Sunday, May 13, 2012

The CEO as False Messiah

Why is the leadership of health care organizations so bad?  An important explanation of one part of the puzzle appears on InformationWeek's Brainyard blog written by Venkatesh Rao. 

The Visionary, Charismatic, or Messianic Leader

In "The Fall of the Messiah Leader," Rao described the rise of the concept of "visionary" leadership:
we'll look at the rise in the 1980s and impending fall of the idea of 'Leadership' as a pop business construct. The role of visionary leader emerged to make up for the apparent failure of the manager mind, but it evolved into something very different, illustrated in the picture below: a role dedicated mainly to creating and maintaining an illusion of control in the markets interspersed with occasional Big Bold crisis management moves that generally fail.

Rao suggested that the first example of the messianic organizational leader was former General Electric CEO Jack Welch:
Welch was the first modern example of 'charismatic leadership,' and his was the first widely recognized business name since the robber barons. I challenge you to name, off the top of your head, one "celebrity" business name between Rockefeller and Welch that the average man on the street would have recognized.

Rao described the charismatic, or visionary leader in truly messianic terms:
one savant-like figure can intuitively read market conditions, spot brilliant strategic opportunities, create clarity of purpose in pursuit of that opportunity, and steer by an innate sense of True North, without a compass.

Oh yeah, and while performing this miracle routinely, the leader also models virtues and values that would put saints to shame. This idealized leader sparks a pursuit of corporate greatness with a brilliant strategic insight every few years, and he ensures that the pursuit is conducted in accordance with values so noble you feel like writing epic poems in his honor.

These charismatic figures are supposed to be capable of intuitively cutting through complexity and producing visionary decisions that make the managers' jobs tractable again.

In case this description of supposedly messianic leaders of recent years sounds far-fetched, recall the example of the failed, then eventually jailed CEO of what was once the Allegheny Health Education and Research Foundation (AHERF), one of the largest vertically integrated health care systems of the 1990s. (Currently, we call such organizations accountable care organizations, or ACOs.) Abdelhak was described in an American College of Physicians publication as a "visionary." (See the summary beginning on p 5 here.) Abdelhak had previously been called a "visionary" or a "genius" in the media. [Gaul GM. Creator of a cross-state health system despite personal and financial questions, Sherif Abdelhak has boldly expanded from Pittsburgh to Philadelphia. Philadelphia Inquirer, March 4, 1991. P. D1. Gaul GM. The new prescription for health care: Hahnemann’s merger dwarfs - and frightens - many local rivals. Philadelphia Inquirer, November 21, 1993. P. E1.]  For more recent examples of how health care leaders may be described in messianic terms, look herehere, and here.

The False Messiahs

Just as Abdelhak proved to be not a messiah, but a criminal, most messianic leaders are anything but. As Rao put it,
Do these Messiahs actually do the job required of them--relieve beleaguered mere-mortal managers and steer the company toward greatness? Nine out of 10 times, they do nothing of the sort. What they do is convince people that they're in control.

His main point is that the "messiahs" are just people playing at that role, supported by public relations, if not propaganda and disinformation:
Heroic, charismatic leadership in the context of large public companies is mostly a myth. What makes it a myth isn't that such figures don't exist (there have been a handful, such as Welch himself, Jobs, and Bezos), but the idea that the phenomenon can be studied in general terms, codified, and turned into a teachable skill.

True leaders are born, not manufactured. And they're quite rare. What the leadership cottage industry can manufacture are false leaders: People who can act like leaders. That theater has two audiences: the media and Wall Street.

The psychological allure of 'leadership' as a concept is almost entirely due to its profitability as a business-writing cottage industry, which in turn is based almost entirely on appealing to the vanities of wannabe-Messiahs. On the other side, there's an entire shadow world devoted to manufacturing perceptions of Messianic capabilities, by 'proving' claims to charismatic leadership using hagiographic narratives.

Rao claimed that the rise of such falsely messianic leadership was due to the ability of such leaders to bewitch investors:
The de facto job of a leader is to manage perceptions on Wall Street and thereby manage the stock price. Projecting an image of charismatic leadership is the easiest way to do that. Managers fight fires out of sight, creating a perception of corporate normalcy and control, and the Glorious Leader uses that blank canvas of apparent normalcy to spin tales that mesmerize Wall Street.

Who Else Benefits

Rao wrote mainly in the context of understanding the stresses and challenges of managers (who he sees as distinct from leaders in the context above). Thus he may not have written about other factors in the etiology of falsely messianic leaders.

I hypothesize that such leaders are not only good at bewitching investors, but bewitching other constituencies and stakeholders. Most health care organization now must deal with government agencies. Non-profit health organizations must deal with groups that are interested in their ostensibly charitable missions. Having a apparently messianic leader makes it possible to bewitch these groups.

Furthermore, I hypothesize that falsely messianic leaders greatly benefit two groups within their organizations. The first is obviously their apostles, often the top layers of organizational executives just below the CEO. Such positions are now almost as personally remunerative as are CEO positions. The second is obviously the spin-doctors, that is mainly the public relations and sometimes the marketing people who help produce the theatre that creates the perception of messianic qualities.

The Final Common Pathway

Rao suggests that falsely messianic leaders are likely to lead their organizations to a bad end, even if they themselves may escape the consequences:
Charismatic theater-leadership is about to die a messy death, like Qadaffi, because the sheer amount of chaos converging in a bottom-up torrent to the CEO's office will become unmanageable very soon. The theater will become increasingly hard to sustain.

Leaders fail when their managers fail to keep up with the fire-fighting. Once the fires become visible externally, the apparent normalcy necessary for the leader to manage perceptions is gone.

At this point, the leader is an impossible situation, but the theater must continue. And so we're treated to the grand finale of the tenure of a CEO: the Big Bold Move, the Bet The Company moment.

The Big Bold Move is usually a Big Dumb Move--deciding to go after large new markets, taking on bold new product initiatives costing hundreds of millions of dollars, making major acquisitions. It's a high-stakes game with a billion-dollar ante.

And usually these moves fail because charismatic leaders are forced to make them at terrible times, with bad data, when growth has stagnated or is plummeting, and there's a need for an 11th hour business model shift to replace hundreds of millions of dollars of collapsing revenue streams. A case of too much, too late.

The leaders who fail are sacked, land safely with golden parachutes, and proceed to loudly blame 'culture' (read: 'incompetent middle management') for the failure.

Rao is writing for a general business audience. The outcomes of such failures when the falsely messianic leader is in charge of a health care organization can obviously be even worse, leading to rising health care costs, declining access and quality, and threats to patients' and the public's health.


We have seen many health care leaders praised for their brilliance and paid royally despite leadership resulting in financial distress, threats to the organizations' health care missions, poor patient care, unethical behavior, or even crime. (The most recent example as of the time this was written was here. For other examples look here.)   Yet health care CEOs are just people, sometimes smart, but almost never brilliant.  Promoting them as messianic to bewitch key constituencies, justify the remuneration of other top managers, and the hiring of more public relations flacks is likely to lead to the sort of organizational disasters and system-wide dysfunction we discuss on Health Care Renewal.  The rise of the falsely messianic leader may allow the entry of the most dangerous false messiahs, the psychopathic ones.  (We discussed the likelihood that some health care leaders are actually psychopaths here.)

Rao's theory of falsely messianic leadership (and related, and also religiously allusional theories of the "divine rights of CEOs," look here and here), suggest that the better paid the CEO, and the more expansive the descriptions of the CEOs talents, the more skeptical we ought to be. 

In the secular occupation of health care, we ought not to yearn for messiahs, but hope for reasonable leadership that draws on the collective knowledge and values of health care professionals rather than dubious "visions," and that show accountability, integrity, transparency, honesty, and ethics.


Couldn't place it in NYC said...

There is a picture of one wanna be in the LATimes:,0,6270898.story

Anonymous said...

In Pittsburgh, the hospital CEOs have repeatedly taken from the needy and defenseless patients to enrich themselves. This is a modern day extension of the concept "filthy rich", a phrase that had its origins in Pittsburgh several centuries ago.

Recent reports in the Pittsburgh newspapers on the compensation packages of its hospital' CEOs are consistent with the chronic abuses of the region.

Fear to complain and meaningfully spineless public leaders enable this farce.

Steve Lucas said...

My attorney wife and I had Mother’s Day lunch with a woman PhD, who had worked for a major aerospace company, and her friend whose husband had been a senior executive with a local corporation. Vassar was mentioned in passing.

Some how we got on the subject of management and I brought up Snakes in Suits. They all related to the premise. I then brought up the saga of a local company with an international reputation and how fortunate I was to spend a large amount of time with the former senior management.

What had taken place was the third and forth generation, all being above average, sold off the family company and it is now only a fond memory in the market. The jobs are gone. The taxes are gone to support the community and the company name does not exist in a meaningful way.

The consensus was that what has been lost is the vetting process of old. In the old days people were promoted form within and, as I call them, problem children where shuffled off into positions where they could not hurt other people, or the company.

Today young computer people are hired because they will become excited about systems that older employees have seen fail time and time again. Young college grads are hired who have never worked a real day in their life, but are very good a sucking up and telling the boss how great they are.

Today many companies ooze a passive aggressive vibe, lack focus, and the major function seems to be massaging someone’s ego. We beat down those who simply speak the truth, because that is hurtful, while rewarding those who can use the most words to say nothing of importance.

This appears to infect all of business, not just medicine.

Steve Lucas

InformaticsMD said...

His main point is that the "messiahs" are just people playing at that role, supported by public relations, if not propaganda and disinformation

In healthcare they're usually playing the role without true expertise.

In 1999 in an essay "Unqualified decision-making: the wrong people making the wrong decisions at the wrong time" I wrote this about healthcare (most specifically, health IT) leadership:

The phenomenon of unqualified decision-making [by "charismatic" but unskilled "leaders" - ed.] is a symptom of these types of ideological debasement. In an era when technology is becoming increasingly more complex, this phenomenon causes the wrong people to be making decisions on complex matters outside their knowledge, ability, and judgment. Not surprisingly, they often do this quite poorly. This phenomenon, in healthcare computing, is perhaps the biggest obstacle and impediment to effective utilization of expertise and rational thought in improving healthcare via information technology. Further, I suggest that such thinking about leadership (which allows expert clinicians, for example, to be overruled by non-medical support staff) is actually causing medicine to drift from its scientific foundations.

'Leadership' has indeed become a pop business construct. True leaders may only be "born" but one can do a lot better, even without "born leaders", than letting the incompetent and untrustworthy float to the top of an organization.

-- SS

Afraid said...

22 UPMC employees top $1 million

Pittsburgh Business Times by Kris B. Mamula, Reporter

Date: Monday, May 14, 2012, 2:57pm EDT

UPMC has 23 employees at the hospital giant who make more than $1 million in total compensation, according to tax reports released May 11.

University of Pittsburgh Medical Center President and CEO Jeffrey Romoff is the highest-paid among 22 employees at the hospital giant who make more than $1 million in total compensation, according to tax reports released May 11.

Romoff received $5.97 million in 2010, up from $3.56 million in 2009 when Romoff and other senior executives voluntarily accepted pay cuts in what the administration called a tough health care environment. In 2010, Romoff received a base of $959,210 plus $3.7 million in bonus and incentive compensation and $797,727 in retirement benefits because he turned 65.

Also receiving more than $1 million in base pay, bonuses, deferred retirement and other sources of compensation were:
- UPMC Health Plan CFO Scott Lammie, $1.015 million
- UPMC Presbyterian Shadyside Hospital President John Innocenti, $1.079 million;
- orthopedic surgeon Dr. Freddie Fu, $1.2 million;
- Dr. James Luketich, director of the Heart, Lung and Esophageal Surgery Institute, $2 million;
- International and Commercial Services Division President Charles Bogosta, $1.3 million;
- legal counsel Robert Cindrich, $1.69 million;
- Elizabeth Concordia, president, hospital and community services, $2.3 million;
- Sandra Danoff, senior vice president, strategic planning and special projects, $1.031 million;
- CFO Robert DeMichiei, $1.337 million;
- CIO Daniel Drawbaugh, $1.382 million;
- Chief of Staff David Farner, $1.3 million;
- Treasurer C. Talbot Heppenstall Jr., $1.1 million;
- UPMC Health Plan President and CEO Diane Holder, $1.684 million;
- Gregory Peaslee, human resources chief, $1.364 million;
- Dr. Marshall Webster, president, Physician Services, $1.149 million;
- neurosurgeon Dr. Richard Spiro, $1.980 million;
- neurosurgeon Ghassan Bejjani, $2.861 million;
- oncologist Dr. Stanley Marks, $1.5 million;
- orthopedic surgeon Dr. Mark Rodosky, $1.880 million;
- neurosurgeon Dr. Adnan Abla, $1.5 million;
- pediatric cardiovascular surgeon Dr. Victor Morell, $1.345 million.

UPMC is a $10 billion system, which employs some 55,000 people and spokeswoman Susan Manko said executives were fairly compensated for “leading one of the largest and most complex health care enterprises in the country.”

Compensation is tied to performance and quality of care, she said, and a board committee, aided by outside consultants, sets compensation rates.