Self-Defeating Behavior: Common (and Costly) in Business
“Sometimes you hit a point where you either change or self destruct.”
We all know of the antics of people such as Bernard Madoff, or Ken Lay and Jeff Skilling of Enron, who wrecked their own multibillion business concerns through behaviors that seemed bizarre to most of us. But these are just spectacular examples of a very common syndrome of self-destruction that affects businesses of all kinds. It’s more common than we think, and we should all be wary of it.
In their book Your Own Worst Enemy: Understanding Self Defeating Behavior, psychologists Roy Baumeister and Steve Berglas took an in depth look at professionals who fall prey to what appears to be irrational thinking and behavior. Rather than dabbling in theory, these two researchers took an empirical approach, analyzing myriads of case studies as well as the results of research in various areas of cognitive and social psychology.
To err is human
Baumeister and Berglas’ analysis reveals that self-defeating behaviors are more common than many people would think. Most striking is their occurrence among individuals who are well educated and have prior histories of success— people who appear to be normal or even gifted by most standards.
It’s something that all of us can benefit by knowing more about, especially given the rather high rate of business startups that fail (about 80 percent, according to Forbes Magazine). It also lends some fascinating insights into human behavior that are interesting in their own right.
The financial network CNBC (not to be confused with liberal news outlet MSNBC) actually broadcasts a series that depicts real cases of business enterprises that were destroyed by self-defeating behavior. Called “American Greed,” it details the extent to which a myopic focus on wealth can lead to thinking and behavior that result in bankruptcy and prison sentences.
The cases included involve individuals who are ambitious, competent, and charismatic— attributes that we idealize as ingredients for success. Rather than applying these to legitimate business concerns, however, they use their talents to concoct scams (typically Ponzi type schemes) in which the funds of trusting investors are used to finance exorbitant and frequently decadent lifestyles.
As investors’ funds are squandered on expensive houses, cars, and exotic junkets, new investors must be found to provide the money to pay the interest owed to the old ones, creating the illusion that the enterprise is profitable. Sooner or later the perpetrators neither are able to pay old investors nor solicit new ones and the scheme collapses. Lives are ruined and prison sentences typically ensue.
Self-deception is common
Whether Ponzi schemes are involved or not, at the root of most self-defeating behavior is self deception. This can occur at the individual, group, or organizational level. A few years back The Arbinger Institute, an international consulting firm, published a book called Leadership and Self Deception, the title of which speaks for itself. It’s an international bestseller, which tells us that interest in the problem is not limited to the United States.
Researcher Irving Janis, who coined the term “groupthink,” analyzed innumerable cases of catastrophic failures in business, industry, and governmental activities and found that both individuals and groups have amazing capacities to entertain illusions of various kinds.
A few examples of these are “illusions of invulnerability,” which lead to overconfidence and recklessness, and “illusions of morality,” which justify actions that may be unethical. Both of these are well represented in virtually all the scandals and catastrophic failures that litter history, both ancient and modern. We may entertain illusions, but sooner or later the truth comes out.
Individuals who are otherwise rational and moral can fall prey to the dynamics of situations in which there are high stakes, high risk, and high pressure. It’s easier for any of us to lose our perspective than we’d like to think. The more we accept this reality, the better we’ll do in the long run.
Success can be intoxicating
Roy Baumeister, one of the authors of Your Own Worst Enemy: Understanding Self Defeating Behavior, has made a thorough investigation into a phenomenon he calls “self handicapping,” which involves individuals who appear to be on top of the world engaging in behaviors that jeopardize or destroy their success.
Substance abuse is a common component, and there are innumerable cases of individuals whose lives took tragic turns just when their futures couldn’t have looked brighter. Athletics and entertainment are two obvious domains in which such occurrences are all too common, but it is by no means limited to them. It’s been found to occur in virtually every area of business.
Baumeister’s research found that individuals who appear “normal” by most standards often slip into patterns of self-handicapping right after major success experiences. He recommends that everyone should regard themselves as potentially at risk. Success conveys options, and the more options one has, the more bad choices one can make. We all need to take note of this reality.
Procrastination is the most common form of self-defeating behavior— Baumeister and Berglas devoted an entire chapter to this problem in Your Own Worst Enemy. Steve Berglas is a clinical psychologist whose clientele includes numerous middle class professionals who inexplicably and habitually busy themselves with minutia, putting more important work on the “backburner.” In Berglas’ assessment, the tendency to procrastinate is occurring in epidemic proportions.
When you encounter a problem this pervasive, you can bet that it’s getting a certain degree of support from the surrounding culture. That’s certainly true in our case. Colleges and universities, where many of our young people prepare themselves for adult life, are bastions of procrastination.
Research on student behavior confirms that procrastination has indeed been increasing at a disturbing rate as texting, video games, and a host of other non-academic activities claim more and more student time. Many college graduates enter the workforce well practiced in the art of procrastination.
A culture of immediate gratification
Virtually every expert on economic and social well-being agrees that societies thrive to the extent that those who populate them are capable of delaying gratification. In a culture in which procrastination has become increasingly acceptable, mundane but useful activities (like thorough reading and serious writing) are getting less and less attention.
As people become more impulsive and less disciplined, we can expect to see more and more self-defeating behavior. Perhaps this explains the increases in lawlessness, substance abuse, and other disturbing trends that concern many law enforcement and mental health professionals.
Implications for business
Ethical behavior, diligence, and attention to detail are all critical for long-term success in business. Clearly establishing these as guiding principles is essential for anyone who intends to avoid the traps that so many people are falling into.
And it can’t just be lip service— these principles need to be the determinants of our daily activities, and we need to be exceedingly conscious regarding our adherence to them. This means establishing means of making ourselves and anyone in our employ accountable to them.
The “Law of the Harvest”
Understanding self-defeating behavior can be a basis for re-establishing an age old rule gleaned from our more agricultural past— the “Law of the Harvest.” Simply stated, we reap what we sow.
Actions have consequences, and while we can control our actions, we have correspondingly less control over the consequences of those actions. That’s why we need to consider our actions carefully and always keep the long-term time frame in mind.
Our high tech world has overwhelmed us with complexity and options, and frankly, seems to have shortened our attention spans. Alvin Toffler’s warnings articulated in his classic work Future Shock are materializing, and now it’s up to us to adjust to the situation we’ve created.
A positive example
Oddly enough, one organization that has formally addressed the situation is the National Basketball Association. Faced with the problem of large numbers of young players who self destruct in response to the sudden acquisition of wealth and fame, the NBA has initiated efforts to foster “Law of the Harvest” type thinking. The program isn’t perfected yet, but the move is clearly a wise one.
Back to business
Individuals who succeed in any area of endeavor over the long haul have always thought in these terms— it used to be called wisdom. But in a world in which so many things change so quickly, it’s difficult to think in terms of timeless, unchanging principles.
That may be why we’re seeing such a dramatic increase of irresponsible and self-destructive behavior in business and in private life. The Law of the Harvest however, is understandable, applicable, and unchanging. And in a world in which everything else seems to be changing so rapidly, it’s one thing that we can count on, and it can be taught— we should put it to good use.
Dr. Richardson is the founder of Redwood Enterprises, a business consulting, training, and executive coaching firm that specializes in helping business owners make sure that what they do every day reflects sound strategic planning. He is available for speaking engagements on business related topics. Visit his company’s website at www.redwood-enterprises.com, or contact Redwood Enterprises by phone at 610.326.3670.