The Narcissism Warning Sign

Signs of narcissism offer the most critical indicator of hubris ahead. In the classic Greek myth, Narcissus perished after becoming captivated by his own image reflected in water. Psychologists characterize a narcissist as someone with a grandiose view of his or her own talents and a craving for admiration. Narcissists exhibit these qualities to the point where they lose perspective and begin to make unreasonable, destructive decisions.

A narcissistic CEO becomes focused on his or her ego rather than the company’s stakeholders. This trait is all too prevalent among executive leaders, as Arijit Chatterjee and Donald C. Hambrick of Penn State University showed in a wonderfully titled 2007 paper, “It’s All about Me: Narcissistic Chief Executive Officers and Their Effects on Company Strategy and Performance.” Their study of 111 CEOs in the computer industry found that those who demonstrated narcissistic traits tended to make more and larger acquisitions, which led to “extreme and fluctuating organizational performance.” Other studies have tied acquisition premiums explicitly to media praise and relative pay for the CEO.

A prime case study of the destructive impact of a narcissistic CEO features Joseph Nacchio, former CEO of Qwest Communications. Nacchio launched his business career in the telecommunications industry through serendipity: At a career fair, he mistakenly ended up in an interview room for AT&T instead of Procter & Gamble. Starting as a young engineer in 1969, he advanced through the business ranks while also extending his educational credentials by earning a master’s degree in business from NYU and a Sloan Fellowship from MIT. In 1993 he became the youngest executive leading a major AT&T business unit: the struggling consumer long-distance business. While the unit continued to struggle, Nacchio’s intelligent but highly competitive manner made him stand out. He gained the respect of colleagues, but he could also instill fear. In a 2005 Denver Post article about Nacchio, former fellow AT&T executive Dick Martin would later recall, “He can be very cutting in a meeting where he’s in charge. He doesn’t suffer fools easily.”

Indeed, one of the earliest signs of narcissism that Nacchio displayed was a propensity for building himself up at the expense of his colleagues, going beyond the competitiveness one might expect from someone who was openly angling for the chief executive role. As a 2000 Forbes profile put it, he was known for having “sniped at [AT&T’s] top executives, impugned their intelligence and even questioned their psychological stability.” The same article quoted Nacchio asserting that he could have been “a powerful asset” to them as CEO.

But when it became clear in the mid-1990s that Nacchio wouldn’t be chosen as CEO, he began looking elsewhere. He landed the chief executive position at Qwest in 1997, on the strength of a plan to turn this relatively small, Denver-based telecom company (US$697 million in 1997 revenues, compared with AT&T’s $53 billion) into an industry leader. Launched just a decade earlier, in 1988, Qwest had originally been an offshoot of the Southern Pacific railroad line, installing fiber-optic cable for companies such as MCI along its rights of way. Qwest had grown by laying its own cables alongside those of its customers. Now, in the early years of the Internet, Nacchio proposed that Qwest could step out in front on the basis of its technological prowess.

Upon accepting the CEO offer, Nacchio quickly developed a business plan — purportedly on the back of an envelope — for an IPO later that year. He was no longer held in check by a staid culture, as he had been at AT&T, and he articulated increasingly grandiose views when talking to journalists. In a 1998 Wired magazine article, “Building the Future-Proof Telco,” he commented, “I feel like an emerging oil baron.” A Fortune article published the same year, “Wild, Wild Qwest — The Gunslinger in Telecom,” described Nacchio as a “modern-day Wyatt Earp” building a new form of telecommunications company. “People ask if we’re telecom guys or Silicon Valley guys,” Nacchio said in the opening paragraph. “I like to say we are a Silicon Valley company on the other side of the Rockies.”