#1 Leadership Weakness: A Fixed Mindset Ruins Your Company

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What are some of the biggest leadership weaknesses? How can you avoid them to more effectively manage your company and increase its success?

Leadership weaknesses range from being egotistical to being in denial, and almost all of the most common ones have to do with having a fixed mindset. Learn why even the biggest names in business fail when they demonstrate these leadership weaknesses.

Leadership Weaknesses in Business: A Fixed Mindset

The mindset of a company’s leader is a key determinant of whether a company fails or succeeds. This is why leadership weaknesses have such a huge impact.

One of the most spectacular business failures in recent years was the collapse of the energy giant Enron in 2006. At the heart of Enron’s failure was a fixed mindset, an obsession with talent that blinded the company’s leadership to serious problems, and blinded investors and outsiders to the fact that the business was a house of cards destined to fall.

Business gurus of the time were insisting that corporate success required hiring with a “talent mindset.” It was touted as the key to beating the competition. Enron’s culture was built on this thinking. The company recruited big talent and paid handsomely for it. But because the company celebrated talent, employees felt they had to always appear highly talented in order to survive. Basically, everyone was forced into a fixed mindset, intent on proving their superiority. Looking for talent seems positive, but it’s actually one of the leadership weaknesses.

Since people with fixed mindsets can’t admit flaws, the company couldn’t acknowledge and correct its mistakes, which spelled its doom. Even after its failure, CEO Jeff Skilling never admitted there was anything wrong, instead blaming others for not getting it.

Self-Proclaimed Heroes

In Jim Collins’ study of great companies in his book Good to Great, he found that the average companies that he included for comparison typically had CEOs with fixed mindsets. Having a fixed mindset contributes to many leadership weaknesses.

Fixed-mindset CEOs believed they were geniuses who didn’t need a strong executive team, just underlings to implement their ideas. These CEOs needed to be the big fish and to feel superior to everyone else.

They were concerned with looking superior and enhancing their reputations. Two-thirds had huge egos that held their company back or led to its failure. Your ego is the biggest of the common leadership weaknesses.

Here’s a set of CEOs whose fixed mindsets caused them to sacrifice their companies for their egos.

The Leadership Weaknesses of Lee Iacocca of Chrysler

Lee Iacocca was tapped to turn Chrysler around in the 1980s. He’d been fired by Henry Ford II, which left him angry and determined to prove himself through saving Chrysler. In his first few years, he made good hires, introduced new car models, and sought bailout loans. In his autobiography, he bragged that he was a hero.

However, Chrysler soon got into trouble again, while Iacocca focused on polishing his image. He spent money on things that would boost Chrysler’s stock to impress Wall Street instead of investing in new car designs and manufacturing efficiencies. He got rid of ambitious, intelligent people he felt threatened by. This was a serious leadership weakness.

Rather than responding to Japan’s innovative new cars with better ones, he made excuses and demanded the U.S. retaliate with tariffs. He spent lavishly on a corporate suite while morale in the company plummeted. The board finally grew fed up and got rid of him.

The Leadership Weaknesses of Albert Dunlap of Scott Paper

Albert Dunlap considered himself a superstar who saved dying companies, such as Scott Paper. He compared himself to Michael Jordan and Bruce Springsteen in star power. His fixed mindset developed in childhood when his family was poor and he felt the need to prove his worth. In his career, he used shareholder profits to do that. This short-term goal was his only measure of success. He had no interest in strengthening companies for the long term, only in boosting the stock enough to sell them for a profit.

After taking over Sunbeam in 1996, he fired 6,000 people and cut most stores. But in a sense, he was too successful — stock prices rose so much that the company was too expensive to sell. So he was stuck with running it. Instead of working hard and learning, he inflated revenue numbers, fired critics, and covered up the real numbers. In less than two years, the company failed and he was ousted. Again, ego was responsible for these leadership weaknesses.

The Leadership Weaknesses of Steve Case and Jerry Levin of AOL Time Warner

What happens when two superstar CEOs with fixed mindsets combine their companies? Steve Case of AOL and Jerry Levin of Time Warner both felt superior, liked to intimidate, took others’ credit, refused to hear complaints, and fired critics. When they merged their companies, AOL was near ruin, but instead of working together to salvage it, they competed for power. Levin failed first and Case refused to work with the new CEO because he didn’t want to share power and credit — he’d rather let the company fail. When he finally was forced to resign, he denied responsibility for any problems. By the end of 2002, AOL Time Warner had lost nearly $100 billion in market value, the largest annual loss in U.S. history.

Other Leadership Weaknesses of Fixed-Mindset Leaders

As noted, Iacocca, Dunlap, Lay/Skilling and Case/Levin put their personal interest in looking good above corporate interests at key points. Paradoxically, as their companies barrelled toward disaster, they felt invincible and entitled. As their companies faced real threats, they lived in an alternate reality.

For instance, while getting millions in compensation, Lay took huge personal loans from the company and used corporate jets as his personal family air service. Iacocca threw Christmas parties for the company elite, at which he presented himself with an expensive gift at company expense. In their worlds, they felt validated while their companies burned. Facing and addressing the problems would have entailed risks of failure they were unwilling to take.

Fixed-minded bosses also have a penchant for abusing employees. This is a major leadership weakness. In his book, Brutal Bosses, Harvey Hornstein says that abusing others shores up a boss’s feelings of superiority, competence, and power. Skilling denigrated others, while those who worked with Levin compared him to Caligula. A former CEO of Sunbeam-Oster, Paul Kazarian, threw things at his executives. Fixed-mindset CEOs excuse this behavior by claiming to be perfectionists or wanting to keep people on their toes. Pleasing the boss becomes the employees’ priority.

#1 Leadership Weakness: A Fixed Mindset Ruins Your Company

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Amanda Penn

Amanda Penn is a writer and reading specialist. She’s published dozens of articles and book reviews spanning a wide range of topics, including health, relationships, psychology, science, and much more. Amanda was a Fulbright Scholar and has taught in schools in the US and South Africa. Amanda received her Master's Degree in Education from the University of Pennsylvania.

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