Book

Ego Check

Why Executive Hubris is Wrecking Companies and Careers and How to Avoid the Trap

Mathew Hayward

Kaplan Publishing, 2007

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Mathew Hayward’s unusual book draws upon mythology to establish a major business premise and then proves it statistically. The premise is that hubris (CEO arrogance) is usually the source of illogical corporate mistakes, such as overpayment for acquisitions. The author draws heavily upon his research and other studies about “behavioral decision theory” to back up the concept that great pride often brings on a great fall. This profundity is basic to the philosophy of Greek tragedy, Dante, Shakespeare and Milton. The author used this concept to analyze more than 100 corporate mergers. He found that CEOs were usually the decision makers behind substantial overpayments for acquisitions. He concludes that egomania and narcissism, but not courage and conviction, must be “checked at the door.” getAbstract recommends this interesting, thoughtful book.

Summary

The Fall of Icarus

The sin of “hubris,” or excess pride, carries a heavy price. Extreme ego or misplaced self-confidence often destroy the culprit, and his or her company and associates. A CEO’s arrogance can harm a company’s employees, stockholders and creditors.

Excess confidence is widely evident in literary classics, such as the Hellenic myth of Daedalus and his son Icarus, who escaped from prison by using artificial wings that Daedalus invented. The son was so thrilled with flying that he arrogantly ignored his father’s advice, flew too close to the sun, melted the wax in his wings and plummeted to his death.

Business schools now teach students about “the Icarus Paradox,” which says that originality and confidence can lead to enormous success, but arrogance and pride generate disaster. This ancient wisdom applies to modern culture, especially to the actions of large corporations. Consider CEO Ken Lay at Enron.

The Danger of Excess Confidence

Overconfidence manifests itself in four intermingled, dangerous qualities: acting based on excessive pride, failing to get the right help, failing to evaluate the reality of a business problem or opportunity...

About the Author

Mathew Hayward served in the Wall Street battlefield as a venture capitalist and investment banker. He turned to academe in 1992 to earn a Ph.D. at Columbia. He is now an assistant professor at the University of Colorado business school, a management consultant and a leading researcher on “hubris.”

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F. A. 5 years ago

This was very interesting and I liked the use of real-life examples such as the Segway scooter. I now know what "hubris" is! Great reading!