Megalomaniac CEOs

Businesses need strong leaders, but if the man or woman at the helm is excessively domineering, it can put a business in jeopardy.

That’s the point made by a new paper with the impressive title: Dominant CEO, Deviant Strategy, and Extreme Performance, by Jianyun Tang, Mary Crossan, and W Glenn Rowe.

According to the book, your megalomaniac boss will drive performance that is either much better, or much worse than the average. Examples of dominant CEOs in the former camp include Jack Welch of General Electric, while in the latter, you have the ill-fated Kenneth Lay of Enron.

The point is that dominant CEOs are not reined in by their boards or management teams. That can be a good thing, helping them to drive necessary innovation through a business in the face of reluctance or opposition. But it can also lead to them ignoring other points of view or (in Enron’s case) refusing to accept reality, to the point where a company simply implodes under the pressure of what the book calls ‘deviant strategy’.

In a small business, you don’t have the scope for true megalomania because you are not insulated from reality by a coterie of fawning sidekicks. However, the danger of your bad decisions going unquestioned is greater, especially if you don’t have anyone else in the business of sufficient experience or authority to counterbalance yourself.

Many owner-managers swear by a mentor or business partner who has helped shape their business’s strategy, but if you lack such a person, you can at least make the effort to question yourself from time to time and talk to other business owners.

Entrepreneurs need to be forceful, even aggressive or unreasonable at times. But you don’t want a megalomaniac at the helm, and you particularly don’t want that megalomaniac to be yourself.

Alan Dobie

Alan Dobie

Alan was assistant editor at Vitesse Media Plc (previous owner of before moving on to a content producer role at Reed Business Information. He has over 17 years of experience in the...

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