September 14, 2009
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Why CEOs are so stupid

If you read the current business press — especially in print, but also on the Web — you can’t help but notice that CEO’s of winning firms are brilliant (and handsome), while the leaders of losing firms are incredible dolts — pursuing obviously-doomed strategies, saying dumb things, and lacking the personal qualities that distinguish winners.

John Gruber often breaks the mold by actually showing a tactical mistake and identifying what was wrong. Today, Gruber calls out Sprint’s Dan Hesse for a poorly-thought-out interview. Charlie Rose asked Hesse whether the Palm Pre was "making a dent into the iPhone market", and Hesse answered that the Pre is doing well but that “the Apple brand and that device have done so well, it’s almost not… it’s like comparing someone to Michael Jordan.”

In other words, what Hesse tried to do was lower expectations, because for the business press it often matters as much whether you beat expectations as whether you actually, like, succeed. Gruber argues that this was a blunder:

This is one of the worst answers he could have given. Even just plain “No” would have been better than comparing the iPhone to Jordan, which suggests that Hesse doesn’t believe they can compete. He could have simply said that the iPhone has a two-year head start, and Sprint is happy with how the Pre is doing three months in.

Gruber’s right, though it might have been even more useful to acknowledge what Hesse was trying to do. (The same thing applies to sports. It’s pretty easy to see that the quarterback just threw another easy interception, but it’s much more interesting to explain what he thought he was doing than to harp on what a lousy throw he made.)

This is also the sort of mistake that seems consequential in the business press, but probably is not. If you read the naval history of World War II, you’ll be struck by a curious anomaly. Before August 1942, the allied navies kept making lots of silly blunders. Flammable paint is left on deck, people have the wrong equipment, watchstanders fall asleep at critical moments, the new model of torpedo doesn’t actually work. By late 1942, the allied navy is getting better and suddenly it’s Japanese seamen who fall asleep, foul up signals, run out of supplies, or steer the wrong way.

It’s almost as if the Allies started out with a virus, and suddenly they got better and the Japanese caught it.

People tend to think this was training: the US Navy got better, the Japanese got worse. In reality, though, it’s selective focus: mistakes matter (and are noticed) when they are costly. In 1941 and 1942, the Allies lost a lot, and naturally wanted to know why. By 1943, the Allies were winning. Everyone has a hand in a victory, and the mistakes — the missed signals, the cans of paint left of deck — are soon forgotten.

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