Hubris: The Silent Killer of Business

Posted on July 23, 2020 by

The common rhetoric for businesses today is to focus on your strengths, not your weaknesses. There seems to be a notion that to be a good leader you can do no wrong, you must exude confidence and make decisions with no hesitation. I see this regularly among failing small businesses. When owners see the outcome of their actions, for example bankruptcy or lost investments, often the last person they point to when determining who is at fault is themselves. Perhaps this is the key, this lack of humility isn’t just a result from failure, but the cause of it.

Humility is the ability to admit to one’s faults. On the other hand, hubris refers to excessive self-confidence and is often what we find among business leaders. Hubris is the failure to admit what you don’t know, and therefore the failure to admit your weaknesses. In short, hubris is a lack of self-awareness. With no ability for introspection, how is a business supposed to learn from mistakes, or even admit faults to begin with? They don’t. This leads to stagnation of growth and eventual failure.

Successful business leaders agree.  Charles Koch, the CEO of Koch Industries, a company that does $115 billion in sales annually and has 100,000 employees has written a book titled Good Profit. In Good Profit, Koch continuously draws attention to how important it is to have humility in the business world. In an interview, Koch warned of the trap of overconfidence, stating, “Hubris, arrogance is just one step ahead of loss of integrity,” he said. “Because if you think you’re better than other people, you know more, then you’re going to think as many leaders have that the rules don’t apply to them. So they lose their integrity.”

In his book, Only the Paranoid Survive, former Intel CEO Andy Groves makes the same argument. Groves states, “success leads to its own demise,” in other words, the overconfidence that accompanies success leads to a lack of humility which harms businesses in the long run.

Koch and Groves arguments are supported by Laurence J. Peter’s management theory, dubbed the Peter Principle. The idea of the principle is that employees will continue to be promoted until they reach their level of incompetence, at which point they will remain in their position indefinitely. This principle is easily applied to entrepreneurship and risk-taking. Entrepreneurs and business people will continue to extend something that works and takes risks with it—Until it stops working. If they lack the humility to objectively step back and assess the situation, it’s unlikely that they will be able to break through the boundary. In short, a lack of humility prevents businesses from working through challenges.

It is the failure for business leaders to admit to what they don’t know that leads to the demise of business. Perhaps what MBA programs and seminars for business people should incorporate is an emphasis on the importance of humility in business. Changing the rhetoric to focus on a business’s weaknesses will foster an environment in which leaders will learn from mistakes and enable them to progress their businesses forward.

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