Abandon Values For Performance At Your Peril

What is the worst that can happen when a small leader is put in charge of a large operation? When a leader doesn’t take the wider perspective or consider the values of the company and the communities it impacts? Let’s take the extreme end of small leadership, when a leader takes such a narrow, one-dimensional, often short-term focus on a singular stakeholder or metric—often financial—that other stakeholders are substantially hurt. The driving force behind this can be greed, fraud, ego or negligence, subverting the company’s core values. This is when we see shortsighted decisions, culminating in outcomes such as collapsed industries, prison sentences, environmental disasters and even death.

Think back on the Deepwater Horizon BP oil spill off the U.S. coast in the Gulf of Mexico. The oil rig explosion, on April 20, 2010, is believed to have killed 11 workers (they were never found). Following that, oil poured into the ocean continuously and catastrophically for months, until it was finally capped four months later. It is considered one of the worst environmental disasters in history, filling the ocean surface floor with an oil slick the size of Oklahoma, killing marine life and damaging the coastal economies of multiple states.

The many criminal and civil cases brought against BP and its partners Halliburton and Transocean exposed small leadership on all sides: a rush to complete the well, cost-cutting measures applied to complex drilling processes and the absence of a culture of safety. The disaster cost over $60 billion in fines to BP, untold dollars in legal fees, public relations damage, damage to the oil industry at large, higher gas prices that affected consumers broadly and 25,000 jobs lost in the region’s commercial and recreational fishing sector.

Leadership had seemingly lost sight of the big picture. Their narrow focus on cost and speed meant they developed a blind spot when it came to safety of their workers and the protection of the ocean environment and coastal communities that were their wider stakeholders. That focus on profit ultimately hurt their bottom line, their investors and the leadership team’s own reputations.

In late 2022, the cryptocurrency exchange FTX collapsed. The U.S. Securities and Exchange Commission charged that CEO Samuel Bankman-Fried had raised more than $1.8 billion from investors under the promise that the platform was run under strict investor protection provisions, while simultaneously misusing funds belonging to FTX’s trading customers to cover losses at his privately owned crypto hedge fund Alameda Research. This, regulators commented, was done in service of enriching himself.

On December 13 that year, the new FTX CEO John J. Ray III told a U.S. House committee that in the past, FTX practiced “no bookkeeping.” He added, “It was old-fashioned embezzlement.”

Bankman-Fried pleaded not guilty but was convicted of all seven counts he faced. Prosecutors made the case that he looted $8 billion from the exchange’s users out of greed. It’s been called one of the biggest financial frauds in history. Bankman-Fried was clearly focused on the wrong things, and protection of his own customers’ funds fell by the wayside. The alleged criminal and negligent behavior contradicts his professed mission, plastered all over ads taken out in Vogue and The New Yorker, showing a photo of Bankman-Fried with his arms crossed in front of the text: “I’m in crypto because I want to make the biggest global impact for good.”

Ultimately, that failure became the undoing of everyone involved, including investors and customers, and deepened the public mistrust of the entire cryptocurrency industry, which sent it into a long “crypto winter.” Had Bankman-Fried been a bigger leader—focusing on the ethics and protection of customer funds—this would never have happened.

Such corporate disasters tend to originate from a focus on profit and a lack of clear purpose and values. Values are stated only for public consumption and contravened in private. Fraud, ego and negligence are of course about as old as commerce itself, but the stakes are rising as the pace of technology does, too.

For instance, the White House Commission report on the BP oil spill found that regulators did not have the authority or knowledge of the complex drilling processes to have noticed the cost-cutting measures that added risk on the Deepwater Horizon. Similarly, FTX was operating in a poorly regulated and poorly understood world of cryptocurrency trading, where both investors and customers were drawn in by FOMO and Bankman-Fried’s increasing celebrity, rather than any understanding of the actual technology or business structure.

Now imagine the trouble that can arise if artificial intelligence is developed irresponsibly. The original founders of OpenAI, the makers of ChatGPT, seemed to understand the precarious position of humanity if any of the doomsday scenarios that some envision play out, once the machines become smarter than we are. OpenAI was created as an open-source nonprofit, with a mission “to ensure that artificial general intelligence benefits all of humanity.” Later, as researchers worked at OpenAI without sufficient funding for talent and computing power (the computer servers providing the processing power behind ChatGPT 3, for instance, cost $700,000 per day to run), a commercial arm was created as a capped-profit entity, with investor returns capped at one hundred times their investment. Elon Musk, an OpenAI founder who left early on, called it “a closed source, maximum-profit company effectively controlled by Microsoft.”

What assurances do we have that leaders at such companies—whether focused on AI or quantum computing or gene editing—will set their gaze wider than their ego or the potential for profit? Especially given that these technological leaps are beyond the capacity for regulators or other watchdogs to keep up with? If the main cohort that has access to decision-making is wealthy geniuses, who have massive fortunes to gain from progress in these high-risk endeavors, should we worry? There is certainly an argument to be made for the inclusion of stakeholders, who can influence the technology that shapes the future and ensure it benefits humanity at large.

The stakes for bigger leadership have never been higher.

Revisit your list of stakeholders

• What do you do that they care about? What outcomes matter to them? How do they gauge your success?
• Are some stakeholders more important to your work than others? What trade-offs will you have to make? Which metrics do you control and which do you influence?
• Do you have data of your performance trends over time for each group? What feedback systems have you established to understand their priorities?
• How have you evolved your metrics and goals to track short-term and long-term performance?

Excerpt from LEAD BIGGER by Anne Chow, former AT&T Business CEO. Copyright © 2024 by Anne Chow. Reprinted by permission of Simon & Schuster, NY.