CEOs are faking it, Stanford professor says, the bigger the company, the less impact they often have

By Robert McMillan
JULY 22, 2005
IDG NEWS SERVICE

Your company's CEO might be a pretender, and that may be a good thing, according to Robert Sutton, professor of management science and engineering at Stanford University.

Sutton, the author of a 2001 study of corporate innovation, "Weird Ideas that Work," says that a close look at the evidence shows that CEOs probably deserve less credit for their company's fortunes than they receive and that the best of them manage a tough balancing act: secretly aware of their own fallibility while also realizing that any sign of indecisiveness could be fatal to their careers.

"In just about every study I've ever seen ... the amount of control a leader has over the company is exaggerated," Sutton said during a keynote address at the AO05 Innovation Summit at Stanford yesterday. Although top executives of the largest companies are often considered uniquely powerful, their effectiveness actually dwindles as companies get larger, he said.

"If you look at these Fortune 500 companies where they get paid a fortune, they have the least impact," Sutton said. The notion of the CEO as a captain, steering the corporate ship, isn't so much a fallacy as it is a "half truth," according to Sutton, who has devoted a chapter to the topic in his upcoming book, Hard Facts, Dangerous Half Truths, and Total Nonsense. In fact, leaders -- even great ones -- often have no clear idea where they are going, he said. And they make mistakes.

The best executives, like Intel Corp.’s former CEO Andy Grove, will admit that they face a dilemma in needing to appear decisive while at the same time being conscious of their limitations. "You have to pretend," Sutton said. "It's sort of a dilemma, but if you want to accept a leadership job, you've got to accept the hypocrisy of it."

In a 2003 interview with the Harvard Business School, Grove acknowledged that no business leader has "a real understanding of where we are heading." In the interview, Grove added that it is important not to be weighed down by the burden of making important decisions without a clear picture of things. "Try not to get too depressed in the journey, because there's a professional responsibility. If you are depressed, you can't motivate your staff," he said. The interview illustrated that Grove was "getting even more honest" as his involvement in the day-to-day management of Intel lessened, Sutton said...