top of page
  • Jason Wingard

The WeWork Disaster: Three Signs A Leader’s Time is Up

In what The New York Times called “a swift and stunning fall,” Adam Neumann, the flashy co-founder of WeWork and the We Company, stepped down from his position as CEO last week.

“His combination of entrepreneurial vision, personal charisma, and brash risk-taking helped the company surpass $2 billion in annual revenue, and made it the country’s most valuable startup,” Eliot Brown wrote in a Wall Street Journal article that preceded Neumann’s resignation. “Now many of the same qualities that helped fuel his company’s breakneck growth in the private market are piling up as potential liabilities.”

While Neumann’s announcement generated the most buzz, it was merely one of a spate of recent high-profile CEO resignations. Besides the obvious — financial troubles, scandals, employee exodus — here are three subtler signs it may be time for a leader to step down.

1. They Have Lost the Will to Listen

As leaders rise in the ranks, some lose their ability to empathize and listen — an early indicator they should not remain at an organization’s helm. “The risks of turning insensitive and unkind to others increase as you become more senior,” Stanford professor Bob Sutton wrote in the McKinsey Quarterly. “Much research shows that being and feeling powerful provokes people to focus more on their own needs and wants and to become oblivious to others’ needs and feelings.”

This self-interest is often accompanied by an unwillingness to seek other perspectives. When leaders “see advice or mere disagreements as mortal threats,” Erik Gordon wrote in the Harvard Business Review (HBR), they can “become hostile when they feel challenged” and put a company at risk. In Forbes, Mike Myatt, the author of Hacking Leadership, was more blunt: “Show me a leader who doesn’t recognize the value of listening to others and I’ll show you a train-wreck in the making,” he wrote.

By all accounts, We’s I.P.O. was, indeed, a train wreck. After its valuation fell from $47 billion to $10 billion — largely because of concerns over corporate governance, finances, and Neumann’s leadership ability — the company eventually decided to withdraw its I.P.O. filing. Myatt, perhaps, would have seen the writing on the wall: One top executive told Fast Company that Neumann strongly discouraged alternative points of view, and was a leader “who did not ever want his reality to be pierced.”

2. They Are Distracted

Another sign that a leader may be approaching their swansong: disengagement from the day-to-day running of the company. “The CEO becomes less interested in operational details; reviews are less rigorous; there are fewer customer and plant visits,” Ram Charan wrote in a strategy+business article about faltering CEOs. “In board meetings, the chief executive routinely defers questions to the chief operating officer or chief financial officer.”

Although one might surmise that a leader would simply step aside if they lose interest in a company, Manfred F. R. Kets de Vries wrote in the HBR that “many CEOs find it very hard to admit that the time has come to pass on the baton.” In this situation, Kets de Vries warned that leaders may “look elsewhere for mental stimulation,” including “risky new ventures” such as acquisitions and investments.

This theory certainly holds true with Neumann. As Katrina Brooker reported in Fast Company, the We CEO pursued a range of deals in recent years, including a $32 million investment into a snack company founded by the surfer Laird Hamilton. Brooker wrote that the deal “confused the internal investing team,” because it did not align with the company’s core business. Yet, according to Kets de Vries’ theory, it makes perfect sense: “Deals are exciting,” he wrote, “they impress the CEO’s peers, and they allow the CEO to pretend that he’s addressing the company’s growing problems.”

3. They Detract From the Mission

Research has shown that power can literally go to one’s head, which might explain why certain leaders seem to transform during their time at the top. Those “under the influence of power,” explained Jerry Useem in The Atlantic, often act as though they have suffered a traumatic brain injury, “becoming more impulsive, less risk-aware, and, crucially, less adept at seeing things from other people’s point of view.”

Kets de Vries expounded on this, writing that “stardom” can cause CEOs to “spend too much time enhancing their personal reputation instead of enhancing the value of the company.” When a leader is constantly in the news for their personal life, they detract from the organization’s core mission. Neumann’s wild partying, erratic behavior, and controversial business dealings, perhaps a result of being “under the influence of power,” certainly did not contribute to We’s lofty mission of “elevat[ing] the world’s consciousness.”

This, in fact, is what Neumann cited as his reason for resigning. “Since the announcement of our I.P.O., too much of the focus has been placed on me,” he wrote in an email to employees. “Our priority has always been our mission and our community. Because of this, I have chosen to step back as CEO.” That statement echoes one written in 2017 by Travis Kalanick, Uber’s founder and former CEO, in which he said: “I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight.”

When a CEO is detracting from an organization’s mission, losing interest in on-the-ground operations, or demonstrating signs of diminishing empathy, it often indicates that their tenure should soon come to a close. Ultimately, it all boils down to a single question, wrote CEO coach Larry Putterman: “Are you placing the good of the organization first?” If the answer is no, it may be time for a leader to follow in the footsteps of Neumann, Kalanick, and the others — and let someone else steer for a while.

Courtesy : Forbes

9 views0 comments
bottom of page