As a long-term student of effective leadership, I’ve noticed a pattern that appears frequently but doesn’t get that much discussion. The pattern that I find curious is that spectacular successes are so often followed by dramatic declines or even miserable failures. I’ll get into some specific examples shortly, but first I feel that it’s important to note that there is often a cyclical nature to success and failure that shows up at both the individual and the organizational levels.

Consider the history of American corporations. The smashing successes, such as General Motors, IBM, as well as the steel giants, U.S. and Bethlehem Steel, all saw their own golden ages. But those that are still in existence are mere shadows of what they were during their boom days. GM owes its existence to government bailout money and IBM, while still a force, lost its dominance to more recent startups such as Dell, who themselves are now scrambling to secure their futures in treacherous and unforgiving marketplaces. The list goes on and on, and the cyclic nature of “rise and fall” continues.

How about individuals? Among other things, history is comprised of stories about “heroes,” who produced incredible results and became objects of acclaim and adoration— at least temporarily. In far too many cases however, the principle that “what goes up, must come down” once again evidenced itself. No single book or collection could be vast enough to catalog the myriads of cases that show that once you reach the top, your next immediate problem becomes how to avoid decline.

When Americans celebrate Columbus Day, we emphasize his accomplishments, but little mention is made that Christopher Columbus died in chains. We all understand the short lived “success” of criminal types such as Al Capone, Kenneth Lay, Jeff Skilling, and Bernie Madoff, who had their days in the sun and then got what they deserve. But the cycle doesn’t seem to be limited to those who are so obviously out of line. It simply seems to be the case that, once you achieve what appears to be a monumental success, you’d better start considering what things might go awry to bring you down.

A classic example:  Napoleon Hill and Charles M. Schwab

One of the most well-known and successful business-related books of all time is Napoleon Hill’s Think and Grow Rich. One outstanding story in Mr. Hill’s book is the saga of Charles M. Schwab, the early 20th century steel magnate, as an example of the kind of success to which we all should all aspire. What doesn’t appear in the book is was the end of the story of this business genius. Despite his early successes, Mr. Schwab lived on borrowed money for the last several years of his life, and according to some estimates died with as much as $30,000 of unpaid debt. 

Granted, the market crash of 1929 and the Great Depression contributed to his economic demise, but additional contributors stemmed from his own self-indulgence. He was an avid gambler and also engaged in numerous extramarital affairs. Problems with impulse control and bad judgment collaborated with hard economic times to dethrone Mr. Schwab and lay him low. His end was anything but pretty.  What’s the lesson here, and what can the rest of us do to avoid the trap?

Self-defeating behavior:  A common companion of success

In recent decades, psychological research reveals a humanity that is far more complex than the simplistic “maximize gains and minimize losses” mentality that economists insist governs our choices. Psychologists Steven Berglas and Roy Baumeister’s 1993 book, Your Own Worst Enemy: Understanding the Paradox of Self Defeating Behavior is a fascinating read regarding how and why human beings can be expected to continue to display patterns of behavior that appear to defy common sense.

What is striking about self-defeating behavior is its tendency to occur after success is achieved in so many cases. One common self-defeating pattern, often referred to as “self handicapping,” has been shown to occur after success is achieved. Dysfunctional patterns such as irrational risk taking, gambling, and substance abuse often appear in individuals after they succeed. Professionals as diverse as executives, athletes, actors, and writers all seem susceptible to the syndrome. In business, the fierceness of competition leaves little room for such self-generated disadvantages.

Avoiding becoming your own worst enemy

Economic and market forces may be beyond the control of many in leadership positions, but those who succeed in the long run will be those who master themselves. Below is a short list of things that history and psychology have taught us about why those who achieve success so often show the common pattern of subsequent decline. To a certain degree, these things can be applied to organizations and nations as well as individuals. The more wary of these we are, the better we’ll fare.

Complacency: Taking things and situations for granted. Once you reach the top, it becomes easy to rest on your laurels and to forget that history is characterized by turnovers and succession. General Motors found this out the hard way. GM had been the biggest and the best automaker in the known universe for decades, and the leadership was too aware of that fact for their own good. They seemed oblivious of the possibility of being outclassed by foreign producers.  This is the old “business as usual” syndrome. The story is more complex, but a rollicking dose of complacency was the earliest symptom.

Denial: Closing your eyes to the negatives. One unfortunate aspect of our common wisdom about business is that we should never say or think anything negative. It’s regarded as bad for morale and motivation, and is forbidden in many business environments. On the other hand, Irving Janis, the psychologist who studied what we now call “groupthink,” found the intolerance of criticism to be a predictor of disastrous business and military failures. Self-deception and defensiveness often masquerade as positivity and optimism. At the same time, anyone who forgets that Murphy’s Law is a reality will soon find him or herself in situations that a healthy dose of realism would have helped to avert. Always be on the alert for what will inevitably go wrong if allowed to.

Arrogance: Always a potential blinding force. All of the major companies that went from riches to rags had leaders that were overconfident and unable to listen, be it to their workers, their customers, or outside analysts. During the 1990s, the Public Broadcasting System presented “Challenge to America,” a four part series on the dramatic declines that were occurring in what were once America’s most powerful business concerns. “Arrogance” among top leaders was mentioned so often that I spent the next 10 years of my career studying arrogance and its manifestations in interpersonal and organizational settings. I found no case in which arrogance wasn’t destructive in the long run.

Cognitive factors: People tend to forget what they know

History, fables, proverbs, and folk wisdom all warn of the above problems as root causes for the demise of successful people as well as organizations. Somehow, we seem to have difficulty incorporating such wisdom into our planning and our daily activities. Cognitive psychologists, who study aspects of human life such as memory, decision-making, and problems solving warn us that we are highly fallible creatures. We often overlook the obvious, make decisions on emotional rather than logical grounds, and often operate on “autopilot,” underutilizing our capacity for conscious and rational thought. One result is an inflated rate of error that seems on the surface to defy rationality.

We’re not doomed, however

They also give us the good news. These limitations can be overcome, or at least offset to some degree. The same research that illustrates the above tendencies also shows that with the proper training, we can minimize the degree of error to which we are prone. It does however, take “special weapons and tactics” and well thought out ones, at that. 

For example, a reliable finding is that organizations that respond to difficult economic times by instituting training that is aimed at improving communication, increasing efficiency, and reducing error yield immediate benefits that show up on their bottom lines when compared to similar organizations that conduct business as usual. 

When external conditions improve, these organizations show economic gains that are double the rate of their counterparts that stuck with “business as usual.” Of course, the training in question needs to be aimed at producing positive behavior changes that are observable and measurable. At the executive level, the procurement of an effective executive coach has in many cases proved to be of incredible benefit, jarring those in powerful positions out of the “ruts” that they inevitably fall into. Those that willingly seek to improve themselves find such services invaluable. 

Interventions such as training and coaching help to offset the natural forces of complacency and “forgetting what we know.” The US military as well as police departments, once both the butt of jokes, comic strips, TV sitcoms, and movie parodies have benefited tremendously from training/coaching type interventions. The increases in efficiency in these domains have been dramatic, reducing waste and error, and increasing the levels of morale and teamwork. Police departments as well as the military are much more effective as a result, much to the chagrin of their adversaries.

Pursuing excellence trumps the pursuit of immediate successes

“Success” is a common mantra when it comes to achievement in business. Perhaps “excellence” is a better one. Long-term expert on effective leadership Warren Bennis often warned about the sports analogies that so often characterize the rhetoric advocating business success. “Making the winning play,” “hitting a grand slam,” and other such graphic depictions of business success are problematical because they suggest short term, abrupt accomplishment rather than emphasizing processes that occur over time.  Just ask Jeffery Skilling or Bernie Madoff.

By emphasizing “excellence,” leaders are stressing continuous and long-term improvements that lead to both superb performance and lead to “success,” but also sustain both. Too often “success” is measured in near term stock prices or quarterly profits. “Excellence” on the other hand, suggests an array of process improvements that enhance competitiveness and a careful accounting of how these improvements may be measured.

A contemporary example of excellence in action

Al Mulally, the president and CEO of the Ford Motor Company refused government bailout money a few years back, while GM and Chrysler grabbed for the immediate payoffs. Rather than bailout money, Mr. Mulally chose to cope by demanding excellence of himself and his company. The result is that Ford is at this time a highly revered automaker with a bright future. No one can dispute that his approach depicted an integrity and long term business focus that continues to yield benefits, while his American auto maker counterparts will always be seen as corporate welfare cases.

Let your competitors pursue “success.” Pursue “excellence,” and both success and excellence are much more likely to be yours over the long run.