I have been wondering for some time now why businesses that look great on paper, businesses that are well positioned to continue to thrive for the foreseeable future, fail.
Before I go on, understand that I don’t have any data to present. There’s no white paper coming. I haven’t spent the last twenty years methodically studying this problem to identify a statistically relevant matrix of causes. All I have to go on is observation. One hundred percent of my hunch (and that’s all it is: a hunch) is anecdotal. I can’t prove any of it. I can’t defend it empirically. I haven’t even pored through papers in relevant fields like psychology and sociology. All I can do is share what I’ve seen pretty consistently, and suggest that maybe, just maybe, there is something to it.
My observations (and conclusions) aren’t limited to companies, by the way. They also apply to military units and police departments, to classrooms, to social clubs, to families… basically any self-organized group of people.
Again, the question is this: what makes organizations fail?
More to the point, is it possible that the long list of likely causes for failure (inability to adapt to change, risk aversion, an entrenched mentality, cultural bubbles, operational dysfunction, resistance, etc.), is actually a list of symptoms rather than a list of causes? Is it possible that all of these problems, these weaknesses, aren’t causes at all, but rather manifestations of something more insidious?
When I first started thinking about this article some months ago, I thought I was going to talk about resistance. I will, at some point, because it’s a super important piece of the puzzle even outside of this particular discussion, but that isn’t what this article needs to be about. Resistance is generally a separate problem. It can be triggered by today’s topic, and it can certainly be exacerbated by it, but it isn’t the root cause of organizational dysfunction or of the systemic cancer-like cause of failure that I see over and over and over again, making once healthy companies increasingly unhealthy.
What we need to talk about today is toxicity. More specifically, toxic people.
From Toxic Relatives to Toxic CEOs:
Again: Why do once healthy, thriving organizations fail? More often than not, if you can trace the cause straight on up (or down), it will come down to people. These people will, like all of us, have positive and negative attributes. They will be better at some things than others. Ideally, they will have some degree of competence and skill when it comes to how well they fit in their role, whether it is a strategic role or a tactical role. But one thing that I keep running into on a consistent basis when I follow systemic failures that threaten and weaken, and essentially poison the well at companies, is toxic people. Top to bottom.
I’ve touched on this before, albeit not in this context. The idea I had back then was to show the impact that hiring assholes has on consumer perceptions. Basically, every interaction a customer has with an asshole in your org results in some kind of customer erosion. Hire enough assholes, and your company will soon be known for housing a bunch of assholes, and your poor hiring decisions will result in negative trending in new business, repeat business, and long term loyalty. Simple enough, right? Don’t hire assholes. But I was just scratching the surface with that article, and now I need to dig a little deeper.
What I am also noticing is that toxic people infect their surroundings with their toxicity. It doesn’t matter if said toxicity is overt aggression (raging assholes, tyrants, bigots, etc.) or more passive forms of aggression (devious, underhanded, easily threatened, self-serving people wracked with insecurities they aren’t dealing with properly).
The impact on an individual’s toxicity on himself or herself is problematic enough, but put a toxic person in a room with several other people for any length of time, and that impact will spread to everyone in that room. Symptoms of this impact are apprehension, discord, stress, negativity… you name it. Whether the group is a family getting together for the holidays or a large organization, the impact is always the same. Toxic people infect their surroundings with their poison.
Toxic teachers. Toxic police officers. Toxic coworkers. Toxic bosses. Toxic pundits. Toxic neighbors. Toxic customer service representatives. Toxic political candidates. Toxic parents. Toxic C-suite executives. Toxic CEOs. It’s all the same mechanism: Toxicity is contagious. Its effective range varies, but the effect is generally proportional regardless of the group’s size. Even if not everyone has direct contact with a toxic person, everyone is ultimately affected. It’s a sort of cultural domino effect (more so than a butterfly effect). Degrees of separation help explain and track the effects of one person’s toxicity on a group they interact with directly and indirectly.
In the absolute worst cases, the ones that usually end badly for the organizations that find themselves afflicted with this, the toxic individual (or individuals, plural) are in charge. They aren’t just middle managers who like to make their staff’s lives miserable because they can. They aren’t just coworkers who put everyone in a bad mood on a daily basis. They are the decision-makers, the leaders, the very people whose energy, enthusiasm and vision are the lifeblood of their orgs.
Let’s look at two really common manifestations of toxic CEOs that I routinely run into: The Arrested Development Ego Monster, and the Grasping-At-Straws Neurotic Monster.
Arrested Development Ego Monsters:
Many years ago, I spent the better part of a year watching the daily whirlwind of complete and near-catastrophic nonsense caused by a CEO whose insecurities and general resentment of other people had obviously been festering inside him since childhood. The result: 1) Tantrums. Lots of tantrums. 2) Focusing on vanity projects at the expense of profitable projects. 3) Rejection of anything that looked or felt like change (yes, including innovation). This wasn’t just a case of arrested development. That can actually be managed. The guy was so toxic that no one, not even his most senior advisers, dared to come to him with any new ideas or data or strategic insights that were actually vital to the company’s continued success. 4) A pathological inability (or reluctance) to lead or take responsibility for anything. Credit, yes. Responsibility, no.
This was an extreme case, but in recent years, I have run into similarly afflicted business leaders – so wracked with personal dysfunction that they lashed out, sometimes violently, at any and all suggestion of necessary change or course correction, or innovation. The reason? My best guess is that admitting that change is necessary is admitting that their organization, under their leadership, is no longer good enough to be competitive. Translated through their dysfunctional brain filter, the suggestion that their org needs to change means that they need to change. The implied deficiency of their organization therefore becomes a suggestion that they themselves are deficient. The result: Any suggestion of necessary change is taken as personal criticism, and their ego simply cannot handle it. They lash out at this perceived threat to protect themselves and their internal status quo.
The effect on the org: 1) A systematic resistance to change. 2) A hostile and toxic environment around the boss, especially when he or she isn’t having a good day. 3) A general fear of being assigned any kind of forward looking project, knowing it will ultimately end up with a) a rejection of whatever the project produces, no matter how good, and b) someone getting sacked for having “failed” even if they didn’t.
Not exactly the kind of business environment that results in initiative, innovation, market adaptation, or long term relevance. (Or healthy morale, for that matter.)
Grasping-at-straws Neurotic Monsters:
Another type of dysfunction I run into on a fairly consistent basis is the CEO who, again, to mask an overflowing crater of insecurities, keeps coming up with random ideas that will allegedly fix (mask) all of his or her company’s problems. It’s kind of a digging a hole to fill up another hole mechanism, in which holes keep getting dug and filled, but nothing of substance ever gets built. It isn’t busy for the sake of busy, necessarily, but it does translate into that somewhat, as each idea trickles down the org chart, and project teams just do what they’re told if they want to keep their jobs.
In this scenario, whatever you were working on for the last few months, which was until this morning the year’s big game-changing initiative is suddenly no longer relevant. There’s a brand new project now, and it’s genius, and everyone needs to get started on it immediately.
As with arrested development ego monsters, there is no dissuading this type of CEO from this new endeavor. Anyone who has worked in the org for longer than six months knows the drill: Stop what you were doing and start working on the new thing. Don’t raise your hand, don’t ask questions, don’t point out the obvious flaws.
Best case scenario, you can complete the project before the next big idea comes along. Worst case scenario, you won’t get to finish that one either. Something else will come along before you can. In really bad cases (and they are more common than they ought to be), project managers and team leads will get sacked for not having completed the projects they were originally assigned to, even though the decision to put these projects on hold came from the CEO. I’ve seen that happen a lot, and it has to be one of the most absurd and toxic side-effects of this type of dysfunction that I can think of.
To add insult to injury, even when these rapid-fire projects do come to fruition quickly enough to avoid being put on hold forever, the idea behind them was so poorly fleshed out to begin with that it ends up being a spectacular flop.
Some typical causes of programs like this failing right out of the gate: No pre-op market research to determine if new the service or product is even viable, no real testing during the development process, no pre-launch marketing or sales, no clear alignment with the company’s strategic objectives, and even lousy timing. (Example: I have watched companies release new business products with virtually no warning or lead-up, and in the middle of major holidays when no one is paying attention. Still, the CEO’s expectation was that the launch would magically be successful even though it clearly couldn’t be. To make matters worse, I have seen this happen mere weeks from major conferences or trade shows where such a launch might have actually generated some measure of success. This type of erratic behavior seems inexplicable, but it isn’t that difficult to understand once you know what causes it.)
The short of it: 1) Insecurities driving a reflex of overcompensation. 2) That overcompensation manifesting itself as a vacuous and ultimately doomed windmill of harebrained ideas. 3) By the very nature of the ideas’ unrealistic expectations and planning, the ideas are doomed to fail. 4) That failure is blamed (projected) onto subordinates. 5) Toxicity spreads across the org as ineffective leadership (and being set up to fail again and again) kills morale and feeds a festering boil of unnecessary stress, further exacerbating mid-level dysfunction, and on and on and on.
Two main reasons drive this mechanism: The first is deflection: The same inability to take responsibility for mistakes and a lack of leadership that we see with the Arrested Development Monster. Failure can’t be hidden forever, so someone else has to be responsible for it. The narrative plays out like this: “I keep coming up with great ideas, and you guys keep failing to execute on them. This is all your fault.” Second: Launching projects that are doomed to fail from the start may, in some cases, be a subconscious exercise in self-sabotage, but that’s a little more complicated.
What you will find is that the types of individuals behind this kind of MO tend to thrive on useless and constant drama. For instance, they love to talk about how complicated their lives are, and how much work they get done in spite of all of the chaos that conspires to leave them in utter ruin on a daily basis. The first five minutes of any conversation with them will be a recap of all of the personal catastrophes they have miraculously managed overcome since you last spoke with them, and how much they still have to overcome before their 89-hour workday is finally done. They are the heroes of their own conflated dysfunctions, survivors of a million self-inflicted dramas, and they want you to know, every time you interact with them, just how impossibly busy, brave, and driven they are.
Anyway, look at any company with short tenures and/or high employee turnover rates, and you can be pretty sure that you are dealing with one or more of these two types of individuals somewhere near or at the top of the org chart.
Why is this important?
I am not writing about this to get nods and likes. Anyone who has worked long enough, whether as an employee, a contractor or a consultant, has bumped into at least one company being run like this, and in some way sensed that the dysfunction they witnessed was caused by poor leadership somewhere along the org chart. In a way, you already know this stuff, even if you haven’t broken it down to quite this degree. I am writing this as a warning. Why? Because here’s the deal – here’s the reality of what this means to you today, tomorrow, next week and next year: That kind of dysfunction is caused by toxic people who, by their very natures, cannot and will not change. Ever. Things around these people will never improve, and you need to accept that.
I mean it. You need to accept that.
This article is not an intro to twelve step program to detox your org or fix your boss. I am not telling you any of this to help you better survive in toxic business environments. This is me helping you identify and understand toxic leadership so that, once you have realized that you are in its presence, you can run.
That’s right: run. If you work for someone like this, whether they are your direct superior or a CEO twenty layers removed, run for your fucking lives.
I am not saying that you should quit your job today. Stay and learn. Build relationships. Hone your skills. Work on the coolest projects you can while you’re there. Pad your resume. But start looking for your next gig now. Today. Don’t wait until next week, or next quarter, or when things start turning sour, which they will. Don’t wait until the hatchet starts moving in your direction either. Start preparing your exit immediately. There isn’t going to be a rebound. Business isn’t going to get better. Morale will never improve. As long as you are there, you won’t ever do the work that you really should be doing and want to be doing. Not there. The arrested development that your CEO or boss is suffering from is pulling you into its orbit and feeding off your energy. The longer you stay, the harder it will be to leave, and the more drained you will be when you finally walk out the door. At the first opportunity, get the fuck out. Escape that professional trap.
This is the best (and probably the only) career advice I will ever give you.
No. There is no but.
The sad reality of this whole discussion is that you cannot fix toxic people. Don’t even try. It’s easier to cure a heroin addict of his addiction than to turn a toxic person around. Even if you happen to be their shrink, and they want to turn a new leaf, good luck with that. You are looking at years of therapy that will lead nowhere because all they are giving you is lip service. They don’t really want to change. They’re terrified of change. Everything they do and say about wanting to fix their dysfunction is a lie. The thing is, you aren’t your CEO’s shrink. You’re just an employee, or a contractor, or a consultant. On a long enough timeline (and it won’t be that long, trust me) all you will ever be in that equation is collateral damage.
Because you can’t fix toxic people, you also can’t fix the organizations they poison by being there. I don’t care how successful that company used to be or still could be. I don’t care if it is sitting on $300B in cash. It doesn’t matter. (Though chances are that it isn’t.) I don’t care if you’re the best and most famous leadership consultant in the world or the most innovative exec in your industry, you cannot fix this. There is nothing you can do about it. As long as these people are there, things will not improve. Not even a little bit. If they ever seem to, brace yourselves because the backslide will be swift: One step forward, two steps back. You probably know what I am talking about. You’ve been there. You may even be there right now.
The only cure is to remove them, and replace them with non-toxic people. That’s it. It’s the only remedy. If you sit on a board and you have that kind of power over a toxic CEO, do that. If not, you’re SOL.
I wish I had better news for you, a better solution to this problem, but I don’t. All I can do is help you make a smart decision – sooner rather than later – and hopefully save you a lot of useless grief and stress and bullshit. Life is too short, and career opportunities are too few to waste your time working for the wrong people especially when they are dragging everything and everyone they touch down into their forever poisonous orbit.
At the first hint of what I described above, start working on your exit. Don’t wait. It may not seem like it now, but you’ll thank me someday.
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