Mindset: The New Psychology of Success

might get credit for successful new designs, so he balked at approving them. He worried, as Chrysler faltered, that his underlings getght be seen as the new saviors, so he tried to get rid of them. He worried that he would be written out of Chrysler history, so he desperately hung on as CEO long after he had lost his effectiveness.

Iacocca had a golden opportunity to make a difference, to leave a great legacy. The American auto industry was facing its biggest challenge ever. Japanese imports were taking over the American market. It was simple: They looked better and they ran better. Iacocca’s own people had done a detailed study of Honda, and made excellent suggestions to him.

But rather than taking up the challenge and delivering better cars, Iacocca, mired in his fixed mindset, delivered blame and excuses. He went on the rampage, spewing angry diatribes against the Japanese and demanding that the American government impose tariffs and quotas that would stop them. In an editorial against Iacocca, The New York Times scolded, “The solution lies in making better cars in this country, not in angrier excuses about Japan.”

Nor was Iacocca growing as a leader of his workforce. In fact, he was shrinking into the insulated, petty, and punitive tyrant he had accused Henry Ford of being. Not only was he firing people who were critical of him, he’d done little to reward the workers who had sacrificed so much to save the company. Even when the money was rolling in, he seemed to have little interest in sharing it with them. Their pay remained low and their working conditions remained poor. Yet even when Chrysler was in trouble again, he maintained a regal lifestyle. Two million dollars were spent renovating his corporate suite at the Waldorf in New York.

Finally, while there was still time to save Chrysler, the board of directors eased Iacocca out. They gave him a grand pension, showered him with stock options, and continued many of his corporate perks. But he was beside himself with rage, especially since his successor seemed to be managing the company quite nicely. So in a bid to regain the throne, he joined a hostile takeover attempt, one that placed the future of Chrysler at risk. It failed. But for many, the suspicion that he put his ego before the welfare of the company was confirmed.

Iacocca lived the fixed mindset. Although he started out loving the car business and having breakthrough ideas, his need to prove his superiority started to dominate, eventually killing his enjoyment and stifling his creativity. As time went on and he became less and less responsive to challenges from competitors, he resorted to the key weapons of the fixed mindset—blame, excuses, and the stifling of critics and rivals.

And as is so often the case with the fixed mindset, because of these very things, Iacocca lost the validation he craved.

When students fail tests or athletes lose games, it tells them that they’ve dropped the ball. But the power that CEOs wield allows them to create a world that caters night and day to their need for validation. It allows them to surround themselves only with the good news of their perfection and the company’s success, no matter what the warning signs may be. This, as you may recall, is CEO disease and a peril of the fixed mindset.

You know, lately I’ve wondered whether Iacocca has recuperated from CEO disease. He’s raising money (and giving a lot of his own) for innovative diabetes research. He’s working for the development of environment-friendly vehicles. Maybe, released from the task of trying to prove himself, he’s now going for things he deeply values.

Albert Dunlap: I’m a Superstar

Albert Dunlap saved dying companies, although I’m not sure saved is the right word. He didn’t get them ready to thrive in the future. He got them ready to sell for a profit, for example by firing thousands of workers. And profit he did. He got a hundred million dollars from the turnaround and sale of Scott Paper. One hundred million for little more than a year and a half of work. “Did I earn it? Damn right I did. I’m a superstar in my field, much like Michael Jordan in basketball and Bruce Springsteen in rock ’n’ roll.”

Iacocca paid lip service to teamwork, the importance of the little guy, and other good things. Albert Dunlap didn’t even pay lip service: “If you’re in business, you’re in business for one thing—to make money.”

He proudly reports an incident at an employee meeting at Scott Paper. A woman stood up and asked, “Now that the company is improving, can we restart charitable donations?” To which he replied, “If you want to give on your own, that is your business and I encourage you to do it. But this company is here to make a buck.… The answer, in a word, is no.”

I’m not here to argue that business isn’t about money, but I do want to ask: Why was Dunlap so focused on it?

Let’s let him tell us. “Making my way in the world became a matter of self-respect for me, of a kid trying to prove he was worth something.… To this day, I feel I have to prove and reprove myself.” And if he has to prove himself, he needs a yardstick. Employee satisfaction or community responsibility or charitable contributions are not good yardsticks. They cannot be reduced to one number that represents his self-worth. But shareholder profits can.

In his own words, “The most ridiculous term heard in boardrooms these days is ‘stakeholders.’ “The term refers to the employees, the community, and the other companies, such as suppliers, that the company deals with. “You can’t measure success by the interest of multiple stakeholders. You can measure success by how the shareholder fares.”

The long haul held no interest for Dunlap. Really learning about a company and figuring out how to make it grow didn’t give him the big blast of superhero juice. “Eventually, I have gotten bored every place I have been.” In his book, there is a whole chapter called “Impressing the Analysts,” but there is no chapter about making a business work. In other words, it’s always about Dunlap proving his genius.

Then in 1996, Dunlap took over Sunbeam. In his typical “Chainsaw Al” style, he closed or sold two-thirds of Sunbeam’s plants and fired half of the twelve thousand employees. Ironically, the Sunbeam stock rose so high, it ruined his plan to sell the company. It was too expensive to buy! Uh-oh, now he had to run the company. Now he had to keep it profitable, or at least looking profitable. But instead of turning to his staff or learning what to do, he inflated revenues, fired people who questioned him, and covered up the increasingly dire straits his company was in. Less than two years after the self-proclaimed superstardom in his book (and one year after an even more self- congratulatory revision), Dunlap fell apart and was kicked out. As he left, Sunbeam was under investigation by the Securities and Exchange Commission and was expected to be in technical default on a $1.7 billion bank loan.

Dunlap deeply misunderstood Michael Jordan and Bruce Springsteen. Both of these superstars reached the pinnacle and stayed there a long time because they constantly dug down, faced challenges, and kept growing. Al Dunlap thought that he was inherently superior, so he opted out of the kind of learning that would have helped him succeed.

The Smartest Guys in the Room

Yes, it seems as though history led inevitably from Iacocca to the moguls of the 1990s, and none more so than Kenneth Lay and Jeffrey Skilling, the leaders of Enron.

Ken Lay, the company’s founder, chairman, and CEO, considered himself a great visionary. According to Bethany McLean and Peter Elkind, authors of The Smartest Guys in the Room, Lay looked down his nose at the people who actually made the company run, much the way a king might look at his serfs. He looked down on Rich Kinder, the Enron president, who rolled up his sleeves and tried to make sure the company would reach its earning targets. Kinder was the man who made Lay’s royal lifestyle possible. Kinder was also the only person at the top who constantly asked if they were fooling themselves: “Are we smoking our own dope? Are we drinking our own whiskey?”

Naturally, his days were numbered. But in his sensible and astute way, as he departed he arranged to buy the one Enron asset that was inherently valuable, the energy pipelines—the asset that Enron held in disdain. By the middle of 2003, Kinder’s company had a market value of seven billion dollars.

Even as Lay was consumed by his view of himself and the regal manner in which he wished to support it, he wanted to be seen as a “good and thoughtful man” with a credo of respect and integrity. Even as Enron merrily sucked the life out of its victims, he wrote to his staff, “Ruthlessness, callousness and arrogance don’t belong here.… We work with customers and prospects openly, honestly and sincerely.” As with Iacocca and the others, the perception—usually Wall Street’s perception—was all-important. The reality less so.

Right there with Lay was Jeff Skilling, successor to Rich Kinder as president and chief operating officer, and later the CEO. Skilling was not just smart, he was said to be “the smartest person I ever met” and “incandescently brilliant.” He used his brainpower, however, not to learn but to intimidate. When he thought he was smarter than others, which was almost always, he treated them harshly. And anyone who disagreed with him was just not bright