The DNA of Failure

    Jan 24, 2019

    By Stephen H. Baum

    It is clear that successful entrepreneurs share certain personality traits: passion, energy, drive, persistence, self-confidence, intuition, and creativity. However, we frequently read about the failure of a company whose name is familiar and whose fortunes we thought were favorable. We wonder what happened. Where did they go wrong? Did a strength morph into a weakness?

    Occasionally, the answer lies in the marketplace: an unanticipated event occurs that not even the best leader can anticipate or control. But more often than not, the failure is a direct result of the leader’s behavior. In my experience, the reasons for such behavior can be broken down into six categories (listed in order of decreasing frequency and increasing catastrophe):

    • Ignorance
    • Incompetence
    • Insouciance
    • Cowardice
    • Arrogance
    • Malice

    The following illustrate each category:

    1. IGNORANCE:  I did not know.

    “I wish I had asked. I would have acted differently if I had known.” Or “Nobody thought to tell me.” Or “They told me, but there wasn’t enough evidence to make me a believer.”

    2. INCOMPETENCE: I knew but did not understand.

    “Hindsight is 20/20. I knew, but I did not understand or foresee the consequences.”

    3. INSOUCIANCE: I knew and understood but didn’t care.

    “Sure I knew. But I really didn’t take it seriously until too late.” Or “I thought it wouldn’t get serious.”

    4. COWARDICE: I knew, understood, cared but did not have the courage to act.

    “I could not bring myself to act (overrule the recommendation from my lawyers, go against my team, fire the executive, put the funds at risk).”

    5. ARROGANCE: I knew, understood, cared and had the courage to make the tough choice but believed I could get away with the path I chose.

    “We were on a roll. We could do anything. Who did they think they were to question me?”

    6. MALICE: I knew, understood, cared, had the courage to act, but my personal agenda comes first (arrogance combined with lack of integrity).

    “I had to protect my own power/wealth.” Or “I was going to get even no matter what.”

    When you read about a company or entrepreneur who’s really in the soup, ask yourself, “What contributed most to the failure?” How far down the hierarchy was the boss in the choices that really mattered? How many words does the text contain before it actually contains the word “arrogance” or cites the boss’s personal agenda as overriding all other concerns? Such failures are not limited to the top 500 companies, some of whose leaders are either out of work or in jail. In smaller companies, the values and behavior of the owner are usually more top of mind for everyone.

    If you have a strong leadership core—character, the desire to lead, the confidence to embrace risk, capacity to be decisive, ability to engage and inspire followers—the intent and behavior that have contributed to your setbacks may not be part of your DNA. You’ll do well if you become more self-aware and more open to the possibility that you may unwittingly have been your own worst enemy.

    However, if you are a “mask,” an impostor who has substituted pretensions for a strong leadership core, who is more about herself or himself than about the enterprise and the people in it, or who has resorted to bullying and browbeating and counterproductive micromanaging, then you possess the DNA of faiure. In that case, I regret to inform you that you have two choices: give more latitude and authority to one of your trusted lieutenants or prepare yourself for a crash.

    If you are an entrepreneur at any stage from start-up to early success, look in the mirror and examine your behavior in this light. Revisit some of the setbacks you have experienced and use them to learn how to reduce the possibility of more catastrophic failure. Discuss your situation with people you trust.

    You may also find it useful to apply this analysis to the one or two people on whom you and your enterprise most depend. Ask yourself: when your people have let you down or otherwise experienced a setback, what was the root cause? A timely conversation may help them perform better next time. If you are a board member, put aside the governance manuals for a moment and think about the DNA of your leadership. If you report to the entrepreneur, have the courage to help him or her avoid sliding down the chain.

    ©The Point Group Network, LLC

    About the Author(s)

    Stephen H. Baum has been an advisor and coach to CEOs for more than twenty years, first as a partner with global consultancy Booz Allen & Hamilton, and then as an independent practitioner. He is the author of What Made Jack Welch, Jack Welch (Random House, 2007). For more information, visit www.stephenhbaumleadership.com