corner office-A Fish Rots From the Head-May 2012

corner office-A Fish Rots From the Head-May 2012

When an organization fails, leadership is the root cause.

An ancient proverb states: “A fish rots from the head down.” For centuries, various philosophers have taught that when something stinks in an organization or government, the stink generally started at the top.

This proverb appears to be metaphorical rather than literal, but my intent is not to get into a biology lesson. Instead, I want to discuss why the ability of the head of an organization—specifically, boards and C-level management—to provide competent leadership is the most important factor in an enterprise’s success.

It’s curious that so much emphasis is placed on the structure and systems of business—quality assurance and control processes, strategic planning, organizational systems, continuing education. Yet businesses continue to fail, recession or no. With all the knowledge and training available, as well as armies of consultants with expertise on any given subject, there really is no excuse—in theory, at least—for any business to ever fail.

Yet they do—by the hundreds, each year. Why?

I said I wasn’t going to talk biology, but I need to do it to make my point. The word “organization” is a derivative of the word “organism,” which means that organizations are like any other living body. Sometimes the leadership of the enterprise (the head) fails to lead the human systems (the heart) to work in sync with the business systems (the body). In order to create symmetry in the long run, leaders must not only lead the body of the organization, but also the heart of its people. 

Let’s look at a case study from IBM, which in the early 1990s was losing billions of dollars. A former pacesetter fading into history, IBM hired a new chairman and CEO, Louis Gerstner, in 1993. He was an outsider, coming to IBM with experience gained at McKinsey, American Express, and RJR Nabisco.

Although it wasn’t immediately apparent to him, Gerstner now says that it wasn’t IBM’s capabilities, technical competence, or processes that contributed to its successful transformation from a products-led to a services-led organization. Rather, it was the company’s focus and values of “providing solutions” to customers that led to its eventual turnaround. 

“It took me to age 55 to figure that out,” Gerstner told a gathering of Harvard MBA students in 2002. “I always viewed culture as one of those things you talked about, like marketing and advertising. It was one of the tools that a manager had at his or her disposal when you think about an enterprise. The thing that I have learned at IBM is that culture is everything.”

Gerstner’s leadership abilities to orchestrate changes in strategy and systems in harmony with IBM’s culture and corporate values were what led IBM through its repositioning and turnaround. He transformed a giant organization built on individualism and decentralization into a team-based, customer-focused, agile, and adaptable company. How? By not ignoring the company’s people while he was performing surgery on its business systems.

In my line of work, I get to see the big, the bad, and the ugly in the business world, so I could easily provide hundreds of examples of bad leadership. But I don’t need to, because all you need to do for that is read your local newspaper to get your daily dose of rotten fish.

Instead, I’d cite another positive IBM-type example from Bill George, the former chair and CEO of Medtronic, whom I came to know when we shared a presentation to an audience of executives and corporate directors on the topic of business ethics.

Bill, who now is a professor of management practice at Harvard Business School, recently posted a blog in which he wrote that “collectively one of the competitive advantages of America’s business leaders is our unique leadership in developing the next generation of global business leaders.” 

Bill notes that our country’s higher education system is a magnet for top business talent from all around the world. U.S. companies are hiring executives with diverse and global backgrounds in much greater numbers than non-U.S. companies. In addition, we are sending our most promising leaders abroad to gain global experience, and non-U.S. companies are relocating their research units here to take advantage of American talent. It’s this type of executive leadership that will maintain American business’s success in a global marketplace for the long run.

Some business leaders try to make business seem so complicated, but at the end of the day, business is simply what each person does—every single day in their job, as part of the whole. To use my fish analogy again, it’s like a salmon with muscles, organs, bones, cells, and nerves all working in concert with one another to swim upstream. 

  When the head is leading the rest of the body in harmony, all goes smoothly and it achieves its goal to reach its spawning grounds and keep the species alive for another generation. But if the head forgets its goal or isn’t paying attention, it is quickly devoured by a hungry grizzly. 

I want to be clear that I’m not talking about rah-rah motivational speeches, company picnics, and reward programs, which all have their place. Rather, I’m talking about visionary, thoughtful, deliberate leadership that demonstrates to all the elements of the organizational body what is valued, what is important, and what is to be done first. Healthy leadership occurs when the human systems are effectively connected with the business systems to mobilize people to work together with purpose and achieve common goals and success. This can only happen when the head is paying attention.When it’s not, the body starts to rot and—stink, too.

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