The Four CEO Beliefs: From Mind to Reality

Robert Hare, a psychologist studying psychopathy, said, "Not all psychopaths are in prison—some are in the boardroom."

The problem with C-suite teams full of dark personalities is they have dysfunctional beliefs about leadership, teamwork, people, the purpose of business, and everything else. Even Milton Friedman, the American economist, believed in the soon-to-be-dead, psychopathic idea that organizations exist to maximize profit.

I've also seen C-suite dysfunction in my consulting work. A few years ago, I was meeting with the executive team of a Fortune 500 organization. The purpose of the meeting was to discuss CEO succession and evaluate leaders one level down to give recommendations on their potential to take on more responsibility.

The CEO walked into the room, threw down The 48 Laws of Power on the desk, and said: "Derek, this is what we think about leadership." Now, for those unfamiliar with the book, it's arguably the most Machiavellian book ever written. It's a how-to guide on cunning manipulation and outright deception. The 48 laws include:

• Conceal Your Intentions: Avoid transparency and psychologically unsettle opponents.
• Always Take the Credit: Get others to do the work, but always take credit.
• Play on People's Need to Believe: Manipulate people's need to believe in something greater than themselves to gain a cult-like following.
• Crush Your Enemy Totally: Annihilate the enemy totally so they cannot recover—even if inhumane and immoral.

Why might this be a bad place to start?

The reason is beliefs matter. Beliefs determine culture and precede everything in business (e.g., strategy, resource allocation, organizational structure, culture, team dynamics).

Take Kodak, for instance. Why did Kodak fail? Because executive leadership, such as Kay Whitmore, believed they needed to double down on their history. He valued tradition over change, and these beliefs caused him to make poor strategic decisions. This is the exact opposite belief of change agents like Thomas Jefferson, who said, "I like the dreams of the future better than the history of the past."

Conversely, Microsoft is the epitome of organizational transformation. In Satya Nadella's book, Hit Refresh, he said the exact opposite of Kay Whitmore: "Our industry does not respect tradition. What it respects is innovation." Nadella's belief system, which also includes strong beliefs about empathy, has dramatically impacted the company's growth since he took over in 2014.

What you believe is how you lead. A C-suite team's foundational beliefs determine its leadership for good or bad. The next question is: What should C-suite teams believe? Should they believe in tradition, like Kay Whitmore, or in the future, like Satya Nadella, Thomas Jefferson, and Elon Musk?

The secret is understanding the four CEO beliefs, as evidenced by Schwartz's theory of basic values and other models in psychology, and then using them to improve strategic decisions and culture.

Beliefs About Relationships. Relationship beliefs facilitate harmony instead of control, dominance, and selfishness. The CEO who threw The 48 Laws of Power on the desk had dysfunctional relationship beliefs. He believed in selfishness at the expense of empathy and the human experience, an idea that no doubt leads to corruption (remember Enron?). Conversely, Richard Branson is one of the most beloved billionaires because of his strong values for authenticity, transparency, and empowerment. He shared this about leadership: "I believe a good leader brings out the best in people by listening to them, trusting them, believing in them, respecting them, and letting them have a go."

Beliefs About Performance. The highest-performing CEOs have beliefs about achievement. The CEO promoting The 48 Laws of Power was bankrupt in relationship values, but he had strong beliefs about working hard to win. While corrupt and ultimately spiraling downhill, these performance beliefs galvanized productivity, high expectations, winning, and accountability. As the founder of Walmart, Sam Walton, said, "High expectations are the key to absolutely everything."

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Beliefs About Change. As Darwin said, "It's not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change." The best organizations bend and flex with new technological innovations and other changes in their environment. These beliefs emphasize individuality, creating, exploring, adventure, novelty, excitement, and fun. Here's a statement from Satya Nadella emphasizing beliefs about change: "Anything is possible for a company when its culture is about listening, learning, and harnessing individual passions and talents to the company's mission."

Beliefs About Stability. The opposite of change is stability. These beliefs emphasize tradition, history, heritage, hierarchy, respect for authority, acceptance of customs, and security. Now, given the fast pace of change and the value of change beliefs in organizational transformation, it's worth noting that beliefs about stability are equally important. They create structure, efficiency, the division of labor, effective project management, safety, cost savings, risk mitigation, due diligence, and so on. George Bush exemplified stability when he said America doesn't have to "invent a system by which to live." All we have to do is "act on what we know."

CEO beliefs determine the fate of organizations. Beliefs about stability and change, relationships and performance, are foundational to creating a culture that touches on every aspect of human performance. The delicate interplay, like threading the eye of a needle, ensures organizations don't become tunnel-visioned down the wrong path. It's a construction company with values for safety and security that still innovates.

SpaceX, with its eyes on colonizing Mars, innovates but tethers to the ground with strands of stability and reverence for tradition. And the CEO talks about empathy and high standards but doesn't throw The 48 Laws of Power on the desk before a meeting about leadership.

As the author F. Scott Fitzgerald said, "The test of first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time and still retain the ability to function."