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Corporate ‘affluenza’—success can be a mighty enemy

Keywords: Tags  Analyst Corner, Michelle Applebaum, Affluenza, John P. McConnell,


It was truly chilling to read the account of a 16-year-old who killed four people while driving drunk. What was far more chilling was the success of his legal team’s creative defense to avoid jail time, what is now being called the “Affluenza” defense: the teenager’s sense of entitlement driven by the material successes of his overly permissive parents left him unable to understand that his actions had consequences.

Historically, not being able to understand the difference between right and wrong has been a successful defense used for those who might be mentally impaired; this was the first time the defense was used for someone whose impairment was driven by no more than the sense of entitlement he derived as a result of his parents’ successes in the material world.

Throughout my 30-plus years following the steel industry, I have seen a kind of “corporate affluenza” that similarly comes as a result of a sense of corporate entitlement that is a result of similar kinds of corporate successes that this youngster’s parents achieved.

Corporate affluenza comes as a result of a number of factors. Worthington Industries Inc. chairman and chief executive officer John P. McConnell quietly coined the phrase “success is a mighty enemy” as a succinct way to describe the phenomenon he observed over his nearly five decades with the company that his father founded in 1955. Despite his team’s success in effecting the company’s turnaround, as evidenced by the near-doubling in the company’s share performance over the past five years, McConnell is as reticent as his father was gregarious, and has had little to say regarding exactly what about Worthington’s success made the very success an enemy of the company’s culture.

So rather than pick on Worthington, I’ll present my own view of what I’ve seen at a number of highly successful companies in and out of the steel industry where I have seen success become a “mighty enemy.”

First, it’s about the culture of being at the top vs. the culture of reaching for the top. A culture of “at the top” creates a well-earned sense of accomplishment, while a culture of “reaching for the top” creates a sense of energy, of can-do. And the new hires at the two types of companies are very different: people who go to work for a company trying to get to the top are naturally very different than the people who go to work at a company that’s already at the top.

Second, it’s about teaming--the human nature of how we bond with those with whom we work. We form teams in the workplace, creating “virtual families” at jobs where we spend nearly half our waking hours (and at achievement-oriented companies, nearly all our waking hours). That bonding often creates a “we vs. they” mentality, kind of a tribal impulse. And while good things come from the teaming, bad things do as well. A cradle-to-grave mentality is simply human nature, and without disciplined oversight these human attachments that form as a result of merit-based team ties often eventually turn into enabling.

Third, it’s about the outsiders that surround the people at a successful company. If the players don’t develop their own sense of entitlement, then often outsiders--ranging from well-intentioned advisors to the more-nefarious sycophants--will often help support the sense of entitlement that success breeds. And by entitling their customers, these advisors can inadvertently sabotage even the most driven meritocracy, moving from performance to enablement. It then becomes hard to separate the wheat from the chaff because outsiders prop up the chaff, supported by the human nature of teammates who ignore the obvious warning signs.

What are the symptoms of corporate affluenza? The same as the drunk driver: a sense of entitlement and arrogance that creates a culture of “we can do no wrong.” How does a corporation ward off this scourge? There are plenty of examples in the steel industry of companies that have grown and been hugely successful while maintaining their culture. Stay humble, cherish those who dare give negative feedback, keep the ideas flowing and--most importantremember where you came from because most tickets are round trip!

Michelle Applebaum is an independent steel analyst who runs a five-member research and consulting company in Chicago. She can be reached at michelle@michelleapplebaum.com.


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