Foolish Wisdom

Would you rather be the Leader or the Leader’s fool?

“The Court Jester” by William Merritt Chase. Source: Wikimedia

There’s a tragic cycle in human affairs. A leader solves a problem and is cheered for wisdom or decisiveness or practical understanding. They’re given authority, perhaps political leadership. The adulation becomes intoxicating. They don’t want to hear bad news – no one does – and they acquire toadies and hangers-on that latch onto them like leeches. These parasites only tell them what they want to hear.

Eventually, they overreach and try to accomplish things beyond their abilities and resources. They don’t get the bad news until it’s too late. They’ve shot the messenger so many times that no one dares deliver but glowing reports. The ancient Greeks called this “hubris.” The cycle of success-overreach-downfall repeats itself in individuals, corporations, and nations. When people need to deliver bad news, they implore their boss not to “shoot the messenger.”

It’s important for companies to have systems in place where bad news can be safely communicated to those in charge before simple mistakes become costly and potentially tragic design flaws. A few years ago Proctor and Gamble eliminated half its brands to streamline its business and cut costs. Seemingly no one was willing to tell the previous CEO that the agglomeration of products as diverse as pregnancy tests and pet foods were acting like barnacles on the bottom of a ship, slowing growth and making it hard to steer. It took new leadership to see the problem and propose this radical solution.

In movies and drama, leaders often threaten those who brings them bad news. This usually happens just before they fall. Shakespeare’s leaders like Macbeth, Henry IV, and Richard III all follow this pattern. By contrast, those who keep a “fool” close to them fare much better. Only a fool – someone with nothing to lose – is willing to tell the truth. If companies want to avoid overreach (and collapse), they need to have a culture that encourages people to speak truth to power. Who is delivering bad news to Zuckerberg or Nadella or Sundar Pichai?

Ironically, it’s the fool who is often the most astute.

Douglas R. Tengdin, CFA

Charter Trust Company

“The Best Trust Company in New England”

By |2018-05-11T07:38:37+00:00May 11th, 2018|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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