[NOTE: This post was updated September 2017]
In a post called, “Lend Me Your Wallets:” Research on the Link Between Charismatic CEOs and Stock Price, Featuring Steve Jobs, Professor Robert Sutton asked his readers about the virtues and dangers of charismatic leaders.
According to Professor Gary Yukl (2010), charismatic leaders are self-confident and possess a strong conviction in his/her own beliefs and ideals. Charismatic leaders are able to influence their followers by (i.e., their virtues):
- Articulating a vision, one that’s appealing and optimistic,
- Using strong, expressive forms of communication when talking about the vision,
- Taking personal risks and making self-sacrifices to attain the vision,
- Communicating high expectations,
- Expressing optimism and confidence in followers,
- Modeling behaviors consistent with the vision,
- Managing follower impressions of the leader,
- Building identification with the group or organization, and
- Empowering followers.
On the flip side, Dr. Yukl (2010) also listed some negative consequences of charismatic leaders (i.e., the dangers/downsides):
(1) Excessive confidence and optimism blind the leader to real dangers.
For instance, as a charismatic leader, I don’t think Steve Jobs (Apple’s founder and current CEO, but was one time fired from Apple) ever saw himself being forced out of the company he founded. But that’s exactly what happened on September 16, 1985 when he left Apple. His feud with John Sculley, the co-CEO who Jobs himself had lured away from Pepsi (with the now famous line, “Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?”) resulted in the Apple board’s decision that he was just too volatile to lead as CEO and so Jobs quit.
(2) Dependence on the leader inhibits development of competent successors.
According to a story in the Los Angeles Times, during the period surrounding Steve Jobs’ health scare (which started in mid-2004 and lasted until his successful liver transplant in 2009), Apple stocks dropped. “One reason for the market’s anxiety — Apple shares shed more than 56% in 2008 — is that the company has been silent about its succession plan” (Hiltzik, 2009).
“Selecting Jobs’s successor will be challenging, given the degree to which he is tied to Apple’s identity.” (Knowledge@Wharton)
(3) Failure to develop successor creates an eventual leadership crisis.
“No American CEO is more intimately identified with his company’s success. Jobs is deeply involved in every facet of Apple development and design, and he’s justly admired for his instinct for the human-factor engineering of Apple products” (Hiltzik, 2009).
“What remains to be seen is whether a post-Jobs Apple will retain the corporate traits that made the company successful with its iconic leader at the helm.” (Knowledge@Wharton, 2009)
“Ultimately, some leaders are so irreplaceable that no amount of succession planning will ensure a seamless power transition. ‘In some sense, with the charismatic person, it’s difficult to prepare a successor, because they are bigger than life,’ says John Larrere, general manager at the management consultant Hay Group.” (Ante & McGregor, 2009)
(4) Denial of problems and failures reduces organizational learning.
One of the biggest drawbacks for charismatic leaders is their failure to sometimes learn. Perhaps, they too fall prey to their own charms and charisma.
This lesson can be illustrated with Apple’s handling of the iPhone 4’s infamous antenna issue (which, when gripped a certain way near the antenna, would often drop calls). Apple never admitted any mistakes on its part and instead said that other phones (by competing carriers) also dropped calls when gripped a certain way near the antenna. Rather than redesigning or offering a permanent solution, Apple decided to offer free cases which would cover the sensitive area to lessen the dropped calls. Consumer Reports, an independent, non-profit organization that test products, refused to recommend the iPhone 4 contending that “putting the onus on any owners of a product to obtain a remedy to a design flaw is not acceptable to us. We therefore continue not to recommend the iPhone 4, and to call on Apple to provide a permanent fix for the phone’s reception issues.”
Interestingly, in 2009 an Apple senior antenna engineer told Steve Jobs the iPhone 4’s external antenna could cause reception problems. Even though Apple engineers knew there could be problems with the iPhone 4’s antenna design, their concerns were dismissed because Jobs liked the design. In addition, a Wall Street Journal article stated, “For at least two years, multiple iPhone carriers lodged complaints with the company that its phone doesn’t work well in making calls and doesn’t hold a wireless signal for a voice call as well as other devices.”
Despite all these warnings, Apple (under Steve Jobs’ charismatic leadership) launched the iPhone 4, flaws included.
Written By: Steve Nguyen, Ph.D.
Organizational & Leadership Development Leader
Ante, S.E., & McGregor, J. (January 2009). Apple Succession Plan: Nobody’s Business? BusinessWeek. Retrieved from http://www.businessweek.com/technology/content/jan2009/tc20090115_863327.htm
Burrows, P., & Guglielmo, C. (July 2010). Apple Engineer Told Jobs IPhone Antenna Might Cut Calls. Bloomberg. Retrieved from http://www.bloomberg.com/news/2010-07-15/apple-engineer-said-to-have-told-jobs-last-year-about-iphone-antenna-flaw.html
Consumer Reports — Lab tests: Why Consumer Reports can’t recommend the iPhone 4
Retrieved from http://blogs.consumerreports.org/electronics/2010/07/apple-iphone-4-antenna-issue-iphone4-problems-dropped-calls-lab-test-confirmed-problem-issues-signal-strength-att-network-gsm.html
Consumer Reports — Apple curtails its free case program for the iPhone 4
Retrieved from http://blogs.consumerreports.org/electronics/2010/09/apple-iphone4-free-bumper-cases-program-ending-finishing-dropped-calls-antenna-design-issue-problem-iphone-4-cases-giveaway.html
Hiltzik, M. (Jan 2009). Apple’s condition linked to Steve Jobs’ health. Los Angeles Times. Retrieved from http://articles.latimes.com/2009/jan/05/business/fi-hiltzik5
Kahney, L. (October 2010). John Sculley: The Secrets of Steve Jobs’ Success. Cult of Mac. Retrieved from http://www.cultofmac.com/john-sculley-the-secrets-of-steve-jobs-success-exclusive-interview/21572
Kane, Y.I., & Sheth, N. (July 2010). Apple Knew of iPhone Issue. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052748704682604575369311876558240.html
Knowledge@Wharton (Jan 2009). Job-less: Steve Jobs’s Succession Plan Should Be a Top Priority for Apple. Retrieved from http://knowledge.wharton.upenn.edu/article.cfm?articleid=2134
Yukl, G. (2010). Leadership in organizations (7th Ed.). Upper Saddle River, NJ: Prentice Hall.