What’s the best way to solve our planet’s economic, political, and social woes? Here’s a thought: Why not encourage multibillionaires like Elon Musk to collectively take control of the world—or at least take charge of saving the human race from our dysfunctional political systems?
Believe it or not, this idea was seriously promoted by Corporate Knights magazine a decade ago in a cover story that went against the grain of critical public attitudes toward income inequality. Less than three years after the Occupy movement attempted to strip society’s wealthy 1 per cent of its influence, the Canadian publication known for promoting clean capitalism ran a headline that screamed, “The 0.1% Can Save the Planet.”
At the time, Musk was hard at work advancing motor vehicle electrification and space exploration via his companies Tesla and SpaceX. In recognition of these noble goals, Robert Downey Jr. had used the billionaire as a role model when portraying industrialist Avenger Tony Stark in the early Marvel Cinematic Universe films. Musk even had a cameo scene in the second Iron Man movie.
Meanwhile, politicians around the world were failing to seriously address climate change, so Corporate Knights found itself in agreement when a Musk fan tweeted: “We need more comic book-style billionaires.” And after noting self-made members of the Richie Rich crowd are often “tenacious problem solvers” with the resources required to counter lobby groups that maintain the unsustainable status quo, the magazine—in an act of optimistic desperation—decided to propose that a Billionaire League of Justice might just be “our best hope of putting humanity on a sustainable path.”
The article in question (penned by IBJ editor Thomas Watson) was illustrated with images of Musk and other allegedly ESG-friendly billionaires dressed up as comic book heroes. But Corporate Knights wasn’t just looking for an excuse to run cool artwork. To support its argument, the magazine included insights from American political activist Ralph Nader, who issued a similar call to action in his 2009 novel Only the Super-Rich Can Save Us—which imagined a fictional version of legendary investor Warren Buffet responding to the deadly ineptitude of modern government that Hurricane Katrina exposed in 2005 by forming a band of enlightened industry titans and well-heeled celebrities dedicated to using their combined influence and resources to fight environmental degradation, corporate greed, and political corruption.
According to Toby Heaps, a former Nadar press secretary who co-founded Corporate Knights, the book offered a detailed and uniquely Naderesque blueprint for returning the United States to the ideals set forth by its founding fathers. “The funny thing is,” Heaps wrote in a Globe and Mail review, “this is not as crazy as it sounds. U.S. culture respects power and wealth. The richest 450 billionaires in the world control more wealth than the poorest three billion people, and the rich have the means to affect massive change for the better, if strategically directed.”
Today, of course, arguing that it is a potentially good idea to trust a team of billionaires working on their own to solve the world’s most pressing issues is a tougher sell, and not just because “Elon [pooped] the bed on that idea,” as a former Corporate Knights editor recently put it. But the point of this article isn’t to judge Musk for his questionable ESG ratings or his controversial public statements or his erratic decision making as a social media mogul or even his childish desire to face off against Meta CEO Mark Zuckerberg in a cage match. The objective is simply to highlight why the idea of a Billionaire League of Justice was flawed from the start.
After the call to action issued in Only the Super-Rich Can Save Us failed to gain traction, Nadar concluded that the enlightened rich don’t really want to work together on progressive issues because they are too competitive. But there is a more obvious flaw in the Billionaire League of Justice idea, which Corporate Knights actually identified when it noted that highly successful individuals often fail to see the benefits of coordinated action because they “take it for granted that standalone initiatives can somehow overcome global challenges, not to mention a better organized and more focused opposition.”
In other words, billionaires often have superhero-sized egos that cloud their judgement.
Over the years, leadership research has clearly established that hubris is the arch-enemy of sound management. And you don’t need to be a superhero to acquire it. In many cases, you just need some recognition of your talent and the power that comes with it, which is why success is actually a double-edged sword when hiring and promoting employees.
In a 2015 paper on the impact of power on leadership published in The Leadership Quarterly, Samuel Bendahan, Christian Zehnder, François Pralong, and John Antonakis note that British historian Lord Acton was only partly right when he observed that power “tends to corrupt, and absolute power corrupts absolutely.” While power can lead to corruption, the authors point out that the impact “depends on the person too.” But when power does corrupt, it can change an individual’s cognition, affect, and behaviour, and there is no easy way to identify individuals who are most at risk. According to experiments (variants of the dictator game) conducted by these researchers, even honest people with socially acceptable attitudes “at the moment of their accession to a position of leadership rather easily changed their moral perspectives once they got a taste of power.”
Simply put, since power inflates ego, it can corrupt judgement in addition to morality. And since success delivers power, managing the impact on decision makers is key to ensuring organizational efficiency and sustainability. This article examines the relationship between hubris and corrupted decision making and then offers some practical steps that organizations can take to manage the risks posed by employee success.
Hubris Syndrome
The impact of hubris on business was originally studied in an attempt to understand why some executives pursue obviously questionable M&A activity. Early findings essentially blamed overconfidence (see Richard Roll’s “The Hubris Hypothesis of Corporate Takeovers”). But over time, research has tied hubristic decision making in business and politics to a relatively complex disorder called hubris syndrome. (For a detailed overview of the research, we suggest “Hubristic Leadership: A Review” by Eugene Sadler-Smith, Vita Akstinaite, Graham Robinson, and Tim Wray, which was published with the support of the Surrey Business School’s “The Hubris Project.” For additional insights, see The Hubris Hub, a resource for managers, researchers, and students on the subject of hubris and hubristic leadership.)
The term hubris syndrome was coined by Lord David Owen, who trained as a neurologist/psychiatrist before entering politics. According to Owen, leaders inflicted with this condition often have a narcissistic propensity to see their world “primarily as an arena in which they can exercise power and seek glory,” along with a predisposition to take actions aimed at enhancing their image, while treating the interests of their organizations as identical to their personal interests. Based on this checklist, Musk’s erratic decision making at the company formerly known as Twitter—which he acquired last year for US$44 billion (after attempting to back out of the deal that appears to have been initiated with lacklustre due diligence)—makes him a good candidate for a case study on the impact of hubris syndrome.
After the billionaire privatized the social media platform now known as X, HR managers watched in disbelief as best practices in talent management that call for prudence when cutting costs were tossed out the window. Musk impulsively culled more than 80 per cent of the workforce, then announced he would try to rehire some of the discarded after realizing they were actually required to maintain operations. This didn’t include many of the employees previously responsible for policing tweets, who were deemed unnecessary, which led to an exodus of advertising revenue, which in turn led to a series of poorly planned subscription initiatives.
When the company’s name change was announced this summer, marketing experts got a turn at shaking their heads because while Musk’s acquisition of Twitter came with numerous issues, the brand was not one of them. In a commentary in The Intercept, Jon Schwarz summed up what many observers thought about the rebranding by noting he “never imagined it possible that Musk would rename Twitter — which had become an incredibly well-known brand — to ‘X’ just because he’s been obsessed with the idea of a company with that name since he was a kid. It’s as though he bought Coca-Cola and changed its name to that of his beloved childhood pet tortoise Zoinks.”
After a full year with Musk as the majority owner of Twitter, estimates of the value destruction top US$20 billion while many former users mourn the lost economic usefulness of the service that critics insist has become a cesspool of intolerance. As a result, Schwarz compares the acquisition to a dark comedy routine: “The results have been bleak and awful for Twitter and the world, but not just bleak and awful: They have also been hilarious. Anyone who likes to laugh about human vanity and hubris has to appreciate his commitment to the bit.”
Whether anyone has been inflicted with hubris syndrome is always open to some debate. But as noted by Hubris Hub blogger Sasha Korobov, Musk’s decision making at Twitter/X has displayed three of the hallmark traits of hubris syndrome—preoccupation with image, impulsivity, and contempt for criticism. Indeed, when acquiring Twitter, Musk insisted he would run it as an even playing field for commentary. But after his tweets related to the Superbowl received less attention than similar tweets issued by U.S. President Joe Biden, software developers were reportedly ordered to artificially boost his engagement numbers. “To tweak algorithms to meet specifications of what pleases Musk personally is his prerogative as owner and CEO of the privately held social media platform,” writes Korobov. “But to claim that recent changes enacted at Twitter are meant to enrich anyone other than Twitter’s chief Audience of One contradicts the growing mountain of evidence against that assertion.”
Musk could eventually transform X into the everything app he frequently talks about. But he doesn’t just display some hallmark traits of hubris syndrome—he also shows signs of a related condition that has long been considered a significant national security threat by the U.S. intelligence community.
In the mid-1990s, the CIA commissioned a report on hubris to help improve the intelligence agency’s analysis of decision making by egotistical leaders with the potential to deploy weapons of mass destruction. In it, RAND Corporation researcher David Ronfeldt describes how the ancient Greeks believed in a divine equilibrium between gods, humans, and nature, noting hubris was a crime committed whenever some mortal disturbed the divine order by demonstrating a “pretension to be godlike.” Whenever this happened, Nemesis, the goddess of divine vengeance, was dispatched to make things right by humiliating or destroying the “vainglorious pretender.”
Using Fidel Castro as an example, Ronfeldt went on to describe a dangerous condition called the hubris-nemesis complex, which can lead hubristic leaders in the modern world to see themselves as Nemesis-like dispensers of justice on a divine mission to destroy an enemy deemed to have disrupted their interpretation of the natural order:
The mentality and behavior of a leader under the spell of both forces seem substantially different from those of a leader affected by only one or neither of the two forces. Moreover, a hubris-nemesis complex seems to impart a rationality that differs from an ordinary cost-benefit rationality. A leader inflated with that much grandiosity and vengefulness may not make what are normally regarded as reasonable, pragmatic calculations of interests, goals, benefits, costs, and risks.
Given Musk’s self-proclaimed views as a free speech absolutist, it is fair to say he is on a mission to take on the “woke forces” that he thinks threaten his interpretation of natural order. As a result, the acquisition of Twitter and the value destruction that followed could be explained as the result of decision making by someone with a hubris-nemesis complex.
Either way, managing ego clearly isn’t easy when you can give everyone on the planet $5 and still be the richest person in the world. And as things stand, the billionaire has done relatively well given what has happened to Theranos founder Elizabeth Holmes and former cryptocurrency wunderkind Sam Bankman-Fried, two other leaders often mentioned in academic discussions about hubris. And if Musk is lucky, he’ll end up like Henry Ford, who is remembered for being a visionary industrialist despite the hubristic decision making that followed his success.
Ford made a fortune selling the Model T as a car built for common consumers. But he could have made even more money if ego hadn’t prevented him from being open to improvements. As pointed out in a chapter by Rachel E. Sturm and Lucas Monzani in The Nature of Leadership, more that 15 million Model T vehicles were sold between 1908 and 1927, and they were all virtually the same because of Ford’s rigidity against changing his design. On one occasion that has become part of industry lore, the legendary industrialist flew into a rage after being surprised with a new version of the Model T by employees expecting praise. Instead of being open to change, Ford violently demolished the perceived insult to his original vision. He then moved the lead designer out of engineering.
When it comes to Ford, of course, perhaps the most fascinating example of his ego at work involves his quixotic attempt to force Indigenous workers in Brazil to live his view of American values. In Fordlandia: The Rise and Fall of Henry Ford’s Forgotten Jungle City, author Greg Grandin documents how a plan to produce rubber on a huge tract of land in the Brazilian Amazon became an ambitious social planning project that fostered a rebellion. Long story short, after Ford tried to force-feed Fordlandia residents what he considered the ideal lifestyle—via prohibition, mandatory square dancing, and a diet of cafeteria-style American food—they rioted and destroyed a good part of his jungle town.
A similar example of billionaire ego at work can be found in central Louisiana, where Canada’s Frank Stronach, founder of the Magna International auto-parts empire, built a town from scratch amid the aftermath of Hurricane Katrina as part of what Newsweek called a relocation project “doomed to fail” by ambition.
In 2005, Stronach made headlines around the world when he arbitrarily decided to deploy resources and companies he controlled via controversial dual-share structures to gift hundreds of displaced citizens of New Orleans with rent-free living for five years in new homes surrounded by manicured fields and state-of-the-art sports facilities. And by all accounts, these people benefited from his impulsive desire to show he could do better than U.S authorities when it comes to housing victims of a natural disaster, which is why Corporate Knights suggested he might make a good addition to its proposed Billionaire League of Justice. But the much-hyped long-term vision was to develop “Magnaville” into a self-sustaining community of city-slickers-turned-organic-farmers. And according to project insiders, Stronach quickly lost interest shortly after things got complicated by human behaviour and local politics, not to mention his unrealistic expectations that individuals used to life in the Big Easy would happily tend his fields to earn their keep. As a result, after five years of living in Magnaville, some Katrina victims had their lives disrupted again when the project was shut down.
The bottom line is that history provides plenty of examples of high-profile hubristic decision making by billionaires. But while they collectively help drive awareness of the issue, they also serve as a dangerous distraction because when it comes to sustaining capitalism, not to mention the planet, we need average executives and middle managers to do a lot of the heavy lifting—and they are just as susceptible to hubris as the Elon Musks of the world.
Lord Owen’s Call to Action
In the years leading up to the pandemic, Lord Owen issued a call to action, urging “risk managers to take heed” of the growing evidence that shows “positions of power in politics and business may corrupt the ability of those in them to behave rationally.” Since then, the explosion of remote work that followed the global outbreak of COVID-19 may have exacerbated the problem by isolating decision-makers affected by hubris from individuals willing to report them or counter their egos by speaking truth to power.
That’s the bad news. The good news is that hubris syndrome isn’t like personality disorders that typically arise in late childhood or adolescence. As Owen noted in a 2008 lecture, “Hubris syndrome is different in that it usually manifests itself later in life and should not therefore be seen as a personality disorder but as an illness of position as much as of the person.”
Sadler-Smith agrees with Owen when it comes to the need to raise awareness of the impact of hubris on decision making. Next year, he expects to publish another book on the topic, entitled The Hubris Hazard and How to Avoid It, which will include a hubris health check for organizations and highlight the various related hubris risk factors using high-profile examples of its capacity for destruction at major corporations, including Theranos and FTX. But the big takeaway he hopes to spread is that “prevention is better than cure.”
Identifying hubris can be relatively easy. When looking for warning signs, an individual’s professional bio can be a good place to start since individuals with hubris often demonstrate delusions of grandeur. Linguistic cues can also be used to indicate the presence of hubris. In fact, Sadler-Smith and other researchers have explored the potential of deploying machine learning to root out linguistic markers of hubris in executive speech.
Prevention is easier said than done. As noted above, when it comes to developing hubris, generally accepted risk factors include a track record of success and the recognition it often generates via praise from stakeholders and the media. According to research by Nathan J. Hiller and Donald C. Hambrick, executives with high levels of core self-evaluation (CSE)—referred to as “hyper-CSEs”—are high risk. And as Lord Owen noted when introducing the hubris syndrome concept, “people who retain a personal modesty, remain open to criticism, have a degree of cynicism or well developed sense of humour” are lower risk.
In “How to Recognize (and Cure) Your Own Hubris,” an HBR article by leadership coach John Baldoni, managers are advised to think about how often they ask others for input and seriously consider alternate views. If “not often” is the answer, then you might have a problem. Unfortunately, if you have a serious case of hubris syndrome, you probably won’t ask yourself these questions. Instead, you justify solo decision making because you are you and you are not to blame when something goes wrong.
This is why battling hubris within organizations is a board-level problem that demands checks and balances on managerial decision making, as well as proactive preventative measures that mitigate the risks of hubris in executive development. When we say this, of course, we are talking about independent boards, which are key to managing ego in the C-Suite. After all, the risks posed by hubris increase when successful individuals report to themselves or have influence over a board responsible for governing their behaviour.
So how do organizations with independent boards prevent hubris?
Various approaches have been suggested. In “Hubristic Leadership: Understanding the Hazard and Mitigating the Risks,” Sadler-Smith, Akstinaite, Robinson, and Wray propose the following four tools for containing the emergence of hubris:
- High reliability organizing
- Co-operative decision making
- Listening for faint signals
- Diagnosing, grounding, and de-isolating the CEO
In a 2014 HBR article entitled “Rooting Out Hubris, Before a Fall,” Steven Berglas wrote: “A few structural modifications of your corporate zeitgeist – or clarifications of principles you assumed were clear and accepted — along with some well-placed and properly-timed shots of tough love should do the trick.” According to the clinical psychologist and executive coach, “humble pie should be the only dessert served in your corporate cafeteria,” meaning the first step to fighting hubris is clearly stating that it won’t be tolerated and that grandstanding is “verboten in your business”:
If an employee earns a reputation for being arrogant (exhibiting hubris), everyone, even colleagues, will want to see him fail. Since it is well known that “Heavy rests the head that wears the crown,” never hold coronation ceremonies at your business, and if a star insists on self-anointment, let him know that he is not engendering admiration in others but, rather, making himself a target.
Berglas says these “shots of tough love” are required because promoting a humble corporate culture is easier said than done, especially among a firm’s “big hitters.” There is a lot of truth in that conclusion, but relying on tough love to counter hubris is problematic because the inflicted are not typically in the habit of changing their behaviour in response to anything other than failure.
Since hubris syndrome is not a personality disorder that develops in childhood, researchers suggest it dissipates when afflicted individuals are removed from power positions. In the meantime, even criticism delivered with warm messaging will likely fall on deaf ears.
The tough love approach also doesn’t fit with how many organizations operate, especially when a star earner is involved. Indeed, despite everything that the corporate world likes to say about being committed to good governance, bad behaviour is still routinely overlooked when profits are being generated by offending individuals.
The relationship between Addias and Kanye West is a good recent example of how far profit-motivated corporations will go when it comes to overlooking bad behaviour. The rap artist is obviously a complicated individual with more issues than ego, but nothing in the best practices playbook justifies overlooking the racist and sexist behaviour he reportedly displayed as an Adidas partner for close to a decade while generating billions of dollars in sales for the sneaker company.
At an early meeting with designers at Adidas’ headquarters in Germany years ago, West drew a swastika on one sketch and told a Jewish employee to kiss a portrait of Hitler, according to a New York Times investigation by journalist Megan Twohey. More recently, he reportedly forced Adidas executives to watch pornography. As Twohey wrote in a newsletter to NYT subscribers, “The partnership, which began in 2013, boosted company profits and made West a billionaire. But West subjected employees to antisemitic and other abusive comments. And though their contract for years had a clause allowing Adidas to end the agreement if West’s behaviour harmed the company’s reputation, it’s not clear that executives ever considered invoking it before terminating the deal last year.”
Preventing Hubris with Character Development
Instead of waiting for hubristic behaviour to occur and then relying on tough love to try and control it, we believe organizations would be better served by simply putting much more value on hiring and developing talent with character-based immune systems.
The impact of power on a leader’s morality and judgement isn’t a recent concern. In Plato’s Republic, a character named Glaucon tells a mythical tale to express what was then a widely held ethical point of view known as egoism—which is based on the belief that people are only motivated by self-interest. In the tale, Gyges, a shepherd in the service of the King of Lydia, finds a mysterious ring in a buried tomb revealed by an earthquake. After realizing it can render him invisible—like the evil one ring of power in J.R.R. Tolkien’s The Hobbit—Gyges uses it to take the king’s throne along with his queen. Glaucon states:
No man can be imagined to be of such an iron nature that he would stand fast in justice. No man would keep his hands off what was not his own when he could safely take what he liked out of the market, or go into houses and lie with any one at his pleasure, or kill or release from prison whom he would, and in all respects be like a God among men.
As noted by the Philosophy Learning and Teaching Organization (PLATO), the Ring of Gyges tale was deployed “as a stalking horse for the development of a more thoroughly developed ethical theory” that argues that people with wisdom derived from strength of character act justly because they understand doing so is in the “self-interest” of their souls.
Since most people don’t possess this wisdom, Plato concluded some people naturally make better leaders than others. He believed good leadership required a “philosopher king,” while being part of the aristocratic elite from which these philosophic leaders would likely emerge.
Aristotle challenged the elitist idea that a deep philosophical understanding of what makes leaders good was required to be a decent leader, arguing instead that learned habits can deliver the character required to resist selfish or narcissistic impulses and instead act on what practical wisdom dictates is the best course of action for the greater good in any given situation.
Unfortunately, in the modern era that saw the rise of shareholder primacy, the importance of leader character took a back seat to leadership skills and commitment. Instead of managing the risk of hubris, egos were often celebrated along with short-term strategies that boosted investor returns at the expense of other stakeholders.
But times change, and the goddess of vengeance paid a visit to the marketplace in 2008, when leadership failures in both the public and private sectors spawned a financial crisis that brought the global economy to the brink of collapse. According to one economic impact study released in 2019, the hit to U.S. GDP alone cost every American about US$70,000 in lifetime income. Meanwhile, the total cost to the world is still mounting thanks to the macroeconomic fallout and related public policy responses.
Clearly, the 2008 market meltdown was a multi-trillion-dollar lesson on the need to address a long-standing crisis in leadership that threatened the sustainability of capitalism. Unfortunately, Nemesis has paid numerous repeat visits to the marketplace because how companies hire and promote leaders didn’t change. The good news is that the importance of leader character was brought back into the spotlight. Indeed, while headlines in recent years might give the impression that nothing will ever change, there has actually been a significant shift in leadership development, at least at enlightened business schools.
Using the 2008 financial crisis as a laboratory, researchers at the Ivey Business School (which supports this publication) examined the performance of leaders that helped distinguish companies that survived or prospered during the crisis from those that failed or were severely damaged. This resulted in the development of Ivey’s Leader Character Framework, which aims to help organizations develop talent development strategies that improve performance by, among other things, reducing the risk of engaging in hubristic leadership.
As noted earlier, Lord Owens observed that “people who retain a personal modesty, remain open to criticism, have a degree of cynicism or well-developed sense of humour” are at lower risk of having their decision making corrupted by hubris syndrome. When developing its leadership framework, Ivey identified specific elements of character that collectively support sound judgement and well-being, but they need to be present in a way that balances their influence in order to prevent perceived leadership virtues like courage from becoming dangerous vices. Humility was identified as one of the strongest predictors of performance increases, not to mention reduced likelihood of managerial derailment. As a result, deploying Ivey’s Leader Character Framework pays additional dividends as a tonic against hubris syndrome that can help ensure power is used appropriately if delivered within an environment of sound corporate governance and a culture willing to oust hubristic leaders.
This tonic against hubris is being actively administered to future leaders. Indeed, as noted in the IBJ feature “Enough. It’s Time to Hire (and Develop) Better Judgment,” today’s business students at Ivey are more likely to engage in discussions about Aristotle’s teachings on character, Plato’s writings on justice, or the Business Roundtable redefining the purpose of a corporation, than Milton Friedman’s outdated ideas on shareholder primacy.
And as leader character development gains traction as a best practice in the marketplace, there are positive signs of change in both the public and private sectors where major organizations like the Canada Revenue Agency and TD Bank Group have moved to elevate character alongside competencies in hiring and executive development processes. To learn more about these initiatives, see the MIT Sloan Management Review article “Make Leader Character Your Competitive Edge” or listen to Ivey’s Question of Character podcast.
When it comes to leadership, dramatically changing long-established HR practices isn’t easy, but it can be done, and it needs to be done to deliver the leaders required for capitalism to survive the so-called Age of Disruption—where hubris can impact organizations and the world within which they operate like a weapon of mass destruction.
The key to embracing character-based leadership is understanding that competence and character go hand in hand—and they both can be developed. Once you understand this, all you really need is resolve and support at the board level, where it is time for directors to start sharing the CIA’s interest in countering the corruption of sound judgement that too often follows success.
