Saturday, April 30, 2011

Courts and Courtesans

I once read that while Americans are citizens of a democracy, we work in dictatorships. The piece said that corporate boards used to vote much more than they do today. I think that some work in royal courts, and the number is going up. As economic inequality increases, the presidents who became dictators have become kings. Petty intrigue abounds.

The New Yorker, once the undisputed bastion of highbrow culture, mentions courtesans from time to time. They are celebrated in a way. Courtesans are smart, tend to invest wisely, and they're willing to do what it takes to rise to the top, as measured by consumption.

In the past, when history was framed by evolution, this would have been regarded as a great leap backward. Such behavior and royal courts were regarded as quaint relics of the past.

CEOs often replace leadership with cults of personality.

The first one to do this in recent history was Frank Lloyd Wright. On a visit to Taliesin West, I peered into a room that was nearly closed off. "That's Mr. Wright's dining room!" said a frightened voice.

"Mr. Wright is out of town."

The rejoinder remained in my head. I walked away from the dining room, and took my place with the tour group.

More recently, Jack Welch's cult of personality has kept going to the extent that he pays for it. As with many like him, he found something bigger than himself, and it was the company. He took GE to false heights, and its stock plummeted as soon as he left. As he ages, he fervently works to turn his biography into an orthodoxy to be carried forward to the less fortunate.

All of the above leads me to think about succession. While strong personalities with a vision can make for a climb to greatness, it is unlikely that there will be a younger person with similar ideas to take over. Consequently, leadership in non-democratic institutions usually falls on two types of people, neither of which is adequate for the job.

If press releases come out saying that the new leader will, "Provide a guiding hand of experience," and add that continuity will be provided, that means the company will be headed by its leading toady. The toady will attempt to build an orthodoxy around the predecessor, but it will collapse at the first crisis. Apparently, no one in management is aware of the old proverb, "Don't follow the wise man. Seek what he sought." The other type of successor is heralded by coverage from the outside about a power struggle. "A master of boardroom battles," is a phrase often used to describe this rising star. The knife-thrower will also build an orthodoxy, and it will be as useful as the one built by a toady.

The toady and the knife-thrower have one thing in common. Both are sheltered by the structure their predecessor built. They are well adapted for life within their company, but they are entirely unaware of the outside world. Both usually exit with golden parachutes, leaving others to face their company's downfall.

Power is always claimed in the name of that which is bigger than oneself. If the health of companies were important to anyone, they would democratize.

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