If you read Walter Isaacson’s biography on Steve Jobs, you’d know that he was a tough boss — most definitely a jerk at times — and in many ways extremely arrogant.
But was he a narcissist? And does it matter if he was?
The answer to the first question is no, he was not, according to Eric Jackson at Forbes based on a study of CEO narcissism. The answer to the second question is, yes, it does matter quite a bit. Narcissistic CEOs have destructive tendencies that can ruin companies.
Penn State’s Donald Hambrick and Arijit Chatterjee looked at how CEO narcissism affects performance in their 2007 study, “It’s All About Me: Narcissistic CEOs and Their Effects on Company Strategy and Performance,” and in their latest follow-up study, “Executive Personality, Capability Cues, and Risk Taking: How Narcissistic CEOs React to Their Successes and Stumbles.”
In the first study, the researchers looked at 111 CEOs in the computer/software industries from 1992 to 2004. They first defined narcissists as having “feelings of superiority, entitlement, and a constant need for attention and admiration” and found that:
“The narcissist is not content with being eventually praised for a success long-in-the-coming, but instead needs applause at frequent intervals. To obtain such applause, the narcissist must regularly undertake challenging or bold tasks that are highly visible to a respected audience; those tasks must be of the type that will earn admiration for their inherent boldness. In a related vein, narcissists are especially susceptible to boredom and engage in various forms of “sensation-seeking.” Therefore, narcissists favour the extreme, the grandiose, and the colourful. Discreet or incremental actions are not satisfying.”
Photo: Penn State
Narcissistic CEOs make hugely different strategic choices for their companies than non-narcissistic CEOs. They’re more likely to take big risks, more frequent risks, and make moves that will get lots of public attention. This means their company’s performance is more volatile; and these CEOs tend to engage in more mergers and acquisitions. The researchers also created a 5-item index to measure CEO narcissism, which considers these factors:
1) The prominence of the CEO’s photograph in the company’s annual report.
2) The CEO’s prominence in the company’s press releases.
3) The CEO’s use of first person singular pronouns in interviews.
4) The CEO’s cash compensation divided by that of the second-highest paid executive in the firm.
5) The CEO’s non-cash compensation divided by that of the second-highest paid executive in the firm.
Jackson notes that narcissistic CEOs spend more on advertising and R&D and take on more debt, even when their company and/or the economy is tanking. He also argues that Steve Jobs doesn’t qualify as a narcissistic CEO because although he did the big product announcements, he put his colleagues’ names in the press releases; he surrounded himself with smart people who could counter his ideas; he used more “wes” than “Is” in his vocabulary; and he created a detailed succession plan for Tim Cook.
Also, this stock chart of Apple shows how the company’s market cap increased dramatically, and mostly steadily, during Steve Jobs’ tenure. It’s also worth noting that he took a $1 salary, although he had tons of stock options.
Although we think there are other factors to consider, and Jobs was most definitely a strange guy, he cared intensely about his work, and that’s what drove him to success — not simply a desire for recognition.
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