The perils of power – how hubris can lead to catastrophe

Hubris, and its nefarious counterpart narcissism, originated with the ancient Greeks and have featured throughout mankind’s history in the millennia that followed. In recent times, the prevalence of these conditions has seemingly increased, and the most prominent examples have dire and far-reaching consequences.

Unlike narcissism, which is a lifelong personality disorder, hubris is an acquired personality trait which occurs when assuming a position of power, accompanied by overwhelming success. Extreme hubristic behaviour is considered a syndrome, comprising a combination of symptoms and ignited by power. The syndrome is diluted when the power diminishes.

There are a number of symptoms that accompany hubris syndrome: having a grandiose view of self, a belief that one is always right and knows better, overlooking the facts of the matter at hand, and a general contempt for others and their opinions. This can then be accompanied by impetuous and reckless decision-making, often in the pursuit of self-edification and producing catastrophic results.

And while there are some positive aspects too, such as an increase in confidence, which can in turn lead to increased resilience and ability to persevere in the face of challenges, the overarching aspects of overconfidence, arrogance, pride and contempt for others make it an undesirable and hazardous personality trait.

Narcissism is prevalent in today’s society and seemingly on the increase. Controversial or high-profile leaders with power are also often described as narcissists; many current and historical fallen leaders could be mistakenly described as narcissists, while they were, in fact, sufferers of hubris. 

Recent and earlier history are awash with examples of significant leaders, both in politics and business, that have suffered from hubris – some with devastating impact.

The 2008 global crash has significant examples of leaders suffering from hubris syndrome, like Richard S Fuld, who was the CEO of Lehman Brothers investment bank, whose collapse is seen by many as the cause of the 2008 financial crisis. There is some meaningful argument refuting this position, but The Lehman Brothers bankruptcy was a material catalyst in the subsequent market crash.

Fuld’s leadership negatively affected the business in the time just before the crash; he is a textbook example of hubris syndrome. Fuld joined Lehman Brothers full-time in 1969 as a trader under the influence of Lew Glucksman who became the first non-banker to take on the role of CEO in 1983. When Glucksman exited in 1984, just one year after taking on the CEO role and having nearly caused the demise of Lehman, the business was sold to American Express and later spun off as a small bond shop – Fuld was made CEO.

He was an insatiable and ruthless leader who moulded the business into his own image and made it tremendously successful. Power and accomplishments created fertile soil for hubris syndrome. He put the capital into property and soon became a dominant player in the subprime mortgage market as well as commercial real estate.

In 2006, various members of the team saw the signs that real estate was coming off its high and advised Fuld – he ignored their warnings. From there on in, up until the crash, the storyline is a comedy of errors and bad calls made on the view that everything would be alright. These views were being forged almost within a vacuum with little consideration for what was actually happening in the open market. His distorted view of reality – the reality he wanted to believe in – and his initial complacency and belief that should anything go bad, the Fed would bail Lehman out as it did Bear Stearns earlier in the year, were all symptoms of his hubris condition. Frantic efforts to sell off Lehman to a wide array of potential suitors failed and Lehman’s bankruptcy was the largest in history.

Then, there was the Royal Bank of Scotland and its CEO at the time of the crash, Fred Goodwin aka “Fred the Shred”. The demise of RBS started many years before the crash.  

Margaret Thatcher’s banking act of 1979 allowed banks to acquire their competitors. (Thatcher herself was a victim of hubris syndrome which led to her party forcing her to resign in 1990.) Following RBS’s precarious position during the 1991-1992 UK recession, Sir George Mathewson was appointed as CEO; he was an engineer who, although he had no banking experience, was initially very successful. Goodwin was appointed as his right-hand man. 

Fred the Shred’s hunger for power and control was insatiable and many of the hubris syndrome symptoms were already visible in his journey up until the crash; in 2012, he was stripped of the knighthood he had received eight years earlier.

In South Africa, Steinhoff and its CEO Markus Jooste, needs little introduction. His hubris syndrome seemed to be contagious and affected members of his executive and board, including non-execs. 

Hubris syndrome prevails in South Africa’s corporate institutions, often exemplified by indiscriminate corporate bullying in various forms.

No quick fix