Mindset: The New Psychology of Success

When students fail tests or athletes lose games, it tells them that they’ve dropped the ball. But the power that CEOs wield allows them to create a world that caters night and day to their need for validation. It allows them to surround themselves only with the good news of their perfection and the company’s success, no matter what the warning signs may be. This, as you may recall, is CEO disease and a peril of the fixed mindset.

You know, lately I’ve wondered whether Iacocca has recuperated from CEO disease. He’s raising money (and giving a lot of his own) for innovative diabetes research. He’s working for the development of environment-friendly vehicles. Maybe, released from the task of trying to prove himself, he’s now going for things he deeply values.

Albert Dunlap: I’m a Superstar

Albert Dunlap saved dying companies, although I’m not sure saved is the right word. He didn’t get them ready to thrive in the future. He got them ready to sell for a profit, for example by firing thousands of workers. And profit he did. He got a hundred million dollars from the turnaround and sale of Scott Paper. One hundred million for little more than a year and a half of work. “Did I earn it? Damn right I did. I’m a superstar in my field, much like Michael Jordan in basketball and Bruce Springsteen in rock ’n’ roll.”

Iacocca paid lip service to teamwork, the importance of the little guy, and other good things. Albert Dunlap didn’t even pay lip service: “If you’re in business, you’re in business for one thing—to make money.”

He proudly reports an incident at an employee meeting at Scott Paper. A woman stood up and asked, “Now that the company is improving, can we restart charitable donations?” To which he replied, “If you want to give on your own, that is your business and I encourage you to do it. But this company is here to make a buck.… The answer, in a word, is no.”

I’m not here to argue that business isn’t about money, but I do want to ask: Why was Dunlap so focused on it?

Let’s let him tell us. “Making my way in the world became a matter of self-respect for me, of a kid trying to prove he was worth something.… To this day, I feel I have to prove and reprove myself.” And if he has to prove himself, he needs a yardstick. Employee satisfaction or community responsibility or charitable contributions are not good yardsticks. They cannot be reduced to one number that represents his self-worth. But shareholder profits can.

In his own words, “The most ridiculous term heard in boardrooms these days is ‘stakeholders.’ “The term refers to the employees, the community, and the other companies, such as suppliers, that the company deals with. “You can’t measure success by the interest of multiple stakeholders. You can measure success by how the shareholder fares.”

The long haul held no interest for Dunlap. Really learning about a company and figuring out how to make it grow didn’t give him the big blast of superhero juice. “Eventually, I have gotten bored every place I have been.” In his book, there is a whole chapter called “Impressing the Analysts,” but there is no chapter about making a business work. In other words, it’s always about Dunlap proving his genius.

Then in 1996, Dunlap took over Sunbeam. In his typical “Chainsaw Al” style, he closed or sold two-thirds of Sunbeam’s plants and fired half of the twelve thousand employees. Ironically, the Sunbeam stock rose so high, it ruined his plan to sell the company. It was too expensive to buy! Uh-oh, now he had to run the company. Now he had to keep it profitable, or at least looking profitable. But instead of turning to his staff or learning what to do, he inflated revenues, fired people who questioned him, and covered up the increasingly dire straits his company was in. Less than two years after the self-proclaimed superstardom in his book (and one year after an even more self-congratulatory revision), Dunlap fell apart and was kicked out. As he left, Sunbeam was under investigation by the Securities and Exchange Commission and was expected to be in technical default on a $1.7 billion bank loan.

Dunlap deeply misunderstood Michael Jordan and Bruce Springsteen. Both of these superstars reached the pinnacle and stayed there a long time because they constantly dug down, faced challenges, and kept growing. Al Dunlap thought that he was inherently superior, so he opted out of the kind of learning that would have helped him succeed.

The Smartest Guys in the Room

Yes, it seems as though history led inevitably from Iacocca to the moguls of the 1990s, and none more so than Kenneth Lay and Jeffrey Skilling, the leaders of Enron.