Why we shouldnt give up on the charismatic CEO – Sydney Morning Herald

For the past 60 or so years we have lived in an age of charismatic capitalists. The paragon of the species was Steve Jobs. I happened to be in Moscow when he died on October 5, 2011, and I remember watching as a giant poster of his face was unfurled on the side of a skyscraper and Russians gathered around in silence, holding candles and sometimes weeping.

But charismatics have thrived outside Silicon Valley. General Electrics Jack Welch was treated as a demigod for supposedly reviving the conglomerate form. Michael Milken was revered (and reviled) for spinning junk bonds into gold. Enrons Jeffrey Skilling told a beguiling story of freeing natural gas from the constraints of molecules and movement. At Alibabas 18th birthday party the company founder, Jack Ma, dressed as Michael Jackson and danced to the song Billie Jean in front of 40,000 cheering employees.

Adam Neumann grew WeWork into one of the worlds most valuable startups before losing control of the company. Credit:Mark Lennihan

In his new book, The Emergence of Charismatic Business Leadership, Richard Tedlow, a legendary professor at Harvard Business School who is now on the faculty of Apple University, argues that charismatic business leaders are more than just larger-than-life personalities. Sam Walton was deliberately folksy and self-effacing. Milken comes across as the class nerd.

What distinguishes them is a combination of personal magnetism and reality distortion. You want to follow them even against your better judgment: One of Milkens employees opined that someone like Mike comes along once every five hundred years. And you are captured by their vision of the world: Guy Bud Tribble, a leading member of the team that designed the Mac, said that in Jobss presence reality is malleable. He can convince anyone of practically anything It was dangerous to get caught in Steves distortion field, but it was what led him to actually be able to change reality.

These charismatic figures exploded on the business world after an era in which capitalism had degenerated into grey bureaucracy. The greatest manager of the era, Alfred P. Sloan, prided himself on turning General Motors into an objective organisation, as distinguished from the type that gets lost in the subjectivity of personalities.

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The most telling book was William H. Whytes The Organisation Man, which includes the wonderful phrase lifted from a documentary film produced for Monsanto Chemical Company: no geniuses here; just a bunch of average Americans working together. This was the world of the corner office, the grey flannel suit and the annual upgrade of the same old product.

Charismatic capitalism was produced by the most powerful forces of the new capitalism unleashed by the Reagan-Thatcher revolution. Technological innovation allowed a few first-movers geniuses rather than average Americans to build world-spanning empires, just as Andrew Carnegie and John D. Rockefeller had done in the second half of the 19th century.

Deregulation forced established businesses to become more agile. The explosion of executive pay persuaded even run-of-the-mill CEOs that they were geniuses who deserved to be splashed on the cover of Forbes. Why else would the average CEO at the top 350 US firms ranked by sales have been paid 386 times their average workers pay in 2000, compared with 45 times in 1989. And changing mores allowed members of out-groups, most notably Oprah Winfrey, to turn charisma into towering fortunes.

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Why we shouldnt give up on the charismatic CEO - Sydney Morning Herald