Mindset: The New Psychology of Success

Levin was the first to fall. But Case was still not trying to make things work. In fact, when the new CEO, Richard Parsons, sent someone down to fix AOL, Case was intensely against it. If someone else fixed AOL, someone else would get the credit. As with Iacocca, better to let the company collapse than let another prince be crowned. When Case was finally counseled to resign, he was furious. Like Iacocca, he denied all responsibility for the company’s problems and vowed to get back at those who had turned against him.

Because of the resident geniuses, AOL Time Warner ended the year 2002 with a loss of almost one hundred billion dollars. It was the largest yearly loss in American history.

Invulnerable, Invincible, and Entitled

Iacocca, Dunlap, Lay and Skilling, Case and Levin. They show what can happen when people with the fixed mindset are put in charge of companies. In each case, a brilliant man put his company in jeopardy because measuring himself and his legacy outweighed everything else. They were not evil in the usual sense. They didn’t set out to do harm. But at critical decision points, they opted for what would make them feel good and look good over what would serve the longer-term corporate goals. Blame others, cover mistakes, pump up the stock prices, crush rivals and critics, screw the little guy—these were the standard operating procedures.

What is fascinating is that as they led their companies toward ruin, all of these leaders felt invulnerable and invincible. In many cases, they were in highly competitive industries, facing onslaughts from fierce rivals. But they lived in a different reality.

It was a world of personal greatness and entitlement. Kenneth Lay felt a powerful sense of entitlement. Even as he was getting millions a year in compensation from Enron, he took large personal loans from the company, gave jobs and contracts to his relatives, and used the corporate jets as his family fleet. Even during bad years at Chrysler, Iacocca threw lavish Christmas parties for the company elite. At every party, as king, he presented himself with an expensive gift, which the executives were later billed for. Speaking about AOL executives, a former official said, “You’re talking about men who thought they had a right to anything.”

As these leaders cloaked themselves in the trappings of royalty, surrounded themselves with flatterers who extolled their virtues, and hid from problems, it is no wonder they felt invincible. Their fixed mindset created a magic realm in which the brilliance and perfection of the king were constantly validated. Within that mindset, they were completely fulfilled. Why would they want to step outside that realm to face the uglier reality of warts and failures?

As Morgan McCall, in his book High Flyers, points out, “Unfortunately, people often like the things that work against their growth.… People like to use their strengths … to achieve quick, dramatic results, even if … they aren’t developing the new skills they will need later on. People like to believe they are as good as everyone says … and not take their weaknesses as seriously as they might. People don’t like to hear bad news or get criticism.… There is tremendous risk … in leaving what one does well to attempt to master something new.” And the fixed mindset makes it seem all that much riskier.

Brutal Bosses

McCall goes on to point out that when leaders feel they are inherently better than others, they may start to believe that the needs or feelings of the lesser people can be ignored. None of our fixed-mindset leaders cared much about the little guy, and many were outright contemptuous of those beneath them on the corporate ladder. Where does this lead? In the guise of “keeping people on their toes,” these bosses may mistreat workers.

Iacocca played painful games with his executives to keep them off balance. Jerry Levin of Time Warner was likened by his colleagues to the brutal Roman emperor Caligula. Skilling was known for his harsh ridicule of those less intelligent than he.

Harvey Hornstein, an expert on corporate leadership, writes in his book Brutal Bosses that this kind of abuse represents the bosses’ desire “to enhance their own feelings of power, competence, and value at the subordinate’s expense.” Do you remember in our studies how people with the fixed mindset wanted to compare themselves with people who were worse off than they were? The principle is the same, but there is an important difference: These bosses have the power to make people worse off. And when they do, they feel better about themselves.

Hornstein describes Paul Kazarian, the former CEO of Sunbeam-Oster. He called himself a “perfectionist,” but that was a euphemism for “abuser.” He threw things at subordinates when they upset him. One day, the comptroller, after displeasing Mr. Kazarian, saw an orange juice container flying toward him.