Two Root Causes for Business Failure: Arrogance and Authoritarianism

“By my count, more business leaders have failed and derailed because of arrogance than any other character flaw.”

-Harvey Mackay

We’re imbedded in a popular culture that cherishes self-esteem, and a prevailing belief is that thinking highly of oneself is the first step on the road to success. This view is oversimplified and ignores the problems associated with inflated egos in business and life. Humility, coupled with a focus on mission and strategy are much more useful in business than focusing on the issues of identity and self worth.

In an article entitled “The Costly Pursuit of Self Esteem,” psychologists Jennifer Crocker and Lora Park reviewed the accumulated research literature related to the subject and found that it painted a disturbing picture. They report that programs aimed at elevating self esteem have created all kinds of unintended effects, many of which none of us want.

Among these are arrogance, a sense of entitlement, bullying, high degrees of ego defense, and an inability to take even constructive criticism. Poorly thought out psychological interventions have a long history of creating Frankenstein-like monsters, and the self-esteem movement continues that sad saga. Crocker and Park report that such results should not be surprising, if one stops and think logically for a time.  Apparently fewer people are doing that than might.

“The Emperor’s New Clothes”

One of my favorite leadership stories is Hans Christian Anderson’s “The Emperor’s New Clothes.” Most of us know the story. It depicts a monarch so blinded by his own arrogance and sense of self importance that while he thought he was displaying his pomp and majesty before others, he was actually making a foolish spectacle of himself.

Business analysts frequently make reference to this story when discussing organizations that are being grossly mismanaged by leaders that are seemingly out of touch with reality. “Someone has to tell the emperor that he isn’t wearing any clothes” is an oft repeated phrase in reference to the leaders of troubled businesses.

Authoritarianism:  A close relative of arrogance

Arrogance and authoritarianism go hand in hand. Arrogance is an inflated sense of self-importance. Authoritarianism is defined in terms of obsessions with power and rigidity in thought. Highly authoritarian individuals rarely change their thinking regardless of evidence that demonstrates that they’re wrong.

Research on authoritarianism proliferated after WWII in response to Hitler’s radical takeover of Germany (for obvious reasons), and much is known about the mindset.  When highly authoritarian individuals succeed in business, it’s usually in spite of themselves.  As is so often said, even a blind squirrel can find an occasional nut.

In favorable economic environments, they may thrive, but they don’t adapt well to changing conditions. And in our age of complexity and rapid change, they’re dropping like flies.

America’s economic challenges

Some years back, PBS aired a four-part documentary called “Challenge to America,” which dealt with the declines of corporate giants such as GM, IBM, and U.S. Steel, which were once the backbone of our economy. What I found intriguing in the series was how often “arrogance and rigidity” were cited as root causes for corporate decline.  While watching it, I counted a dozen and a half references to that duo before I lost track.

Like Hans Christian Anderson’s emperor, the top executives of those companies held views of themselves and their companies that were unrealistically positive. They failed to heed warning signs such as declining market share and the rise of foreign competition, which were occurring before their very eyes.

When junior executives expressed concerns, they were chastised as being naysayers and pessimists.  If they persisted in expressing their concerns, it could cost them promotions or even their jobs.  Arrogance and authoritarianism do not take kindly to challenges, no matter how well informed or well intended those challenges may be.

A classic study in leadership

A now classic study conducted some years back illustrated the dangers associated with authoritarian (also called autocratic) of leadership as opposed to more democratic and compassionate approaches.

This study compared the productivity of work groups supervised in accord with one of three styles of leadership:  (1) “autocratic” (a leader who unilaterally issued orders and commands without asking for input from subordinates); (2) “democratic” (a leader who guided the group, but welcomed input and suggestions from subordinates); and (3) “laissez-faire” (a leader who outlined the task, but provided no real guidance regarding how the work is to be done).

The results indicated that when the leader was present, both the autocratic and the democratic leadership styles yielded comparable levels of productivity, both of which were significantly higher than those of the groups exposed to the laissez-faire (nondirective) style. No surprise there.

The truth about the authoritarian (autocratic) leadership style came out, however, when the leader was removed and the group was to carry on the work without him. Those had been exposed to the democratic leader maintained their high level of productivity— not so in the case of autocratic leadership.

The productivity of work groups exposed to the autocratic leader collapsed when the leader was absent. In addition, there was a substantial amount of disharmony and quarreling among group members. The autocratic leader produced subordinates who were clearly less committed to the task than those who had been exposed to the democratic leader.

The emergence of “servant leadership”

In a world deluged by models of leadership, a recent trend makes sense in light of what we know from history, psychological research, and common sense. Dubbed “servant leadership,” it involves the leadership role as one of service rather than the mere exercise of power.

The whole servant leadership concept has emerged as a result of the business failures wrought by arrogance and authoritarianism, and it is gaining popularity in a number of sectors of the business world. 

Actually, it’s Bible based.  Jesus Christ exemplified it in regard to His band of disciples, whom he led, served, and sacrificed himself for. Arrogant and authoritarian leaders are not in the business of subordinating their own interests to those who follow them, and they ultimately pay a price in terms of reduced margins and lower levels of commitment from their workers.  

A living example of servant leadership

I have an acquaintance who is the CEO of a very successful manufacturing firm in my area who exemplifies the concept of servant leadership.  Her success in guiding her firm to prosperity stems from a philosophy that she articulates in a single sentence: “I put my 40 employees first”. 

She sees her role as a facilitator rather than as a boss, and her task is to make it as easy as possible for her employees to do their jobs.  It’s a lot more complicated than I’ve made it sound.  It involves a whole array of sub tasks and considerations that combine knowhow, logic, and compassion. And it works.

It starts with getting the right people and then equipping them with whatever tools or skills that it takes to enable them to contribute to the highest levels that their competencies allow them.  This means knowing and being able to do every job in her operation as she would like to see each done by her employees.  It also means having a good understanding of the individuals she employs.

Commitment to mission and strategy

The evidence is clear that people are much more moved by what they see than what they’re told (or told to do). The CEO I mentioned above has a very clear business strategy and mission.  She subordinates herself to it and her employees are keenly aware of that fact and respond in turn.

Leading by example is one of the most inexpensive, and yet most effective motivational strategies available. Rather than bumbling around fixated on her level of self esteem or that of her employees, she demonstrates a commitment to her firm’s mission that influences her workers in ways that flattery and false praise could never accomplish.  And it shows up on her bottom line.

Sociological thalidomide?

History has repeatedly shown us that inflated egos are devastating to businesses, governments, and relationships of all kinds.  These occur at too high a rate on their own and do not need help from poorly thought out programs for raising it artificially.  We need fewer, not more egomaniacs.

In Europe during the 1950s, a drug we now know by the name thalidomide was prescribed to alleviate the discomforts associated with pregnancy in women.  Although the treatment was well intended, it resulted in birth defects that were much worse than the morning sickness it was prescribed to relieve.

I liken the self-esteem movement to thalidomide on the sociological level— although well intended, it’s caused much more harm than good. When the research came out that associated thalidomide as a treatment with negative effects, it was stopped. The same needs to happen to our misguided self-esteem movement.

Dr. Richardson is the founder of Redwood Enterprises, a business consulting, training, and executive coaching firm that specializes in helping business owners make sure that what they do every day reflects their strategic plans. He is available for speaking engagements on business related topics. Visit his company’s website at, or contact Redwood Enterprises by phone at 610.326.3670.