Fighting corporate hubris: The four steps of the perpetuity principle. (2013)

CEOs should serve as stewards of their companies, developing profitable, sustainable, and trusted businesses.

Hans-Paul Burkner, Chairman, Boston Consulting Group
bcg.perspectives 6 June 2013.

“Massive corporate fraud, the dot-com bubble, the worst economic crisis since the 1930s – these events have undermined many companies and leaders over the past 15 years. As CEOs begin to absorb the lessons of this turbulent period, they should be careful not to overlook one significant contributory factor: hubris, the pride that comes before a fall.

“In a corporate setting, hubris can take many forms, such as:

• Creating grandiose strategies that find their way into glossy brochures, new advertising campaigns, and rhetorical conference speeches—but never get implemented
• Launching high-profile moves into new, exciting, international markets in a costly and flamboyant way – but failing to create competitive advantage
• Pursuing big mergers and acquisitions that deliver scale, bold headlines, and large bonuses for the management team – but no long-term value
• Completing dubious financial transactions that undermine transparency – and serve only to show that the company isn’t addressing the fundamentals of business.”

Burkner goes on to recommend that CEOs and boards should follow the perpetuity principle, “serving as stewards of their companies and, by doing so, developing profitable, sustainable, and trusted businesses.”

In pursuit of this principle, Burkner outlines and enlarges on four key steps. CEOs should:

• Renew the focus on delivering long-term value
• Foster an open and questioning culture, and encourage the company’s major decision makers to challenge conventional wisdom.
• Develop a role as stewards of the company, guiding it toward a prosperous future with a respected place in society.
• Ensure a regular change of top leadership.

Access the full article here: Fighting corporate hubris: The four steps of the perpetuity principle