Article
How Leader Bias Can Result in Business Failure
February 11, 2021
When trusting your gut is dangerous
Your Decisions Create Your Future
There is an old saying, “Leaders are paid to make decisions.” Whether in business or any other field, making decisions is one of the most critical things leaders do. Look at any company’s performance, and you can immediately see the results of its decision making. It is not an exaggeration that the success of your team or your organization depends on whether your decisions enhance your chances of success or set you up for failure. You are creating your future, one decision at a time. The results you get reflect the effectiveness of your decision-making.
Take a quick look at your own past decisions, both personal and professional, and you will have to concede that your track record is far from perfect. Sure you will see smart, timely, effective decisions that got you where you are today. But if you look objectively, you’ll see over the long term the impact of decisions you made that were impulsive, where you trusted your gut, or you made decisions in the heat of emotion, or you had strong beliefs that got in the way of the facts, and you shaped the analysis to fit the mental model that you already had in your head.
Improving your capabilities as a decision maker involves understanding and making use of what research has discovered about the decision making process, as well as understanding your own tendencies and the things in your behavior and your problem-solving process that can lead you astray. The fate of companies rises or falls based on the wisdom and efficacy of the decisions that are made. And so do the careers and destinies of the deciders.
The Pressure to Make Important Decisions---Fast
As all leaders know, the pressure of decision making is great, and gets greater the higher up you go. The torrent of problems requiring solutions and decisions is relentless. “This is the terror of being a founder / CEO,” said Andreessen Horowitz co-founder Ben Horowitz. “It is all your fault. Every decision, every person you hire, every dumb thing you buy or do — ultimately you’re at the end.” The list below shows just a fraction of the key decisions that entrepreneurs, for example, have to make:
• Should I raise more capital to fuel growth but reduce equity?
• Do I have the right people on the bus?
• Do I have the right people in the right seats on the bus?
• Should I change my role or my job?
• Is it time to lay people off?
• Is it time to give up and throw in the towel on this project?
• Is it time to sell the company or should I go for an IPO?
• How should I deal with this new competitive threat?
• Should I pursue this merger opportunity?
• Is it time to expand or should we stick with what we know?
• Is it time to raise funds?
• Should we make this huge capital investment?
• Should we go all out or conserve cash?
• Should I accept a term sheet now or hold out?
“If There Is Time To Reflect, Slowing Down Is Likely To Be A Good Idea" Daniel Kahneman
How do you make decisions of this importance? Do you take enough time to gather data and carefully weigh all the options, the pros and cons? Do you seek input and feedback from your team and/or your peers and mentors? Do you go with your gut?
According to futurist Stowe Boyd, “There is an enormous lie underlying business, the lie that decisions are made rationally, applying logic and expertise, sifting evidence, and carefully weighing alternatives.” The reality, he says, is quite different. “The science is clear: in general, we don’t really make decisions that way.” [Source: “How to Untell the Lie at the Heart of Business”, quoted in “Don't Fail At Decision Making Like 98% Of Managers Do,” Eric Larson, Forbes, May 18, 2017]
Most people are not totally rational when they make decisions. Far from it. According to Daniel Kahneman, the Israeli-American economist awarded the Nobel Memorial Prize in Economic Sciences in 2002 for his work on the psychology of decision making and behavioral economics, “irrationality often trumps rationality in the human decision-making process.” Kahneman’s findings on the prevalence and influence of cognitive biases challenged the assumption that human rationality was the key factor in decision making. His book, Thinking Fast and Slow (2011) was an international best-seller.
Most people are not totally rational when they make decisions
Because of cognitive biases, impulsiveness exacerbated by time pressure, failure to do due diligence and get all the relevant facts, and overconfidence regarding our brilliant decision-making ability, a disturbingly large number of our decisions turn out to be faulty. Most people are not totally rational when they make decisions. And because we are unaware of what we don’t know, key information may be lacking. Yet in order to make effective decisions, we need all the information relevant to the problem, viable alternative viewpoints, and we also need a process that minimizes the impact of our biases and blind spots.
Ninety-five percent of our decisions use irrational mental shortcuts or rules of thumb that cloud our judgment and impair our decision-making. “The brain,” Kahneman wrote, “is a machine for jumping to conclusions”.
Entrepreneurs are Wired to Move too Fast
Hagberg research (and others) shows that leaders are often optimistic and self-confident risk-takers, who have strong opinions and a bias for action. These are valuable qualities in leaders, but they are a two-edged sword: This confidence, along with a forceful personality, action orientation and clear points of view can lead to a failure to consider what might go wrong, and that they themselves might be wrong. They over-trust their intuition and jump to conclusions, and are therefore more vulnerable to making bad decisions.
The Impact of Biases on Judgment--200 Ways to Make Your Company Fail
Cognitive biases are systematic mental shortcuts in thinking or judgment, mental models or rules of thumb that influence how we evaluate our experiences and make decisions. They can be helpful, in that they make our thinking and decision making faster and more efficient. But they can also lead to faulty judgment, illogical interpretations and irrational choices.
Close to 200 cognitive biases have been identified and explained, many of them by the American-Israeli psychologist Daniel Kahneman. Over 40 years of research, Kahneman found that 95% of our decisions use irrational mental shortcuts that cloud our judgment and impair our decision making. As a leader, it is vital for you to be aware of these biases, which color not only the attitudes and behavior of team members, but also influence your own. But Kahneman’s later research suggested that this is very difficult and almost impossible for most leaders.
“For every complex problem there is an answer that is clear, simple, and wrong.”
– H.L. Mencken, American journalist and social critic
Kahneman’s research makes it crystal clear that if we want to make better decisions, we need to develop preemptive “workaround” strategies that enable us to make decisions that are more rational. One of the best strategies for this is group decision making, where all members of the team weigh in with their insights and perspectives.
As you learn about cognitive biases, you will be able to spot team members falling prey to them in meetings. And if you have built an environment of trust, in which your people can speak freely without fear of retribution, you can use the collective intelligence of your team to help you uncover your own faulty thinking and thereby enable better decisions.
Common Biases That Derail Entrepreneurial Leaders
Sunflower Bias
: People lean in the direction in which the leader is leaning, as sunflowers pivot to face the Sun. Groups tend to align themselves with the views of their leaders, whether overtly expressed or assumed. If a team knows your position on a decision, or believes they know it, the team is likely to be an echo chamber. As Kahneman said, the decision-making process becomes contaminated when people believe they know the leader’s preference.
Confirmation Bias
: Confirmation bias is the tendency to search for, interpret, favor, and remember information that affirms our prior beliefs or hypotheses. (Remember this bias the next time you do a Google search. Are you looking for info that supports your position or your hunch, or are you truly looking to learn?) In the same way, people often discredit information that does not support their views.
Overconfidence Bias
occurs when a person's subjective confidence in his or her judgments is greater than the objective accuracy of those judgements, i.e., you think you’re smarter or more savvy than you really are, or you’re certain that your plan will bring great results when you really don’t have the data to back up your belief. In tests comparing confidence to actual ability, research data regularly show that confidence often exceeds accuracy, that is, people are more sure that they are correct than is warranted.
Optimism Bias
is at play when we overestimate our likelihood of experiencing positive outcomes and events and underestimate our likelihood of experiencing negative events. People with this bias are sometimes quite unrealistic about what might go wrong when making a business decision. When a leader’s subjective confidence in their own judgments is regularly greater than the facts would suggest, disaster could be right around the corner.
Action-Bias
: This is the pressure or tendency to take action NOW, without doing adequate research and/or taking time for analysis and reflection. “Let’s just get the deal done.” Thus we don’t consider all the possible ramifications of our action. When you have this bias, you will tend to overestimate your odds of a successful outcome, and minimize or discount the chances of failure. Bernard Baruch, American financier and advisor to several 20th century presidents said, “Whatever failures I have known, whatever errors I have committed, whatever follies I have witnessed in public and private life, have been the consequences of action without thought.”
Other Common Biases That Can Damage Your Judgment
Affinity Bias
: The tendency to be biased toward people like ourselves, with similar backgrounds, interests, skills, and affinities. This is a common temptation in hiring but may not result in building the strongest team.
Blind Spot Bias
: This happens when you are able to recognize biased thinking by others, while failing to see the impact of biases on your own judgment and decision-making. This is extremely common: In one study of 600 Americans, more than 85% believed they were less biased than the average person.
Status Quo Bias
: Directly opposite the action-oriented bias, status quo bias is an emotional or unconscious preference for maintaining the current state of affairs. “If it ain’t broke, don’t fix it.” This is not based on analysis that shows the current state to be objectively better, but is simply an attachment to the way things are and have been. Sticking to what worked or works now is fine if a rational decision-making process shows it to be the best alternative, but status quo bias can interfere with openness to new ideas, new technologies, and to progress in general.
Effective team leaders need to be willing to change as the company scales. They often hold on to practices that worked when the company was small and flexible and everybody was in one room, but all of a sudden they have 4,000 employees and holding on to what worked for a dozen or twenty just won’t work.
Anchoring bias
: This describes the tendency to base a decision on the first piece of information we receive; it makes a strong enough impression that we become “anchored” to it This happens consistently when making budgetary predictions and financial plans. When considering a decision or course of action, the decision maker gives undue weight to the initial input or information received. These initial impressions, estimates, or data anchor subsequent judgment or analysis.
Self-serving bias
: We believe our failures are due to external factors, that it is “their fault” when things go wrong, but we believe we are responsible for our successes.
Framing
: Frames, according to cognitive scientists, are the different perspectives through which we look at the world. They are mental models that simplify and guide how we make sense out of a complex reality. They limit the effectiveness of our decision-making. This happens when making decisions with a multi-functional or multi-cultural team who have a variety of perspectives based on their background. Marketing, finance, engineering, product, sales, human resources, operations and so on have very different perspectives on many other issues. They look at different factors, and see different risks, opportunities, and potential outcomes, and are driven by different values and interests, all of which frame their decision making. They may have competing perspectives and concerns. Team members from different countries and cultures see the world differently due to their differing values.
“Mental models are deeply held internal images of how the world works, images that limit us to familiar ways of thinking and acting. Very often, we are not consciously aware of our mental models or the effects they have on our behavior.”
- Peter Senge
Trusting Your Gut or Systematic, Reasoned Judgment
In his book, Thinking Fast and Slow, Daniel Kahneman distinguishes between two broad categories of decision making. Fast decision making is essentially intuition-based, and involves feelings, beliefs, hunches that come readily to mind, require little effort or gathering of information, and result in on-the-spot decisions. Slow decision making, on the other hand, is based on reasoned judgment, and involves decisions that take time and effort to make, require careful information gathering, generation of alternatives, and evaluation of the alternatives. “If there Is time to reflect,” says Kahneman, “slowing down is likely to be a good idea."
Rapid decision making can be based on too-little data and too-little time to analyze it, increasing the odds of making miscalculations and mistakes that can have company and career threatening consequences. The antidote would seem to be to slow down, yet business and technology today are moving at warp speed, and leaders of fast-scaling companies must make multiple decisions every day. Not only that, but even the best-reasoned decisions come face to face with randomness and unpredictability. The challenge is to balance speed with the best possible judgment.
Hiring Mistakes Caused by Trusting Your Gut
A prime example of how biases can interfere with wise decision making is in the hiring process. An interviewer who makes snap judgments and lets his or her first impression cloud the interview can make critical hiring mistakes. You think you don’t do this? Guess again: A study from the University of Toledo found that the outcome of an interview could be predicted by judgments made within the first 10 seconds of dialogue! Interviewers then subconsciously spend the rest of the time seeking new information to confirm their first impression, rather than objectively assessing the person in front of them.
What this means is that your initial or gut reaction isn’t always a product of hidden wisdom! It may be a result of unacknowledged biases that can lead you to overlook strong candidates or choose those who are less qualified.
Example: Giving more credence to the fact that the candidate graduated from the interviewer's alma mater than to the applicant's knowledge, skills, or abilities.
Studies and surveys over the last 50 years have shown that 80% or more of the hiring decisions from traditional interviews are based on rapport and likeability and often miss competency, accomplishments, ability, and potential. In short: We like to hire people who are like us, who share our interests, values and style. But they are not always best for the job.
Hiring mistakes can be very costly. A common rule of thumb is that a hiring mistake ends up costing about 15 times the employee’s core salary, including both hard costs and lost productivity as you bring the new hire up to speed. That means a hiring mistake with a $100,000/year employee can cost you $1.5 million, or more. Another thought provoking statistic is that the success rate for hiring at senior levels is estimated to be about 50% - half of all executive hires do not pan out. According to Marc Bennioff, CEO of Salesforce, “Acquiring the right talent is the most important key to growth. Hiring was – and still is – the most important thing we do.”
We Are All Blind to Our Biases and Mental Models
You have probably recognized many of the biases and mental mind-sets described above, and no doubt you can see how they can and do interfere with clear thinking and thus to making the best decisions. However, it is not enough merely to understand the nature of various biases. Kahneman and other decision-making researchers have concluded that it is extremely difficult to eliminate your cognitive biases by yourself. They are too subtle and wired in. It’s like asking a fish to describe water. In addition, awareness of the effects of biases has done little to improve the quality of business decisions at both the individual and the organizational level. To combat the negative effects of bias on team performance, active steps need to be taken.
Catalyzed by the research of Daniel Kahneman and many others, we now know vastly more about how the decision-making process operates, why it so often leads us astray, and what we can do to become a more effective decision maker. I will summarize some of that research in this and follow-up blog posts, with a special angle: much of the existing research concerns how individuals decide. In today’s corporate universe, an enormous number of decisions every day are made in a group setting by teams of various kinds, a far less studied field that I will look at in addition to discussing individual decision making.
Evaluating Your Decisions
Ask yourself
:
• Did you do enough analysis?
• Did you follow a disciplined process to get all the right facts and views on the table?
• Did you avoid letting your strong viewpoint influence your team and narrow the options that were considered?
• Were you overconfident?
• Did you make assumptions that were wrong?
• Did you miss options that might have improved the results?
• Did you miss the big picture?
• Did you focus too much on short-term rather than long-term implications?
• Did you let pressure and stress influence your choice and end up compromising your standards or violating your values?
• Did you act impulsively without validating your intuition?
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After many years of coaching leaders, I have learned something that should make every executive uncomfortable. People do not automatically tell leaders the truth. They tell leaders the version of the truth they think the leader can handle. If you are defensive, they edit. If you are impatient, they shorten. If you are dismissive, they soften. If you are punitive, they hide. If you are brilliant but emotionally clumsy, they may still respect you, but they will manage you. And once people start managing you, you are leading theater. The higher you go, the more people study you before they speak. They watch your face, listen to your tone, and adjust. They give you the headline without the emotional context. They bring you the problem after it has become unavoidable. They agree in the meeting and dissent in the hallway. That is how leaders lose contact with reality. Not all at once. Slowly. Politely. Professionally. With calendar invites. Connection Is Not About Being Liked Connection is not about becoming everyone's buddy. It is not about being endlessly available, emotionally gushy, conflict avoidant, or so supportive that no one knows whether you actually have standards. That is not leadership. That is codependence with a title. Connection is the ability to make another person feel seen, respected, and safe enough to tell you what is real. That is it. It does not require agreement, lowered standards, or meetings where everyone discusses feelings while the business quietly catches fire. People open up when they feel safe. People shut down when they feel judged, dismissed, humiliated, rushed, or corrected too quickly. Connection is not the opposite of performance. It is how you get access to the information that performance depends on. Every Organization Has a Truth Pipeline The question is whether reality moves through it cleanly or gets filtered on the way up. In a healthy culture, people tell the leader what they see early enough for it to matter. They raise concerns before the decision is locked. They disagree before the strategy fails. In an unhealthy culture, the truth gets laundered. Bad news becomes "some emerging concerns." Fear becomes "alignment issues." Resentment becomes "communication gaps." Lack of trust becomes "cross-functional friction." By the time the leader hears the truth, it has been professionally deodorized. Many leaders unknowingly create this problem. They say they want candor, but their behavior teaches caution. They interrupt, argue with feedback, explain too soon, punish bad news with irritation, and turn every concern into a debate. Then they wonder why people are not more transparent. Here is the simple answer: because transparency has not felt safe. Small Moments Decide Everything Connection is built in small moments, not grand declarations. At work, bids for connection sound ordinary: "Do you have a minute?" or "I may be wrong, but I see it differently." These are not just comments. They are tests. Every time someone reaches toward you, even slightly, your response teaches them what kind of relationship this is. You can turn toward, turn away, or turn against. Turning toward means you engage: "Tell me more," or "What are you seeing that I may be missing?" Turning away means you avoid the moment: "I'm busy," or "Let's not overthink this." Turning against means you respond with irritation, superiority, sarcasm, or contempt: "That makes no sense," or "We already covered this." Most leaders do not turn against people because they are trying to be cruel. They do it because they are busy, pressured, impatient, or convinced they already understand the issue. But the impact is the same. The person learns, "This is not safe." After enough experiences like that, people still communicate, attend meetings, and send updates. But the deeper truth goes underground. Listen for the Conversation Beneath the Conversation In every important conversation, there are usually two conversations happening. The first is the official conversation: the product launch, the missed deadline, the strategic decision. The second is the human conversation underneath it: Can I trust you? Is it safe to disagree? Do you actually want the truth? Disconnected leaders hear only the official conversation. Connected leaders listen for both. This does not mean they become therapists. It means they understand that people are not reasoning machines with job titles. They are status-sensitive, threat-sensitive, belonging-sensitive creatures trying to get work done while protecting themselves. If you ignore that layer, you misunderstand the meeting. The leader who misses the second conversation will often solve the wrong problem with great confidence. That is a specialty of very smart people. Make Contact Before You Make Your Point If you want people to tell you the truth, remember this rule: Make contact before you make your point. Before you explain, correct, defend, decide, or solve, show the person that you understand something about their experience. Not agree. Understand. You can say, "I can see why that would bother you," or "You are worried this decision will create confusion." Those statements do not require surrender. They require attention. Analytical leaders often resist this because they think understanding someone's emotion means endorsing their conclusion. It does not. You can understand someone and still disagree. You can validate the concern and still make a hard decision. But if you skip understanding, your eventual decision will feel imposed, even if it is correct. Connection first. Influence second. Reverse the order, and you may win the argument while losing access to the person. Stop Solving Too Soon Some leaders use problem-solving as a socially acceptable way to avoid contact. Someone says, "I'm overwhelmed." The leader says, "Let's reprioritize." That may be useful. But if you move there too quickly, the person may experience it as, "Please make your feelings operationally convenient." Solving too soon tells people, "Your emotional experience is a problem I want to make disappear." Listening first tells them, "Your experience matters to me." Before solving, ask one better question: "What are you worried I am not understanding?" Or the most important leadership question: "What am I missing?" That one shift creates space for truth. Contempt Kills Candor If there is one behavior that destroys connection fastest, it is contempt. Contempt says, "I am above you." It may be loud, but more often it is subtle: an eye roll, a sigh, a smirk, or a clipped tone. Contempt is especially dangerous in smart leaders because it can hide inside intelligence. The leader experiences himself as clear or efficient. The other person experiences being reduced. Once people feel contempt, they become careful, performative, and compliant instead of candid. If you want the truth, you have to become someone people can disagree with without feeling diminished. Repair Is How Trust Gets Rebuilt You will miss people. You will interrupt. You will get impatient. You will defend yourself. You will explain too soon. You will turn away when you should have turned toward. Welcome to the species. The goal is not perfection. The goal is repair. Repair is the moment when you notice a rupture and come back. "I came in too hard. Let me try that again." "I answered too quickly and missed what you were really saying." "I got defensive. Keep going." These sentences are not weakness. They are maintenance. People do not need you to be flawless. They need to know you can notice your impact and come back. The Real Payoff The payoff from connection is not that everyone likes you. This is leadership, not summer camp. The payoff is that people bring you more reality. They tell you what is happening sooner. They disagree before the mistake is baked in. They warn you when the culture is drifting. They admit confusion before execution fails. That is how connection improves results. It gives you better data. It lowers distortion. It deepens trust. It makes hard conversations possible. The deepest leadership question is not: "Did I make my point?" It is: "Did I earn the truth?" Because if people do not trust you with the truth, your intelligence will not save you. You will be making decisions from edited data and managing appearances. You will be leading the version of reality people think you can tolerate. And eventually, reality always wins. Connection is how leaders earn the truth. And the truth is what keeps leaders, companies, and relationships alive.
Founder who stops learning does not usually look stupid. They look confident. Busy. Decisive. Certain. And increasingly wrong. That is what makes the problem so dangerous. I coach founders, studying personality, and watching them either scale or stal. I have become convinced that learning agility is one of the most important predictors of whether a founder can grow with the company they created. Not IQ. Not raw drive. Not technical skill. Not even prior success. Those things matter. But they are not enough. Because the reflexes that win at 10 people often stop working at 100. The decision-making speed that saved the company early can become recklessness at scale. The founder’s vision that once pulled everyone forward can become rigidity when the market changes. The control that created quality in the beginning can become the bottleneck that prevents the organization from growing up. The founder who succeeded through instinct now needs to succeed through systems. The founder who succeeded through force now needs to succeed through people. The founder who succeeded by being at the center now needs to build an organization that can function without everything going through them. That is where many founders get into trouble. They do not fail because they are unintelligent. They fail because they keep applying yesterday’s playbook with today’s authority. And when the results deteriorate, they rationalize. The market is confused. The team is weak. The investors are impatient. The customer does not get it. Maybe. But sometimes the real problem is simpler and more uncomfortable: The founder stopped learning. What Learning Agility Really Means Learning agility is not just being open-minded in theory. Plenty of leaders describe themselves as open-minded right up until someone disagrees with them. Learning agility is the capacity to absorb experience, update your assumptions quickly, and change your behavior without losing your center or your conviction. It means reality can still teach you. That sounds simple. It is not. Founders are often rewarded early for conviction, speed, intensity, and control. Those are useful traits when a company is fragile and every decision feels existential. But over time, the company changes. The job changes. The market changes. The team changes. The founder has to change too. Learning agility has several parts: Mental agility. The ability to think through complex problems and resist the gravitational pull of the first plausible answer. People agility. The ability to understand different kinds of people, read dynamics in real time, and adapt your approach. Change agility. A positive orientation toward novelty, uncertainty, and disruption rather than a defensive one. Results agility. The ability to deliver outcomes in first-time conditions where the old formulas do not apply. Self-awareness. The ability to perceive accurately how you are actually doing, not how you hope you are doing. That last one matters most. Because you cannot learn from experience if you cannot tell the truth about your own impact. Busyness Is Not Learning One of the great founder traps is confusing busyness with learning. You can be in a thousand new situations and learn nothing from any of them. You can raise money, hire executives, launch products, fight fires, open markets, lose customers, change strategy, and still not extract the lesson. That is not learning. That is motion with a calendar invite. Learning requires reflection. Not endless self-analysis. Not navel-gazing. Not journaling until everyone around you loses hope. Just disciplined reflection. After important events, decisions, conflicts, or surprises, ask yourself: What was I trying to accomplish? What actually happened? What is the gap? What does the gap suggest about my model of how things work? What will I do differently next time? Done weekly for a year, that practice alone can change a leader. Experience does not automatically make you wiser. Reflected experience does. How the Ego Turns Experience Into Repetition Here is where the problem gets deeper. The ego blocks learning agility at every stage, and it does so in ways most founders do not see coming. Start with the obvious. If you are identified with being right, feedback becomes a threat instead of data. You defend instead of inquire. You cherry-pick evidence that supports your existing view and discount what does not. The moment someone challenges your approach, your instinct is not curiosity. It is protection. But there is a deeper layer. Learning agility requires you to update your mental models quickly. That means letting go of the identity you built around the old model. Early success creates a story. “I am the visionary who sees what others miss.” “I am the decisive founder who trusts my gut.” “I am the one who knows what great looks like.” “I am the person who moves faster than everyone else.” That story may have been useful. It may even have been true. Until it wasn’t. When the market shifts and your gut starts failing, you now have a psychological problem, not just a business problem. Updating your strategy may feel like updating your identity. So you double down. You blame the team. You blame the market. You blame timing. You blame execution. Anything is easier than admitting that the operating system that got you here is now becoming a liability. The Insulation Problem As founders gain authority, they often lose access to reality. Employees defer more. They challenge less. They soften the truth. They try to read what the founder wants to hear. They nod. And once everyone is nodding, the founder may already be in trouble. This is what I call the insulation problem. The founder receives a curated version of what is actually happening, filtered through people who fear the founder’s reaction or want the founder’s approval. Meanwhile, the ego is getting reinforced constantly. You are the founder. You raised the money. You set the vision. You are in charge. The cruel irony is that self-awareness can regress during the exact period when the company most needs the founder to grow. The company is scaling. The role is changing. The stakes are higher. But the feedback loop is weaker. That is a dangerous combination. The Founder Derailers I See Most Often The specific derailers are painfully predictable. Founders who cannot tolerate ambiguity rush to certainty and then grip it. Founders who anchor on past success treat it as a blueprint for the future. Founders who are so action-oriented that they never reflect keep applying the same playbook and wondering why results are deteriorating. Founders who are loners by nature solve problems alone instead of drawing on the collective intelligence of the team. Founders who are overconfident genuinely believe they have less to learn than everyone else. Founders who treat disagreement as disloyalty train the organization to stop telling the truth. All of these are ego in motion. Each one protects an identity at the expense of learning. And each one makes the founder less adaptive right when the company most needs adaptation. What Agile Leaders Do Differently The best leaders remain connected to reality. That is not glamorous, but it is everything. They build practices that keep them humble about their own limits and curious about what is actually happening. They reflect consistently. Not quarterly at some beautifully facilitated offsite. Weekly. After real decisions. After real mistakes. After real surprises. They surround themselves with people who will challenge them. Not professional contrarians. Not cynics. Not people who enjoy being difficult. People whose judgment they trust and who feel safe enough to disagree. They stay close to the ground. The higher you rise, the more filtered the information becomes. Great leaders stay connected to customers, frontline reality, and the unpolished version of what is happening. They study outside their domain. A finance executive who studies design. A CEO who studies anthropology. A founder who reads about ecology, military strategy, or psychology. Cross-domain learning interrupts the default thinking of your primary field. And most importantly, they develop the capacity to observe their own mind. That is where meditation becomes practical. Not meditation as spa music for stressed executives. Meditation as observation. You sit quietly and watch the mind defend itself. You notice the urge to be right. You notice the fear of irrelevance. You notice the attachment to the old model. You notice the impatience that wants to skip the lesson and get back to action. That awareness creates space. And space is where adaptability lives. The Founder’s Real Test The old playbook does not announce that it has expired. It simply starts producing worse results. That is why founders have to keep learning before the evidence becomes humiliating. The founder who keeps learning can scale with the company. The founder who stops learning slowly becomes the constraint. Not because they lack intelligence. Not because they lack courage. Not because they lack work ethic. But because they are still running yesterday’s operating system in a company that now requires something more. Learning agility is not a nice-to-have leadership trait. It is the founder’s survival skill. The company will keep changing. The market will keep changing. The team will keep changing. The real question is whether the founder can change without feeling personally diminished by the need to change. That is the mark of a leader who can scale. Not the leader who is always right. The leader who can be corrected by reality and still stay strong. That is learning agility. And for founders, it may be the difference between building a company that grows and becoming the reason it stops.
After almost 50 years of coaching leaders, it’s time for me to be very honest about what I’ve seen. The ego has destroyed more leaders than incompetence ever did. That may sound harsh, but I have watched it happen too many times. Smart people. Talented people. Visionary founders. Hard-driving executives. People with charisma, intelligence, courage, ambition, and often a real desire to build something meaningful. Then success arrives. And success is where the ego really gets dangerous. When leaders are struggling, reality still has a vote. Customers complain. Investors push. Employees leave. The market humbles them. But once leaders gain power, money, status, and a circle of people who need something from them, reality gets quieter. People start editing the truth. They laugh at jokes that are not funny. They soften bad news. They call emotional reactivity “passion.” hey call micromanagement “high standards.” hey call arrogance “confidence.” They call avoidance “strategic patience.” And before long, the leader is no longer leading a company. They are leading a carefully managed psychological ecosystem designed to protect their self-image. That is when things get expensive. Ego Is Not Just Arrogance Most people think ego means arrogance. That is too simple. Ego is the mental picture you carry of who you are. Your role. Your competence. Your status. Your worth. Your story about what makes you special. It is not useless. Early in life, ego helps organize identity. It helps us function, strive, compete, and build. But here is the problem. The ego starts as a tool and quietly becomes the boss. At first, you use it to orient yourself. Later, you defend it like your life depends on it. If you are identified with being the smartest person in the room, disagreement feels like an attack. If you are identified with being the founder, criticism of the company feels like criticism of you. If you are identified with being decisive, uncertainty feels humiliating. If you are identified with control, delegation feels like loss. If you need admiration, honest feedback feels unbearable. And if you are identified with being a great leader, congratulations. You have just made it harder to become one. The Ego Is Always Looking for a Deal The hidden bargain beneath ego-driven leadership usually sounds like this: Uf I succeed enough, I will finally feel secure. If I am admired enough, I will finally feel worthy. If I control enough, I will finally feel safe. If I win enough, I will finally be beyond doubt. The problem is that the bargain never fully pays off. Achievement does not end the hunger. Often it intensifies it. The leader gets the title, the funding, the exit, the recognition, the keynote invitation, the glowing article, the larger house, the more impressive friends. And somehow the inner machinery keeps running. More proof. More control. More admiration. More winning. More reassurance. This is why some extremely successful leaders remain strangely restless, defensive, brittle, and dissatisfied. They have achieved enough to impress the world, but not enough to quiet the self they are trying to protect. That is not a moral failure. It is a psychological trap. And leadership gives that trap a very large stage. How Ego Distorts Leadership Here is the brutal part. The ego does not just make leaders annoying. It distorts judgment. When the ego feels threatened, the leader stops seeing clearly. They stop listening when challenged. They become rigid instead of adaptive. They surround themselves with people who agree with them. They take credit and avoid blame. They micromanage because they cannot trust others. They confuse being questioned with being disrespected. They interpret disagreement as disloyalty. They protect the image instead of examining the truth. The more power they have, the worse it gets. Not because power makes everyone corrupt, but because power reduces corrective feedback. People defer more. They challenge less. They wait to see what the leader wants to hear. The leader slowly loses contact with reality. This is the great danger of executive success. The external world starts confirming the internal illusion. The Founder Version Is Especially Dangerous Founders are particularly vulnerable because the company often begins as an extension of their identity. That is not all bad. In the early stages, a founder’s obsession can be essential. The company may need the founder’s force, conviction, stamina, and refusal to accept conventional limits. But what gets a company born can also keep it from growing up. When the founder is fused with the company, every problem becomes personal. A product critique feels like an insult. A senior hire’s independence feels like a threat. A board challenge feels like betrayal. Delegation feels like irrelevance. Operational discipline feels like bureaucracy. The founder says, “No one cares as much as I do.” That may be true. But sometimes what they really mean is, “No one validates my identity the way this company does.” That is a harder sentence to say out loud at a board meeting. The Great Leadership Question After all these years, I have become less interested in the surface behavior and more interested in the motive underneath it. Not just, “Why do you micromanage?” But: What are you trying to protect? Not just, “Why do you dominate meetings?” But: What happens inside you when someone else has the better idea? Not just, “Why do you avoid conflict?” But: What does disapproval threaten in you? Not just, “Why do you need to win?” But: Who would you be if you did not? That is where the work starts to get real. Most leaders do not change because someone gives them a better technique. They change when they see the hidden bargain they have been making with themselves. Self-Awareness Is Not Self-Absorption Some leaders resist this work because they think inner development is soft, indulgent, or irrelevant to results. That is nonsense. Self-awareness is not sitting around admiring your emotional complexity. It is the discipline of seeing what is actually driving you before it drives the company off the road. A leader who cannot observe their own defensiveness will call it conviction. A leader who cannot observe their fear will call it urgency. A leader who cannot observe their need for admiration will call it culture building. A leader who cannot observe their control needs will call it accountability. Self-awareness is not ornamental. It is operational. It determines whether you can hear bad news, accept feedback, delegate authority, admit mistakes, make clean decisions, and separate the mission from your own self-image. What Actually Helps When ego is running the show, insight alone is not enough. You can understand your patterns intellectually and still be captured by them under pressure. I have seen brilliant leaders explain their own dysfunction with great sophistication and then repeat it 20 minutes later. So the work has to become practical. First, notice the pattern in real time. When you feel defensive, name it silently. I am defending. I am trying to win. I am afraid of looking incompetent. I am trying to control the room. That small act creates space. You are no longer completely fused with the reaction. Second, use feedback as inquiry, not verdict. When someone gives you hard feedback, do not rush to decide whether it is accurate. Ask: What part of me feels threatened by this? What self-image am I defending? What might I see if I were not protecting myself? That shifts feedback from judgment to information. Third, meditate. Not because you need to become serene, spiritual, or annoyingly calm in a linen shirt. Meditation trains the basic leadership muscle most leaders lack: the ability to observe the mind without immediately obeying it. You notice the tightening in your chest when someone questions you. You notice the urge to defend before the other person has finished the sentence. You notice the story your mind creates to protect your image. In that noticing, there is freedom. Fourth, practice non-doing. This is radical for founders and high achievers. Sit for 10 minutes. Do not optimize. Do not plan. Do not solve. Do not check your phone. Do not turn stillness into a productivity hack. Just sit there and watch how uncomfortable it is to not be becoming something. That discomfort is data. It shows you how addicted the ego is to motion, improvement, fixing, proving, and control. The Real Shift The goal is not to kill the ego. Good luck with that. Also, you need a functioning self to lead. The goal is to stop being unconsciously governed by it. You can still be ambitious. You can still be decisive. You can still be competitive. You can still build something enormous. But your ambition does not have to be compulsive. Your confidence does not have to be fragile. Your leadership does not have to be a 24-hour defense system for your identity. That is when ego becomes something you can use rather than something that uses you. And that is when leadership matures. The deepest leadership question is not: How do I become more powerful? It is: What is my power serving? Because if your power is serving your ego, the company will eventually pay the bill. And so will you.
