The Charisma Proxy

Sometimes a leader is so magnetic and compelling that people can get caught up in their energy, story, and mindset. Even smart, experienced leaders can make mistakes and sometimes they admit it, as the BBC reported Masayoshi Son, CEO of Softbank, did regarding the investment in WeWork. The cost to Softbank and other investors was billions of dollars not to mention the embarrassment of bad judgement.

Recently, it was announced that WeWork would no longer serve free alcohol. Perhaps this is an indication that the charm of Mr. Neumann proudly throwing back Tequila shots has worn thin with the new leadership. That’s the thing about charisma, at one point in time it is charming, but on its own, it doesn’t sustain a business.

How are smart people swayed by charisma?

One way that lulls even the most experienced person into making errors is getting caught up in an idea, especially when it is presented by a compelling person. Adam Neumann, a founder of WeWork, is such a person and no matter your opinion of him, he is compelling. Pair that with a great idea like WeWork and the appeal is quite attractive, even to sophisticated investors. A great idea presented by someone who is captivating can sometimes lead people to assume the person has other qualities as well. For example: Intelligence, worldliness, trustworthiness, sophistication, business savvy, good judgement, and so forth.

This cognitive leap underlies many decisions that seem right at one time but prove misguided later. The very tricky part of it is, the process happens fast and without intention or awareness. 

Why do people make these cognitive leaps in the first place? Enthusiasm, urgency, external pressures, and over-confidence all play a role. While many are loath to admit it, emotion plays a role in decisions and, once made, it can be surprisingly hard to admit error. Emotion, including the strong desire to be right, has great power to interfere with our ability to see, never mind accept, information that contradicts what we believe. The confirmation bias is not only real, its influence is usually invisible, even when we are acquainted with the idea.

This is precisely why leaders find it hard to push back on someone they hired, the very person with whom they are, or once were, enamored. In hindsight, leaders might look delusional but often they are in the grips of decision traps that are quite predictable, such as allowing a single, dominant characteristic to stand as a proxy for character and competence.

How to reduce the risk:

There are steps anyone can take to reduce the risk of falling into a decision trap fueled by the need to be both a quick study and to be right.

• Ask if the person is telling a credible story? Is it logical? Frances Frei, Harvard Business School professor, says that a critical aspect of trust is logic. When a story, plan, or proposal is illogical, trust is weakened and for good reason.
• Is the information provided truthful? It isn’t cynical to check the information provided, it’s prudent.
• On what are performance targets based? Revenue projections are guesses, but they shouldn’t be wild guesses.
• Are there luminaries involved? Social proof is a powerful way to influence. Unfortunately, it can be misused in the way someone like Bernie Madoff used it.
• List the factors you believe to be true, then ask yourself, “How do I know that?”

No one likes to make mistakes especially when the cost is both high and public. It is especially painful and embarrassing when one realizes they have been fooled, whether deliberately or by a leader who is delusional. Either way, it’s best to find out, even if it means challenging ourselves – the hardest thing to do.