Sometimes the dark side of leadership eclipses the bright side—to the detriment of both the leader and the organization.

The Dark Side of Leadership

JAY A. CONGER

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n recent years, business leaders have gainedgreat popularity: Lee Iaccoca and StevenJobs, for example, have stepped into the

limelight as agents of change and entrepreneur-ship. But though we tend to think of the posi-tive outcomes associated with leaders, certainrisks or liabilities are also entailed. The verybehaviors that distinguish leaders frommanagers also have the potential to produceproblematic or even disastrous outcomes fortheir organizations. For example, when aleader's behaviors become exaggerated, losetouch with reality, or become vehicles forpurely personal gain, they may harm the leaderand the organization.

How do leaders produce such negativeoutcomes —and why? Three particular skillareas can contribute to such problems. Theseinclude leaders' strategic vision, their commu-nications and impression-management skills,and their general management practices. Wewill examine each to discover its darker side.

PROBLEMS WITH THEVISIONARY LEADER

As we know, the 1970s and 1980s broughttremendous changes in the world's competi-tive business environment. Previously success-ful organizations that had grown huge and bu-reaucratic were suddenly faced with pressuresto innovate and alter their ways. Out of these

turbulent times came a new breed of businessleader: the strategic visionary. These men andwomen, like Ross Perot of Electronic Data Sys-tems and Mary Kay Ash of Mary Kay Cos-metics, possessed a twofold ability: to foreseemarket opportunities and to craft organiza-tional strategies that captured these opportu-nities in ways that were personally meaning-ful to employees. When their success storiesspread, "vision" became the byword of the1980s. Yet though many of these leaders ledtheir organizations on to great successes, othersled their organizations on-to great failures. Thevery qualities that distinguished the visionaryleader contained the potential for disaster.

Generally speaking, unsuccessful strategicvisions can often be traced to the inclusion ofthe leaders' personal aims that did not matchtheir constituents' needs. For example, leadersmight substitute personal goals for what shouldbe shared organizational goals. They mightconstruct an organizational vision that is es-sentially a monument to themselves and there-fore something quite different from the actualwishes of their organizations or customers.

Moreover, the blind drive to create thisvery personal vision could result in an inabil-ity to see problems and opportunities in theenvironment. Thomas Edison, for example, sopassionately believed in the future of directelectrical current (DC) for urban power gridsthat he failed to see the more rapid acceptanceof alternating power (AC) systems by America's

then-emerging utility companies. Thus thecompany started by Edison to produce DCpower stations was soon doomed to failure.He became so enamoured of his ov/n ideas thathe failed to see competing and, ultimately,more successful ideas.

In addition, such personal visions en-courage the leader to expend enormousamounts of energy, passion, and resources ongetting them off the ground. The higher theircommitment, the less willing they are to seethe viability of competing approaches. Becauseof the leader's commitment, the organization'sinvestnient is also likely to be far greater insuch cases. Failure therefore will have moreseriou:S consequences.

Fundamentcil errors in the leader's percep-tions can also lead to a failed vision. Commonproblems include (1) an inability to detect im-portant changes in markets (e.g., competitive,technological, or consumer needs); (2) a fail-ure to accurately assess and obtain the neces-sary resources for the vision's accomplishment;and (3) a misreading or exaggerated sense ofthe needs of markets or constituents. For ex-ample^ with a few exceptions like the Chryslerminivan. Lee Iacocca inaccurately believed thatautorriobile style rather than engineering wasthe primary concern of automotive buyers. AtChrysler, he relied on new body styles and hischarisma to market cars built on an aging chas-sis (the K car) developed in the late 1970s. Theend result was that, after several initial yearsof successful sales, Chrysler's sales plunged22.8% in 1987. Today, the future of Chryslerlooks equally cloudy.

Ultimately, then, the success of a leader'sstrategic vision depends on a realistic assess-ment of both the opportunities and the con-straints in the organization's environment anda sensitivity to constituents' needs. If the leaderloses sight of reality or loses touch with con-stituents, the vision becomes a liability. Visionsmay fail for a wide variety of reasons; Exhibit1 outlines some of the more significant ones.We will examine several of these categories andillustrate them with the experiences of someprominent business leaders.

Exhibit 1

THE SOURCES OF EMLED VISION

The vision reflects the intemal needs of leadersrather than those of the market or constituents.

The resources needed to achieve vision have beenseriously miscalculated.

An uru-ealistic assessment or distorted perceptionof market and constituent needs holds swray.

A failure to recognize environmental changes pre-vents redirection of the vision.

Making the Leader's Personal Needs ParatciQunt

As mentioned, one of the most serious lia-bilities of a visionary leader occurs whea heor she projects purely personal needs and be-liefs onto those of constituents. A common ex-ample is the inventor with a pet idea whq ac-quires sufficient resources to initiate a venturethat fails to meet the market's needs. When aleader's needs and wishes diverge from thoseof constituents, the consequences can be quitecostly. Consider, for example, Edwin Landi in-ventor of the Polaroid camera. Dr. Land's ex-periences with a camera he developed calledthe SX-70 illustrate how a leader can get side-tracked by his own personal goals.

As we know. Land's company, Polaroid,held a monopoly on the instant photographymarket for some three decades and became thehousehold word for such cameras. Throqgh-out the 1960s and 1970s, Polaroid's salesclimbed with astonishing speed. By 1973] fourmillion of the company's Colorpack caxneraswere being sold annually at $30 a piece. ButDr. Land was not content. His dream wfas tocreate what he called "absolute one-step pho-tography"; the SX-70 camera was to embodyhis dream. "Photography v/ill never be the same. . . With the gargantuan effort of brinjgingSX-70 into being, the company has come fullyof age," Land remarked on the day of thecamera's inauguration.

In setting the parameters for his new vi-sion. Land outlined several demanding criteria:The camera was to be totally automatic andwould have to fold to fit into a purse or pocket, 45

Jay A. Conger is associate professor of or-ganizational behavior at the Faculty ofManagement, McGill University in Mon-treal, Canada. He received his D.B.A. de-gree from the Harvard Business School,his M.B.A. degree from the University ofVirginia, and a B.A. degree in anthropol-ogy from Dartmouth College. As thedirector of International marketing for ahigh-technoiogy company, he also has ex-perience as a practicing manager.

Professor Conger's research centerson executive leadership, the managementof organizational change, and the trainingand development of leaders. His work onthese subjects has been published innumerous book chapters and journalssuch as The Academy of Management Re-view and The Academy of ManagementExecutive. His most recent books includeThe Charismatic Leader (Jossey-Bass,1989) and Charismatic Leadership, co-authored with R. N. Kanungo {Jossey-Bass, 1988). He has servea as a consul-tant cp executive development and or-ganizational change to a wide variety ofU.S. and Canadian companies.

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possess a single-lens reflex-viewing system, andfocus from less than a foot to infinity. It wasto be a radically new design, making earlierversions of instant photography obsolete.

The SX-70 also represented a major stra-tegic shift for the company. Before its advent,the manufacturing of Polaroid products, es-pecially films, was subcontracted to outsiders.Plant and equipment were usually leased orrented. But Land's dream of the SX-70 requiredtotal integration of the company. A color-negative and camera-assembly plant were de-

signed and built, and the company's existingchemical production and films-packaging fa-cilities were expanded.

Although the total cost of the SX-70strategy was never formally disclosed. Landresponded in an interview that it was a half-billion-dollar investment. Other estimates haveput it higher. In any case, the SX-70 was a de-sign masterpiece. It was estimated that thereflex-viewing system cost millions of dollarsand required more than two-and-a-half yearsof engineering effort. Engineering for the eye-piece alone cost $2 million.

Land's expectations of the camera's suc-cess were as lavish as his investment in the cam-era. At S180 per camera, company projectionswere that first-year sales would reach severalmillion. By some accounts, sales of 5,000,000units were predicted. 'Yet despite such opti-mism, the camera met with only limited pub-lic support. 3y the end of its first year inl973,only 470,000 SX-70 cameras had been sold. Irwould take several years, many design changes,and significant price cuts before the camerawould gain widespread market acceptance —all at the cost of sacrificing many of the camera'soriginal features. Land's personal vision or theinstant camera had missed vvhat the irKirketwanted.

Most important, in his quest for the per-fect instant camera he had failed to take intoaccount lessons that his company had alreadylearned about consumers' needs. Before the SX-70, Polaroid's experience with both its black-and-white and its color cameras was that de-mand was intimately tied to price. Consumerswanted an inexpensive, earj^^-to-use, instantcamera. Their foremost desire was not a per-fect picture but a relatively good instant pic-ture at a low price.

In the j.960s, the marketplace had power-fully demonstrated its needs to Polaroid afterthe company first introduced its color systemin 1963. Vvhen the Colorpack cameras pricedat SlOO met with only limited market interest,Polaroid introduced a version at $75 and, by1969, a 830 Colorpack. At the $30 price level,volume dramatically expanded, and 4.000,000

units were sold by 1973. Consumers wantedinstant photography but only at an inexpen-sive price. So how could 5,000,000 SX-70s at$180 a piece be sold when only 4,000,000Colorpack cameras had been sold at $30 each?Clearly they could not. Dr. Land's vision wasa personal ideal, one that was not shared byconsupiers at a price of $180 per camera.

VVhat happened to Land that he failed tolearn from the past? There are several possibleexplanations. For one, his initial vision of in-stant photography had been correct; peoplereally did want instant photographs. This ini-tial success, however, may have convinced himof the 'invincibility of his ideas. Second, Landwas an engineer at heart; he loved the technol-ogy rnore than the marketing of the product.His very background made him product- andtechnology-driven, not so much marketplace-driven. Finally and most important, I believethat Land, like other leaders, came to identifywith his vision to an unhealthy extreme: Thevision personified him.

A similar example is seen in Henry Ford,who vyas willing to build a Model T of anycolor as long as it was black. The vision inessence becomes so much a part of the leader'spersortality that he or she is unwilling or un-able to consider information to the contraryfrom staff members or from the marketplace.Convinced by past successes of their invinci-bility, such leaders plov/ ahead without con-sidering other viewpoints — a sure course to-ward failure.

Becoming a "Pyrrhic Victor"

In the quest to achieve a vision, a leadermay be so driven as to ignore the costly impli-cations of his strategic aims. Ambition and themiscalculation of necessary resources can leadto a "Pyrrhic victory" for the leader. The term"Pyrrhic victory" comes from an incident inAncient Greece: Pyrrhus, the King of Epirus,sustained such heavy losses in defeating theRomans that despite his numerous victoriesover them, his entire empire was ultimately

undermined. Thus the costs of a "Pyrrhic" vic-tory deplete the resources that are needed forfuture success.

In this scenario, the leader is usually drivenby a desire to expand or accelerate the realiza-tion of his vision. The initial vision appearscorrect, and early successes essentially deludeor weaken the leader's ability to realisticallyassess his resources and marketplace realities.The costs that must be paid for acquisitionsor market share ultimately become unsustaina-ble and threaten the long term viability of theleader's organization.

Robert Campeau is the quintessential Pyr-rhic victor. After amassing a fortune as a realestate developer, he proceeded to expand hisempire into retailing with a series of purchasesin the mid-1980s totalling $13.4 billion. He didthis despite the fact that he knew little aboutthe business of retailing itself. His celebratedpurchase of the Allied and Federated Depart-ment Stores alone cost him some $400 millionin bankers' and lawyers' fees and added $? 1.7billion of debt to the Campeau Corporation.They also transformed him overnight into themost powerful retailer in the world. The priceof course was an enormous amount of debt—much of it in the form of high-interest junkbonds that would soon demand most of thecompany's operating cash to service.

When asked how he planned to success-fully integrate and enhance the profitability ofthese new and unrelated acquisitions, Cam-peau explained that it was only a matter ofconsolidating various operations, selling off as-sets to pay off company debt, and motivatingmanagement by giving them stock options.With an air of great confidence, he commented:"I own the best department stores in the world,and they will be damned profitable." He alsoenvisioned enormous potential for synerg i be-tween his retailing and real estate operations.His plans included the building of some 50 US.shopping malls anchored b3' his newly acquiredretail stores. These projects, which included17 new Bloomingdale's stores, were estimatedat a cost of $1.5 billion. In comments to thepress, he stated: "Most retail managements 47

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don't know much about real estate and finance. . . [but] real estate is the gravy on top of thesegreat retailing deals." For Campeau, his newlyacquired stores sat on prime land—ripe for fu-ture deals. It was an intriguing and untrieddream.

Ironically, these bold strategic moves wereall made during a sales slowdown in the depart-ment store industry and in a country gluttedwith shopping malls. As well, the two chainshe had acquired were prestigious but alsonotoriously inefficient. None of these factorsseemed to impede Campeau, who was intenton building an empire.

Despite his rosy projections for the future,Campeau's kingdom quickly unraveled withina few years. After struggling to meet a crush-ing debt load, Campeau's retail operations ranout of operating cash in August 1989. By Janu-ary 1990 his company stood on the edge ofbankruptcy, and so did Campeau himself. Theprojections of great profitability for the retailoperations had never materialized. New andlast-minute junk-bond financing to keep thecompany alive came at a dear price, with in-terest rates as high as 1775%. But this wouldnot save the company as soaring debt-servic-ing costs forced Campeau to sell off companystock to others and to default on companyloans. Even the company's crown jewel —Bloomingdale's—was soon put up for sale.Campeau's own personal fortune of $500 mil-lion was said to have ail but evaporated byFebruary 1990.

Campeau's tragic error in this case was tiedas much to blind ambition as it was to poorstrategic and financing decision. His historyof successes in the real estate field, in combi-nation with an ambitious personality, led thisvisionary leader to dream, of ever-greater ex-pansion, but in new and unfamiliar territories.The idea of an "empire" became more impor-tant than the satisfaction of enjoying his pres-ent successes. Failing to see that he lacked thelong-term resources or skills needed to sustainhis grand, plan, he continued to acquire com-panies and debt at an alarming rate.

Then, too, in wishing to maintain an im-

age of self-confidence, he may have denied orminimized the existence of any problems. Al-ready an autocratic leader, Campeau becameeven more autocratic. For example, he him-self assumed the position of chairman of theboard at both Federated and Allied, a job hehad originally and sensibly promised to an ex-ecutive of a highly successful retail chain. Hewanted to run his new and glamorous acquisi-tions personally. Sadly, this scenario is all tootypical of the Pyrrhic victor whose ambitionsstymie his ability to assess goals and resourcesrealistically. Investment bankers and subor-dinates may further encourage visions of gran-deur. As serious problems emerge, their im-portance is minimized. Once a crisis stage isreached, the leader exerts greater personal con-trol and becomes less able to hear the counselof advisors or staff members who might behelpful. In the worst case, such as Campeau's,the organization's resources are exhausted andthe company fails.

Chasing a Vision Before Its Time

Sometimes a leader's perceptions of themarket are so exaggerated or so significantlyahead of their time that the marketplace failsto sustain the leader's venture. The organiza-tion's resources are mobilized and spent on amission that ultimately fails to produce the ex-pected results. In this case, the leader is per-haps too visionary or too idealistic. He or sheis unable to see that the time is not ripe, sothe vision goes on to failure or, at best, a longdormancy.

Robert Lipp, former president of Chemi-cal Bank, is an example of a visionary charis-matic who in one project was essentially toofar ahead of his time. He had championed avision of home banking in the early 1980s.Sensing that the personal computer was revolu-tionizing many aspects of everyday life, Lippand others at Chemical Bank expected personalbanking to be the next beneficiary of the per-sonal computer revolution. Tiirough a modem,phone line, software supplied by the bank, and

a personal computer at home, individuals couldinstruct their banks to carry out certain trans-actions. A service fee of $8 to $15 a monthwas charged for personal users and $20 to $50a month for small businesses. From the user'sviewpoint, home banking provided conve-nience in bill paying and ease of access to ac-counts. While on travel, the user could instructthe system to pay bills on exact due dates.

For banks, electronic home banking was

banking led to consumer resistance. First, cus-tomers were reluctant to give up the "float" be-tween when they wrote a check and when itwas cashed. With home banking, once the com-puter authorizes a payment, it is immediatelydebited from the customer's account.

Second, some investment—for a computerand a modem—was required on the customer'spart. It is estimated that only 10% of personalcomputer owners had modems — and the num-

sconce a crisis stage is reached, the leader exertsgreater personal control and becomes less ableto hear the counsel of advisors or staff mem-bers who might be helpful."

very appealing. The printing, processing, andreturn of some 41 billion checks annually inthe United States amounted to $41 billion. Thisfigure represented 20 % of the annual revenuesof banks belonging to the Federal Reserve Sys-tem. Hc^me banking offered the possibility ofa tremendous reduction in operating costs.

In 1P83, Chemical Bank under Lipp's guid-ance introduced a home banking system calledthe Pror^to Two with a goal of four m illion cus-tomers v rithin several years. By 1988, however,the total nationwide users of home bankingsystems jiad reached only 100,000 people. Anarticle iiji Business Week (February 29, 1988)remarked: "When Chemical Bank unveiled theidea of home banking in 1983, it projected that10% of itjs customere would eventually pay billsand make banking transactions from their homecomputer. Talk about misplaced optimism. To-day, if you're among those who deal with anybank by J)ersonal computer, you're in a minorityof a mere 100,000 people —and that includesa numbet of small business operators," Only30 banks |were offering the service by 1988, outof a tot4 of 14,000 banks nationwide.

What Chemicaii and others later discoveredwas that Several inherent problems with home

ber of personal computers in homes v.iaslimited. Finally, it was a matter of opinionwhether writing a paper check was not jiistas simple and convenient as paying bills by per-sonal computer. Given the costs of such opm-puter systems, it was believed that only byproviding a wider range of services, such ashome shopping services, would home bank-ing's appeal increase — and that a period of 10to 15 3^ars was required for market acceptance.

In Lipp's case, his vision was essentiallypremature for its market. Part of the probleincould be attributed to the difficulty of tryiiitgto predict a future event for which there isi rtohistory. It is extremely difficult to accuratelyestimate the demand for a particular productor service; the leader is essentially relying; olnhis or her forecast of resources and markettrends. The margin for error in these situa-tions is high, and the costs and time horizonsfor introducing a new product or service 'a-veoften underestimated. Such miscalculati6;riscan forestall a vision.

Two other factors may play importantroles. In their own excitement over an idfefi,leaders may fail to adequately test-market iinew product or service or fail to hear naysayters 49

or overlook contrary signs from the environ-ment. Again, because of successes in otherprojects (Lipp had had several outstandingones), they may delude themselves into believ-ing they know their markets more accuratelythan they actually do. Or their spellbindingability to lead may not be backed up by anadequate understanding of marketplace trends.

HOW LEADERS COME TO DENY FLAWS IN

THEIR VISIONS

All three of these cases share certain char-acteristics that cause leaders to deny the flawsin their visions. Often, for example, leaderswill perceive that their course of action isproducing negative results, yet they persist.Why this happens can be explained by aprocess called "cognitive dissonance," whichprevents the leader from changing his course.Simply put, individuals act to keep the com-mitments they have made because failing todo so would damage their favorable percep-tions of themselves. For example, studies havefound that executives will sometimes persistin an ineffective course of action simply be-cause they feel they have committed themselvesto the decision. This same process, I suspect,occurs with leaders.

Others in the organization, who tend tobecome dependent on a visionary leader, mayperpetuate the problem, through their own ac-tions. They may idealize their leader exces-sively and thus ignore negative aspects and ex-aggerate the good qualities. As a result, theymay carry out their leader's orders unquestion-ingly—and leaders may in certain cases encour-age such behavior because of their needs todominate and be admired. The resulting senseof omnipotence encourages denial of marketand organizational realities. The danger is thatleaders will surround themselves with "yes peo-ple" and thus fail to receive information thatmight be important but challenging to the mis-sion. Their excessive confidence and the desirefor heroic recognition encourages them to un-

50 dertake large,, risky ventures — but because of

Exhibit 2

POTENTIAL LIABILITIES IN THE LEADER'S

COMMUNICATIONS AND IMPRESSION

MANAGEMENT SKILLS

Exaggerated self-descriptions.Exaggerated claims for the vision,A technique of fulfilling stereotypes and images of

uniqueness to manipulate audiences.A habit of gaining commitment by restricting

negative information and maximizing positiveinformation.

Use of anecdotes to distract attention away fromnegative statistical information.

Creation of an illusion of control through affirm-ing information and attributing negative out-comes to external causes.

their overreliance on themselves and their cadreof "yes people," strategic errors go unnoticed.Bold but poorly thought-out strategies will bedesigned and implemented. The leader's vision,in essense, becomes a vehicle for his or her ownneeds for attention and visibility.

Finally, problems with "group-think" canoccur where the leader's advisors delude them-selves into agreement with the leader or domi-nant others. In such a case, decision-makingbecomes distorted, and a more thorough andobjective review of possible alternatives to aproblem are all but precluded. This is espe-cially true of groups that are very cohesive,highly committed to their success, under pres-sure, and possessing favorable opinions ofthemselves—common characteristics in the or-ganizations of powerful and charismaticleaders. When group-think occurs, the opin-ions of the leader and advisors with closelyallied views come to dominate decision mak-ing. Doubts that others might have are kepthidden for fear of disapproval. It is more im-portant "to go along to get along" rather thanto consider contrary viewpoints.

John DeLorean is an example of a leaderwho may have purposely created group-thinksituations. One executive of the DeLoreanMotor Company, after being dismissed byDeLorean from the company board, com-

mented: "He told me he knew how some ofthe things the board was doing bothered myconscience. He said he wanted me to keep aclear conscience and not to worry as much asI did, so he had dropped me from the board.. . . . When I told him he couldn't bear havinganyone disagree with him so he had to stackthe board his way, John , . . just nodded andsaid, 'That's right. It's my company and I'mgoing to do what I want to do — when you getyour own company, you can do the same'" (HillLevin, Grand Delusions, Viking, 1983, pg.248).

MANIPULATION THROUGHIMPRESSION MANAGEMENT ANT)COMMUNICATION SKILLS

Because some leaders are gifted at com-municating, it may be quite easy for them tomisuse this ability. For instance, they may pres-ent infoi'mation that makes their visions ap-pear mof'e realistic or more appealing than thevisions actually are. They may also use theirlanguage skills to screen out problems in thelarger er^vironment or to foster an illusion ofcontrol when, in reality, things are out of con-trol. Exhibit 2 highlights a number of these pos-sible problem areas.

While at General Motors John DeLoreanwas partjicularly adept at employing skills ofarticulation and impression management topromote! himself. For example, he would oftenclaim responsibility for projects without ac-knowledging the contributions of others. Hisaim was simply to manipulate information sothat he afjpeared as the originating genius. Inthe case 6f the highly successful Pontiac GTO,DeLoreah claimed to be the engineer at Pon-tiac whc conceived the idea of combining alighter version of the Tempest body with apowerful engine to create the GTO. In reality,the idea jwas suggested by a GM colleague.

In Current Biography, DeLorean is de-scribed ai owning "more than 200 patents, in-cluding fjhose for the recessed windshieldwipers arid the overhead-cam engine." How-

ever, Hill Levin in his biography of DeLoreianreported that the U.S. Patent Office listed a to-tal of 52 patents, none for the wipers or Jorthe overhead cam. Exaggeration of personaldeeds was perhaps DeLorean's way of build-ing the legend. What we see with some leadersis that their need for personal recognition andvisibility is so high that they feel compelledto distort reality to enhance their own image.

When leaders rely greatly on their impres-sion management skills in communicating, ttieydo themselves a disservice. For instance, re-search in impression management indicates notonly that one's self-descriptions are effective indeceiving an audience, but also that they maydeceive the presenter as well. This is especiallytrue when an audience reinforces and approiresof the individual's image. Such positive ire-sponses encourage leaders to internalize theirov\m self-enhancing descriptions, Especiallj/when exaggeration is only moderate, leaderstend to internalize and believe such claims. SoDeLorean may ultimately have come to believein his own responsibility for the Pontiac GTQ,

Considerable research has also been per-formed on people who are ingratiators ~people who play to their audiences by tellingthem what they want to hear. Two particulartactics that I suspect charismatic leaders useto ingratiate themselves with their audiencesare to (1) fulfill stereotypes and (2) create animage of uniqueness.

Research shows that if individuals behavein ways that fulfill the positive stereotypes ofan audience they are more likely to interactsuccessfully with them. This can be achievedby espousing the beliefs, values, and behaviorsassociated with the stereotype and appearingas the stereotype is expected to look. For ex-ample, DeLorean supposedly went to great ef-forts to present the image of a young, highlysuccessful executive with an entrepreneurialspirit. He underwent cosmetic surgery, dietedfrom 200 pounds to 160, lifted weights, dyedhis grey hair black. He flew only first class.When he ate out, he always obtained the besttable. To many, his image fulfilled the stereo-type of the successful businessman, 51

52

DeLorean used the second tactic—to dem-onstrate uniqueness —through his unconven-tional actions while working at General Mo-tors and his tales of innovations at theautomobile giant. These stories created the im-age of a highly successful, unique individualexcelling in the corporate world.

In terms of how or what a leader commu-nicates, according to Charles Schwenk, thereare several tactics that individuals can use togain commitment from others even when thecircumstances are unethical. Because our abil-ity to process information is limited, we relyon simple biases to reduce the amount of in-formation needed to make a decision. Byplay-ing on these biases, a leader can create orheighten commitment to a course of action.They may manipulate information so as to en-courage biases in others that will increase con-fidence in and commitment to the leader's stra-tegic choices. For example, leaders canwithhold information that is not favorable toa cause and present instead more positive in-formation. Or they may relate anecdotes de-signed to draw attention away from statisticalinformation that reflects negatively on theirplans.

DeLorean's management of investors in hisautomobile venture offers one example of thisprocess. If investors had looked at history, theywould have found that the odds of his succeed-ing were slim. Not since the founding of thefour major auto companies had a new automo-bile company succeeded, and there had beenmany attempts in the interim. Moreover, therewas negative statistical information in the com-pany prospectus that might have dissuaded in-vestors. But instead of focusing on such im-portant statistical infonnation, the investorsallowed themselves to be swayed by DeLorean'spersonal character and his impressive presscoverage while at General Motors. Could it bethat L")eLorean aimed to create a flashy imagein the minds of investors in order to draw theirattention away from other sources of infor-mation?

Anecdotal infonnation may be used by theleader not only to influence decision makers'

Exhibit 3

POTENTIAL LIABILITIES OF A LEADER'S

MANAGEMENT PRACTICES

Poor management of people networks, especiallysuperiors and peers.

Unconventional behavior that alienates.Creation of disruptive "in group/out group" ri-

valries.An autocratic, controlling management style.An informal/impulsive style that is disruptive and

dysfunctional.Alternation between idealizing and devaluing oth-

ers, particularly direct reports.Creation of excessive dependence in others.Failure to manage details and effectively act as an

administrator.Attention to the superficiaLAbsence from operations.Failure to develop successors of equal ability.

choices, but also to increase their confidencein a choice. The sheer amount of informationthe leader provides may act to build overcon-fidence. Various studies of decision making in-dicate that more information apparently per-mits people to generate more reasons forjustifjdng their decisions and, in turn, increasesthe confidence of others in the decisions.Leaders might also create an illusion of con-trol by selectively providing information thataffirms they are in control and attributesfailures or problems to external causes. All ofthese tactics may be used by leaders to mis-lead their direct reports and their investors.

MANAGEMENT PRACTICES THAT BECOMELIABILITIES

The managerial practices of leaders alsohave certain inherent liabilities. Some leadersare known for their excessively impulsive, au-tocratic management style. Others become sodisruptive through their unconventional be-havior that their organizations mobilize againstthem. Moreover, leaders can at times be poorat managing their superiors and peers. Ingeneral, some of the very management prac-

tices that make leaders unique maj/ also leadto their downfall.

Leaders' liabilities fall into several catego-ries: (1) the way they manage relations withimportant others, (2) their management stylewith direct reports, and (3) their thoroughnessand attention to certain administrative detail.Typical problems associated with each of thesecategories are shown in Exhibit 3. We will startwith the first category: managing relations withimportant others.

Managing Upwards and Sideways

Some leaders —particularly charismaticleaders in large organizations — seem to be verypoor at managing upwards and sideways. Be-cause they are usually unconventional advo-cates of radical reform, they may often alien-ate otheirs in the organization, including theirown bosses. The charismatic leader's uncon-ventiona l actions may trigger the ire of forceswithin the organization which then act to im-mobilize him or her. Leaders' aggressive stylemay alsp alienate many potential supportersand ultiinately leave them without sufficientpolitical support for their ambitious plans. Thisproblem is common when charismatic leadersare broujght in from the outside; their radicallydifferent values and approaches may alienatethe rest of the organization.

This kind of situation occurred at GeneralMotors jf/hen Ross Perot was made a boardmember Once on the board, Perot became oneof the company's most outspoken critics. Asan entrepreneur, he was quite naturally ac-customed to running his own show, and afterhis comfJany, Electronic Data Systems (EDS),merged ilvith CM he insisted that any changesmade in EDS procedures be cleared throughhim. His style and outspokenness were so muchat odds with the General Motors culture thatthe company offered Perot $700 million instock to step down, from the board — an offerhe finally accepted.

A second problem related to managing re-lations within large organizations is the ten-

dency of certain leaders to cultivate a feelingof being "special" among members of theiroperating units. This practice is often accom-panied by a corresponding depreciation ofother parts of the corporation. In short, theleader creates an "us versus them" attitude. Al-though this heightens the motivation of theleader's group, it further alienates other groupsthat may be important for resources or politi-cal support. Steven Jobs did this with theMacintosh division at Apple Computer. E\ienthough the company's Apple II Computerprovided the profits. Jobs consistently down-played that division's importance. He essen-tially divided the company into two rivals. Hewas fond of telling people in the Macintoshdivision, "This is the cream of Apple. This isthe future of Apple." He even went so far astelling marketing managers for Apple II thatthey worked for an outdated, clumsy organi-zation. Jobs's later departure from Applestemmed in part from morale problems hecreated within the company by using this tactic.

In another case, the charismatic presidentof a division in a large corporation used as Hisgroup's emblem a mascot symbol of the TVcartoon character Roadrunner. (In the car-toons, Roadrunner was particularly adept atoutwitting a wily coyote.) To him, his divisionmanagers were the "roadrunners" who weresmarter and faster than the corporate "coyotes"who laid roadblocks in their path. He also hada habit of ignoring corporate staff requests forreports or information, and he returned theirreports with "STUPID IDEA" stamped on thefront cover. Although such behaviors and tac-tics fostered a sense of camaraderie and ag-gressiveness within the charismatic leader's di-vision, they were ultimately detrimental bothto the leader and to the organization. In thiscase, the executive eventually stepped dovmfrom the organization.

Relationships with Subordinates

Highly directive and visionary leaders areoften described as autocratic. Jobs, for exatn- 53

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pie, has been described as dictatorial. I sus-pect that in many cases the vision is such apersonification of the leader that he or she be-comes obsessed about its perfection or im-plementation. Leaders' natural impatience withthe pace of the vision's achievement exacer-bates the problem and encourages them to bemore hands-on, more controlling.

There also appears to be, at times, an im-pulsive dynamic at work in the way leadersmanage — and at such times they will overridesubordinates' suggestions or insights. Again,this occurs especially in relation to accomplish-ing the vision. DeLorean is described as in-creasing his production of the DeLorean carby 50% in the belief that his product wouldbecome an overnight sensation. Productionwent to an annual rate of 30,000 cars. This wasdone in spite of market research that showedtotal annual sales of between 4,000 and 10,000cars. A company executive lamented, 'Ourfigures showed that this was a viable companywith haif the production. If the extravagencehad been cut out of New York, we could havebroken even making just 6,000 cars a year. Butthat wasn't fast enough for John. First he hadto build his paper empire in the stock market.A creditable success was not enough for him"(ibid., pg. 282).

Steven Jobs is known to have darted in andout of operations causing havoc: "He wouldleap-frog back and forth among variousprojects, dictating designs, with little or noknowledge of whether or not the technologyeven existed to make his ideas work" (L.Butcher, Accidental Millionaire, ParagonHouse, 1988, pp. 140-141).

Another potential problem can arise froma style of informality when managing the hi-erarchy of an organization — this is especiallytrue of charismatic leaders. Advantages of thisstyle are that leaders are highly visible, ap-proachable, and able to react quickly to issuesand problems. The drawback is that they of-ten violate the chain of command by goingaround direct reports and thus undercut theirdirect reports' authority. If a particular proj-ect or idea interests them, they do not hesitate

to become involved, sometimes to the detri-ment of the project managers' responsibilities.DeLorean would drop in on his engineers tosuggest what seemed trivial ideas. One com-pany engineer said: "He came in one day tosay we should hook into the cooling systemand make a little icebox for a six-pack of beerbehind behind the driver's seat. Or, anothertime, he told us to work on a sixty-watt radiospeaker that could be detached and hung out-side the car for picnics" (H. Levin, ibid., pg.267).

Administrative Skills

Some visionary leaders are so absorbedby the "big picture" that they fail to understandessential details-except for "pet" projects inwhich they become excessively involved. lac-coca, for instance, turned over most of the day-to-day operations to others as he became in-creasingly famous. As a result, he lost touchwith new model planning. He himself admit-ted: "If I made one mistake, it was delegatingall the product development and not going toa single meeting" (ibid., pg. 267). A DeLoreanexecutive complained "He [John DeLorean] justdidn't have time for the details of the project.But attention to detail is everything" (ibid., p.267). Then, too, leaders may get so caught upin corporate stardom that they become absenteeleaders. Again, laccoca is an example. His suc-cess at Chrysler led to his becoming a best-sellingauthor, a U.S. presidential prospect, and the headof the $277 million fund-raising campaign forthe Statue of Liberty-all of which distractedhim from the important task of leading Chrysler.

Because these individuals are often excitedby ideas, they may at times be poor implemen-tors. Once an idea begins to appear as a tangi-ble reality, I suspect they fed the need to moveon to the next challenge, thereby leaving subor-dinates scrambling to pick up the pieces. Fur-thermore, because some leaders have high needsfor visibility, they gravitate toward activitiesthat afford them high people contact and rec-ognition. Such activities are generally not per-

formed at a desk while paying careful atten-

tion to the details.

Succession Problems

A tiiue leader is usually a strong figure and,

as noted, often one upon whom subordinates

develop dependencies. Thus it is difficult for

others with leadership potential to develop fully

in the shadow of such leaders. For while they

may actively coach their subordinates, I sus-

pect that it is extremely difficult for them to

develop others to be leaders of equal power.

Leaders simply enjoy the limelight too much to

share it, so when they ultimately depait, a leader-

ship vacuum is created. Moreover, under charis-

matic leadership authority may be highly cen-

tralized around the leader—and this is an ar-

rangement that, unfortunately, weakens the

authority structures that are normally dis-

persed throughout an organization.

It's clear that many of the qualities of

a strong leader have both a positive and a

negative face. That's why the presence of

leaders entails risks for their direct reports,

their organizations, and at times their socie-

ties. They must be managed with care. The

negatives, however, must always be weighed

in light of the positives. For companies and so-

ciety, the need for organizational change and

strategic vision may be so great that the risks

of confrontation, unconventionality, and so on

may seem a small price to pay. It is also possi-

ble that organizations and educational insti-

tutions can train, socialize, and manage future

leaders in ways that will minimize their nega-

tive qualities.

SELECTED BIBLIOGRAPHY

For ^n in-depth look at the psychological dy-namics of the dark side of leaders, we recommendThe Neurotic Organization (Jossey-Bass, 1984) byManfred Kets de Vries and Danny Miller and "Per-sonality, Culture, and Organization" {The Academyof Maniigement Review, April 1986), also byManfredi Kets de Vries and Danny Miller.

Works that provide an informative treatmenton the topic of impression management include ThePresentation of Self in Everyday Life (Doubleday-Anchor, 1959) by Erving Goffman and ImpressionManagement (Brooks/Cole, 1980) by B.R. Schlenker.Books arid articles that deal more systematicallywith the issue of-commitment to a course of actionas well as communicating information are A The-ory of Cognitive Dissonance (Row, Peterson, 1957)byL. Festinger; Charles R. Schwenk's "Information,Cognitive Bias, and Commitment to a Course ofAction" {The Academy of Management Review,April 1986); Barry Staw's "Knee Deep in the BigMuddy: A Study of Escalating Commitment to aChosen Course of Action" {Organizational Behaviorand Human Performance, June 1976); and "The Es-calation of Commitment to a Course of Action" {TheAcademy of Management Review, October 1981).The defir^itive work on group-think is Victims ofGroup Think (Houghton Mifflin, 1972) by I. L. Janis.

Readers wishing more depth on the individual

case studies of leaders should consult the follov/iiigsources. For Edwin Land and the SX-70 camera, seeG.W. Merry's Polaroid-Kodak Case Study (HarvafdBusiness School, 1976) and P.C. Wensberg's Land'sPolaroid (Houghton Mifflin, 1987). Several articleson Robert Campeau include "Buy-Out Bomb" {WallStreet Journal, Jan. 11, 1990), Kate Ballen's "Cam-peau Is on a Shopper's High" {Fortune, Aug. 15,1988), and Eric Berg's "Is Campeau Himself Bank-rupt?" {New York Times, Feb. 2,1990). Two interest-ing sources on John DeLorean are Michael Dal/s'The Real DeLorean Story" {New York, Nov. 8,1982)and Hill Levin's Grand Delusions (Viking Prei^s,1983). Accidental Millionaire (Paragon House, 1988)by Lee Butcher presents a darker-side view of Steii snJobs. Two articles on the home banking indusl:ryand its slow takeoff are Efrem Sigel's "Is Home Bank-ing for Real?" {Datamation, Sept. 15, 1986) aitdLaura Zinn's "Home Banking Is Here — If You V\fentIt" {Business Week, Feb. 29, 1988).

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