It's Insular at the Top

Did Chuck Prince and Stan O'Neal lose touch with the companies they ran?

I find that, in running my business, I am making many decisions alone. I know that can't be good. How can a leader keep from becoming isolated? — Arthur Lakiisa, Kampala, Uganda

It's something of a coincidence that your question arrived this week, just as two CEOs, Chuck Prince of Citigroup and Stan O'Neal of Merrill Lynch, were cast out of their jobs and publicly crucified for the "sin" of surprising the market with bad results. Now, we don't know if either CEO had become isolated from the people in his organization who knew trouble was looming. But the size of the "expectation gap" suggests both CEOs were blindsided, at least to a degree, by their company's poor performance. Like you, perhaps, they were lonely at the top.

And perhaps, like you, they knew it meant trouble. They just didn't correct the problem soon enough.

That can be a fatal mistake. In fact, when you're a leader, the last thing you can afford to do is allow yourself to be pushed into an ivory corner where you end up plucking decisions out of the air. Instead, and especially if you run a sprawling empire like Citigroup or Merrill, you've got to create a culture of candor and an operating system that together bring to light information from every nook and cranny of the organization. And yet, obvious as that may be, there's something about being a boss that incontrovertibly lends itself to isolation; it's as if every natural force is working to "protect" you from reality. Good news travels up fast, but bad news festers in the trenches where those who possess it hope they can make it go away before anyone notices. And then there is the propensity for leaders to surround themselves with yes-types who make themselves all the more welcome with the assurance, "Don't worry, it's under control." Of course, that's rarely the case. Which is why you have to get aggressive against creeping insularity.

How? Well, large company leaders, like Prince and O'Neal, actually have an extra lever at hand. They can cut layers, which are evil and do nothing but filter information. But other, more universal techniques work well, too. For instance, any leader can leave the office—and should. Every day spent in the C-suite is a day you're not out learning about your people, processes, and market realities. Since you can't rig your chair to give you electric shocks, how about a sign on your desk that reads: "Why are you here?" Visit stores, trading floors, regional offices, factories. And customers, especially the ornery ones.

Just as important as getting yourself outside is whom you surround yourself with when you're inside. Yes, most leaders have a standing group of advisers comprised of direct reports. But without an operating system and culture that reward candor, such committees can easily fall into a grind, with dialogue devolving into them telling you what they assume you want to hear. You can alter that dynamic by reaching into the organization to create a revolving "kitchen cabinet," filled with the smart, edgy, self-confident individuals who have at-their-fingertips expertise. Try to avoid the usual suspects, and make sure you draw in people who are sworn change agents and inveterate cranks. Change agents are often first to sense market shifts. And cranks, well, they can be annoying. But the best of them are usually onto something and have candor in their veins. Ignore them at your peril.

Finally, leaders can prevent insularity by doing something that will surely feel, at first, terribly counterintuitive. They must act like the dumbest person in the room. Sure, as a boss, people will turn to you for all the answers, and you'll want to supply them. But instead, show people that your job is to have all the questions. Greet every decision and proposal with "What if?" and "Why not?" and "How come?" Then wallow in the answers, dropping every artifice of formality during the ensuing conversation and debate. Kill the PowerPoint slides, and drop the jargon. In time, this approach will breed an atmosphere of vigorous engagement and straight talk, drawing the best ideas out of the group, and yes, even exposing the buried crisis that is about to blow.

Which brings us back to Chuck Prince and Stan O'Neal. Again, we're not saying either CEO suffered from isolation. We just don't know. But the market's surprise at their poor results raises a question that every leader must ask: Am I alone up here?

The answer can never be yes.

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