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Delusion of Celebrity Brings Down Another CEO

Renault-Nissan’s chief Ghosn is the latest example of what can happen when top executives get caught up in the celebrity culture.

Delusion of Celebrity Brings Down Another CEO
Carlos Ghosn, chief executive officer of Renault SA and Nissan Motor Co., speaks during a panel discussion at Waseda University in Tokyo, Japan. (Photographer: Akio Kon/Bloomberg)

(Bloomberg Opinion) -- The apparent downfall of Carlos Ghosn, the celebrity chief executive officer of Renault and board chairman of Nissan, is the latest example of what can happen when top executives get caught up in the celebrity culture.

Ghosn was arrested in Japan on Nov. 19 for under-reporting his income and misusing Nissan’s corporate funds to pay for real estate in four cities around the world and expensive family vacations. He has an estimated net worth of $100 million; he clearly didn’t need the funds he is accused of diverting. But then, rock-star executives often consider the access to company assets no more than their due. Even Steve Jobs, the closest the business world has to deity, barely escaped major damage from a scandal involving backdated options. General Electric CEO Jack Welch, another hero to aspiring MBAs, got a lifetime of sports tickets as part of his extravagant severance package. Tesla CEO Elon Musk, with a fortune estimated by Bloomberg Billionaires at $4.8 billion, this year received the biggest compensation plan ever approved for any chief executive. 

This isn’t really about greed. It’s about craving rock star levels of appreciation. A chart-topper relishes the roar of the crowd; a dictator walks on flower petals; a celebrity CEO gets something an ordinary company head wouldn’t — and gets away with it, at least for a while.

This is all part of the culture that begat President Donald Trump and that places a celebrity in a bubble of aggrandizing public attention, positive or negative, deserved or undeserved. Donald Hambrick at Pennsylvania State University, who has focused on the “CEO effect” in his research, has shown that a strong CEO can have a major, quantifiable effect on a company’s performance — but that narcissistic CEOs, those with the bigger photographs in annual reports, the purveyors of portentous quotes, the attention-seekers and empire builders don’t really outperform their less self-absorbed peers. 

Ghosn has spent many years inside a celebrity bubble. His quotes scattered throughout specialized sites show that he’s accepted being treated as a guru and an oracle. “You don’t build your character by doing what everybody else is doing,” the auto executive has said. And, “I think that the best training a top manager can be engaged in is management by example.” These nuggets suggest that Ghosn saw himself as a larger-than-life figure. Plenty of people have been willing to prop up his ego; there’s even a manga comic about him. 

A teacher, a sensei doesn’t have to dive into the details of running a business; he’s everywhere at once to give speeches and inspire people, and he deserves treatment befitting his celebrity status. Ghosn, as he worked to gradually ease himself out of running the vast automotive empire he cobbled together, has turned from a manager into a sensei.

That’s the kind of metamorphosis decried by Jim Collins, the author of the business bestsellers “Built to Last” and “Good to Great.” “There is perhaps no more corrosive trend to the health of our organizations than the rise of the celebrity CEO, the rock-star leader whose deepest ambition is first and foremost self-centric,” Collins wrote in 2001, arguing that successful corporate performance really required something different, a set of qualities he called “Level 5 leadership.” 

Leaders who achieve this level, according to Collins, “are somewhat self-effacing individuals who deflect adulation, yet who have an almost stoic resolve to do absolutely whatever it takes to make the company great, channeling their ego needs away from themselves and into the larger goal of building a great company.” Think Warren Buffett, who has always worn his celebrity status like an ill-fitting suit. Even his motivational quotes are about humility and curiosity.

There’s hope for the charismatic narcissists, too. Jobs is remembered as a maker of great things, and Musk will inevitably be remembered in this way, no matter how his story ends. But that’s not the case with Ghosn. In last year’s reliability rankings for two-to-three-year-old cars, published by the German Association of Technical Inspection Agencies, the first Renault model appears in the 51st position, and the first Nissan comes 61st. That increases the likelihood Ghosn won’t be given as much leeway as Jobs or Musk when his legacy is judged. A forced resignation after being accused of financial improprieties can easily change his legend into a cautionary tale.

To contact the editor responsible for this story: Max Berley at mberley@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is a Bloomberg Opinion columnist covering European politics and business. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

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