13 traps bad leaders fall into
James Altucher, a famous entrepreneur and author, tells us about how bad bosses become bad bosses and how not to become one.
I have known many bad bosses, worked with them and for them. I myself have been a bad leader many times in my life. I don’t know if I will be the right leader now. But I know the mistakes that led me to fail. And sometimes to get a little better, you have to avoid getting a little worse. So let’s begin.
The qualities of bad leaders
1. They don’t understand the 30/150 rule
If a person does not follow the 30/150 rule, he will be a bad leader. This rule has been in effect for 200,000 years. For 200,000 years people lived in tribes. Each tribe had a leader, but when the tribe became too big for one leader (more than 30 people), it split in two.
Then about 70,000 years ago we evolved and started to manage tribes of up to 150 people. But this is a new thing, an evolutionary aberration, and so we keep failing at it.
But in each of these categories (under 30 people, under 150 people, over 150 people) bad leaders get a chance to prove how bad they are. And here’s how: they don’t change their behavior depending on how many people they lead.
2. How leaders in organizations of less than 30 people go wrong
If you have less than 30 people in your organization, you have to be very familiar with the problems of each of them. You need to know their skills, what they are good at, what they are bad at, what they want to be good at, what their dreams are.
Each person needs to be assigned something ONE thing. That is his particular responsibility. Bad managers give people many tasks at once, and then people handle all of them mediocrely.
When I ran a company with less than 30 employees, I would randomly take people with me to meetings. That way they could see the impact the company was having on customers or on other people. I knew my limitations as a manager. So I wanted my subordinates to be leaders.
Bad leaders become jealous of their subordinates and never hire people smarter than themselves. This is the most common mistake of bad leaders.
Understand each of your 30 people. Find out who their parents are. Find out how they have fun. Help them develop their skills to the max. Let them excel and outshine you.
I might have been a pretty good leader in that organization. I don’t know. But I still remember every one of those thirty, and we’re still friends. Give people more than they give you, and they’ll still be giving back twenty years from now. That I know for a fact.
3. 30 to 150: How to Fail
When you have 30 to 150 people in your organization, it’s impossible to know everyone intimately. That’s why you need everyone to talk about each other. I want to be able to ask A what it’s like to work with B and get a good meaningful answer.
Your direct subordinates should give more than they get to the people who work with them. That’s how you can get to know people. And that’s how a leader indirectly can get to know all 150 people when he gets working groups together, gives out assignments, and tries to inspire people to move toward a common goal.
4. Failure with a “vision”
When there are more than 150 people, you have to do a lot of things. But the most common reason leaders fail is a lack of strategic vision.
What is that? There are probably a thousand boring books that could be written about it. When there are more than 150 people, it’s impossible to know everyone and even impossible to know about everyone secondhand. So the most important thing you can do-and in fact even the only thing you can do-is to lead people by your example.
You can’t talk to everyone and understand their problems. You can’t define their roles and fulfill their dreams. So you have to unite them with a story – one that everyone believes in, is inspired by and is willing to follow. All stories: religion, nationalism, politics, etc – are more or less designed to unite as many people as possible with the strongest possible ties.
And because we don’t do all that well, wars often happen, or societies simply disappear into the dustbin of history.
When Tim Cook became CEO of Apple, everyone feared that history would change. The stock plummeted.
What was the story? It wasn’t about Steve Jobs “making the most profit”. Those stories are rarely about money at all. It was that Steve Jobs was the best at combining technology with design. Could Tim Cook have led this story any further? His leadership will be judged solely on whether he supports the story or can successfully change it.
And, in fact, he should do both. If he tries to turn into Steve Jobs, the story will be: “Tim Cook is a bad version of Steve Jobs”.
It’s a delicate business. It’s a balance that has to be maintained every day in order to attract the best employees, to generate the joy of customers and investors – and yes, to enjoy life itself. That’s what leadership is all about.
5. The Wrong Vision
A good strategic vision is hard to make up. It’s a rare thing. But because I know a lot of bad leaders, I can tell you about the wrong vision. I’ve worked in management for at least two companies that were worth at least a billion dollars. In both cases, the leadership was just awful. How did they make it to a billion with that kind of leadership? It’s easy.
They went public and then bought other companies with their stock. Buy many small versions of themselves, and then when you add up the numbers, all of a sudden you find yourself making a billion a year.
But the vision was: “We bought a bunch of companies doing the same thing, and now our turnover is a billion dollars!”.
Your vision could be even worse. For example: “We just bought a bunch of companies, fired all the HR managers and accountants (we have them at the head office), and now we have billion-dollar revenues and higher margins!”.
All of the companies that went this route failed.
Some companies did and came close to failing. For example, it was unbelievable that Google would fail. But when Eric Schmidt was CEO, they were buying one company a week. They didn’t integrate those companies well enough, and Google started to stumble. Divisions started closing down. The team spirit went down because the Google story itself started to disintegrate.
Larry Page took charge and changed the story. He said: “Google is the best company in the world at these four things”. And shut down everything that didn’t apply to those four. Now people in each of those four areas could say: “We’re the best in the world at this”. And that contributes to Google’s overall vision: the company gives you all the information in the world, no matter where you are. The first company in history to do that.
Honestly, I wish I had worked at Google. It even almost worked out when I tried to sell them the company. I loved their history so much that I wanted to bathe in it. I wanted to revere it as a religion. And that’s how all the great religious leaders operate. They tell the story.
These are the elements of a good story:
- We fight an evil force (think of the 1984 Apple ad against IBM, or the Buddha rejecting the caste system);
- We have something mysterious that no one else has (a deity, a design philosophy, a special technology, etc.);
- We think people will be happy to work with us, to sign up with us, to join us. Apple’s products are often inferior in functionality to comparable competitor products. But people are happier with Apple products because they have such a strong history;
- Our leaders have “seen the light” or “experienced a second birth”. Steve Jobs left the company for ten years to come back as a hero. Buddha had to leave home for seven years to achieve enlightenment. Mandela was in prison for decades;
- Together we are better than separately. The bigger we are, the better we can help the people who will be with us. So if a company buys a bunch of small companies, they need a story that explains why bigger is better. For example, we can help people faster because we understand their needs in every city in the world;
- Social proof. There should be other stories in the vision: people your vision has helped, people whose lives have gotten better, people who can stand up and say: “this has changed my life”.
6. Bad leaders don’t want you to call your mom
People who follow a good leader should be able to call their parents every day and say: “I’m so happy. You won’t believe what I did/what I learned/who I met today”…
7. Bad leaders speak ill of their customers, employees or constituents
I gave a lecture at one company. It turned out that most of them hated their customers. I was surprised. How can you hate your customers? They’re the ones who pay you money. They’re the reason you come to work. If you hate your clients’ stories, how can you help them achieve their dreams? Something will always get in your way.
Leadership is not about achieving your dreams. It’s about helping everyone else achieve their dreams.
It’s not the employees’ fault. Everything comes from the leaders. If a leader doesn’t like customers or constituents, his subordinates won’t either. Leadership trickles down from above.
8. Bad leaders don’t want you to beat them
I’ve had four mentors in my life. Other people wanted to be my mentors too, but they didn’t have that mentoring effect on me.
What do I mean by that? I wanted to be like them. I wanted my life path to replicate theirs. I wanted to mimic their behavior, to learn what they knew, to be as successful as they were.
And at some point they all wanted me to fail. I learned what I could from them. I did everything they asked. I helped each one to further their cause. But at some point, when I wanted to move in my own direction or start my own business, they all got angry and tried to stop me. They wouldn’t talk to me anymore. And two of them even tried to hurt me, even though I was always just helping them. However, I understood that danger and I did it deliberately.
A good leader helps the people around him to get around him. A great example is Stanford professor Rajiv Montvani.
What?! Who the hell is that?
He was Sergei Brin’s supervisor. And instead of keeping Brin in a cage, he opened the cage, Brin flew out and founded Google with colleague Larry Page. And as a result, today Montvani is a billionaire.
The leader asks no questions: “How strong can I get? How far can I go?” He asks: “How far can the people around me go?”.
A lot of negative things are said about Steve Jobs. But if he was such a bad person, he wouldn’t be such a great leader. People like Tim Cook, Joni Ive, John Lasseter (of Pixar) and even Bob Iger (CEO of Disney) and Tony Fadell (the iPod developer who recently sold his company to Nest for $3.2 billion to Google) owe much of their success, their creativity, their freedom and their wealth to the fact that Steve Jobs was once their mentor, or they benefited something from Steve Jobs’ leadership decisions.
All of these people are highly motivated-that’s how they ended up with Steve Jobs as their mentor. But combine that motivation with Steve Jobs’ leadership skills and that’s when you get real success.
The same thing happened at Google with Larry Page’s leadership skills. The heads or CEOs of Twitter, Facebook, AOL, and Yahoo at one point or another learned from Larry Page, and today are successful leaders and mentors themselves.
9. Bad leaders don’t know the numbers they need
I’ll confess something intimate to you. When I was running companies, it took me a long time to figure out what numbers I needed to know. And you need to know not only your revenue and profit, but also revenue and profit per employee, per customer, per square meter, etc. This is important, whether you’re the leader of a company, a community organization, a country, whatever.
What metrics do you need to know to determine your success? If you’re a teacher, make a list of what your students would do well to achieve by the end of class. Not everyone will achieve this, and that’s okay. Make a list of all your students. Across from each one, write everything you want him or her to accomplish. At the beginning of class, rate everyone on each of these items on a scale of 1 to 10. Add up all these numbers – this will be the starting score. When the class is over, that number should be higher. Even if only one of the students has made much progress. That’s fine. It means you’ve led well.
If you’re having trouble at all coming up with the right metrics, use these: competence, attitude, autonomy. Let each person get better at all three.
And metrics are important. I was recently at a company that I thought formulated the wrong vision for clients. And customer success was defined by the wrong metrics. But even the wrong vision is better than no vision.
10. Bad leaders don’t get rid of bad people
I once worked with a company that had a weak leader. He owed his position to the biggest shareholder. But the problem was that the largest shareholder was a completely rotten person.
A good leader would have gotten rid of his ties to this man and built his vision on his own leadership. This leader, however, got bogged down in the financial problems of the largest shareholder, failed to unify the company’s divisions, and failed to become an effective mentor to his direct reports. A year later, the company collapsed.
Bad leadership can cause an almost instant collapse. Examples include the collapse of Bear Stearns and Lehman Brothers banks in 2008. When Bear Stearns stock fell from $80 to $2 in a week, the company’s CEO was at a bridge competition. While he was playing cards, thousands of people lost their jobs. And the Bear Stearns collapse set off a chain of dominoes that ended up having to bail out banks and insurance companies, spending trillions of dollars.
The person who put that executive in office had to remove him or admit his own mistakes. And there’s another problem here…
11. Bad leaders often have enormous charisma
How does a bad leader achieve a leadership position? It’s simple. They are extremely charismatic. They are incredibly smart and know how to charm the leaders who have led organizations before them.
Here’s an example from filmmaking. The director is a leader. But he has a big problem. Actors are hired because of their tremendous charisma. The world adores them. And when they want something, it’s hard for them to say no. A good director has to fight the urge to give in to that charisma and hold on to his vision.
In the case of Bear Stearns, contagion occurred when the original director, Alan Greenberg, met a new employee. Jim Kane, this new guy, was a professional bridge player. And essentially, no one else. To play bridge (or any professional game for that matter) well, you need years of self-education, you need to be able to “read” people well, be good with numbers, and be able to quickly calculate a lot of situations in your head.
These are all attributes of a good leader, and these tools can often convince other good leaders that you are a good leader, too. But alas, Jim Cain was nothing more than a good bridge player – he wasn’t very good at everything else.
Good leaders include successful players: Bill Gates (bridge), Warren Buffett (bridge), Peter Thiel (chess) and many others.
Alan Greenberg was an aspiring bridge player. He met Jim Kane, who was an excellent player. He asked Jim: “How good are you?” And he replied: “Even if you play me for a hundred years, you’ll never beat me”. So began the road to success for Kane and the collapse of the entire American economy.
12. Bad leaders smoke crack
I don’t mean that literally. If they were really smoking crack, they probably wouldn’t have made it to a real leadership position.
There’s this cognitive bias that makes people not see their own mistakes. They’ve spent so much time, effort, and money creating a particular story that now their brain won’t let them say: “I may have made a mistake”.
A bad leader doesn’t admit his mistakes or even think about them. It is too painful to think about them. The brain will rebel, or the leader will become depressed, and he will begin to doubt his leadership skills.
I once started a company with a friend at the same time. I knew right away that things would go bad in his company, but I wasn’t a good enough friend to tell him he had a bad idea. I asked him: who are the users? Who are the customers? How would you make money? I wanted him to see for himself that his idea was bad. But by asking these questions, I woke up myself. Every day I asked myself the same questions about my own company. I would go to my partners, ask them if they had the impression that I was smoking crack, and discuss these questions with them. This process forced me to come up with some new feature every day that would help me serve my customers better.
I sold my business after eight months for $10 million. My friend has been fiddling with his for nine years. And he has no income.
You have to get over yourself and do a rigorous review of your organization as if you were an outsider. Examine all the success metrics, see if they are correct. They will often be wrong.
Ask for help from other people in your organization. Ask the customers. Ask the outside people. They won’t always be right either. And sometimes they will lie to you to avoid offending you. The one person who will ultimately keep you from getting cocky is yourself. In many cases, that’s what separates good leaders from bad ones.
13. Bad leaders were bad employees
Leadership begins long before you reach the top of an organization or community. At any point in your career, you are either a thermostat or a thermometer. You either determine the temperature of those around you and help them achieve their goals and dreams, or you do as you’re told and don’t inspire others.
How do you become a thermostat? Every day make 1% improvement in your physical, emotional, mental and mental health. These percentages accumulate very quickly. Do something every day that will help those around you become more competent, improve their relationships with people, and give them more freedom.
Help others and then fully acknowledge their merits. Whether it’s your boss, a coworker, a friend, a relative, or someone else.
Bad employees and bad leaders do exactly the opposite.
Leadership is a complex and vague term. Sometimes a boss does not mean a leader. Sometimes a king is ruled for him by his court. Sometimes the artist is supported and propelled forward by the leaders in his entourage.
And there are many holes along the way. It’s easy to fall into the trap of ego, money, wrong concepts, temptations flirting with you. The feeling of “I did it!” even though there is still a long way to go.
That’s why I never trust articles that tell me “how to be a good leader”. But I know I’ve fallen into every one of those traps. And if I avoid them (or fall into them less often), maybe someday I can be a good leader.
A leader for whom? Well, for starters, for myself.