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Beware the corporate cult of personality

Group of people putting their hands up in the air.
(Photo: Adobe Stock)

What do communist dictators Joseph Stalin and Mao Zedong have in common with U.S. Presidents like John F. Kennedy and Ronald Reagan? Hint: It’s the same thing they have in common with career revolutionary Che Guevara. They developed a cult of personality.
Cults of personality emerge when the image of a public figure is molded by the media into a heroic and idealized form. The aim isn’t simply love, admiration, and popularity. It’s to foster unconditional allegiance to the figure and that which they stand for. In the minds of their followers, the figure ceases to be an individual and transforms into a sacred object—something worthy of reverence and even sacrifice.
Stalin and Mao used state-controlled propaganda to spread their godlike alter egos. Conversely, the cults of Kennedy and Reagan took off after their tenures in office, cultivated by pundits and political operatives to gin up zeal for bygone eras.
“On a small and interpersonal level, this is the treatment that cult leaders strive for: no questions, no doubts, only unending commitment and respect. Politically, of course, large numbers of energetic and decidedly uncritical followers make life easier,” writes Adrian Pecotic for Psychology Today.
When it comes to cults of personality, scholarship—and rock ‘n’ roll singles—have focused on the political realm, yet business leaders have also strived for their time in the divine spotlight. And while the damage done by a corporate cult may be more contained, they can still devastate the organizations and people under their sway.

WeWork (for the Glory of the Leader)

Exhibit A is Adam Neumann, former CEO of We Company. Neumann is well-known for his charisma, over-the-top style, and ability to sell his vision to others. His stated goals include “becoming the world’s first trillionaire, taking WeWork to Mars, living forever, being Israel’s prime minister or ‘president of the world.’” That’s a lofty bucket list for anyone, let alone someone who used to lease co-working space.
But it was that manic energy that caught the eye of investors, such as Softbank’s Masayoshi Son, who invested more than $10 billion in WeWork. That energy also propelled Neumann to foster an interoffice avatar that was larger than life and exercised excessive control over the company and its people.
Under the Neumann gospel, WeWork tried to force vegetarianism on its employees, infused spiritualism into its employment practices, and hosted mandatory camps complete with “yoga babble” ministries and all-night booze fests.
It wasn’t just culture that suffered either; WeWork’s feeble corporate governance ensured Neumann had unchecked power, allowing him to treat the company as his fiefdom. In a stunning example of insider dealing, he sold hundreds of millions of dollars of his WeWork stock, used the proceeds to purchase buildings, and then leased those buildings back to the company. He even laid out a succession plan that granted his wife and children the right to choose WeWork’s next CEO. 
Neumann wasn’t building a company; he was forging a dynasty.
All the while, few members of the media took note of the malfeasance. They were instead blinded by Neumann’s showmanship, his company’s massive over-evaluation, and the backing he received from Son, a so-called “unicorn breeder”. That facade would crumble, however, under the weight of the company’s IPO prospectus .
The S-1 filing is a hard-numbers document, but WeWork tried to muddle those numbers behind its cult of personality. Its filing included celebrity endorsements, ads for WeWork amenities, and mantras such as “We dedicate this to the energy of We. Greater than any one of us but inside each of us.” Scott Galloway, an NYU professor of marketing, ran the document through a program to count how much certain words were used. On average, Galloway finds CEOs are namechecked 15–50 times. In WeWork’s S-1, Neumann’s name was mentioned 169 times. 
“There was definitely this kind of Jesus complex seeping into a financial disclosure document,” Galloway told Wonderly for their podcast series, WeCrashed.
But the numbers wouldn’t convert. WeWork’s overspending, insider dealings, and lack of revenue broke the spell. The massive overvaluation became public knowledge, and the IPO was shuttered. To cut costs, thousands of employees—the true victims of Neumann’s hubris—were laid off. Their shares in the company effectively worthless.
As for Neumann, he was asked to step down as CEO and given a billion-dollar deal as settlement.

Demanding Loyalty and Blood

Neumann’s cult of personality led employees and investors to overestimate both his competence and the company’s value. But in some cases, a cult of personality can protect a leader from the people within their organization.
That brings us to Exhibit B: Elizabeth Holmes and Theranos.
On paper, Holmes’s Edison machine was objectively cool. The biometric scanner could run comprehensive blood tests with just a finger prick’s worth of blood. It was smaller, faster, and more efficient than anything that had come before—making modern medical tech feel like something from a medieval barbershop. Unfortunately, it only worked on paper and within the glossy dream world constructed by Holmes and her COO in crime, Ramesh Balwani. 
Under their leadership, Theranos’s marketing campaign claimed the Edison was operational. They struck a contract with Walgreens, cozied up with the Department of Defense, and began selling their service to customers. In reality, the company ran a majority of their tests on competitor machines, and the tests they did run on the Edison proved highly inaccurate. 
As detailed in the documentary The Inventor: Out for Blood in Silicon Valley, several workers within the company raised concerns, but their efforts were thwarted by unreasonably tight security measures and threats of prohibitively expensive litigation.
Holmes also surrounded herself with social elites. Theranos board members included former U.S. secretary of state George Shultz, former secretary of defense James Mattis, former CEO of Wells Fargo Richard Kovacevich, former director of the Centers of Disease Control and Prevention William H. Foege, and another former U.S. secretary of state, Henry Kissinger.
These men created a phalanx of clout and political power that shielded Holmes from scrutiny. But why would such powerful men protect Holmes, a young entrepreneur and college drop-out with no medical expertise? 
While we certainly can’t rule out their six-figure compensation, it’s also obvious that they were drawn into Holmes’ cult of personality. The documentary recounts how they heaped adulation upon her, calling her impressive, revolutionary, and, in the words of Kissinger, possessing of an “ethereal quality”.
“They were talking about her as if she were Beethoven, as if she was this rare creature that maybe one in a century or two in a century come along who really can change the world,” Ken Auletta, a New Yorker contributor who wrote about Holmes and Theranos, said in the film.
Their reverence for the leader rendered these elites “terrible stewards of innovation” and led them to prosecute the very people they claimed to serve. And when whistleblowers finally exposed Holmes and Balwani, the board members skirted responsibility for the part they played in the cult.

When Cultish Leaders Don’t Go Nuclear

Granted, Neumann and Holmes are extreme examples. One could easily point to cultish leaders such as Jeffery Bezos and Steve Jobs—the latter of which Holmes styled her management practices and personal life on—to demonstrate that hagiographies can have happily ever afters.
But even in less severe cases, organizations caught up in a cult of personality pay a price.
For instance, economists Ulrike Malemendier and Geoffrey Tate looked at the benefits superstar CEOs brought to companies. Using prestigious business awards as a measure of CEO status, Malemendier and Tate found that award-winners underperform “both relative to their prior performance and relative to a matched sample of non-winning CEOs”. Despite this lackluster performance review, superstar CEOs extract more compensation from their businesses and spend more time working on non-business activities, such as serving on boards and writing books.
And the weaker the corporate governance, Malemendier and Tate warn, the stronger these effects.
So, while cults of personality don’t all end apocalyptically, they remain risks that are best avoided by creating cultures of open communication, strong checks and balances, and missions that seek employee and customer happiness, not the leader’s glory.
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