Ego Check

The key idea in his book is about overconfidence. Hayward does not deprecate overconfidence, which he says is essential for corporate success.

Ego Check examines the bad kind of overconfidence and its four sources, all of which are easily recognizable. The first is “excessive or exaggerated pride”. This might come from a person’s concern with impressing other people. Or it can arise from the false sense of satisfaction leaders get from using self-serving data to inflate their accomplishments. Think about corporate leaders who try to show a positive turn in business performance at about the time they took charge.

The second source of the bad kind of overconfidence is “isolation”. In a chapter called “Getting Out of Our Own Way”, Hayward focuses on former Hewlett-Packard CEO Carly Fiorina. The pride she exhibited before her fall leads him to the conclusion that “few people were willing to tell her that she was wrong… She insulated herself behind assistants within the executive suite and blamed deteriorating performance on subordinates. And she used guilt to tell people how much they had let her, the board, and the firm down.”

The third source for bad overconfidence: Executives get valuable feedback from people, but because it is contrary to their own views, they ignore or discount it. This Hayward describes as “selective judgment”, or “our propensity to make decisions about situations that are based on feedback that pleases us or fits our preconceptions of our situations”.  Here he makes an example of Merck leaders who did not listen to the feedback on the harmful side effects and questionable safety of Vioxx. (The author reminds us that on September 30, 2004, the day then CEO Ray Gilmartin took the $2.5 billion-in-revenue drug used by 20 million Americans off the market, Merck lost $25 million in market capitalization.)

The fourth source of bad overconfidence is leaders “underestimating the consequences” of their decisions. Quoting Stephen Covey from The Seven Habits of Highly Effective People, “While we are free to choose our actions, we are not free to choose the consequences”, Hayward similarly argues that failing to think about tomorrow fuels hubris in decision making today. Leadership failures during recent world news events, such as the Iraq war and Hurricane Katrina, illustrate his point without too many words.

About the Author:  Mathew Hayward, PhD, worked as a consultant with Accenture and an investment banker with UBS. In 1992, he left the corporate world for academia to pursue a doctorate at Columbia University in New York. He is now an assistant professor at the Leeds School of Business at the University of Colorado, and his writing has appeared in The Economist, the New York Times, Harper’s magazine, and USA Today.

ISBN: 978-1-4195-3535-2