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CEOs of 2011 – The Good, the Bad and the Ugly: What We Can Learn from Senge’s 7 Learning Disabilities

January 2, 2012

Call it a culture of myopia and greed, but there remains a huge tension between organizations led by CEOs who demonstrate little concern for employees, shareholders or the environment through bad leadership and management practices, and those led by CEOs who practice corporate social responsibility. The former cause extraordinary harm but to society, especially when they keep repeating the same mistakes. The latter, unfortunately, get smeared by the same media brush.

Why do so many CEOS operate in such a harmful way?

One would think that people would learn over time. After all, we’re supposedly the most intelligent life forms on Planet Earth, though I think that my Labrador Retriever, Max, might dispute that.

Unfortunately, human history is littered with the carnage and entrails of past blunders. Pick a century or a decade. You’ll find lots of examples. The recent decade that launched us into the 21st Century had a long list of horrendous errors, which can be traced back to decisions made by those in positions of authority, whether in the public sphere or in business.

Let’s look first at the Bad and the Ugly in leadership examples, saving the Good for an uplifting finale, followed by a quick note on what CEOs can learn from Peter Senge’s Seven Learning Disabilities. I’m only using two examples per category to help illustrate Senge’s work. The list of naughty and incompetent CEOs is indeed very long. And yes, there are a number of excellent CEOs.

THE BAD:

A Once-Great Canadian Company: RIM

Research in Motion (RIM), maker of the Blackberry (of Crackberry fame), became Canada’s pride and joy, especially after the spectacular collapse of Nortel Networks. RIM has been the only Canadian technology company to make it on international technology lists. RIM’s growth was exponential during the late nineties and well into the 2000s.

Spearheaded by the technology vision of co-founder Mike Lazaridis and aided by business savvy co-CEO Jim Balsillie, RIM’s growth seemed unstoppable.

But change is never-ending, and the market is constantly evolving. Steve Job’s relentless pursuit for innovation and perfection and Google’s drive to build Android’s market share caught RIM off-guard. That’s the polite way of saying that hubris on the part of Lazaridis and Balsillie placed RIM in a very reactionary position. Other events have contributed to RIM’s recent continued slide, such as the three-day BlackBerry outage in late 2011, successful hacking attempts into its operating system and disastrous sales of the Playbook tablet.

Yes, the Blackberry has proven very popular in such developing countries as Indonesia, Saudi Arabia and India, for reasons of its excellent secure text messaging. But it’s getting the crap beat out of it in North America and Europe. And recent data show that RIM’s sales in emerging economies has slowed, due to wireless carriers in these countries opting not to carry older Blackberry models (hand-me-downs, if you like) in place of moving to smart phones.

As a Canadian I want RIM to succeed, particularly since it has been the country’s sole major global technology player. However, that may end in 2012. Are there any buyers out there?

The Tech World’s Golden Boy Takes a Fall: Netflix

Chairman, President and CEO Reed Hastings was viewed as a golden boy of the tech world. Hastings (50) has led Netflix since 1998 since he and Marc Randolph co-founded it. The company’s meteorite rise during the 2000s seemed unstoppable, until Hastings did something really stupid. In July 2011, he decided to charge a two-tier structure to customers as part of its move to movie downloads.

Netflix’s loyal customers erupted, promising Armageddon. Hastings beat a hasty retreat, but only to a drop in share prices and horrible media attention. Within a month, the new brand name Qwikster was put out of its misery. Whether through hubris or naivete, Hastings made a “hasty” decision, one that caused significant damage to the company’s brand.

THE UGLY

Carol Bartz of Yahoo: “These people fucked me over.”
Carol Bartz, became CEO of Yahoo in January 2009, and was fired on September 6, 2011, by Board chairman Roy Bostock. (Note: firing someone on the phone, as Bostock did, is an act of cowardice in my view).

During her tenure, Bartz became a lightning rod for business analysts who believed she was responsible for Yahoo’s large drop in advertising revenues. Never one to spare an “F” shot or other expletive-deletives, she admittedly gave herself a B- in her job performance after her first year with Yahoo. Strikingly, she was named most overpaid CEO in 2010 when she received a whopping $47 million in compensation.

Her now infamous May 2010 interview with tech blogger Michael Arrington, where she began the conversation with “So how the fuck are you,” went downhill when she became perturbed with his questions and told him to “fuck off.” Definitely not a class-act, or the behavior expected of a CEO in charge of a huge company.

Bartz’s most unglamorous exit made her 32 month stint at Yahoo all the more pathetic.


The Dualing Twins: Freddie Mac’s Charles Haldeman and Fannie Mae’s Michael J. Williams

Freddie Mac’s CEO, Charles E. “Ed” Haldeman Jr. became CEO in July 2009, stepping down at the end of 2011. Haldeman (62) became a lightning rod, along with sister mortgage giant Fannie Mae, led by Michael Williams (53, and CEO since April 2009), for questionable lending practices. Both publicly funded quasi government institutions have been bailed out by U.S. taxpayers to the tune of $170 billion, which may reach $240 billion by 2014.

What put members of the House Oversight and Government Reform Committee into apoplexy was the obscene compensation of the two CEOs: Total compensation for the top six executives at Fannie and Freddie for 2009 and 2010 was $35.4 million, with Williams and Haldeman receiving half of that. Each could take home as much as $6 million apiece in salary and bonuses in 2011.

THE GOOD:

Courage and Perseverance: Michael Woodford
Michael Woodford was raised in poverty by a single mom in Liverpool, a high school drop-out, a camera salesman, and then at age 30 took over KeyMed’s European camera division. However, his biggest coup was becoming CEO of Japanese Camera manufacturer Olympus. Having a white British dude heading a Japanese conglomerate was unheard of.

Still new in the job, Woodford (51) caused a firestorm of media attention when he was sacked in early 2011 by Olympus’ board of directors.

His crime?

Exposing $1.7 billion in accounting irregularities. The Board was so pissed off with Woodford that it put him on a bus to the airport.

But Woodford is not just smart and competent, he’s also tough as nails. One of the outcomes of the ensuing investigations into the accounting debacle was the firing of the chairman of the board (who had hired Woodford), along with two senior executives. Watch this short media interview with Woodford from last November.

Woodford described Olympus’ corporate culture as an “emperor system” and a “regime.” But he wants his old job back, and his perseverance is admirable considering he’s living and working in an ancient culture that has ingrained practices and beliefs. As he stated, “I know what Olympus needs to be radically more profitable and successful.”


This Dude Loves Cars: Chrysler’s Tenacious Sergio Marchionne
If there were ever a basket case of an automotive company it was Chrysler. It was one thing for the U.S. and Canadian governments to bail out General Motors; however, Chrysler was in such desperate shape (financially, collapsing market share and horrible product quality) that government CPR seemed to be grossly irresponsible.

Then an Italian-Canadian rode in on his steed, a chain-smoking, no bullshit, exceptionally bright business man. Sergio Marchionne, boss of Chrysler, Fiat and Fiat Industrial, does not fit your stereotypical CEO. This guy loves fast cars, gadgets and big challenges. He knows how to align and lead people, fires managers who aren’t performing and fully dedicates himself to a cause – in this case, saving Chrysler from the joining the dust heap of past automotive failures.

While Chrysler still has a long road ahead of it, especially with mounting global competition from hungry new players, Marchionne’s extraordinary hard work and focused leadership has produced unexpected results: 23% increase (3rd quarter 2011) in Chrysler, Dodge, Ram and Jeep sales. Total sales for 2011 are forecasted to hit $55 billion. Contrast this rosy scene with 2009, when Chrysler was hemorrhaging $1 billion a month.

In Memory of the Greenest CEO on the Planet

I decided to include one more Good CEO of 2011as a way to express my respect. His recent passing was a huge loss for the corporate world.

This extraordinary CEO was Ray Anderson of Interface Inc. Unfortunately, Anderson died from cancer in August 2011. Ray Anderson died from cancer in August, 2011, at age 77. Click here to read one of my posts on Anderson.

Anderson worked relentlessly over two decades to transform Atlanta-based Interface Inc. (a global flooring manufacturer) to become a zero carbon footprint company. In other words, he wanted Interface to exert zero negative impact on Planet Earth. A key part of his journey was to constantly articulate his vision to employees and to ensure that they shared and embraced it. His leadership was exceptional and visionary.

THE GOOD for 2012?
I want to take a moment to peer into the unknowns of 2012 and suggest a potential “Good” CEO.

Newly appointed Royal Canadian Mounted Police Commissioner Bob Paulson is a possible 2012 candidate for the “Good.” Paulson has an enormous challenge ahead of him, noting in a late December 20 interview with the Globe & Mail’s editorial board, when asked about whether the public trust has been violated: “I tell you, one day, there is going to be the removal of the Stetson if we don’t get this straight. We’ve got to get onto this. This is urgent.”

Canada’s iconic national police force, the RCMP, has been rocked from scandal to scandal, an unbelievable array of incompetence, corruption and abuse. The latest was the revelations of systemic sexual harassment which hit the media big time in the fall. Paulson’s top priority is to correct this sordid problem, among many other issues.

Time will tell, but perhaps the RCMP has finally “got their man” in the name of Bob Paulson. Stay tuned.

Let’s now take a look at what corporate CEOs can learn from Peter Senge. I’d like to suggest that those leading public sector institutions would do well to listen to what Senge has to say. And more broadly all of us, regardless of our position in an organization, have much to learn from Senge.

I’m drawing Peter Senge’s Seven Learning Disabilities from his seminal management book The Fifth Discipline: The Art and Practice of the Learning Organization. Released in 1990, The Fifth Discipline has not only retained its relevance to the challenges facing organizations in a globalized, volatile world, but I believe its content and key messages are even more important today.

The 7 Learning Disabilities

Most organizations, as the collective entities of human beings with all their baggage and foibles, have difficulty learning. When the word “organization” is used, it’s vital to remember that it’s people who actually make them up, not the buildings, office furniture or other physical assets.

Senge provides a set of what he calls learning disabilities, which underlie many of the problems and mistakes inherent in how organizations (public, private, non-profit) typically function. If you want to get at the root of a problem, it’s necessary to first identify these disabilities.

1. I am my position. Because we’re expected to be loyal to our jobs, we tend to confuse them with our own identities. As Senge explains: ‘When people in organizations focus only on their position, they have little sense of responsibility for the results produced when all positions interact.’

2. The Enemy is Out There. We have a tendency to blame others when something goes wrong, whether it is another unit in the organization, a competitor or government agency responsible for regulatory policies.

3. The Illusion of Taking Charge. We hear all too often that we must be ‘pro-active,’ taking action to make something happen. However, pro-activeness can really be reactiveness in disguise. Senge sees ‘true pro-activeness’ as coming from our ability to see how we contribute to our own problems. In essence it’s the outcome of how we think, not how we react emotionally.

4. The Fixation on Events. The ongoing discussions and conversations in organizations focus typically on events, those ‘urgent’ day-to-day issues that grab our attention. But the real threats to our survival are not events but rather the slow, gradual processes that creep up on us. We need to move away from short-term thinking to long-term thinking.

5. The Boiled Frog. This parable states that if you place a frog in boiling water it will hop out immediately. If you place it in cool water and gradually turn up the heat, the frog will remain in the pot, growing groggier until it cooks to death. What we learn from this parable is that if we wish to see the slow, gradual processes, we must slow down and pay attention to the subtle as well as the dramatic.

6. The Delusion of Learning from Experience. We learn best from direct experience. In organizations, however, we usually don’t experience directly the consequences of our decisions. A major underlying reason for this is the functional silos that exist. These silos impede the flow of communication among people. The organization’s ability to analyze complex problems is subsequently greatly weakened.

7. The Myth of the Management Team. This reflects the desire for management to appear as a cohesive group that is pulling in the same direction. The reality is that in most management “teams” the need to uphold their image means that dissent is frowned upon and that joint decisions are “watered-down compromises.” As Harvard’s Chris Argyris Chris Argyris has discovered through his research (and referred to frequently by Senge), most organizations reward those who promote senior management’s views. Those who pose probing questions or who ‘rock the boat’ are penalized.

Reflect on each of these learning disabilities in the context of your own leadership and work environment. If you have time, think about how they relate to the monumental errors perpetrated by a large cast of CEOs. For example, what could Mike Lazaridis and Jim Balsillie have done differently in how they managed and led RIM?

What could CEOs learn from former Olympus CEO Michael Woodford?

Take a moment to watch this short interview with Ray Anderson from three years ago, where he talks about his leadership journey in sustainability practices.

Yes, there’s a distinction between committing stupid mistakes and ethical lapses and crimes. However, there’s indeed a strong learning element embedded within all of these types of leadership miscalculations and mistakes. They can generally be traced back to the 7 learning disabilities, perhaps with the exception of truly sociopathic CEOs.

Suggestion: Hold a lunch and learn in your organization, at which you’d talk about Senge’s 7 Learning Disabilities and your group’s experiences in the workplace and community.

Senge’s seven learning disabilities may be seen as a framework, from which people – not organizations – can start to learn from their mistakes and to cease their perpetual repetition. And the first ones in line to reap the benefits should be those leading organizations.

Are YOU ready to lead in 2012?

I am putting myself to the fullest possible use, which is all, I think, that any conscious entity can ever hope to do.
-Hal 9000 computer, 2001, A Space Odyssey


Photos by J. Taggart (Chicago)


Click here to download my complimentary e-book Creating Order and Meaning during Organizational Chaos: The Fall & Rise of the Learning Organization.


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