strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: October 1, 1996

 
 

Why C.E.O.'s Succeed (and Why They Fail): Hunters and Gatherers in the Corporate Life

What are the factors that determine which C. E. O.'s succeed and which fail? Even in the high-tech world, the laws of the jungle still rule.

Anthropology and cultural evolution can bring us a long way toward understanding why people succeed or fail in a business setting. Putting the focus on chief executive officers, the authors show how their studies of primitive societies can explain why otherwise successful, competent and well-trained executives stumble when they reach the top of the ladder.

Chief executives fail most often in three situations: 1) he or she has moved to a much smaller company, either as an entrepreneur or to take over a start-up or early-stage business; 2) the C.E.O.'s small company has grown to middle size; 3) the C.E.O. has been a successful vice president or chief operating officer and has been promoted to the top spot or has been recruited as chief executive for another company. These three modes of failure are related, the authors argue. Something changes when a company reaches a certain size that makes it somehow different to manage; also, running an independent company is different from running a division of a large company. In short, small-company C.E.O.'s fail in large companies, large-company C.E.O.'s fail in small companies and C.E.O.'s who have risen through the ranks can't work with their boards.

The clue to solving the problem, the authors say, is understanding that modern companies have structural counterparts in primitive organizations, from which they evolved. These entities -- defined by size in such forms as the working group, the hunting and gathering camp and the hierarchy -- have always behaved in different ways. To survive, the C.E.O. must recognize the behavorial patterns of each type of organization, particularly the camp-like board of directors, which, the authors warn, has an intrinsically different structure from the corporation it serves.

It is enormously destructive and expensive to change the chief executive of a growth company who stumbles in office. The human cost is high, as well: competent executives, used to success, fail without understanding why. They are branded with their failure. Some succumb to bitterness and despair; a few are suicides.


Why do these otherwise successful, competent, well-trained people fail? Why, in the face of good advice, do they do things that bring their ruin? Why, after they fail, can people of less training, skill and intelligence turn their failures into successes?

The authors of this article are an early-stage venture seed capitalist and an anthropologist who specializes in leadership. We have examined the most common ways that C.E.O.'s fail by applying the findings and techniques of anthropology to business organizations. We have found that the cause of these systematic failures is not the C.E.O.'s lack of skill, nor even his psychology; it is the changing institutional context in which he must perform.

C.E.O.'s fail most often in these three situations:

  • He or she has moved to a much smaller company, either as an entrepreneur or to take over a start-up or early-stage company;
  • The C.E.O.'s small company has grown to middle size;
  • The C.E.O. has been a successful vice president or chief operating officer and has been promoted to chief executive, or has been recruited as chief executive for another company.

These three modes of failure seem unrelated; they are not. Something changes when a company reaches a certain size that makes it somehow different to manage; also, running an independent company is different from running a division of a large company. In short, small-company C.E.O.'s fail in large companies, large-company C.E.O.'s fail in small companies and C.E.O.'s who have risen through the ranks can't work with their boards.

Camp, Corporation and Community: The View from Anthropology

Every company is a polity: a "politically organized community." Even though employees may be hired and fired at will, and may be called "resources," "heads," "directs" or some other impersonal term, each director, officer, manager and employee of a company is a functioning member of the polity.

 
Page 1 2 3 4 5 6 7 8  | All | Next Last>
 
 
 
Close
Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.

Close