Professional Documents
Culture Documents
6.3. Conger 1990 - The Dark Side of Leadership
6.3. Conger 1990 - The Dark Side of Leadership
6.3. Conger 1990 - The Dark Side of Leadership
n recent years, business leaders have gained turbulent times came a new breed of business
great popularity: Lee Iaccoca and Steven leader: the strategic visionary. These men and
/ Jobs, for example, have stepped into the women, like Ross Perot of Electronic Data Sys-
limelight as agents of change and entrepreneur- tems and Mary Kay Ash of Mary Kay Cos-
ship. But though we tend to think of the posi- metics, possessed a twofold ability: to foresee
tive outcomes associated with leaders, certain market opportunities and to craft organiza-
risks or liabilities are also entailed. The very tional strategies that captured these opportu-
behaviors that distinguish leaders from nities in ways that were personally meaning-
managers also have the potential to produce ful to employees. When their success stories
problematic or even disastrous outcomes for spread, "vision" became the byword of the
their organizations. For example, when a 1980s. Yet though many of these leaders led
leader's behaviors become exaggerated, lose their organizations on to great successes, others
touch with reality, or become vehicles for led their organizations on-to great failures. The
purely personal gain, they may harm the leader very qualities that distinguished the visionary
and the organization. leader contained the potential for disaster.
How do leaders produce such negative Generally speaking, unsuccessful strategic
outcomes —and why? Three particular skill visions can often be traced to the inclusion of
areas can contribute to such problems. These the leaders' personal aims that did not match
include leaders' strategic vision, their commu- their constituents' needs. For example, leaders
nications and impression-management skills, might substitute personal goals for what should
and their general management practices. We be shared organizational goals. They might
will examine each to discover its darker side. construct an organizational vision that is es-
sentially a monument to themselves and there-
fore something quite different from the actual
PROBLEMS WITH THE wishes of their organizations or customers.
VISIONARY LEADER Moreover, the blind drive to create this
very personal vision could result in an inabil-
As we know, the 1970s and 1980s brought ity to see problems and opportunities in the
tremendous changes in the world's competi- environment. Thomas Edison, for example, so
tive business environment. Previously success- passionately believed in the future of direct
ful organizations that had grown huge and bu- electrical current (DC) for urban power grids
reaucratic were suddenly faced with pressures that he failed to see the more rapid acceptance
44 to innovate and alter their ways. Out of these of alternating power (AC) systems by America's
then-emerging utility companies. Thus the Exhibit 1
company started by Edison to produce DC THE SOURCES OF EMLED VISION
power stations was soon doomed to failure.
The vision reflects the intemal needs of leaders
He became so enamoured of his ov/n ideas that
rather than those of the market or constituents.
he failed to see competing and, ultimately, The resources needed to achieve vision have been
more successful ideas. seriously miscalculated.
In addition, such personal visions en- An uru-ealistic assessment or distorted perception
courage the leader to expend enormous of market and constituent needs holds swray.
amounts of energy, passion, and resources on A failure to recognize environmental changes pre-
getting them off the ground. The higher their vents redirection of the vision.
commitment, the less willing they are to see
the viability of competing approaches. Because
of the leader's commitment, the organization's Making the Leader's Personal Needs ParatciQunt
investnient is also likely to be far greater in
such cases. Failure therefore will have more As mentioned, one of the most serious lia-
seriou:S consequences. bilities of a visionary leader occurs whea he
Fundamentcil errors in the leader's percep- or she projects purely personal needs and be-
tions can also lead to a failed vision. Common liefs onto those of constituents. A common ex-
problems include (1) an inability to detect im- ample is the inventor with a pet idea whq ac-
portant changes in markets (e.g., competitive, quires sufficient resources to initiate a venture
technological, or consumer needs); (2) a fail- that fails to meet the market's needs. When a
ure to accurately assess and obtain the neces- leader's needs and wishes diverge from those
sary resources for the vision's accomplishment; of constituents, the consequences can be quite
and (3) a misreading or exaggerated sense of costly. Consider, for example, Edwin Landi in-
the needs of markets or constituents. For ex- ventor of the Polaroid camera. Dr. Land's ex-
ample^ with a few exceptions like the Chrysler periences with a camera he developed called
minivan. Lee Iacocca inaccurately believed that the SX-70 illustrate how a leader can get side-
autorriobile style rather than engineering was tracked by his own personal goals.
the primary concern of automotive buyers. At As we know. Land's company, Polaroid,
Chrysler, he relied on new body styles and his held a monopoly on the instant photography
charisma to market cars built on an aging chas- market for some three decades and became the
sis (the K car) developed in the late 1970s. The household word for such cameras. Throqgh-
end result was that, after several initial years out the 1960s and 1970s, Polaroid's sales
of successful sales, Chrysler's sales plunged climbed with astonishing speed. By 1973] four
22.8% in 1987. Today, the future of Chrysler million of the company's Colorpack caxneras
looks equally cloudy. were being sold annually at $30 a piece. But
Ultimately, then, the success of a leader's Dr. Land was not content. His dream wfas to
strategic vision depends on a realistic assess- create what he called "absolute one-step pho-
ment of both the opportunities and the con- tography"; the SX-70 camera was to embody
straints in the organization's environment and his dream. "Photography v/ill never be the same
a sensitivity to constituents' needs. If the leader . . . With the gargantuan effort of brinjging
loses sight of reality or loses touch with con- SX-70 into being, the company has come fully
stituents, the vision becomes a liability. Visions of age," Land remarked on the day of the
may fail for a wide variety of reasons; Exhibit camera's inauguration.
1 outlines some of the more significant ones. In setting the parameters for his new vi-
We will examine several of these categories and sion. Land outlined several demanding criteria:
illustrate them with the experiences of some The camera was to be totally automatic and
prominent business leaders. would have to fold to fit into a purse or pocket, 45
signed and built, and the company's existing
chemical production and films-packaging fa-
cilities were expanded.
Although the total cost of the SX-70
strategy was never formally disclosed. Land
responded in an interview that it was a half-
billion-dollar investment. Other estimates have
put it higher. In any case, the SX-70 was a de-
sign masterpiece. It was estimated that the
reflex-viewing system cost millions of dollars
and required more than two-and-a-half years
Jay A. Conger is associate professor of or-
of engineering effort. Engineering for the eye-
ganizational behavior at the Faculty of
Management, McGill University in Mon-
piece alone cost $2 million.
treal, Canada. He received his D.B.A. de- Land's expectations of the camera's suc-
gree from the Harvard Business School, cess were as lavish as his investment in the cam-
his M.B.A. degree from the University of era. At S180 per camera, company projections
Virginia, and a B.A. degree in anthropol-
were that first-year sales would reach several
ogy from Dartmouth College. As the
director of International marketing for a million. By some accounts, sales of 5,000,000
high-technoiogy company, he also has ex- units were predicted. 'Yet despite such opti-
perience as a practicing manager. mism, the camera met with only limited pub-
Professor Conger's research centers lic support. 3y the end of its first year inl973,
on executive leadership, the management only 470,000 SX-70 cameras had been sold. Ir
of organizational change, and the training
would take several years, many design changes,
and development of leaders. His work on
these subjects has been published in
and significant price cuts before the camera
numerous book chapters and journals would gain widespread market acceptance —
such as The Academy of Management Re- all at the cost of sacrificing many of the camera's
view and The Academy of Management original features. Land's personal vision or the
Executive. His most recent books include instant camera had missed vvhat the irKirket
The Charismatic Leader (Jossey-Bass,
wanted.
1989) and Charismatic Leadership, co-
authored with R. N. Kanungo {Jossey- Most important, in his quest for the per-
Bass, 1988). He has servea as a consul- fect instant camera he had failed to take into
tant cp executive development and or- account lessons that his company had already
ganizational change to a wide variety of
learned about consumers' needs. Before the SX-
U.S. and Canadian companies.
70, Polaroid's experience with both its black-
and-white and its color cameras was that de-
mand was intimately tied to price. Consumers
possess a single-lens reflex-viewing system, and wanted an inexpensive, earj^^-to-use, instant
focus from less than a foot to infinity. It was camera. Their foremost desire was not a per-
to be a radically new design, making earlier fect picture but a relatively good instant pic-
versions of instant photography obsolete. ture at a low price.
The SX-70 also represented a major stra- In the j.960s, the marketplace had power-
tegic shift for the company. Before its advent, fully demonstrated its needs to Polaroid after
the manufacturing of Polaroid products, es- the company first introduced its color system
pecially films, was subcontracted to outsiders. in 1963. Vvhen the Colorpack cameras priced
Plant and equipment were usually leased or at SlOO met with only limited market interest,
rented. But Land's dream of the SX-70 required Polaroid introduced a version at $75 and, by
total integration of the company. A color- 1969, a 830 Colorpack. At the $30 price level,
negative and camera-assembly plant were de- volume dramatically expanded, and 4.000,000
46
units were sold by 1973. Consumers wanted undermined. Thus the costs of a "Pyrrhic" vic-
instant photography but only at an inexpen- tory deplete the resources that are needed for
sive price. So how could 5,000,000 SX-70s at future success.
$180 a piece be sold when only 4,000,000 In this scenario, the leader is usually driven
Colorpack cameras had been sold at $30 each? by a desire to expand or accelerate the realiza-
Clearly they could not. Dr. Land's vision was tion of his vision. The initial vision appears
a personal ideal, one that was not shared by correct, and early successes essentially delude
consupiers at a price of $180 per camera. or weaken the leader's ability to realistically
VVhat happened to Land that he failed to assess his resources and marketplace realities.
learn from the past? There are several possible The costs that must be paid for acquisitions
explanations. For one, his initial vision of in- or market share ultimately become unsustaina-
stant photography had been correct; people ble and threaten the long term viability of the
really did want instant photographs. This ini- leader's organization.
tial success, however, may have convinced him Robert Campeau is the quintessential Pyr-
of the 'invincibility of his ideas. Second, Land rhic victor. After amassing a fortune as a real
was an engineer at heart; he loved the technol- estate developer, he proceeded to expand his
ogy rnore than the marketing of the product. empire into retailing with a series of purchases
His very background made him product- and in the mid-1980s totalling $13.4 billion. He did
technology-driven, not so much marketplace- this despite the fact that he knew little about
driven. Finally and most important, I believe the business of retailing itself. His celebrated
that Land, like other leaders, came to identify purchase of the Allied and Federated Depart-
with his vision to an unhealthy extreme: The ment Stores alone cost him some $400 million
vision personified him. in bankers' and lawyers' fees and added $?^1.7
A similar example is seen in Henry Ford, billion of debt to the Campeau Corporation.
who vyas willing to build a Model T of any They also transformed him overnight into the
color as long as it was black. The vision in most powerful retailer in the world. The price
essence becomes so much a part of the leader's of course was an enormous amount of debt—
persortality that he or she is unwilling or un- much of it in the form of high-interest junk
able to consider information to the contrary bonds that would soon demand most of the
from staff members or from the marketplace. company's operating cash to service.
Convinced by past successes of their invinci- When asked how he planned to success-
bility, such leaders plov/ ahead without con- fully integrate and enhance the profitability of
sidering other viewpoints — a sure course to- these new and unrelated acquisitions, Cam-
ward failure. peau explained that it was only a matter of
consolidating various operations, selling off as-
sets to pay off company debt, and motivating
Becoming a "Pyrrhic Victor" management by giving them stock options.
With an air of great confidence, he commented:
In the quest to achieve a vision, a leader "I own the best department stores in the world,
may be so driven as to ignore the costly impli- and they will be damned profitable." He also
cations of his strategic aims. Ambition and the envisioned enormous potential for synerg^i^ be-
miscalculation of necessary resources can lead tween his retailing and real estate operations.
to a "Pyrrhic victory" for the leader. The term His plans included the building of some 50 US.
"Pyrrhic victory" comes from an incident in shopping malls anchored b3'^ his newly acquired
Ancient Greece: Pyrrhus, the King of Epirus, retail stores. These projects, which included
sustained such heavy losses in defeating the 17 new Bloomingdale's stores, were estimated
Romans that despite his numerous victories at a cost of $1.5 billion. In comments to the
over them, his entire empire was ultimately press, he stated: "Most retail managements 47
don't know much about real estate and finance age of self-confidence, he may have denied or
. . . [but] real estate is the gravy on top of these minimized the existence of any problems. Al-
great retailing deals." For Campeau, his newly ready an autocratic leader, Campeau became
acquired stores sat on prime land—ripe for fu- even more autocratic. For example, he him-
ture deals. It was an intriguing and untried self assumed the position of chairman of the
dream. board at both Federated and Allied, a job he
Ironically, these bold strategic moves were had originally and sensibly promised to an ex-
all made during a sales slowdown in the depart- ecutive of a highly successful retail chain. He
ment store industry and in a country glutted wanted to run his new and glamorous acquisi-
with shopping malls. As well, the two chains tions personally. Sadly, this scenario is all too
he had acquired were prestigious but also typical of the Pyrrhic victor whose ambitions
notoriously inefficient. None of these factors stymie his ability to assess goals and resources
seemed to impede Campeau, who was intent realistically. Investment bankers and subor-
on building an empire. dinates may further encourage visions of gran-
Despite his rosy projections for the future, deur. As serious problems emerge, their im-
Campeau's kingdom quickly unraveled within portance is minimized. Once a crisis stage is
a few years. After struggling to meet a crush- reached, the leader exerts greater personal con-
ing debt load, Campeau's retail operations ran trol and becomes less able to hear the counsel
out of operating cash in August 1989. By Janu- of advisors or staff members who might be
ary 1990 his company stood on the edge of helpful. In the worst case, such as Campeau's,
bankruptcy, and so did Campeau himself. The the organization's resources are exhausted and
projections of great profitability for the retail the company fails.
operations had never materialized. New and
last-minute junk-bond financing to keep the
company alive came at a dear price, with in- Chasing a Vision Before Its Time
terest rates as high as 1775%. But this would
not save the company as soaring debt-servic- Sometimes a leader's perceptions of the
ing costs forced Campeau to sell off company market are so exaggerated or so significantly
stock to others and to default on company ahead of their time that the marketplace fails
loans. Even the company's crown jewel — to sustain the leader's venture. The organiza-
Bloomingdale's—was soon put up for sale. tion's resources are mobilized and spent on a
Campeau's own personal fortune of $500 mil- mission that ultimately fails to produce the ex-
lion was said to have ail but evaporated by pected results. In this case, the leader is per-
February 1990. haps too visionary or too idealistic. He or she
Campeau's tragic error in this case was tied is unable to see that the time is not ripe, so
as much to blind ambition as it was to poor the vision goes on to failure or, at best, a long
strategic and financing decision. His history dormancy.
of successes in the real estate field, in combi- Robert Lipp, former president of Chemi-
nation with an ambitious personality, led this cal Bank, is an example of a visionary charis-
visionary leader to dream, of ever-greater ex- matic who in one project was essentially too
pansion, but in new and unfamiliar territories. far ahead of his time. He had championed a
The idea of an "empire" became more impor- vision of home banking in the early 1980s.
tant than the satisfaction of enjoying his pres- Sensing that the personal computer was revolu-
ent successes. Failing to see that he lacked the tionizing many aspects of everyday life, Lipp
long-term resources or skills needed to sustain and others at Chemical Bank expected personal
his grand, plan, he continued to acquire com- banking to be the next beneficiary of the per-
panies and debt at an alarming rate. sonal computer revolution. Tiirough a modem,
48 Then, too, in wishing to maintain an im- phone line, software supplied by the bank, and
a personal computer at home, individuals could banking led to consumer resistance. First, cus-
instruct their banks to carry out certain trans- tomers were reluctant to give up the "float" be-
actions. A service fee of $8 to $15 a month tween when they wrote a check and when it
was charged for personal users and $20 to $50 was cashed. With home banking, once the com-
a month for small businesses. From the user's puter authorizes a payment, it is immediately
viewpoint, home banking provided conve- debited from the customer's account.
nience in bill paying and ease of access to ac- Second, some investment—for a computer
counts. While on travel, the user could instruct and a modem—was required on the customer's
the system to pay bills on exact due dates. part. It is estimated that only 10% of personal
For banks, electronic home banking was computer owners had modems — and the num-
SELECTED BIBLIOGRAPHY
For ^n in-depth look at the psychological dy- case studies of leaders should consult the follov/iiig
namics of the dark side of leaders, we recommend sources. For Edwin Land and the SX-70 camera, see
The Neurotic Organization (Jossey-Bass, 1984) by G.W. Merry's Polaroid-Kodak Case Study (Harvafd
Manfred Kets de Vries and Danny Miller and "Per- Business School, 1976) and P.C. Wensberg's Land's
sonality, Culture, and Organization" {The Academy Polaroid (Houghton Mifflin, 1987). Several articles
of Maniigement Review, April 1986), also by on Robert Campeau include "Buy-Out Bomb" {Wall
Manfredi Kets de Vries and Danny Miller. Street Journal, Jan. 11, 1990), Kate Ballen's "Cam-
Works that provide an informative treatment peau Is on a Shopper's High" {Fortune, Aug. 15,
on the topic of impression management include The 1988), and Eric Berg's "Is Campeau Himself Bank-
Presentation of Self in Everyday Life (Doubleday- rupt?" {New York Times, Feb. 2,1990). Two interest-
Anchor, 1959) by Erving Goffman and Impression ing sources on John DeLorean are Michael Dal/s
Management (Brooks/Cole, 1980) by B.R. Schlenker. 'The Real DeLorean Story" {New York, Nov. 8,1982)
Books arid articles that deal more systematically and Hill Levin's Grand Delusions (Viking Prei^s,
with the issue of-commitment to a course of action 1983). Accidental Millionaire (Paragon House, 1988)
as well as communicating information are A The- by Lee Butcher presents a darker-side view of Steii^sn
ory of Cognitive Dissonance (Row, Peterson, 1957) Jobs. Two articles on the home banking indusl:ry
byL. Festinger; Charles R. Schwenk's "Information, and its slow takeoff are Efrem Sigel's "Is Home Bank-
Cognitive Bias, and Commitment to a Course of ing for Real?" {Datamation, Sept. 15, 1986) aitd
Action" {The Academy of Management Review, Laura Zinn's "Home Banking Is Here — If You V\fent
April 1986); Barry Staw's "Knee Deep in the Big It" {Business Week, Feb. 29, 1988).
Muddy: A Study of Escalating Commitment to a
Chosen Course of Action" {Organizational Behavior
and Human Performance, June 1976); and "The Es-
calation of Commitment to a Course of Action" {The // you wish to make photocopies or obtain reprints
Academy of Management Review, October 1981). of this or other articles in ORGANIZATIONAL DYNAMICS,
The defir^itive work on group-think is Victims of please refer to the special reprint service
Group Think (Houghton Mifflin, 1972) by I. L. Janis. instructions on page 80.
Readers wishing more depth on the individual 55