How Humility Impacts the Bottom-line

Word_humilityThe title of the book is ‘How Toyota Became Number 1: Leadership Lessons from the World’s Greatest Car Company’ by David Magee. It’s a book I have had in my library for some time now. The copy with me was published in 2008. Exactly one year after, Toyota began to careen down from its heights; recalling over 8.3million cars; resulting in massive loss in reputation, loss in double-digit billions of dollars; a pile of lawsuits and most especially loss of customer lives. Listen to this commentary from David Buss in 2010: “Not very long ago at all, Toyota was the reigning star of management book after management book, and of innumerable business-school lectures – all lauding how company leadership relentlessly pursued quality in their products and effectiveness in corporate strategy. Explaining the keys to Toyota’s lofty status was a full-blown cottage industry around the globe.

What a difference a year makes. In the wake of its massive safety recalls early this year and the ensuing hit to its sales and brand reputation, Toyota already has become newly synonymous with another concept: corporate hubris”. To understand corporate hubris or modern-day hubris would require a journey through another book, ‘How the Mighty Fall’ by Jim Collins. They found that “it turns out that a company can indeed look like the picture of health on the outside yet already be in decline, dangerously on the cusp of a huge fall, just like Bank of America in 1980. And that’s what makes the process of decline so terrifying: it can sneak up on you, and then – seemingly all of a sudden – you’re in big trouble”. In their quest to make sense of this outside-health-inside-decay situation, their research led them to discover that the once mighty organizations begin to fall through a five-staged sequence which they termed, ‘Five Stages of Decline’.

Stage One in the phases organizations pass through as they unknowingly decline (or fall) is ‘Hubris born of Success’. I quote, “Great enterprises can become insulated by success; accumulated momentum can carry an enterprise forward, for a while, even if its leaders make poor decisions or lose discipline. Stage 1 kicks-in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place. When the rhetoric of success (“We’re successful because we do these specific things”) replaces penetrating understanding and insight (“We’re successful because we understand why we do these specific things and under what conditions they would no longer work”), decline will very likely follow. Luck and chance play a role in many successful outcomes, and those who fail to acknowledge the role luck may have played in their success – and thereby overestimate their own merit and capabilities – have succumbed to hubris”.

The Fall Of Motorola

For us to further grasp the severity of the phenomenon, they gave us examples. Here is one of such, “By the mid-1990s, Motorola’s magnificent run of success, which culminated in having grown from $5 billion to $27 billion in annual revenues in just a decade, contributed to a cultural shift from humility to arrogance. In 1995, Motorola executives felt great pride in their soon-to-be-released StarTAC cell phone; the then smallest cell phone in the world, with its sleek clampshell design, was the first of its kind. There was just one problem: the StarTAC used analog technology just as wireless carriers began to demand digital. And how did Motorola respond? According to Roger O. Crockett, who closely covered the company for BusinessWeek, one of Motorola’s senior leaders dismissed the digital threat: “Forty-three million analog customers can’t be wrong.

Then Motorola tried to strong-arm carrier companies like Bell Atlantic. If you want the hot StarTAC, explained the Motorola people, you’ll need to agree to our rules: a high percentage (along the lines of 75 percent) of all your phones must be Motorola; and you must promote our phones with stand-alone displays. Bell Atlantic, irritated by this “you must” attitude, blasted back that no manufacturer would dictate how much of their product to distribute. “Do you mean to tell me that [if we don’t agree to the program] you don’t want to sell the StarTAC in Manhattan?” a Bell Atlantic leader reportedly challenged the Motorola executives. Motorola’s arrogance gave competitors an opening, and Motorola fell from being the No. 1 cell phone maker in the world, at one point garnering nearly 50 percent market share by 1999. Motorola’s fall from greatness began with Stage 1, Hubris Born of Success”.

In its modern usage, hubris denotes overconfident pride and arrogance; it is often associated with a lack of humility, not always with the lack of knowledge. Hubris often indicates being out of touch with reality and overestimating one’s own competence or capabilities, especially for people in positions of power. Please take note that hubris rarely shows up until success has set in. I guess that’s why someone said that success sometimes bears within itself the seeds of its own destruction. And may also explain why good rarely becomes great. Or even the biblical caution that, “Pride goes before destruction, a haughty spirit before a fall”. “The danger is that as we become more successful, we become ever more vulnerable to hubris” – Matthew Hayward, Executive Hubris. There are some notable characteristics of hubris such as: admitting to having all the explanations for one’s success; attributing one’s success to one’s methods, or skill; blind certainty about the future; indifference to customer or frontline employee complaints; claiming to have all the facts; boasting and high-mindedness; an over-bloated view of one’s opinion; a conceited sense of one’s superiority; paying lip-service to people’s opinions and external facts; exaggerated self-esteem; a puffed up and inflated ego; excessively abusive and dismissive etc. In addition to avarice, I think it was this same lack of humility that worsened the problems we had in the Nigerian Stock market crisis and the Banks-Sanusi debacle. Clearly had all the leaders involved in the Stock Marketbeing more circumspect (or humble), perhaps it would have been possible to mitigate the resultant loss.

The Dangers Of Hubris

In the article, The Dangers of Hubris by Herbert I. London, I found some more disturbing information. Read Herbert, “Kenneth Lay, former CEO of Enron, lauded his company for having been a “New Economy” firm “before it became cool to be one.” On August 14, 2001, he sent an email to employees, noting, “Our performance has never been stronger, our business model has never been more robust. We have the finest organization in American business today.” Now, of course, the company is in ruins, employees are out of work, pensions have been converted to dust, and criminal proceedings may await the principals.

Similarly, a Money Central article noted that John Chambers, chairman of Cisco, had predicted continued 30 to 50 percent annual growth for his company. One year after he made that prediction, the company suffered three straight quarters of 70 percent declines in profits. In yet another recent example of this phenomenon, after a vice president of Delta Airlines said, “We are the best in the business,” the company’s stock price plunged 31 percent. There is often a high price to be paid for such boasting.

Hubris leads naturally to an illusion of invincibility, and a belief in one’s own invincibility leads to complacency, carelessness, and failure. In his autobiography, The Education of a Speculator (1998), Victor Niederhoffer, a Wall Street futures fund manager for billionaire George Soros, points out that many companies, after putting up huge edifices to celebrate their success, soon find their fortunes declining. Obviously, this isn’t true for all companies, but examples such as the GM building in midtown Manhattan, the IBM tower, the AT&T building, and the E. F. Hutton building are interesting cases that buttress his claim. The Wall Street Journal confirmed that companies that bought the rights to name sports stadiums after themselves often fell into bankruptcy or financial difficulties soon thereafter. Examples include Enron, TransWorld Airlines, PSINet, Fruit of the Loom, 3Com, Conseco, and CMGI Inc”.

“When executives have high hubris, it can have a negative impact on the strategic decision making process, the actual strategic choices that are made, and ultimately organizational performance. Filled with confidence, these executives believe they posses valuable personal insights or understanding of their strategic situations and available alternatives, such that they will not feel the need to exhaustively gather, analyze, and discuss data.

High-CSE executives believe that they personally possess valuable insights and skills. Moreover, they hold the core conviction that their efforts – their personal efforts – lead to favorable outcomes.  It is unlikely that such executives would embrace the idea that others in the organization can make a given decision as well as they can; nor would they want to defy their conviction that effort equals reward.  High CSE executives will tend not to delegate and will prefer to act unilaterally” – Strategic Management Journal.

Compelling! That hubris could bring about the decline or demise of governments, organizations, units, projects or people has been compellingly presented from multi-perspectives. Intuitively, therefore, the pursuit of humility by us all, shifts from a may-have to a must-have, from a may-need to a must-be.

The pursuit of humility shifts from a soft, woolly, religious concept to a hard, data-driven corporate and professional attribute. Unsurprisingly, in Jim Collins study of how companies go from good to great, documented in the book Good to Great, they found out that the first factor required by such companies was what they termed Level 5 Leadership. Hear, “Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self-interest.

Indeed, they are incredibly ambitious – but their ambition is first and foremost for the institution, not themselves”. There are many things that humility grants you access into which helps curtail hubris. Of the many there is one that bears further analysis and that is Continuous Learning.

You Start To Fall When You Stop Learning

A laudable thing done by Jim Collins and his team in the book, How the Mighty Fall, was to present at the end of each chapter some kind of self-diagnostic checklist. One of the markers or symptoms of hubris is Decline in Learning Orientation. Explaining they said, “ leaders lose the inquisitiveness and learning orientation that mark those truly great individuals who, no matter how successful they become, maintain a learning curve as steep as when they first began their careers”.

It would therefore seem that Sir Benjamin Collins Brodie was on point when he made this statement: “Humility leads to the highest distinction, because it leads to self-improvement”. Continuous learning or continuous improvement or kaizen like the Japanese call it is the competence of the 21st century. “In a chaotic world, the only competence that matters is continuous learning” – Dr. John Sullivan. Our world has experienced and continues to experience so much rapid change that rapid change seems to be the only sure bet on the future.

Being humble about ourselves and our successes, personal and corporate, makes us open and thirsty to know more; forces us to ask more questions; makes us more accommodating to opposing ideas; produces better listeners in us; compels us to validate our assumptions; engenders more team orientation; stimulates the urge for continuous learning and induces more reverence and dependence on God.

The Need For Continuous Learning

“Anyone who stops learning is old, whether this happens at twenty or eighty. Anyone who keeps on learning not only remains young, but becomes constantly more valuable regardless of physical capacity” -Harvey Ullman. Hear Dr. Sullivan again: “The era of long-lasting competencies is gone, and I am predicting that it will never return. Chaos and rapid change are the new norm and will be for decades to come. In the chaotic environment that is today, one thing is clear: the approaches developed for organizing labor and accomplishing work in the industrial era have become barriers to productivity today. No longer do organizations need indefinite access to narrowly skilled talent; instead, they need medium-term access to versatile talent and short-term access to specialized talent.

The only competency that will matter is continuous learning. It should be clear to everyone in HR that in a world of constant obsolescence, knowledge, skills, tools, and practices have an extremely limited shelf life. Instead of relying on past experience, training, or education, employees will be required to continually “unlearn” yesterday’s obsolete practices and solutions and to seek out completely new ones using the social trends and technology of the day. In that environment, the only key competency that can effectively counter continuous obsolescence is the ability to continuously learn and apply knowledge. The continuous learning competency is the foundation behind building a “learning organization,” a concept firms like Google, Nike, Netflix, and Apple have championed since inception”.

“All of the top achievers I know are life-long learners. Looking for new skills, insights, and ideas. If they’re not learning, they’re not growing… not moving toward excellence” -Denis Waitley. The point is that learning or openness to learning has become an imperative. The clarion call is deafening, the need is blaring! “Accepting obsolescence of knowledge and experience is hard, but if you are going to be successful in a world of chaos, innovation, and constant obsolescence, you need to realize that “yesterday’s answers” are not only rapidly losing their value, but reliance upon them may be a liability. If as an individual you desire to be successful and enjoy job security, you need to become a “learning machine.” If you want to make your organization successful in a chaotic world, declare “continuous learning” to be your organization’s No. 1 core competency” – John Sullivan.