McClellan, Grant, Excessive Hubris, And Bad Business Decisions By Jim Leverette

As the public imagination turns against corporate executives in the wake of the recent high profile fiascoes that have recast CEOs as villains, one word you’ll see more and more is “hubris.” n It defines the overbearing pride of men and women who denounced business traditions while proclaiming a new economy, who purchased yachts and sports franchises in a conspicuous show of wealth, who ignored warning signs, who put their own interests above the greater good.

I thought of this other day after bumping into an acquaintance at a local restaurant. He was sitting at the bar, projecting success — and why not? He kept a shipping software firm afloat, even as the tech industry collapsed. Yet his discussion focused not on his business acumen, but rather on the accoutrements of success. I learned the exact dimensions of his house, how much it cost him, the size of his swimming pool, as so on. Many in business, it seems, can only measure their skill by the number and quality of goods purchased.

That is not to say that acquisition is a bad thing. George Washington backed a stronger central government in part to secure lands in western Pennsylvania and Ohio from squatters. The Astors and Vanderbilts and other barons of the late 1800s competed in the boardroom, by building ostentatious mansions, and through hefty charitable grants.

But the rewards of leadership often outweigh the actual skill wielded by executives. According to a study by the American Management Association, 70 percent of all decisions made by business executives turn out to be, well, bad decisions. Certainly that’s not the sort of thing worth bragging about — but it does tend to explain the emphasis on pithiness and conspicuous consumption. In the absence to true leadership ability, lacking that Ben Franklin-esque legacy of creation and genius, we tend to fall back on platitudes and shallow symbols of success.

The truly intriguing problem, however, is not about the earnings gap — growing wildly and without cause since 1980 — or the psycho-social drive for recognition above the hoi polloi. It’s the failure of business leaders to make astute decisions.

In a classic analysis of leadership, On The Psychology Of Military Incompetence, author Norman Dixon pointed out that American armies historically suffer through a series of miscues early in a war before righting themselves and storming on to victory. He identifies the causes in Freudian terms, but still hits close to the mark. In peacetime, Dixon said, the military attracts officers who enjoy the trappings of leadership — the order, the power, the discipline, the control — but who do not lead. They typically fail when pressed to actually direct an organized body of men in combat. Fortunately, true leaders emerge from the chaos of battle and eventually work their way up into leadership positions.

General George McClellan, a former railroad executive turned Civil War officer, created a marvelous assemblage of men, the Army of the Potomac, then whittled it away. He acted upon inaccurate advice, feared the loss of men and power, and rarely managed to reign in his massive ego. Yet he was the product of the finest schools (West Point was the MBA of that day and age) and training programs. He looked great on paper, displayed a massive amount of energy, and even planned well. Unfortunately, he lacked the ability to think broadly, to relate big picture goals to generalized knowledge to local details. When confronted with robust defense in front of Richmond in 1862, his training taught consolidation. He refused to listen to frontline commanders (one of whom hinted in exasperation while McClellan ordered a general retreat that he could march forward with his single corps and take Richmond). Out west, that same year, an obscure general, U. S. Grant and his equally obscure subordinate, William T. Sherman, took a pounding at Shiloh in Tennessee. One reads of Grant calmly pondering events, anticipating the arrival of reinforcements, calculating the disposition and losses of the enemy. When Sherman stammered that they had taken a beating, Grant looked up and replied: “Yes. We’ll beat them tomorrow, though.”

Grant’s Vision

It was not hubris that led Grant to that decision. He planned actions based upon goals (both long and short term) and resources (both his and the enemy’s). During the Overland Campaign in 1864-65, leading to the Confederate surrender at Appomattox, Grant chose to oversee the anvil of a two-part plan — the Army of the Potomac, slated to pound Robert E. Lee’s army day after day, bleeding it, shoving it, not letting it go. To Sherman he gave the task of winning the war by tearing through Georgia and the Carolinas, the hammer. He knew his army could outlast Lee in a war of attrition. He also was willing to suffer charges of “Grant the butcher” and worse in order to win the war.

Oh, and he wore an old slouch hat and a combat infantryman’s coat — very understated. He wasn’t there to measure his worth against others of his class, to gloat over the less fortunate, or to bask in the media spotlight. He desired, simply, to get the job done.

The inability of executives to make consistently positive decisions owes something to the narrow education acquired at most business schools, the emphasis on short term gains and stock performance so prevalent in most industries, the trappings and prestige we assign to authority, the easy entry into leadership (the military incompetence syndrome), and dozens of other factors. A quick look at history — and this is an all too abbreviated review — suggests that many companies simply have the wrong person in place at the wrong time.

Some executives fill their role perfectly when nothing occurs to upset the situation. Others are consummate team builders who freeze when something threatens to unravel their creation. A few, however, excel in the confusion of combat, when the fate of a company or product teeters on the edge of destruction. Grant proved to be brilliant when in charge during a crisis. Before the war, as an officer and as a businessman, he languished. After the war, as a president, he failed. McClellan, on the other hand, served as an effective business executive before the war and developed an efficient, highly trained army when safe behind the fortifications surrounding Washington. In the confused, dangerous frenzy of combat, however, he folded.

The lesson, then, is one of specialization. Executives excel at different things and when placed in a situation that suits them, will master it and drive their company or department forward. Yet when left in a position ill-suited to their particular skills, their judgment falters.

As in the book, On The Psychology of Military Incompetence, there are those captivated by leadership and those who lead naturally. The challenge, of course, is to find the natural leaders at the opportune moment, the men and women who possess intelligence beyond the jargon-laden MBA classroom and who measure success according to achievement.

Jim Leverette is senior vice president of The Broadmoor Group, an executive search firm located in Dallas, Texas. Contact him at www.randall-james.com.

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