5 Reasons Why CEOs Fail and How to Prevent It

With fallout from the WeWork IPO fiasco, a spotlight has been shown on the role of the CEO. While academics point to a combination of leadership characteristics and staying power as the reason why some CEO succeed where others fail, the realities are often more complex. The long-standing “singularity hypothesis” which claims success is all down to the man or woman leading the charge has been largely debunked.

This is evident in companies such as WeWork where the problems are tied to a systemic breakdown of the culture.  But if success or failure is not just due to characteristics, then what determines who will prevail? While this article might not give you all of the answers, but here are four reasons why CEOs fail and how to prevent it.

1)    Complacency

A competitive market is ruthless and not a place for complacency. Unfortunately, some CEOs fail to get the message. Sure, no leader likes to think that they are being complacent but a quick review of once-great companies which no longer exist indicates that many CEOs failed to grasp what was happening with their industries.

Examples include everything from Kodak (who invented digital photography) to the numerous steel companies across the U.S. – many of whom were world leaders not so long ago.

Why does this happen? Usually, it is because CEOs, and by extension corporate boards, tend to lose sight of the big picture. Sure, things might be going well as revenues and profits are up, but the market can change at a moment’s notice.

As such, effective CEOs are constantly looking out for what is around the corner. Maybe it’s a new technology, a new competitor, or just a better way of doing things. Successful CEOs know that good enough is never quite good enough.

2) Ignore Marketing

Unfortunately, many CEOs don’t understand the power of marketing and how they can leverage it to their benefit. For example, marketing comes in different shapes and sizes. “Many marketers focus solely on social media or SEO,” says Baker’s Signs, a sign company in Houston “Other types of marketing, like storefront marketing and direct mail marketing are also important.” Start by analyzing where your current market is, hiring a  market research firm where necessary. This will help you better allocate your dollars. For CEOs and small business owners with storefront properties, you should be paying particular attention to signage and creating great first impressions.

 3)    Can’t Stand the Heat

It doesn’t matter if you are the CEO of a $10 million-dollar company or the largest company in the world. The reality is that the CEO is under constant pressure. While some can thrive, others crack.

What separates the winners from the losers? In many ways, it is luck of the draw. Those CEOs who start out focusing on small wins tend to build up a head of steam and this can make it easier to keep their cool when things don’t go according to plan.

However, not every CEO has it easy. For some, they are brought into turnaround a struggling operation and this means that they must be prepared for the heat that comes with accepting the role. This could be from shareholders, the press, or even customer and suppliers.

Either if you want to be a successful CEO, then you need to learn you to stand the heat. For some, this means taking time to decompress, while others are workaholics but they also know the value of having a strong team around them.

4)    There is No “I” in Team

While CEOs know that managing people is a key part of the job, some are better than others.  Often, the problem can start with a “star” perform who is seen as being critical to helping the company hit its targets. However, if their behavior serves to fragment other team members it can create headaches for the CEO.

What can you do? For starters, successful CEOs know there is a no “I” in team. This starts by not only respecting the contribution of everyone on the team but also understanding that no one member of the team is indispensable. Granted, this can be hard to achieve, the role of the CEO is to recognize and develop talent – not find ways to fracture the team.

5)    Group Think

This can be just as dangerous as complacency as an unwillingness to question preconceived notions about the company or the market can lead to getting it wrong. An example would be the need to take out a business line of credit when it doesn’t appear that the company needs the extra money.

As experienced CEOs will tell you, there is never a thing such as too much money. This is as true when times are good as it is when times are bad. Getting access to additional cash before the market turns can help to save a company – just look at what Ford did in the lead up to the Financial Crisis.

It doesn’t matter if you have been a CEO for 20 years or are just stepping into the role, if you want to succeed, you need to watch out for these four reasons why CEOs fail.