Page 62 - MS Year in Review 2020

Director shall decide”! The Director’s “message” was crystal clear and not subject

to rebuttal!

In the context of cases examined above, we recall that Lee Iacocca made
questioning decisions of the CEO as an explicit part of the Chrysler’s culture under

his leadership. This implies that it was not really part of the culture prior to his
becoming CEO. Similarly, we know that Harvey Golub made open debate and key

part of decision-making at Amex. One of the stated reasons he picked Kenneth
Chennault as his successor was the latter willingness to take positions contrary to
Golub as CEO, leading the latter to the conclusion that Chennault had courage.

Unwillingness to Question Ideas and Proposals

The type leadership behavior described above is intended to shut down any

challenge to authority. However, it tends to lead to a relatively passive organization
that is unwilling to question ideas and proposals even among equals. It is

commonly found in siloed organizations and those with fiefdoms where the cultural
norms (either stated or implicit) are: “You stay out of my territory and I’ll stay out
of yours”!

Conflict Avoidance

While extreme conflict can be counter-productive, a lack of conflict in a culture can

provide a spurious sense of harmony and lead to poor decisions. A good example is
the consequences of the culture at AIG in the period leading up to the great

financial crisis of 2008-09, where there were no challenges to the assumption that
32
credit default swaps were a “free lunch. ” Specifically, one of the key aspects of
the culture at AIG which had characterized the firm from its beginnings was that

33
“just about anyone could question a trade.” However, this cornerstone of the AIG
culture eroded over time under the leadership of Frank Cassano, formerly the firm’s

32 Eric Flamholtz and Yvonne Randle, Corporate Culture: The Ultimate Strategic Advantage, Stanford
University Press, 2011, pp. 180-183
33 Ibid.

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