If human employees were robots who instantly followed commands from the singular controlling entity, then the top-down model would be the most agile; and if the all-powerful leader were endowed with perfect abilities and flawless judgment, the organization would stay ahead of the competition.
But in the real world neither of these conditions exists.
Human beings are not robots, and no leader is perfect. In fact, over and over again throughout history we see examples of single-leader autocratic companies failing to innovate and creating huge problems for themselves. As businessman, author, and syndicated columnist Harvey Mackay said, “By my count, more business leaders have failed and derailed because of arrogance than any other character flaw.”
Here are just a few.
- Albert “Chainsaw” Dunlap, upon being named as the chief executive officer of Sunbeam Corporation in 1996, immediately set to work with an autocratic leadership style. His twenty-month tenure, during which he eliminated 11,000 people, representing forty percent of the workforce, remains a benchmark for indiscriminate wholesale firings. While these moves temporarily improved the bottom line by slashing costs and giving the company’s share price a boost, the loss of talent meant that the company faced erosion on value, leading to long-term decline and a total inability to stay competitive.
- Fred Godwin, who led Royal Bank of Scotland (RBS), was famous for his dictatorial style. A control freak who micro-managed the construction of a vast new head office costing $600 million, he personally designed the company’s Christmas cards yet remained oblivious to the bank’s deep exposure to toxic loans. RBS collapsed and had to be rescued by the British government at huge expense.
Often blind to their own faults, autocratic leaders discourage people from telling them bad news. Living in their own bubble, they’re unaware that their organization is falling behind or even headed for ruin.
- Martin Winterkorn was CEO of auto giant Volkswagen AG during the disastrous scandal in which company engineers installed software that falsified emissions results on 11 million diesel vehicles. Winterkorn ducked responsibility for any wrongdoing and pointed the finger at “the terrible mistakes of a few people,” whom he did not name; but critics were skeptical because of his reputation as a relentlessly autocratic micro-manager.
As the scandal unfolded, Bernd Osterloh, who as chief of the VW Works Council represented employees on VW’s supervisory board, wrote in a letter to VW staff, “We need in the future a climate in which problems aren’t hidden but can be openly communicated to superiors. We need a culture in which it’s possible and permissible to argue with your superior about the best way to go.”
Innovation leadership thrives in an open, vibrant culture where ideas are exchanged freely and everyone’s input is valued. You’ve hired the best people—so be sure to put their imaginations to work for you!
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