Academy of Managemenl Executive. 2000. Vol, Ii. No. 1 Napoleon's tragic march home from : Lessons in hubris

Mark J. Kioll, Leslie A. Toombs. and Peter Wright

Executive Overview Throughout history, hubris has been cited as a common reason for leadership failure. One of the more famous examples of hubris at work was Napoleon's Russian campaign of 1812. in which he lost his and empire. The authors examine (he consequences of both Napoleon's hubris and the hubris of contemporary business executives. Among the managerial behaviors that may reflect hubris are making unsound and over-priced corporate acquisitions, pursuing growth for its own sake, and knowingly violating the standards of acceptable conduct. Using historical material on Napoleon as well as contemporary business examples, we examine the causes of hubris and specific leader behaviors that are likely to result. Guidelines for reducing the incidence of hubris are suggested.

Napoleon, supreme egoist that he was, ig- Hubris has been defined as exaggerated pride, nored the significance of the omens until he self-confidence, or arrogance, frequently resulting and his host were completely and irrevocably in retribution.^ Hubris may be blamed for the re- committed to an undertaking that was sounding failure of Napoleon's campaign because doomed. Never did the gods punish hubris Napoleon possessed all its symptoms: unbounded more severely. confidence given his past successes and the ac- companying narcissism, the adulation that fed M. de Fezensac, The Russian Campaign, that narcissism, and his callous indifference to- ward the rules that governed 19'^ Century geopol- In June of 1812, Napoleon Bonaparte was ruler of itics. the Empire of France, King of Italy, and master of As a result. Napoleon was able to convince him- the European continent. At the head of The self that, despite all of the obvious obstacles, he Grand Army, numbering over 500,000 men, the could, through force of will, succeed in bringing largest force ever assembled at that point in Russia and especially Emperor Alexander I, the history, he set out to conquer the one nation in sole power on the Continent that refused to pay Europe he had not yet subjugated—Imperial Rus- him homage, to their knees. His campaign was sia. In December of the same year, less than much less about the need to thwart the hostile 20,000 of those men would make it home alive, and as a practical matter, all that Emperor Na- intentions of a rival power, and more about the poleon had accomplished in his meteoric career need to satisfy a hubris-infected personality with would soon be lost. The tragedy of the Russian an arrogant confidence about what great feats campaign, the loss of life, and the horrible suf- could be accomplished. fering of those on the march back from Moscow One frequently cited explanation for hubris is have been a source of fascination for historians that leaders often hunger for reassurance and ap- ever since. Explanations for the disaster include plause from others. This hunger may first arise poor planning, unusually bad weather, insight- when a child's narcissistic displays are fondly re- ful leadership on the opposing side, and plain ceived by parents."" As such leaders grow and be- bad luck. But, as indicated by our epigraph, al- come a part of groups or organizations, however, most all accounts of the campaign include a they may seek the same adulation from organiza- recognition of the role played by hubris.^ tion members in response to their displays of skill. U7 118 Academy of Management Executive February

Those who excel in select skills may receive posi- the securities markets provide accurate feedback tive feedback from others as they produce benefi- by doing a fairly effective job of valuing publicly- cial results. Napoleon clearly excelled in the skills traded firms.'^ The premiums executives sometimes of warfare, as he planned and implemented win- pay over target firms' prevailing market prices of- ning campaigns. Before the Russian attack. Napo- ten reflect a Napoleonic logic; "I will be able to leon had amassed a record of 35 wins versus only overcome all the obstacles and make the acquired 3 losses. The losses were either early in his career, business far more successful than its incumbent and then forgotten, or were only very temporary management; I can turn a profit on the deal in spite setbacks from which he quickly recovered. of the high price I am paying." Through these warfare experiences, he developed However, compelling research evidence shows a distinctive approach to command, along with that corporate acquisitions driven by managerial hu- considerable confidence in that approach. By the bris are often financially harmful for the sharehold- time of the Russian Campaign, however, this con- ers of acquiring firms.^ It also appears that as the fidence had turned into arrogance and a sense of level of managerial hubris rises, so does the likeli- invincibility. Worse, given his record, he appears hood that a firm will grossly overpay for an acquisi- to have believed that unique problems of a war tion.^ Compounding the problem of overpayment is with Russia were minor details that the force of the possibility that managerial hubris will under- will could surmount. mine the process of integrating the acquired and In the contemporary corporate arena, actions acquiring firms. There is the very real threat that the such as takeovers, corporate expansion programs, acquiring firm's management, imbued with a sense and blatant disregard of the rules of the game may of conquest, will treat the acquired firm's manage- reflect the presence of hubris. These actions some- ment and employees as conquered supplicants. This times suggest that the firm's management believes is especially likely if the acquiring firm is perceived that the world, and the major forces in it, including as having a better track record than the acquired financial markets, government regulators, and firm.^° The inevitable results are a failure to achieve competitors, are wrong, and that they are right, potential synergies and a loss of talent from the and are not governed by the same forces. As with acquired firm. Both outcomes will exacerbate the Napoleon's Grand Army, corporate hubris is often initial overpayment problem. punished severely. We will take a look at three An example of potential corporate hubris in an circumstances in which hubris may set businesses acquisition is the buyout of WordPerfect by Novell and their leaders down a perilous path—corporate in March 1994. Novell's CEO, Raymond Noorda, acquisitions, unbridled growth for its own sake, offered $1.4 billion for WordPerfect, in what indus- and disregard for the rules. Parallels are drawn try observers suggested was an attempt to build a with Napoleon's circumstances. software empire comparable to Microsoft's. Fol- lowing the acquisition, Novell reportedly ran roughshod over WordPerfect's management and As with Napoleon's Grand Army, culture, leading to a hemorrhage of managerial corporate huhris is often punished and technical talent and a significant deteriora- severely. tion in the performance of WordPerfect. In early 1996, Novell was forced to sell WordPerfect for about $124 million, or less than 10 percent of what Corporate Acquisitions it paid for the firm in 1994.'i Well before the invasion of Russia, Napoleon's top lieutenants argued that the chances of failure, and the cost in lives and materiel were high. Napoleon Unbridled Growth for its Own Sake rejected their warnings, pointing out that his plans Hubris can also manifest itself in a drive to domi- called for a quick, decisive, and therefore low-cost nate others and engage in empire building for its campaign. He had conducted such campaigns be- own sake. Napoleon's determination to invade fore, and saw no difference this time.^ Richard Roll Russia was driven not only by a desire to take over has suggested that all too frequently takeover at- that country, but also by a burning ambition to tempts result from an executive's belief that he or dominate Czar Alexander. The Czar was the only she can greatly improve the target firm's effi- European monarch Napoleon had not subjugated, ciency. The executive rejects feedback from others and by doing so Napoleon would have become the and, in particular, the wisdom of the financial mar- sole master of Europe. The same need for domina- kets,^ even though it is generally recognized that tion and empire building may surface in the cor- 2000 Kroll, Toombs. and Wright 119 porate world. It is generally recognized that indi- grabs were undertaken in spite of his earlier vidual executives infected with hubris have pledges of fidelity to the republic and its demo- narcissistic requirements that demand they control cratic ideals. He evidently concluded that obliga- fiefdoms of such large scale as to justify their own tions to the French people and living up to oaths importance.'^ An executive infected with hubris were for others to fulfill.'^ will likely see growth as a means of building a Managers afflicted with hubris can also create a bureaucracy of sufficient size to reflect his or her climate in which they and the organizations they prominence. For instance, the rise and fall of the govern do not play by the same rules as everyone Saatchi & Saatchi advertising empire in the 1990s else." For example, observers have remarked on the reflected the ambition of a pair of brothers who no indifference of the managers of Archer Daniels Mid- longer concerned themselves with building a prof- land Company to the laws they broke and how the itable advertising business. ^^ Instead, they aspired long-time CEO, Dwayne O. Andreas, allowed an for dominance by building an advertising empire anything-goes culture to develop.' ^ Such hubris- that was the very biggest, only to be forced out of prone personalities are likely to perceive themselves the business they had built. Similarly, Barclay's as having made great sacrifices and contributions Bank under CEO Sir John Quinton went on a quest that entitle them to special dispensation.'^ to become Britain's largest bank in the early 1990s. This attempt also failed and Sir John was forced to abdicate.^'' Managers afflicted with huhris can also create a climate in which they and the Blatant Disregard of the Rules organizations they govern do not play by the same rules as everyone else. Napoleon rose to power during the French Revolu- tion, having been an officer in the army of the First Republic.'^ After establishing a winning record at the head of the Grand Army, he decided that he Sources of Hubris merited the title of first council or dictator, and As illustrated in Figure 1, hubris has four sources: later named himself emperor. These blatant power a personality prone to narcissism; a string of suc-

Sources Implications

Narcissism

Confidence turns to arrogance

Series of successes HUBRIS Reliance on a simplistic formula for success

Uncritical acceptance o( accolades

Failure to face changing realities Exemption from the rules FIGURE 1 Sources and Implications of Hubris 120 Academy of Management Executive February

cesses that feed the narcissism; blindly believing followers for someone to bring order and stability the accolades of others, particularly the media; to their lives.^'' They in turn feed the leader's nar- and a history of getting away with breaking the cissism, which transforms his or her self-confi- rules. All these conditions can lead executives to dence into arrogance.2^ Napoleon arrived on the believe that they are above the rules.20 French political stage in the midst of the confusion of post-revolutionary France. The population, ex- hausted by 10 years of violence and uncertainty, Narcissism undoubtedly saw in Bonaparte the firm hand that Hubris derives from an overbearing sense of gran- could at last take the helm. Napoleon fed on that diosity, need for admiration, and self-absorp- need. Having taken great pains to rid themselves tion—in a word, narcissism. Narcissism is com- of a royal monarchy in 1789, many French people monly found in many successful people, and it embraced Napoleon as another type of monarch, often compels them to seek leadership positions, consul for life, further contributing to his narcis- with their accompanying power, status, and self- sism and hubris. affirmation.2' However, narcissism can drive exec- utives to use their leadership roles to create a reality that further reinforces their narcissism.^^ Series of Successes Even very charismatic leaders may use their lead- Narcissism and hubris feed on further successes. ership talents to gain position and status in order As an executive accumulates a record of accom- to satisfy their narcissism at the expense of oth- plishment, his or her susceptibility to hubris tends ers.^^ In Wai and Peace, Tolstoy comments on Na- to grow.29 Indeed, a consistent theme that runs poleon's narcissism: "He alone—with his ideal of through the various accounts of Napoleon's career glory and grandeur developed in Italy and Egypt, is the inclination for his narcissism and hubris to his insane self-adulation, could justify what had to grow with each successful campaign.^o Following be done."2'' his successes in Italy, for instance, he remarked to A number of business analysts have attributed one of his officers: Quaker Oats's disastrous acquisition of Snapple Beverages in part to the hubris of Quaker's man- They haven't seen anything yet, and the fu- agement. Quaker's then CEO, William Smithburg, ture holds successes for us far beyond what had made some very successful moves earlier in we have so far accomplished. Fortune is a his tenure, often proving the pundits wrong. The woman, and the more she does for me, the company's Gatorade purchase won Smithburg more I will demand from her. In our day no praise in the business press. Observers believe he one has conceived anything great; it is for me saw in Snapple an opportunity to surpass past to give an example.^' triumphs and establish Quaker as a force to be reckoned with in the beverage industry. In spite of the consensus view of Wall Street analysts that As an executive accumulates a record of Quaker was paying at least double what Snapple accomplishment, his or her susceptibility was worth, Quaker paid $1.7 billion for the firm. to hubris tends to grow. Even worse, perhaps owing to their extreme confi- dence in their ability to turn things around, Quak- er's management went ahead with the purchase in In the context of contemporary business, the re- spite of strong indications that Snapple was in the lationship between hubris and prior success and process of imploding. On the day the deal was subsequent egoism makes particular sense when announced, Quaker's stock dropped $7.38, or over one recognizes that the executives of most organi- 10 percent.^^ zations take disproportionate credit for high firm performance.32 The valuable stock options and the It is possible that the need to create a reality that lofty salaries American executives receive (mean fits an executive's narcissistic vision, even though executive total compensation in 1998 for the top 800 it materially departs from actual facts, may often chief executives in the U.S. was $6.5 million) tend to lead to organizational underperformance. Narcis- reinforce the credit executives take for corporate sism may be reinforced by subordinates who, hav- performance.3^ Napoleon similarly took full credit ing little sense of control over the world around for all the victories of the Grand Army. When Na- them, look to and idolize a leader they believe can poleon set off for Moscow at the head of an army of deal with the helplessness they feel.^^ The leader's half a million soldiers, he had compiled an ex- apparent confidence and pride fulfill the needs of traordinary win-loss record. In one 16-month pe- 2000 Kioll, Toombs. and Wright 121 riod, beginning in November 1805, he had won the ing the rules, inflicting sacrifice on others, and battles of Ulm, Austerlitz, Auerstadt, Eylau, and getting away with it.^^ Narcissistic personalities Freidland against the Austrians, Russians, and are predisposed to break the rules because they Prussians, making him the toast of Paris. This in- tend to possess a sense of independence from the clination on the part of most leaders to attribute norms that govern others. This sense of indepen- successes primarily to their own actions^'* may be dence from norms not only may be accompanied a natural one. Leaders may visualize how their by a willingness to exploit others, but also to lack own behavior brought about success and they may of empathy for them.''° see a clear and linear connection between the two. If they had not initiated certain actions, accord- ingly, the desirable outcomes attained would prob- Narcissistic personalities are predisposed ably not have occurred. to break the rules because they tend to possess a sense of independence from the Uncritical Acceptance of Accolades norms that govern others. The third source of hubris is a natural outgrowth of the first—leaders come to believe the exaggerated Napoleon's behavior dramatically illustrates accolades they receive from others. Praise from these inclinations. He consistently broke all of the others, particularly the press, is likely to intensify 18'^ century rules limiting the scope of destructive- hubris because it confirms and legitimizes an ex- ness of warfare. He encouraged his troops to loot ecutive's narcissism and reinforces the executive's the countries through which they passed rather own feelings of grandiosity. As his or her fame than rely on provisions from France. During the spreads, especially in the media, the executive's 1796 Italian campaign, he invaded the neutral hubris is in effect ratified.^^ Napoleon was widely Duchy of Parma in order to escape a trap laid by heralded as a military genius of the first order. If the Austrians. Having overrun the Duchy for con- he did not think of himself as the master of Europe venience, he also took hostage the governor of the early in his career, the newspapers of the day capital city of Piacenze to make it easier to loot the certainly helped him perpetuate this image. For city.**' Following the Russian campaign, with loss instance, the Journal de Paris reported in 1807 that of life in the hundreds of thousands, he issued his "He [Napoleon] was invincible, grateful to God, famous 29'^ Bulletin, blaming the massive losses forceful, modest, clever, magnanimous . . . and he on the weather, but adding that "His Majesty's combined the qualities of all the great men of health has never been better."''^ On returning to history."^^ Paris, Napoleon ordered lavish receptions and Contemporary leaders may become more sus- balls. An officer who attended one gala later com- ceptible to hubris as the press increasingly focuses mented: "I felt I was dancing on tombs."''^ on them. The press, however, may not present a Breaking the rules has its counterpart in con- balanced view of leaders.^^ An excellent example temporary business. For instance, in August of someone who recognized the extremes in which 1991, Salomon Brothers, a major bond trading the press can portray individuals is James Car- house, admitted to a host of Treasury Depart- ville, a key strategist in President Clinton's 1992 ment rule violations. These revelations caused campaign. Shortly after the 1992 election, Carville the Treasury Department to suspend the firm's was heralded as a political strategy genius. He trading privileges and forced the resignation of acknowledged the accolades, but also pointed out the top three officers. From the accounts of both that he had managed failing campaigns, and had insiders and outsiders familiar with the firm, the received a heavy dose of criticism in the press. He violations were a direct result of what acting said he knew he was not as good as the press Salomon chairman Warren Buffett referred to as made him out to be following Clinton's election, the firm's "macho and cavalier culture." just as he knew he was not as bad as the press had Salomon's bond traders regularly flouted Trea- portrayed him in his sury Department regulations designed specifi- cally to rein in Salomon's excesses. Salomon's traders simply did not agree with the rules. This Exemption from the Rules cultural deficiency appears to have been toler- ated by Salomon's former CEO, John Gutfreund, Finally, those possessed by hubris tend to be part who once told the Economist he was out for "the of a group that Freud referred to as "the excep- money, the power and the glory."^•^ tions" to the rules, people with a history of break- 122 Academy of Management Executive February

Implications of Hubris Belying on a Simplistic Formula for Success When senior managers succumb to hubris, they Another ramification of hubris is the tendency for are likely to engage in behavior that reflects that leaders to develop what they perceive as their own hubris—confidence to the point of arrogance, rely- unique and ingenious formulas for success. Such ing on simplistic formulas for success, and failing formulas, having served well in the past, are reap- to face changing realities.^^ All of these can be plied in many situations. In effect, leaders may very costly to the firm in various ways. reduce their strategy formulation and implementa- tion to predictable action plans.^^ Napoleon's Rus- sian campaign clearly reflected a reliance on what had worked well in the past, to the point that Confidence Turns to Arrogance former innovations became standard operating Individuals possessed with hubris have an over- procedure. This predictability served the Russians bearing confidence in their abilities to make well, as General Michael Barclay de Tolly and events conform to their will in spite of contrary Major General Prince Golenishchev-Kutuzov both external evidence. They believe that whatever ex- consistently refused to play by Napoleon's estab- ternal problems might arise will be easily and lished rules of warfare. willfully overcome.^6 For example. Napoleon was In an attempt to repeat past successes. Napoleon advised by several of his senior officers that an had sought to quickly engage the Russians early in attack on Russia was foolhardy. In fact. Napoleon's the campaign in order to divide and destroy their close friend and one-time ambassador to the Rus- army with overwhelming, decisive force. Quick sian Court, General Armand Louis de Caulain- and decisive engagements had worked well for court, recounted to Napoleon Czar Alexander's ex- Napoleon in Austria, Italy, and Prussia. Knowing planation of how Russia would defeat him: this, both Russian commanders, and especially Ku- tuzov, baited the enemy with rear-guard attacks, followed by further retreats into Russia. These It will not be a one day war. Your [Emperor] compelled Napoleon to follow the Russians, in the will be obliged to return to Paris to manage hope that perhaps at the next major city the his affairs [after a long absence], and every sought-after engagement would occur. These pur- advantage will be with the Russians. Then suits progressively stretched his lines of supply the winter, the cruel climate, and most impor- and communication thinner. tant of all, my determination and avowed in- Reliance on a simple formula has its counterpart tention to prolong the struggle, and not, like in the world of business. A famous example is the so many monarchs, have the weakness to strategy of General Motors in the 1970s. Company sign a peace treaty in my own capital. All executives were committed to their big car, rear- these will take their wheel-drive formula for success despite the indus- try's changing around them. Well into the 1970s, and even after several oil shocks, GM's managers To this prophetic report. Napoleon responded with still clung to the belief that the land yacht products complete indifference, dismissing Czar Alex- of the 1950s and 1960s would again prevail.^' The ander's observations with the comment, "One good commitment to this formula resulted in GM's mar- battle will knock the bottoms out of my friend Al- ket share dropping from 49 percent to 28 percent exander's fine resolutions. He is fickle and fee- over two This pattern of behavior is also evident in mod- ern corporate takeovers. As mentioned earlier, the Failure to Face Changing Realities acquisition of Snapple by Quaker Oats appears to have been largely the result of management's as- Another ramification of hubris is the tendency to sumption that it possessed unique talents that create a simplified scanning process, selectively screening for external environmental cues that could breathe new life into Snapple. This high were previously relevant in implementing a time- level of confidence appears to have been so strong tested formula for success. This screening process that even a rapidly deteriorating situation at tends to exclude those environmental factors that Snapple and an exorbitant price tag could not dis- have previously not been critical to implementing suade the Quaker Oats managers. The net result the formula for success. One of Napoleon's previ- was Quaker's later having to divest Snapple and ous experiences had been that local populations write off a $1.4 billion often viewed him as a liberator. This reaction al- 2000 Kroll. Toombs, and Wright 123 lov(red him to provision his army and avoid attacks cluding taking such personally painful steps as by partisans. Because Russia was a feudal society, owning up to his failure with the aerospace divi- he anticipated the same reaction from local peas- sion and his allowing it to go into bankruptcy. The ants. Instead, he was subject to incessant attacks result was a 45-percent appreciation in Daimler's by roving bands of Cossack partisans. share price over a 12-month period.^' Senior executives of General Motors similarly exercised an external scanning process so simple Listen fo Naysayers that they did not even consider it necessary to establish a consumer market research department Executives exhibiting hubris tend to fall into the until 1985.^^ In fact, GM's competitive analysis in trap of listening only to people whose opinions are the early 1970s consisted largely of assessing the compatible with their own. Indeed, such execu- threats that its own Pontiac and Buick divisions tives tend to build teams with members whose posed for each other. Rarely did the analysis scru- conception of the desirable closely resembles their tinize the threats posed by Ford and Chrysler, own. Such behavior tends to promote "groupthink" that normally leads to inferior alternatives and much less by the Japanese auto makers.^* decision making.^^ Alternatively, such managers Given the obvious dangers hubris represents to may surround themselves with sycophants who a successful firm's future success, we will look at echo what they believe the leader likes to hear, remedies both for the individual executive and the even if they inherently consider the leader's board of directors. choices to be flawed. In 16'*^ century Italy, Machia- velli observed: "Courts are always full of flatterers; men take such pleasure in their own concerns, and What Executives Can Do to Guard Against are so easily deceived, that this plague of flattery Hubris is hard to escape."^^ A sincere self-examination of an executive's lead- ership behaviors may be the best place to start. Asking questions such as, "Am I willing to take the Executives exhibiting hubris tend to fall counsel of others when those ideas are counter to into the trap of listening only to people my own views of circumstances?" and "What do I whose opinions are compatible with their need to do to improve my abilities to help the own. organization move forward?" will be helpful in this self-examination process. To combat the limitations of groupthink and sy- cophants, senior executives need to make sure that their team is composed of members with diverse Reflect on One's Own Performance backgrounds as well as functional areas. Just as Managers sometimes exhibit the natural human important, the members chosen must have the in- tendency to attribute successes to their own ac- tegrity and courage to argue for alternatives that tions, while blaming failures on external forces.^^ may differ from those preferred by the senior exec- Those managers who have the capacity to recog- utives. In fact, superior alternatives and strategiz- nize their own culpability in poor firm perfor- ing are often the outcomes of groups whose mem- mance, however, tend to be more successful in the bers have dissimilar opinions and who are long-term.^^ Thus, to combat the tendency to blame allowed to openly discuss their views without ret- externalities, managers need to confront their own ribution.^° Senior executives, however, must not failures. For instance, Daimler-Benz was an orga- only allow but also should encourage open discus- nization that by the 198Gs had experienced enough sions. Otherwise, even people of integrity and success to infuse its managers with hubris. By the courage may be thwarted from fully contributing to 1990s, according to industry observers, the firm had discussions. Unfortunately, leaders often discour- fallen victim to its managers' arrogance, as dem- age open discourse. Napoleon's first wife, Jose- onstrated by its deteriorating performance. Jurgen phine, for example, recorded in her memoirs: Schrempp had presided over the unbridled growth ".. . in his presence, no one had the right to hazard of Daimler's aerospace before becoming the slightest [contrary! observation."^^ the CEO. However, Schrempp was reflective enough to realize that the decline in Daimler- Benz's fortunes was due as much to internal prob- Appoint an Alter Ego lems as to the downturn in Europe's economy. Senior executives may also benefit from an alter Schrempp began reinventing Daimler-Benz, in- ego who can tell them when they are wrong.^^ This 124 Academy of Management Executive February

is especially important in organizations where per- sulted when outside board members took such ac- sonnel are inclined to normally go along with the tion. Allen had led Delta through a series of leader. The person who plays the role of alter ego acquisitions and painful cost-cutting programs should also serve as a mediator and a sounding that made him look decisive but were costly to board. Preferably, such a person should be non- employees and customers. Allen had plans to buy threatening to the senior executive, having devel- Continental Airlines and to continue cost cutting. oped a relationship of mutual trust. This alter ego However, the board became disheartened by de- must be respected by the top leader and not criti- clining employee morale, which was detracting cized for expressing different opinions. from customer service. The board also saw a need Not only Napoleon's confidant Caulaincourt, but for Delta to revert to its strategy of disciplined most of his lieutenants, offered a host of reasons internal growth rather than acquisitions. Allen why Napoleon should not invade Russia. Napoleon was replaced by Leo Mullin, who promised that invariably accused them of being timid, weak, and customers and employees would not take a back incapable of seeing what could be accomplished. seat to the company's stockholders.^^ However, following Napoleon's departure from Russia, Caulaincourt found him far more willing to listen to what he had to say about the Russian Promote a Heterogeneous Corporate Culture campaign. Caulaincourt was in fact amazed by how frankly he could talk to the Emperor compared Boards should ensure that views that run counter with the period before the campaign. Unfortu- to conventional wisdom are tolerated or encour- nately, this willingness to listen came only after an aged, and should promote the use of a more decen- estimated 570,000 tralized organizational structure.^' Board members may also recommend that corporate codes of ethics and values be developed. Such codes should em- phasize that firm decisions will promote the bene- Model Behavior That is in the Organization's Best fits of all stakeholders. Interest Senior managers serve as role models for others employed by the company. Consequently, they Develop a Strong Organizational Knowledge should display behavior that contributes to firm Base performance. Herb Kelleher, CEO of Southwest Air- As the world's economy continues to prove both lines, is a maverick who, by example, has created turbulent and extremely competitive, the informa- a culture in which employees can do things differ- tion needs of firms will continue to change rapidly. ently. In 1971, Southwest had three planes serving Prevailing systems have done well in gathering three Texas cities. Today the company has over 240 information within organizations.^^ But if internal aircraft serving 50 cities. This growth is largely the reports are positive, managers may be prone to result of Kelleher's leadership style, which values staying with simplistic formulas for success even if creativity and efficiency. As Kelleher puts it: external conditions are changing, threatening the "We've always [encouraged that] work be done viability of the firm. differently. You know, we don't assign seats. Used to be we only had about four people on the whole plane, so the idea of assigned seats just made A Call to Action people laugh. Now the reason is you can turn air- planes quicker at the gate. And if you can turn an In ancient Greece, hubris was considered a crime airplane quicker, you can have it fly more routes under Athenian law, and in Greek tragedy it was each day. That generates more revenue, so you can considered the greatest of sins, reflecting an arro- offer lower fares."^•^ gance growing out of a misplaced sense of one's own abilities rather than the generosity of the gods.^^ As we have seen, many historians have What Can Board Members Do to Control Hubris? concluded that Napoleon fell victim to his own over-inflated sense of what he could accomplish, Monitor Executives for Signs of Hubris losing an army and an empire. We are hearing increasing calls for boards of di- Financial and managerial markets also exact rectors, and especially outside board members, to their own form of retribution for corporate hubris. take on a greater monitoring role in confronting the People afflicted with corporate hubris often find it potential hubris of senior executives.^^ The depar- necessary to build an organization that reflects ture of Ronald Allen as CEO of Delta Airlines re- their narcissistic requirements through such con- 2000 Kroll, Toombs, and Wright 125

Table 1 Examples of the Sources of Hubris

Sources Napoleon Executives

Narcissism Napoleon's need for position and self- Executives with hubris will seek out positions oi aggrandization to satisfy his narcissism. power to satisfy their narcissism. Recent successes Napoleon's hubris grew as his record of battlefield A record of outstanding performance permits an victories lengthened. executive to rationalize his or her hubris. Exaggerated accolades Napoleon's hubris fed on the adulation showered As executives receive praise from others and the of others on him by the French people and press. media, their hubris is reinforced. Exemption Irom the rules Napoleon regularly broke the rules that governed A sense of entitlement accompanies hubris in IQ''^ century Europe, and his hubris grew as he executives as they break the rules and get away got away with more and more. with it. quests as acquisitions, even though acquisitions bat hubris is to be introspective enough to realize have not uniformly proven the path to quick riches one will never have all the answers and that the ior shareholders. The pursuit of narcissistic grati- counsel of others is vital. One must also realize fication can also inspire growth and investment that success in an organizational context results decisions that may lead to a larger, but not neces- from a complex interplay of the organization's var- sarily more profitable, organization. Finally, hu- ious resources with the environment. While the bris can lead to arrogance that justifies breaking leader may be a significant component in that rules. success, it is dangerous to assume that the leader's Hubris tends to appear most frequently in people role is the only factor. Executives should also work already prone to narcissism. A string of successes, to insure that they have at least one confidante some good press, and subordinates willing to feed who is in a position to speak the truth. that narcissism, can exacerbate hubris. As did Na- poleon in a military context, corporate executives infected with hubris may come to believe they pos- The most practical way for an individual sess abilities and insights others do not have, and to combat hubris is to be introspective may trivialize the wisdom and contributions of oth- enough to realize one will never have all ers. Predictably, such executives come to believe the answers and that the counsel of that their formula for success is infallible and that others is vital. additional information is largely irrelevant. The results of this process are especially unfortunate in competitive arenas such as war or commerce, as The most practical way to combat hubris in an behavior becomes predictable and thus suscepti- organizational setting is to ensure that top execu- ble to attack in ways that are not part of the exec- tives are monitored by a vigilant board with a utive's model of reality. Tables 1 and 2 compare reasonable number of outside directors. In addi- examples of the sources and implications of hu- tion, organizations should work to establish cul- bris. tural norms that encourage the membership to dis- The most practical way for an individual to com- agree without being disagreeable. Organizations

Table 2 Examples of the Implications of Hubris

Implications Napoleon Executives

Confidence turns to When Napoleon's officers pointed out the perils of Executives with hubris appear to undertake arrogance the Russian campaign, he called them timid and mergers that are overpriced out of a sense that weak. they know better than others what is best. Relying on a simplistic Napoleon assumed the quick, hard-hitting attacks Once executives believe they alone know the formula that had worked before would subdue Russia. formula for success, they repeatedly trot out the same strategy regardless of circumstances. Unwillingness io see the Napoleon systematically refused to recognize the Once absorbed with hubris, and convinced of obvious differences between the Russian campaign and infallibility, executives may become blind to earlier campaigns. signals of environmental change. 126 Academy of Management Executive February

should also encourage the kind of continuous en- P. Omstein (Ed.), The search for the self. Volume 2. New York: vironmental surveillance necessary to avoid as- International Universities Press, suming that the future will conform to the predict- ^Cate, op. cit.: 9-11. Roll, R. 1986. The hubris hypothesis of corporate takeovers. able patterns that allowed for past glories. Journal of Business, 59:197-216. Hubris does not affect every organization, but it ' Fischer. D. E. & Jordan. R. J. 1995. Security analysis and is important to monitor for hubris because it can portfolio management. Upper Saddle River, New Jersey: Pren- lead to devastating consequences. Boards must tice-Hall, sixth edition: 556. learn to distinguish between the confidence of an ^Berkovitch, E. & Narayanan, M. P. 1993. Motives for take- executive who, in the face of opposition, pursues overs: An empirical investigation. Journal of Financial and Quantitative Analysis. 28:347-362. Bradley, M.. Desai, A.. & Kim. an entrepreneurial vision, and the blind disregard E. H. 1988. Synergistic gains from corporate acquisitions and of an executive suffering from hubris. Confidence their division between the stockholders of target and acquiring and arrogance may be intertwined, as in the case firms. Journal of Financial Economics, 21:3-40. Jarrell, G. A. & of Napoleon, who was both a military genius and a Poulsen, A. B. 1989. The returns to acquiring firms in tender slave to his own narcissism. However, the lesson of offers: Evidence from three decades. Financial Management, Autumn: 12-19. Limmack, R. J. 1993. Bidder companies and de- history is clear: All too often, successful leaders fended bids: A test of Roll's hubris hypothesis. Managerial with many positive qualities become their own Finance. 19:25-36. worst enemies by succumbing to their narcissistic ^Hayward. M. L. & Hambrick, D. C. op. cit.: 103-127. Hitt, M., inclinations and allowing hubris to cloud their vi- Harrison. J., Ireland, R. D. & Best, A. 1998. Attributes of successful sion. When an organization and its leader have and unsuccessful acquisitions of U.S. firms. British Journal of achieved their ambitions, they must not allow hu- Management. 9:91-114. bris to erode their hard-earned accomplishments. "^Hambrick. D. C. & Cannella, A. A. Jr. 1993. Relative stand- ing: A framework for understanding departures of acquired executives. Academy of Management Journal, 36:733-762. ^'Business Week. 1994. How sweet a deal for Novell? April Acknowledgment 4:38. Wall Street Journal. 1996. Software firm fights to remake business after ill-fated merger. January 12:A1, A8. The authors wish to thank Charles Pringle for his '^Kets de Vries, M. F. R. & Miller, D. 1985. Narcissism and helpful comments. leadership: An object relations perspective. Human delations, 38:583-601. '^ Goldman. K. 1997. Conflicting accounts: The creation and crash of the Saatchi & Saatchi advertising empire. New York: Endnotes Simon and Schuster. Forbes. 1997. Hubris redeemed. lanuary ' De Fezensac. M.. translated by Lee Kennett. 1970. The Rus- 13:42-44. sian campaign, 1812. Athens, GA: The University of Georgia ^* Economist. 1992. The shake-up in the Barclay's boardroom. Press: viii. April 25. 83-84. ^ Our discussion of the 1812 Russian campaign, and the geo- ^^ Barnett, op. cit.: 36-53. political situation at the time of the campaign, is based on '^Lefebvre. G. 1969. Napoleon 1799-1807. New York: Rout- numerous sources. To avoid the bias of any single historian or ledge and Kegan Paul: 141. account of the events, we have avoided taking any positions ''Kets de Vries. M. F. R. 1991. Whatever happened to the that are not reflected in at least two of the works listed below: philosopher-king? The leader's addiction to power. Journal ot Aldington. R. 1943. The Duke: Being an account of the life and Management Studies. 28:339-351. achievemenfs of Arthur Wellesley. First Duke ol Wellington. '^ Business Week. 1996. Archer Daniel's cleanup: Don't stop New York: Viking; Aubry, O. 1938. Napoleon: Soldier and em- now. January 29:37. peror. New York: Lippincott; Ballard. C. R. 1971. Napoleon, an '^ Frances, A. (Task Force Chair). 1994. Diagnostic and statis- outline. New York: Books for Libraries; Barnett, C. 1978. tical manual oi mental disorders. Fourth Edition. Washington, Bonaparie. New York: Hill and Wang; Carr, A. 1941. WapoJeon D. C: American Psychiatric Association: 658-661. Miller, A. 1981. speaks. New York: Viking; Cate, C. 1985. The war oi the two Prisoners ot childhood. New York: Basic Books: 33-34. emperors. New York: Random House; Duffy, C. 1973. Borodino ^° The four sources of hubris we identify are derived from and the War of 1812. New York: Charles Scribner's Sons; De several works (which are listed below). As Hayward and Ham- Fezensac, op. cit.; Fournier, A. 1913. Napoleon I. New York: Henry brick observe, there is no definitive set of factors that must Holt; Nicolson, N. 1985. Wapoieon 1812. New York: Harper & Row; always be present in significant amounts in order to engender Tarle, E. 1942. Napoleon's invasion of Russia, 1812. New York: hubris. However, there are clearly common threads that run Oxford University Press; Tolstoy, L. N., translated by Louise & through much of the hubris-related literature. We have distilled Aylmer Maude. 1970. War and Peace. London: Oxford University from that literature the four sources we have discussed. It would Press. of course be unrealistic to assume that hubris can exist only in ^Hayward. M. L. A. & Hambrick, D. C. 1997. Explaining the an intense presence of all four of the sources we discuss. How- premiums paid for large acquisitions: Evidence of CEO hubris. ever, it seems reasonable to conclude that greater degrees of Adm in is fra tive Science Quarterly. 42:103-127. Kets de Vries. the four sources of hubris will lead to elevated levels of hubris. M. F. R. 1990. The organizational fool: Balancing a leader's Also see: Brockner. J. 1988. Seli-esteem at work: Research, theory hubris. Human Relations, 43:751-770. Wilson, A. The Classics und practice. Lexington, MA: Lexington Books. Hayward & Ham- Pages, at http://www.globalnet.co.uk/-loxias. brick, op. cit.: 103-127. Kets de Vries, The organizational fool, op. * Kohut, H. 1978. Cieativeness. charisma, group psychology. In cit.: 751-770. Kets de Vries & Miller, op. cit.: 583-601. Salancik, 2000 KroU. Toombs, and Wright 127

G. R. & Meindl. J. R. 1984. Corporate attributions as strategic strategic consequences for the firm. Another behavior not dis- illusions oi management control. Administrative Science Quar- cussed that may manifest itself in someone imbued with hubris terly. 29:238-254. is abuse of authority that leads to the alienation and departure ^' Kets de Vries. The organizational fool, op. cit.: 764. Frances, oi valued employees. A charismatic leader who is also con- op. cit.: 658-681. sumed with hubris may use his or her talents to achieve a ^^ Sankowsky. D. 1995. The charismatic leader as narcissist: position oi leadership and trust, only to betray that trust when Understanding the abuse of power. Organizational Dynamics, it becomes expedient to do so in order to satisfy his or her Spring: 57-71. personal needs. Throughout his career. Napoleon betrayed ^•^ O'Connor, J.. Mumford, M. D.. Clifton. T. C, & Gessner, T. L. those to whom he had made commitments when it became 1995. Charismatic leaders and destructiveness: An historiomet- expedient to do so. including his first wife Empress Josephine. ric study. Leadership Quarterly, 6:529-555. Please see: Sankowsky. op. cit.: 57-71. 2^ Tolstoy, op. cit.: 427. •'^ Kets de Vries & Miller, op. cit. Kets de Vries, The organiza- ^^ Business Week. 1996. Crunch time at Ouaker Oats. Septem- tional fool. op. cit. I ber 23:71. Business Week. 1996. Putting the snap back in •*'' Nicholson, op. cit.: 17. Snapple. July 22:40. Advertising Age. 1995. Snapple is now up to "^ Ibid, 18. Smithburg. October 30:8. Wall Street Journal. 1994. Quaker Oats *^ Beverage World, op. cit.: 92. to buy Snappie for $1.7 Billion. November 3:A3. Forbes. 1996. He ^ Miller. D. 1993. The architecture of simplicity. Academy of who laughs last. January 1:42-43. Beverage World. 1997. Management fleview, 18:116-138. Snapped up. April 15:92. Fortune, European Ed. 1997. Quaker ^' Keller. M. 1989. fiude awakening. New York: Harper Per- acts—At last. May 26:30. nnial. ^^ Kets de Vries. The organizational fool, op. cit.: 765. ^^ Business Week. 1998. Slip slidin' away at General Motors. ^' Kets de Vries & Miller, op. cit.: 583-601. March 23:38. ^^ Ibid., 589. "Keller, op. cit.: 21. ^^ Brockner, op. cit. ' ^^ Ibid.. 51. ^° Barnett. op. cit.: 45 " Clapham, & Schwenk, op. cit.: 227. ^' De Raguse. D. 1857. Memoires / Paris: 297. ^ Ibid., 227. ^^ Meindl. J. R. & Ehrlich. S. B. 1987. The romance of leadership ^''Forbes. 1996. A tough deadline. April 22:165-174. Forbes. and the evaluation of organizational performance. Academy ot 1997. Mercedes-Benz's bold niche strategy. September 8:68-76. Management Journal, 30:91-109. Also see: Staw, B. M-. McKech- Economist. 1996. Neutron Jurgen?. March 16:72. Schrempp. J. E. nie. P., & Puffer, S. M. 1983. The justification of organizational 1997. Thriving on global economic changes, address delivered performance. Adminisfrafive Science Quarteriy, 28:582-600. to the Economic Club of Detroit. Detroit. Michigan. January 6. Bettman. J. R. & Weitz, B. A. i983. Attributes in the board room: Fortune. 1997. Neutron Jurgen ignites a revolution at Daimler- Causal reasoning in corporate annual reports. Adn^inistrative Benz. November 10:144-152. Business Week. 1997. The bulldozer Science Quarterly, 28:165-183. at Daimler-Benz. February 10:52. 3^ Forbes. 1999. The scorecard. May 17:216-286. ^^ Filley, A. C. House, R. J.. & Kerr. S. 1976. Managerial process ^'' Clapham. S. E. & Schwenk, C. R. 1991. Self-serving attribu- and organizational behavior. Glenview, III.: Scott. Foresman & tions, managerial cognition, and company performance. Strate- Co.: 57-62. Janis, I. L. 1972. Victims ot gioupthink. Boston: Hough- gic Management 7ournaJ, 12:219-229. ton Mifflin: 13-15. ^^Chen, C. C. & Meindl J. R. 1991. The construction oi lead- ^^Kets de Vries. The organizational fool, op. cit.: 757. ership images in the popular press: The case of Donald Burr and ^° Filley. et al.. op. cit.: 353. Janis, op. cit. People Express. Administrative Science Quarterly. 36:521-551. ^' Le Normand. M. A. 1895. The histoiical and secret memoirs Hayward, & Hambrick. op. cit.: 109. Meindl, J. R., Ehrlich, S. B. & of the Empress Josephine. London: 229. Dukerich, J. M. 1985. The romance of leadership. Administrative ^^ Kets de Vries. The organizational fool, op. cit.: 757. Science Quarterly. 30:78-102. ^^ Nicolson, op. cit.: 162. The attentive reader may wonder at ^^Holtman. R. 1969. Napoleonic propaganda. New York: the 570.000 casualty figure, given that Napoleon entered Russia Greenwood Press: 33. with an army of 500.000 and about 20.000 recrossed the Neiman =''Chen & Meindl. op. cit.: 521-551- Meindl, Ehrlich. & Duke- River and escaped alive. However, several supplemental regi- rich, op. cit.: 78-102. ments of reinforcements joined the army at various points dur- ^^ James Carville, speech given before the student body and ing the retreat, thus increasing the absolute number of men faculty of Louisiana State University, broadcast by CSPAN. involved in the campaign. In addition to the 570,000 official November, 1992. casualties, there were many thousands of noncombatant casu- ^^ Freud, S. 1957. Some character-types met with in psycho- alties. Many of the officers brought with them wives, children, analytic work. In J. Starchey (Ed.) The Standard Edition ot the and personal servants who were not officially part of the army, Complete Psychological Works ot Sigmund Freud: Volume 14. but suffered the same fates as their husbands, iathers, and London: Hogarth Press and Institute oi Psychoanalysis. masters. In addition, early 19"' Century were often ac- *° Kets de Vries. Philosopher-king, op. cit.: 342. companied by merchants who sold various items to the troops along the way, as well as by women camp followers, many of *' Barnett. op. cit.: 45. whom faired poorly, ibid., 172. "Ibid.. 182. " Nicolson. op. cit.: 180. ^^ Kelleher, Herb, http://www.iflyswa.com/herb/herbie.html. ''•'Economist 1991. Salomon brothers: Life after Gutfreund. ^^ It is worth noting some scholars have argued that subor- August 24:67-68. /nstitutionai Investor. 1991. Who should run dinate insiders will check the behavior of the CEO as they are Salomon Brothers? September: 11-14. natural competitors for control of the firm and their fortunes are *^ While the three behaviors we discuss here are not the only tied to the firm's. For these reasons, they will act to cause the ones manifested by a hubris-infected executive, for the sake of replacement oi the CEO by influencing outside board members brevity we address these three as they likely have the greatest when the CEO's behavior is truly harmful to the firm. See Fama, 128 Academy ot Management Executive February

E. F. 1980. Agency problems and the theory of the firm. Journal ot Political Economy, 88:288-307. Mark J. Kroll is a professor of ^Business Week. 1997. Bailing out of Delta. May 26:82. Wall management and the George Street Journal. 1997. Delta Air's Allen to quit three top posts. May W. and Robert S. Pirtle Distin- 13. guished Professor in Free Enter- ^^As organizations become more decentralized and move prise at The University of Texas toward the use of self-directed work teams, decision making at Tyler. He received his D.B.A. occurs at lower levels in the organization. This is especially in management from Missis- true in organizations where empowerment exists. In such orga- sippi State University. His cur- nizations, hubris at the corporate level may be less of an issue rent research interests are busi- in that control oi decision making is reduced. ness policy and strategy, ^^ Drucker, P. F., Dyson, E., Handy. C. SafEo. P., & Senge. P. M. agency problems, and corpo- 1997. Looking ahead: Implications of the present. Harvard Busi- rate acquisitions, Contact: ness Beview, September-October. 22. [email protected]. ^^ Wilson, op. cit.

Leslie A. Toombs is an associ- Peter Wright is a professor of ate professor of management management and the holder of at The University of Texas at the University of Memphis En- Tyler. She received her D.B.A. dowed Chair in Free Enterprise in management from Louisi- Management. He received his ana Tech University. Her cur- undergraduate degree from Ohio rent research interests are State University, and his M.B.A. strategic compensation and and Ph.D. degrees from Louisi- performance excellence and ana State University. His re- related strategic quality is- search focuses on agency theory sues. Contact: itooinbs@maii. and the valuation oi firm uttyl.edu. strategies. Contact: pwiight® memphis.edu.