cipfa org Why senior executives do incredibly stupid

cipfa. org Why senior executives do incredibly stupid things Jean Pousson Board Evaluation Limited

cipfa. org Jon Corzine I have no idea where the money is … MF Global 2

cipfa. org Tough at the Top …I do attend Board meetings but I have no idea about their content. I only provide medical advice. Dr. Hayadisha. Olympus …I didn’t understand anything! Mercedes Rojo-Izquierdo Ex Bankia Director (€ 374 k pa 2011) 3

cipfa. org How long have you got? 80% of S & P 500 CEO’s do not make it to retirement Average tenure of FTSE 100 CEO? 6 years! 4

cipfa. org Executive Failures § Overconfidence § Mental Accounting § Status Quo bias § Anchoring § Sunk Cost Effect § Herding instinct § False Consensus Mc. Kinsey Quartely(2003)no 3 5

cipfa. org Executive Failures(ctd) § Terminally self absorbed § Celebrity CEO § Keen to leave a legacy § Right about most things § Rely on what has worked in the past § Listening has become waiting to speak § You have become entwined with the company § Avoid derailment 6

cipfa. org Groupthink § Illusion of invulnerability § Absolute belief that the group is right § Stereotyping of outsiders § Illusion of unanimity § Intolerance of dissenters § Bodyguards to protect leaders § Mentioned in the UK Corporate Governance Code! 7

cipfa. org Board Malfunction § Mix and composition § Poor challenge. Ugly baby syndrome! Omerta! § Avoid incest § Reliance on processes § Blind faith on professionals eg Auditors. § No true independence § No evaluation, no learning, no unlearning 8

cipfa. org Strategic Failures § § § § Failure to adapt Strategy set by CEO(or consultants) Fatal attraction to spreadsheets Testosterones Mirage of acquisitions Obsession on short term results Risks not properly understood Too narrow definition of competitors and industry 9

cipfa. org Current Influences § Customers and markets § Regulatory § Environmental § Convergence § Connectedness § Globalisation § Commoditisation § Economic downturn 10

cipfa. org Strategy is Not Easy! § Over 600, 000 books on the subject (Amazon). § Approximately 90 well used models. (www. valuebasedmanagement. net) § About 7000 new business books written every year. 11

cipfa. org How Strategy Happens “ The nicest thing about not planning is that failure comes as a complete surprise and is not preceded by a period of worry and depression” 12

cipfa. org “Bureaucracy: A device for converting energy into solid waste. ” Anonymous 13

cipfa. org What Really Works § Clear and focused strategy § Flawless execution § Structure § Company culture Source HBR July 2003 - Nohria, Joyce & Robertson Study of 160 companies over a 10 year period 14