How the Mighty Fall

What, if anything, have we learned from Enron, WorldCom and
other corporate failures?
What have we learned from the collapse of Bear Stearns and Lehman Brothers?
What have we learned from the alleged misdemeanors of media giants, Hollywood
moguls, unicorn leaders, and others who we treated as icons till recently?
It
appears that we refuse to learn anything.
When Carlos Ghosn arrived in Japan
in 1999, many expressed surprise. After all, Renault was not in good shape and taking on the responsibility of
the troubled Nissan appeared to be
an unnecessary risk.
In fairness to Ghosn, he proved his critics wrong. With a ruthless focus on cost-cutting measures combined with engineering
precision, he turned the company around.
The success of Nissan was instrumental in the
acquisition of Mitsubishi. The
conglomerate of Renault, Nissan, and Mitsubishi became one of the world leaders in automobiles.
The success story was not
without its downside. For a start, Ghosn’s
lifestyle contrasted wildly with the frugality of Japanese culture. Ghosn’s
larger-than-life image was the antithesis
of Japanese CEOs who cherish group
success over individual limelight. Ghosn’s
compensation was several times that of his Japanese
counterparts.
At another level, Ghosn’s personality glorified
flamboyance. With a dual Brazilian
and French nationality, and having
spent years in the Middle East, Ghosn epitomized the emerging “global
leader.” Once, he hosted a party complete with period costumes and lavishness
bordering on a mindless show of wealth and a long-forgotten era in history.
Ghosn’s
detention on November 19 on alleged charges of having misreported his earnings,
among other things, once again holds a mirror to the limits of hubris.
We
would be very short-sighted if we were to view this case in isolation.
Have we already forgotten the
scandal involving Volkswagen? Could deliberate tampering of the software to mislead
regulators about emission levels under testing conditions have been carried out
by operation level people? The readiness and willingness of the company to pay
billions of dollars in punitive fines and the promise to fix the cars already
on the roads tell a story of leadership malaise that is frightening.
Close on the heels of what
Fortune magazine called ‘Hoaxwagen’ came the report of Audi’s CEO Rupert Stadler’s arrest on charges that he knew about “dieselgate.” As of this writing, six executives have gone
to prison for their role in the scandal.
Are
customers bothered about any of this? Volkswagen continues to advertise its automobiles aggressively. Audi’s positioning continues to be that
of a luxury car. Sales of Renault, Nissan, or Mitsubishi are unlikely to be
affected by Ghosn’s behavior.
In
other words, our value systems have declined to such an extent that even the
thought of ostracizing organizations for
what appear to be actions with far-reaching
consequences related to integrity, safety, and sustainability appear to escape
us.
I have said this before, and it is worth repeating.
Organizations
don’t fail.
People
do.
Today’s
world needs leaders who look beyond themselves and for the larger good.
What
we see is the exact opposite. We see more and more examples of leaders acting
in self-interest and often at the cost of stakeholders and society.
What
do you think?
Note: My views are that of an
academic with an inside look at the corporate world for decades. I do not have
any commercial interest in any of the companies that I discuss.
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