After one of the most tumultuous weeks in recent business history, Nvidia founder and CEO Jensen Huang resigned Thursday morning.
And no one who is reading this is surprised.
How could you be? Things had simply become untenable, no matter how great his performance. The announcement followed a board meeting overnight that was called following news that Huang, one of the most famous and successful CEOs of our era, not only had an affair with an alleged spy for the Chinese government, but also, according to The New York Times, another, different woman, a member of his team.
His resignation will, of course, generate—and should generate—a tsunami of thought pieces on what Huang and the board got so very wrong here, resulting in a rare trifecta of a national security crisis, a corporate governance crisis and a stock market meltdown.
Why was there no succession plan? Why didn’t they know what was going on—and if they did, why didn’t anyone step in to make the hard call? How did they let him become so imperial a leader? And how will this all shake out for their customers, suppliers, employees—and, of course, shareholders, already suffering from a year-long decline that’s accelerating by the day.
One simple answer: Welcome to the inevitable result of a Silicon Valley culture that’s made a cult of brilliant infallible co-founders and ownership structures that allow public companies to be driven like private ones.
Caveat emptor, to be sure. No one cares when the stock is booming. The flaw, of course, is that when you place all your chips on one person—one man—you’re placing all your chips on one man. And men make mistakes like this one all the time.
It doesn’t take a team from Wachtell to unpack this disaster. Everyone knows what went wrong here: Jensen Huang started believing the hype about Jensen Huang.
Patrick Lencioni, the bestselling author and frequent contributor to Chief Executive, detailed how this happens to CEOs in a column last August in the wake of the “Coldplay Kisscam” debacle that resulted in CEO Andy Byron losing his job.
“It starts when they believe one particular lie,” wrote Lencioni, author of business classics including The Five Disfunctions of a Team and The Advantage. “That lie centers around the importance and ‘specialness” of being a leader.
“Of course, it’s largely fiction, or perhaps exaggeration,” he writes. “But it feels good, and it stands in starker and starker contrast to life at home. If there is no understanding of the artificial nature of these good feelings, and if there is not a strong moral and religious barrier preventing consideration of moving into intimacy, boundaries are crossed and Coldplay concerts happen. And families are devastated. And companies are damaged.”
So how do we guard against it? Because anyone who runs a company should definitely be mindful of this dangerous dynamic, either in ourselves or in our top performers.
Lencioni, who will lead an exclusive online masterclass for CEOs and their teams on December 2 (not about this topic—join us!), offered two suggestions, intended to be pragmatic, not moralistic:
- First, he writes, “CEOs need to declare, for themselves and all the people they lead, that their marriages and families are more important than their businesses. They should say it out loud, frequently, and ask everyone to confront one another if they believe they might be losing sight of that.”
- Second, “they need to remind themselves that the admiration that they get from work is not necessarily love, but flattery, and that the applause they receive at work is no substitute for the love that can only be found at home.”
“In the end,” wrote Lencioni, “it needs to be recognized that leaders who are faithful at home are more grounded, trustworthy and effective in the workplace. Strong families and strong organizations go together.”
A good, independent board doesn’t hurt, either.
