ILLUSTRATION BY RUTH MACAPAGAL
Where decisions are made at lightning speed and success hangs in the balance, the role of CEOs and business owners is akin to that of captains steering the ship through stormy seas.
They are the visionaries, the strategists, the leaders who shape the destiny of their companies. Yet, despite their lofty positions, there’s a pervasive challenge that often goes unnoticed—the ivory tower trap.
As a “global management guru”—as Bloomberg has called me—and the “mentor of the giants” (according to Fortune) who advises some of the most famous CEOs and business owners around the world, I see every day that even the most powerful ones are not immune to this trap.
The best you can do, as a top executive or business owner, is to know that this trap exists, and then build precautionary measures to offset all the negative results so they do not kill your business.
Top executives become disconnected from reality, insulated within their own bubbles of authority and privilege. They’re surrounded by layers of yes-men and women, shielded from the raw truths of their organizations and the outside world. In this cocoon of comfort, the clarity of vision becomes clouded, and decisions are made based on distorted perceptions rather than cold, hard facts.
Root causes of the ivory tower trap
But why does this happen? And, more importantly, what can be done to break free from the confines of the ivory tower and see the world as it truly is?
Firstly, let’s delve into the root causes of this phenomenon. At the heart of the issue lies a lack of honest feedback. Imagine a CEO presenting a new initiative to their team. Instead of candid critiques and constructive criticism, they’re met with nods of approval and murmurs of agreement. The fear of reprisal or the desire to curry favor often stifles dissenting voices, leading to an echo chamber where dissent is silenced, and dissenters are sidelined.
Moreover, the trappings of power can breed complacency. When surrounded by opulence and adulation, it’s all too easy for CEOs and business owners to lose touch with the realities faced by their employees and customers. They become insulated from the daily struggles and triumphs that shape the fabric of their organizations, leading to decisions that are divorced from the lived experiences of those they serve.
Prominent examples
Here are a few real-life examples of CEOs and business owners who made wrong decisions due to the ivory tower effect and receiving inaccurate information from their own teams:
• Enron This company’s collapse in 2001 was one of the most infamous corporate scandals in history. The company’s top executives, including CEO Jeffrey Skilling and chairperson Kenneth Lay, were misled by their own team about the true financial health of the company.
Enron’s executives relied on deceptive accounting practices and false financial reports provided by their finance team to conceal massive debts and losses. As a result, Enron’s leaders made decisions based on inaccurate information, ultimately leading to the company’s downfall and bankruptcy.
• Volkswagen In 2015, this automotive firm admitted to cheating on emissions tests for millions of its diesel vehicles worldwide. The scandal was a result of deliberate deception by the company’s engineering team, who installed illegal software in Volkswagen vehicles to manipulate emissions test results.
Volkswagen’s CEO at the time, Martin Winterkorn, claimed to have been unaware of the cheating software and blamed “a small group of rogue engineers” for the scandal. However, it later emerged that senior executives, including Winterkorn, had received warnings about the illegal software but failed to take action.
• Boeing This aircraft maker faced a crisis in 2019 following two deadly crashes involving its 737 MAX. The crashes, which occurred in Indonesia and Ethiopia, were attributed to a faulty flight control system known as MCAS (Maneuvering Characteristics Augmentation System). Boeing’s management, including CEO Dennis Muilenburg, had received assurances from their own engineering and safety teams that the 737 MAX was safe to fly.
However, it later emerged that Boeing had downplayed the risks associated with the MCAS system and failed to adequately inform pilots and regulators about its operation. The ensuing scandal led to the grounding of the 737 MAX fleet, billions of dollars in losses for Boeing, and a crisis of confidence in the company’s leadership.
Practical solutions to the ivory tower problem
So, what’s the antidote to the ivory tower syndrome? Below are some solutions that can act as an antidote to the ivory tower syndrome.
Cultivating a culture of truth-telling and transparency. The answer lies in cultivating a culture of truth-telling and transparency within organizations. CEOs and business owners must actively seek out dissenting voices, encouraging open dialogue and constructive criticism. They must foster an environment where feedback is valued as a precious resource, rather than a threat to be quashed.
Challenging your own assumptions and biases. Leaders must be willing to do this. It’s all too easy to fall into the trap of confirmation bias, seeking out information that confirms preconceived notions while ignoring evidence to the contrary. By fostering a culture of intellectual humility and critical thinking, CEOs and business owners can guard against the pitfalls of cognitive bias and make decisions grounded in reality rather than wishful thinking.
Bridging the gap between top executives and front-line employees. This is essential. CEOs and business owners should make a concerted effort to engage directly with their workforce, listening to their concerns, and understanding their perspectives.
Setting up external advisory boards. Establish such a team that is composed of industry experts, thought leaders, and stakeholders from outside the organization. These advisory boards can provide valuable insights and perspectives that may not be readily available within the organization. By soliciting input from external sources, leaders can gain a more comprehensive understanding of industry trends, competitive dynamics, and emerging opportunities.
Encouraging constructive dissent. Create a culture where constructive dissent is not only tolerated but actively encouraged. Encourage employees to speak up and voice their opinions, even if they may differ from those of leadership. By fostering an environment where diverse perspectives are valued and respected, leaders can make more well-rounded decisions that take into account a broader range of factors.
By breaking free from the confines of their insulated bubbles, embracing honest feedback, and fostering a culture of transparency and humility, leaders can overcome this challenge and lead their organizations to greater heights of success. INQ
Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email Tom.Oliver@inquirer.com.ph.