These 3 Types of CEOs Are Most Likely to Make Bad Decisions
By Chris Mailander | 06 Nov 2023
According to Chris Mailander, bad decisions don’t happen overnight. Here are the red flags to look out for.
There is a myth that CEOs make brilliant, or terrible, decisions in a singular moment. The myth might be good for movie making and setting up the climactic peak of a story, but it is rarely reality. Instead, bad decision-making often happens slowly over time—the product of seeds planted long before.
In my experience counseling corporations and governments on their most arduous decisions in over 30 countries around the world, I have found that there are three CEO archetypes which are most at risk of poor decision-making. There are three common scenarios where I see CEOs at significant risk of getting it wrong when it will later matter the most.
THE FRUSTRATED CEO
The Frustrated CEO struggles with their team’s inability to do more, see more, and create more. This kind of CEO knows that their company can ascend, if only their team could reach the next higher level of performance. The core problem, however, is often not with the team. It is instead how decision-making happens within the company.
When I hear a Frustrated CEO criticize their team, I know what is often going on is that all decisions are being made by a singular CEO. In these environments, the CEO’s team conforms to the decision-making architecture in place by structuring their logic, language, and measurables to best navigate the established process. What they don’t do is bring in new frameworks which better align decision-making to changing market conditions—whether driven by changes in consumer preferences, technological innovations, or an evolving supply chain ecosystem. The remedy for The Frustrated CEO is not to criticize the team but instead to remodel the decision-making architecture to better capitalize on the unfolding opportunities or threats.
THE HIGHFLIER
Highflier CEOs achieve great runs of success by pushing their companies to greater heights quarter-over-quarter, year-over-year. They have seemingly perfected their recipe, consistently making decisions that lead to further growth, market share, and accolades. The risk is that their decision-making models are perfected to meet a consistent set of conditions. When these conditions change—there is an interest rate change, a supply chain breaks down, their working capital becomes strained—the established decision-making models falter.
When this happens, vulnerabilities are exposed. New learning curves must be ascended quickly. Growth recedes, critics multiply, and mistakes are made. For instance, Greg Becker, the CEO of Silicon Valley Bank enjoyed several years of fast growth, but when interest rates began rising in 2022 and 2023, the situational context for SVB’s run of success changed. Prior decision models proved irrelevant to managing the new environment. Becker’s wrong bets—evidenced by a balance sheet with mismatched assets and liabilities in a new economic environment—quickly manifest. SVB failed. Once the highflier, Becker was out. I would argue that the seeds of Becker’s failed decision-making judgment were not planted in early 2023 just before the bank failed. Instead, they were planted as early as 2018.
THE FOMO CEO
I believe we will see many Fear Of Missing Out (FOMO) CEOs emerge in 2024. The current wisdom is that 2024 will be marked for a tremendous upsurge in M&A activity. This creates a unique window for shareholders to harvest significant rewards for investments they made in private companies long before.
These can be once-in-a-lifetime wealth creation opportunities and FOMO CEOs will want into the 2024 M&A game.
Unfortunately, many are not completely prepared to play. They have not optimized their companies’ financials for sale. They have not built playbooks for managing the process, including the myriad strategies, expectations, and negotiation tactics used by competing bidders. Their teams have not prepared for the immense burden a sale process can place on the organization while continuing to successfully manage the day-to-day affairs of the business. Deal-making is a chaotic, intense, and potentially life-changing opportunity. Most FOMO CEOs will miss out because they have failed to prepare their decision-making processes for an opportunity that may matter most—including for the CEO individually, their boards, and their shareholders.
Bad decision-making takes seed within an organization in subtle, but profound, ways. Decision processes and methods need to be curated to meet the specific opportunities and threats which await in the year ahead, such as the likely upsurge in M&A activity; changing trade patterns; conflict in Ukraine and throughout the Middle East; tension along the South China Sea; a U.S. economy which continues to send mixed signals; a chaotic domestic political environment.
Whatever conditions CEOs faced over the last several years, will likely change in 2024—and their decision-making will be as impactful as ever.