Silicon Insider: Faking It, CEO Style

July 28, 2005 — -- CEOs are faking it. Bless them -- and pity them -- for doing so.

An interesting wire story this week quoted Robert Sutton, a Stanford management science and engineering professor, at an industry conference saying, "In just about every study I've ever seen … the amount of control a leader has over the company is exaggerated," adding, "If you look at these Fortune 500 companies where they get paid a fortune, they have the least impact."

In other words, crediting a CEO for a company's success or blaming him or her for its failure is fundamentally wrong because it assumes that the captain actually controls the rudder of the great corporate ship. The CEO is being mistakenly honored for directing actions and events for which he or she was only a marginally a participant.

As comforting as this sounds -- see, those big shots aren't the Masters of the Universe they think they are! -- I think it is fundamentally wrong. Having spent my professional career around CEOs, and having known just about every major figure in the high-tech world, I have no doubt that CEOs have a profound effect upon the fates of their companies. Not in detail: any CEO who attempts to micromanage every decision made by his employees is a damn fool and should be fired.

But in the big picture it is another matter. For 30 years I have watched strong, decisive, and thoughtful executives lead their companies to glory. And I've watched weak, indecisive and self-absorbed CEOs kill great companies large and small. Many of those successful companies had second-rate employees and products; and many of those dying or dead companies had terrific technologies and smart, hard-working workers and managers. In the first case, the CEO made the company and its employees better than they were, in the second, the CEO screwed the employees and the marketplace.

Intel and Apple Followed Different Leaders

As an example, consider Andrew Grove, who took a good company, Intel, and turned it into a great one -- all the while navigating a 20-year minefield that included vicious competition, an unpredictable technology, government investigations and a series of disastrous mistakes (the Pentium Bug, letting Motorola get ahead, etc.). Now compare him to John Sculley, who took a great company, Apple, with a great technology and market leadership and led it aimlessly around for a decade until it was a pathetic also-ran.

Were Intel employees that great? No, but they got better as time went on; partly because they got used to being winners and partly because Intel was able to attract ever-better talent (which may be the mistake people like Sutton make when investigating after the fact). And were Apple employees that lousy? On the contrary, they were some of the smartest people in Silicon Valley -- until demoralization and departures sapped their energies. The only real difference between the fading Apple of the Sculley era and the red-hot Apple of the second Jobs era two years later was the CEO.

Frankly, the counterexamples to Sutton's claim are everywhere. To my mind, the most powerful is that of the great return at HP, when an aged Bill Hewlett and Dave Packard returned to the company they founded (based on a single memo from a secretary!) and almost overnight restored it from a sclerotic, tired, over-bureaucratized old corporation to the fastest-growing big company in history -- all with the same people and (at the beginning, at least) the same products.

So, am I then claiming that CEOs aren't faking it when they claim to be leading their companies? On the contrary, my experience tells me that they are faking it all the time. And that it is a good thing that they do -- at least for the rest of us.

Masking Sheer Terror

Being around CEOs a lot, I get the chance to see them off the job, away from the public eye, and, occasionally, even when they take off their masks. And I can tell you that most of them are utterly terrified. They know fully well that the decisions they make put at risk the careers and lives of thousands of their employees -- and that most of the time they will have to make those decisions based on incomplete, even false, information, in an unpredictable marketplace, against ruthless competitors. Many of them don't feel smart enough for the job, most of them don't feel experienced enough, and all of them don't feel wise enough.

But they also know, almost instinctively, that to admit any of these doubts would not only be career suicide, but, ironically, the most irresponsible decision they could possibly make for the organization. We all know that the big boss is a human being, complete with human foibles and fears -- we even laugh over anecdotes underscoring that fact -- but God help us all if the CEO actually comes out from behind the pinstripes to be revealed as a scared rabbit who is not really sure if the next big company initiative is actually going to work. After all, if the boss isn't sure the damn thing is doable, why should we be?

Chaos ensues. Everybody suddenly is backing away, rehearsing their excuses for failure ("Hey, even the CEO wasn't behind it."). Nothing gets done. The stock price falls; customers gravitate toward competitors run by more (apparently) self-assured leaders, Chapter 11, big layoffs, career-ending profile in the Wall Street Journal ("CEO Doubt Capsizes XYZ Corp."), eternal humiliation in a Harvard Business School case study, retirement to a gated community where everybody finds an excuse not to attend your cocktail parties, oblivion, death with an embarrassing obituary.

No, no. Much better to always look confident, stand by your decisions and look your employees/customers/shareholders/directors in the eye with the confidence of a person who can already see the future … even if it means vomiting in your expensive bathroom sink every night at 3 a.m.

Faking Professional and Personal Life

And it doesn't end with the job either. When I say CEOs fake it all of the time, I'm talking 24/7/365.

Let's face it, we all fake it -- every time at the office we pretend to enjoy a level of competence we aren't sure we have, every time we act happy when we're disappointed in the progress of our daily lives, every time we lecture our kids on responsible adulthood, every time we pretend to be happy to see people we privately hate. In a sense, a certain low-grade hypocrisy is the glue that holds society together. But for most CEOs, this hypocrisy is increased by an order of magnitude: every moment is like meeting your date's parents on prom night, or a crucial job interview, or a college admission essay. The wrong word, look or act might bring down on you the vengeance of the market, your employees or the SEC.

Sound like Hell? Well, it probably is, except for the nice toys and the (occasional) feelings of real power. The one piece of good news is that you can grow into it. Here, in the aftermath of Freud, Watson & Crick, we tend to think that our natures are fixed by childhood and chromosomes. But, as great men and women have always shown, if you play a role long enough you can become it. That fake can turn real.

But until that happens, you can never let down your guard. Even if you want to, too many other people have a stake in not letting you do so.

I once interviewed the CEO/Chairman of a major electronics firm, a man and a company you know well. Twenty minutes into the interview, I asked him, "How do you possibly manage to balance running a multibillion dollar corporation and being the father of young children?"

A look of despair appeared in the man's eyes. The mask of the cocky, outspoken Prince of Silicon Valley momentarily slipped from his face. "I can't," he whispered. "I just can't do it."

At that instant, the corporate PR director, who been watching the monitor, stormed onto the set and blocked the camera. "Mr. X has to leave right now for another appointment," she announced. Still blocking the camera, she helped the slumped executive out of his chair and marched him away.

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone, once called “the Boswell of Silicon Valley,” most recently was editor at large of Forbes ASAP magazine. He has covered Silicon Valley and high-tech for more than 20 years, beginning with the San Jose Mercury-News as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, The Economist and Fortune, and for two years he was a columnist for The New York Times. He has hosted two national PBS shows: "Malone," a half-hour interview program that ran for nine years, and in 2001, a 16-part interview series called "Betting It All: The Entrepreneurs." Malone is best known as the author of a dozen books. His latest book, a collection of his best newspaper and magazine writings, is called "The Valley of Heart's Delight."