizing and hubris, and how do they manifest? You probably know I like to speculate on root causes.

For a start, the most egotistical leaders need to have their ego stroked. Over time, this makes them really selective listeners. They only listen to viewpoints that support their own perception of themselves and reinforce their unassailable place in the hierarchy. This dark-side behavior weakens their decision-making effectiveness, because they sometimes rule out critical information that doesn't accord with their view of how things should work.

And any ambitious up-and-coming leader is going to see this, and they'll play to the boss’s ego by repeating and rephrasing the already-stated views of the egotistical leader.

The most egotistical leaders are (somewhat ironically) a bottomless pit of insecurity: and this is a void that's almost impossible to fill. They learn to protect themselves from any type of deep scrutiny, preferring instead to construct and tell a story of their greatness to anyone who will listen.

In the mold of The Emperor's New Clothes, they carefully curate their self-image. I once knew a CEO who, as the result of a scathing company-wide culture survey, decided that everyone on the senior leadership team should undergo a 360-degree feedback process. Everyone, of course, except himself. This prompted one of my colleagues to cheekily coin the expression, "The head rots from the fish."

The most egotistical leaders are generally unable to read the play. They're out of touch with people at the lower levels of the company. They don't seek to know why things go wrong, and they're unable to accept their own accountability for failure. They'd rather blame those people at the lower levels of the organization. This creates an adversarial divide between workers and management.

To ensure their ongoing safety, security, and ego satisfaction, the most egotistical leaders surround themselves with yes men and women. They don't seek to stimulate the conversation with opposing viewpoints. Instead, they find security in the fact that their people generally agree with them and confirm what they already know to be true.

As an executive, I was always at pains to bring diversity of thinking and perspective to my leadership teams, so that we could create an environment of robust debate and creative tension. You simply can't have a high-performing team without it.

3 TIPS TO KEEP YOUR EGO IN CHECK

I'm pretty confident that none of these ego-driven people are listening to the No Bullsh!t Leadership podcast… by definition, because as I said, "They'll avoid anything that might encourage introspection or self-evaluation." So, in case you're wondering… don't! You’re okay.

But, equally, I wouldn't want you to develop a false sense of security. You know, the old, "This could never happen to me."

That's why I'm going to finish by giving you three tips for keeping your ego in the healthy range. That way as you go up through the ranks and reach the stellar heights of your career, you'll escape the pitfalls of ego and hubris.

1. Always keep a trusted advisor nearby

A trusted advisor is someone whom you trust to tell you the truth. They don't just tell you what you want to hear.

A trusted advisor is generally a direct report. They have the benefit of seeing you in many different contexts, and you have frequent touch points. They get to know you pretty well. You'll know you have a really good trusted advisor if you find yourself bristling or becoming annoyed at some of the feedback they give you: that means that you need to hear it.

If you want some more information on this, you can have a listen to Ep.183, Mentors, Coaches, and Trusted Advisors.

2. Develop a daily reflection routine

Making the time to reflect each day and ask yourself some pointed questions is a great discipline to keep you honest. I used to use my drive home from work each night to run through the list of questions and decompress. Most importantly, I'd ask myself what I avoided that day that I knew deep down I should have done. This was all about getting into the habit of reflection.

In our very first podcast episode ever, I mentioned this and created a resource for you to download. So if you'd like to get your hands on this daily reflection template, go to Ep.1: Respect Before Popularity.

3. Retain your healthy sense of self-doubt and skepticism

Despite the rampant popularity of the term ‘imposter syndrome’, I've come to the view that self-doubt is an essential part of regulating the ego. As I say, "Self-doubt is the handbrake that stops confidence from becoming arrogance." That's why it's incredibly beneficial to ask yourself good questions.

Questions like, “Is that really true, or are they just telling me what I want to hear?”

Questions like, “Was this outcome really attributable to me? Or was it the pure luck of external factors beyond my control?”

Questions like, “Could I be wrong about this?”

If you want more information on this, go and have a listen to Ep.229, Confidence, Arrogance, and Self-Doubt.

Let's face it, lessons of the ego are hard to swallow. The Monty Finniston's and Chris Licht's of the world are cautionary tales for those of us who might otherwise find ourselves on the dark side of ego and hubris.

You may find it hard to stay humble and grounded when you start to get the feedback of superior results over an extended period of time. And every promotion reaffirms your brilliance.

So, stay grounded, stay humble, and most importantly… stay out of the newspapers!

RESOURCES AND RELATED TOPICS:

• ARTICLE: INSIDE THE MELTDOWN AT CNN, The Atlantic - Read Here

• Ep #1 - Respect Before Popularity - Listen Here

• Ep #183: Mentors, Coaches, and Trusted Advisors - Listen Here

• Ep #229: Confidence, Arrogance, and Self-Doubt - Listen Here

• Buy the NO BULLSH!T LEADERSHIP BOOK - Here

• Explore other podcast episodes - Here

• Take our FREE Level Up Leadership Masterclass - Start Now

• Check out our 8-week online leadership program, Leadership Beyond the Theory - Learn More

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