At a time of increased public attacks toward business executives for their lack of accountability, theories proposed in "Why Smart Executives Fail," a book written by Sydney Finkelstein, professor at the Tuck School of Business, has recently become increasingly noteworthy for its explanations of executives' refusals to apologize.
"It is almost without exception that [accountability for failure] goes back to the senior leaders or board of directors and what they did," Finkelstein said in an interview with The Dartmouth. "It is quite phenomenal that they reference other reasons why it wasn't really their fault."
Although it was published in 2003, "Why Smart Executives Fail" has gained media attention in light of the recent financial crisis and the widespread trend among CEOs, according to Finkelstein, to not admit their mistakes, personal or in business.
In an article that quoted Finkelstein, The New York Times reported Jan. 12 that business leaders tend to acknowledge blunders and poor decisions, but do not accept responsibility.
"You see time and time againblame [is placed on] circumstance, like the Internet took off,' or a new competitor came with a new product and we were blindsided,'" Finkelstein said. "All those things happen in business and are part of the business landscape, but those types of externally-driven explanations of failure never explain what went wrong in the company."
Some business leaders have acknowledged their businesses' contribution to the financial crisis, but this admission is not enough, according to Finkelstein.
"An apology, for a CEO, is to stand up and say, It was my fault,'" he said. "You don't see that much."
Tuck students helped Finkelstein with research during his six years of work on the book. Students conducted interviews and analyses from psychological, sociological and political perspectives.
"We studied over 50 companies in depth, we did long detailed historical case narratives on each of these countries and interviewed over 300 people that were principals in these organizations," Finkelstein said.
There are three main reasons that explain chief executives' avoidance of accountability, Finkelstein said. First, corporation heads are not accustomed to expressing remorse and accepting blame.
"To get to the top of an organization, you've been the best at everything not once, or twice, but over the course of 15 to 25 years you're not used to doing anything that doesn't turn to gold," Finkelstein said. "Some of that self-awareness that is needed for people to identify they've done something wrong gets driven out."
Second, admitting personal responsibility can subject a CEO to legal consequences, Finkelstein said.
The final explanation for a CEO's refusal to apologize is American culture, in which apologies are an indication of weakness, Finkelstein said.
"In America, it's not normal to say, It's my fault and I did this wrong,'" Finkelstein said. "In Japan, they apologize, admit it was their fault and often resign."
Finkelstein's book also discusses the reasons businesses under the leadership of accomplished executives fail.
"The book looked at trying to explain what the underlying reasons for why organizations break down and go out of business," Finkelstein said. "Why would that happen to the best and the brightest?"
Inspiration for the book stemmed not only from Finkelstein's fascination with the subject, but also from the opportunity to pioneer an unstudied field.
"[It is as] simple as looking when you go to Barnes and Noble bookstore, and you go to the leadership section," Finkelstein said. "It's almost always about successes. There are hardly any books on what went wrong. I thought there was a real imbalance in what we knew in literature and what we could say to CEOs and managers about running organizations."
