Chapter 6: Humility
How to control your ego's drive for comparison and put others' interests ahead of your own.
“The man who asks a question is a fool for a minute; the man who does not ask is a fool for life.”
— Confucius
What will I learn in this chapter?
We’ll reveal what humility really means and explore its counterbalancing effect on superiority. You'll discover how humility makes you more resilient against the perils of a widening stochasm, as well as how leaders influence the IQ of their organization by encouraging a culture of humility. You’ll learn how Missionary and Mercenary mindsets differentiate true from false confidence.
Here are your key takeaways:
Humility is the prerequisite required for all intelligence to have a yield.
Narcissism is the chief obstacle for humility. It makes it impossible to put others' interests ahead of your own.
While Missionaries have an advantage in making people more teachable, the Mercenary uses humility as a weapon against narcissists.
The story of The Emperor's New Clothes demonstrates the consequences of avoiding reality.
Chief executives and their companies can illustrate humility’s benefits and narcissism’s costs. We’ll dive into stories about Herb Kelleher, Jack Welch, Jim Collins, Kimberly-Clark, Berkshire Hathaway, Shark Tank, and even Steve Jobs (in his second stint as Apple’s CEO).
Concepts like Humility Quotient (HQ) can make your leaders more teachable, while understanding your Investment Grade Conjecture (IGC) helps your financiers tolerate risk.
Our parents raised us on lessons straight out of the School of Hard Knocks, which we’ve needed from time to time at Aurora whenever we’ve gotten too big for our britches.
Confronting your frailties isn’t admitting defeat; it’s committing to win.
Doctrine and Tradecraft
In the classic children’s fairytale by Hans Christian Andersen, The Emperor’s New Clothes, an emperor invites tailors from far and wide to the capital city. Two conmen promise to make a royal suit of clothes with a truly unique differentiator: Intelligent observers will be able to see the magical garments, but fools will see nothing at all.
This captivates the emperor’s ego, and he hires the conmen on the spot. They pretend to get to work on their magical looms. But when the emperor’s court officials come to check on their progress, they notice the looms appear to be empty.
Can they admit their foolishness by acknowledging they see nothing? Not a chance! Unwilling to sacrifice their pride, they pretend to marvel at how wonderfully the magic weaving is coming along and hurry back to the palace to tell the emperor.
When the emperor is finally presented with his magical new clothes, he can’t see them either. After all, they don’t exist! But he can’t confess his foolishness. So, he lets the scammers pretend to dress him and parades — bare naked — throughout the city.
As the rumor spreads that only smart people can see the emperor’s magnificent new clothes, all his subjects pretend to admire his invisible garb. Finally, a young child innocently inquires, “Why is the emperor naked?”
At last, the people have permission to acknowledge the truth. The emperor, too, has permission to admit he’s been fooled. But unlike his people, who overcame their pride to acknowledge they’d been duped, the emperor admits to nothing out of the ordinary. He denies the reality of his situation and proudly struts his way through the city, feeling more superior than ever.1
How does denial indicate an out-of-control ego in a person, an organization, or even a whole culture? And why is a lack of humility a danger signal for anyone depending on an unhumble teammate?
Instead of accepting help or advice when offered, the proud insist that everything is under control. They’re so consumed by their prideful ego they cannot see an obvious mistake about to happen. To make matters worse, they let this bias erode the reputational trust their stakeholders have invested in them. They might even overlook a supposed ally's secret wish to see their arrogance justly punished.
You might define humility as having a low opinion of yourself or even as a form of shame. Perhaps you assume that, to be humble, you’ll have to put yourself down, be self-critical, or embarrassed by your manifold faults.
But we define humility as having as much regard for others as you have for yourself. You need not deny your self-respect or value. But you will need to stop comparing your value to others. Humility is not about comparing your faults or virtues. It is about celebrating the traits others can add to your own and assessing how you might complement theirs.
“In essence, you are neither inferior nor superior to anyone. True self-esteem and true humility arise out of that realization. In the eyes of the ego, self-esteem and humility are contradictory. In truth, they are one and the same.” — Eckhart Tolle, A New Earth: Awakening to Your Life’s Purpose
How does humility apply to intelligence work?
As discussed in the last chapter, people resist pursuing superiority because they might question their right to win. Pride reveals this anxiety rather than heals it. Ironically, people who see humility as a weakness tend to cling more tightly to their fragile ego. The prideful are paralyzed into inaction because thinking about their fragilities makes them anxious. This irrational denial of opportunities for improvement leads incumbents and innovators alike to failure. Opportunistically, humility removes the excuses for this kind of denial and empowers the humble to seize their chance to get better and better.
In social circles, having the humility to confront your frailties has a way of revealing allies and enemies. In business, this must be done to properly position your offers and grow your market share. Most of our work is designed around the objective of closing knowledge gaps to help clients take and keep market share. However, the intelligence we provide will never produce its highest yield unless we challenge faulty assumptions about how to win in the macro-environment. Often, this amounts to asking uncomfortable questions about past wins or losses and how the root causes have persisted in spite of organizational acknowledgement that things need to change.
Remember, every stochasm consists of two gaps: knowledge you lack and the knowledge that is false or no longer true. This second knowledge gap requires a deeper degree of humility to close, which is why we’ve dedicated the last chapter of Section 2: Optimality to this topic. If you thought it was difficult to answer your boss’ question with “I don’t know,” just wait until they ask a question where your only answer is “I was wrong.”
“In the absence of humility, there’s nothing I can teach you that you don’t already know.” — Aurora Proverb
Our society has taken the need to be correct and certain to extremes that make admitting our knowledge gaps tantamount to intellectual suicide. Intelligence suffers from this same problem. As a result of the need to be simultaneously correct and certain, most intelligence performs the exact opposite task by confirming assumptions without enough evidence to put them to the test. Intelligence should not merely support decisions; it should challenge decisions to prove optimality with evidence. Intelligence never takes optimality on faith alone, or on the past performance of an overconfident leader.
Humility is difficult for our modern society because the rewards are often hidden and known only to the individual practicing its benefits. The rewards for pride, however, are everywhere. Our culture teaches self-obsession with one’s own success, often at the expense of others; self-centeredness has become, not only permissible, but admirable.
One of the toughest social forces confronting the business world today is the epidemic of narcissism that seems to reward people for their self-confidence, however false. A narcissist’s unreasonable self-importance requires constant, excessive admiration from peers to maintain their charade. They feel as though they deserve special treatment, even without merit.
Who do you know in your organization or industry who fits this description of a narcissist?
Worse than narcissism’s effect on a meritocracy, however, is the impossibility it creates for anyone to admit they were wrong.
Think about how difficult it was for the emperor to admit he’d been fooled. For example, the emergence of new superiority criteria might be overlooked or even intentionally ignored if it’s difficult to understand or makes us regret our past choices. Missed opportunities become the norm. High achievers seek other work.
Worse yet, it’s impossible for a narcissist to feel shame or accept forgiveness. Needing to be perceived as perfect means a narcissist can’t offer forgiveness, either. Blame will always be placed on the actions of others instead of on their own. Reality becomes the construct their ego is able to survive. But it catches up to them eventually.
“You can avoid reality, but you cannot avoid the consequences of avoiding reality.” — Ayn Rand2
To the opportunistic adversary, narcissism presents a golden opportunity they can exploit. Because a narcissistic culture seeks out external validation, teammates falling into this trap are easily programmed to act in predictable ways. All that is needed is to stroke their ego to convince them they were right all along. They’ll recommit to past choices, however wrong, and they’ll double-down on their most pitiful mistakes to get one more endorphin hit of praise.
Because organizations are run by people who are subject to such prideful weaknesses, we can see this behavior in the industrial psychology of the incumbent Alpha. Alphas find a disruptor’s comparative superiority in the eyes of the market all but unthinkable. They will wallow in denial until financial results speak for themselves. Then, they’ll blame the oversight on forces beyond their control.
It’s never been more important for organizations and their leaders to seek and destroy this most virulent form of arrogance. An arrogant CEO can lead to a managerial culture of condescension that can be seductive to the rest of the leadership team. When this phenomenon takes hold, the intelligence quotient of the business will decline. Vulnerabilities will compound, as no one wants to take responsibility for the outcomes they’re producing.
Humility is the capacity to admit to mistakes without a permanent loss of self-esteem that damages an organization’s inherent right to win. This is similar to the way an individual’s ego would be damaged. It’s difficult for a person to make ambitious plans for the future once their self-confidence has been irreparably harmed.
More important than preserving the organization’s IQ, however, is the correlation with Humility Quotient (HQ). HQ is the ability to recover from a humbling experience; it decides much more than financial results. HQ will determine whether you have a future at all.
Your business has no future without a reliable and confident source of capital to fund your growth. Financiers don’t invest as much in the abstract growth strategy as they do in the entrepreneur and the management team chosen to execute it. Arrogance is a dead giveaway to investors that the overconfident innovator has frailties in their business plan that will come back to haunt them. Investors appreciate humble, confident entrepreneurs who openly disclose the possible threats and weaknesses their business plan may encounter. What a less narcissistic innovator might lack in personal charisma, they make up for in empathy with their investor’s risk tolerance and appetites.
However, a business plan is a lengthy way of explaining an innovator’s right to win. And the more disruptor-based the superiority criteria are, the less confident an innovator can be about their chances, since there’s thin historical evidence they will succeed.
Instead of a full blown business plan, we suggest growth ideas start with a much simpler, more strategically-minded instrument we call the Investment Grade Conjecture, or IGC. You read a smattering of superiority context about the IGC in the last chapter, but you require an understanding of humility to really put your IGC into action.
Why do you call it a “conjecture” and which characteristics make it “investment grade” to a source of capital contemplating funding your plans?
In its most basic form, your IGC is simply an idea or hypothesis for growth that your backers can have as much confidence in as you do. Your idea is probably not as well-tested as it should be to produce similar confidence in risk-averse investors. So, boiling off peripheral details is also valuable from the standpoint of the market segment that you’re targeting.
Because your IGC has no actual history to rely upon for forecasting or predictability, it requires additional evidence to succeed beyond a simple hypothesis. This is particularly true for the other stakeholders — especially incumbent competitors — who might win or lose if you succeed. With a little convincing (and collateral if your funders are especially conservative), your IGC should be exciting enough for investors and buyers alike to get it off the ground.
A conjecture can also be called a guess. Every great growth strategy or innovation in human history started out with a guess by an entrepreneur or inventor about how to take advantage of macro-environmental circumstances to produce an offer someone specific might want to buy. That guess was formulated in the absence of much evidence but used the instincts and experience of the innovator to energize others to help. Before getting funded to develop their innovation and take it to market, that innovator had to produce a degree of confidence that the hypothesis would succeed.
The more risk-averse the funder, the higher the threshold of evidence needed to risk their valuable capital in your venture. A bank is traditionally a pretty conservative place to go for funding, as they use depositor funds to make loans, not investments. Bankers expect a reasonable rate of return of a few percentage points over and above the cost of capital (interest paid to depositors) they risked in lending to you. Since no equity is changing hands, they’ll also need collateral — or an especially solvent cosigner — to vouch for your ability to repay the loan if you fail.
Bankers don’t like disruptive innovations. They struggle to understand how abstract business models that displace incumbents with something new will compete for cash flows long-term. Bankers tend to like boring, stable businesses with as little disruption potential as possible.
Large corporations tend to behave a lot like bankers much of the time, often because the market where their stock is traded hates surprises, especially to the downside. The corporate VCs we talked about in the last chapter exemplify a way to overcome this bank-like risk aversion. The larger and more successful the company, the more likely they will be to require an independent arm of the corporation specifically inoculated to seek out, rather than mitigate, this kind of disruptive risk.
More risk-tolerant sources, such as private equity (PE) funds, accept greater risk, since they’ll usually receive a long-term ownership position in the legal entity profiting from the hypothesis. This ownership is usually in the form of a ratio of the shares of the business through which the innovation is offered to market. Instead of favoring more mundane growth ideas, PE tends to invest in tried-and-true concepts that have a proven track record of past performance. This track record provides the confidence that collateral or a cosigner might produce with a bank. However, PE seeks to grow more aggressively than bankers do and realizes this often must come from the kind of creative destruction only disruptors can bring to market.
Truly risk-seeking investors, such as venture capitalists (VCs), expect a sizable number of their investments will inevitably fail. They’ll produce a zero return and might lose 100 percent of their initial capital investment in the process. As a result, VCs usually don’t back IGCs with modest return expectations. They seek out disruptive innovators who change the rules of the markets they enter by challenging the relevance of incumbents with a new definition of performance. Only blockbuster exits provide enough return to re-liquify a VC’s portfolio.
However, in recent years, expectations around the size of these exits have grown more modest and, simultaneously, have tempered the risk-appetites of many VCs. Incubators emerged from the angel investor world to de-risk disruptive innovations with smaller infusions of cash and expertise at a slower pace to ensure fewer flameouts before exit.
Which type of financier do you have backing your IGC? How can you make your investor more risk-tolerant while also increasing their confidence in the future success of your plans?
You might be a startup entrepreneur going for seed capital to get your business started. Or, maybe you’re inside a bigger company developing a new line of business. The simpler your IGC, the greater the confidence you can create in it with stakeholders, teammates, and other collaborators. The reason we developed the Superiority Criteria Canvas you first saw in the last chapter was to boil down the elements of your IGC into a simple map explaining your unique right to win.
A good example of evaluating IGCs in practice is the hit reality TV series Shark Tank. On the show, entrepreneurs pitch the savviest investors on their offer and answer questions to reveal, in effect, which superiority criteria the market will reward with share. The entrepreneurs pitching the Sharks must put the interests of those investors at least equal to or ahead of their own to convince them they’re a good bet.
Let’s learn about a few examples where that kind of humility can transform into an overwhelming competitive advantage.
Applied Case Examples
Premiering in 2009, the Shark Tank series centers on early-stage entrepreneurs who have proven some ability to grow their start-up business but are experiencing growing pains to reach scale. As the entrepreneurs deliver their pitch — essentially an IGC — the Sharks critically examine the fit between each offer, the market segment they seek to take share in, and their own ability to get their time and money back plus a return on their investment capital. An innovative idea, demonstrated success selling their existing offer, a cost structure that can be sustained or improved, and a multitude of other variables are all part of the equation.
Some of the now-famous personalities on the show include Barbara Corcoran, Mark Cuban, Draymond John, and Kevin O’Leary. Every Shark looks for a strong-enough business concept attractive to their own experience, expertise, and network. But the entrepreneurs must also be personally likable and give the sense that they would value a Shark’s investment of time and money as a true partner. While self-confidence is key, there’s no room for a narcissistic innovator who lacks humility and can’t be a team player.
If you’ve watched a few Shark Tank episodes, you’ll have noticed that entrepreneurs walk into their pitch with varying degrees of HQ. They’re all proud of the business they’ve created. But they also recognize that being on the show is a plea for help. They must maximize the Sharks’ valuation of their business to make the deal worthwhile, but many have delusions of grandeur and forecast unrealistic future success. This is often driven by the need to raise capital without significantly diluting the interests of earlier-round investors (or their own).
The ideal scenario is to create a bidding war between the Sharks for the opportunity to make a deal. More humble entrepreneurs who are realistic and believable about their future potential tend to attract more interest. It's good storytelling to hear entrepreneurs put their best foot forward. But the real entertainment value is the rivalry between Sharks during the feeding frenzy over a deal.
Have you ever been put off by someone’s overconfidence or arrogance? Have you wondered why it made you suspicious of them?
Leadership expert and author Jim Collins studied the connection between humility in top managers and corporate performance for decades. In a 2001 Harvard Business Review article, Collins outlined the traits of what he called a “Level 5” leader: “an executive in whom extreme personal humility blends paradoxically with intense professional will.”
More specifically, Collins cites humility, will, ferocious resolve, and the tendency to give credit to others while assigning blame to themselves. It’d be tempting to replace humility here with a different word: accountability. But that would mistake an individually-specific personality trait (humility) for simply taking ownership of group outcomes (accountability).
Humility is a much deeper and more powerful character trait that requires experience to develop. Not all of those experiences are positive or uplifting. Our folks would’ve called it “The School of Hard Knocks.”
At the time Collins wrote his article, celebrity CEOs were hard-charging, take-no-prisoners, type-A personalities. One who typified this persona was Jack Welch, who infamously advocated automatically firing the bottom ten percent of employees of each of GE’s business units — “the C players” — once a year. This era of CEOs took more than their fair share of the credit for the success of their companies. Their boards paid them tens of millions in compensation to guarantee that performance would continue.
Collins, however, used the HBR article to cite mild-mannered Kimberly-Clark CEO Darwin Smith as his ideal Level 5 leadership example:
“Smith’s ferocious resolve was crucial to the rebuilding of Kimberly-Clark, especially when he made the most dramatic decision in the company’s history: selling the mills. To explain: Shortly after he took over, Smith and his team had concluded that the company’s traditional core business — coated paper — was doomed to mediocrity. Its economics were bad and the competition weak. But, they reasoned, if Kimberly-Clark were thrust into the fire of the consumer paper products business, better economics and world-class competition like Procter & Gamble would force it to achieve greatness or perish.
And so, like the general who burned the boats upon landing on enemy soil, leaving his troops to succeed or die, Smith announced that Kimberly-Clark would sell its mills — even the namesake mill in Kimberly, Wisconsin. All proceeds would be thrown into the consumer business, with investments in brands like Huggies diapers and Kleenex tissues.
The business media called the move stupid, and Wall Street analysts downgraded the stock. But Smith never wavered. Twenty-five years later, Kimberly-Clark owned Scott Paper and beat Procter & Gamble in six of eight product categories. In retirement, Smith reflected on his exceptional performance, saying simply, “I never stopped trying to become qualified for the job.”3
Smith’s sense of gratefulness is closely tied to the capacity to be humble by remembering past struggles, taking nothing for granted, and always seizing the opportunity for improvement when presented. Once a leader has this key sense of gratitude, they can unlock humility as a competitive advantage that makes them — and their organization — more teachable.
But a humble leader’s capacity to learn is dwarfed by their confidence to act with boldness. Smith knew coated paper would be a slow, agonizing death for the company he had been entrusted to lead. So, he led instead into more profitable, competitive market segments with superiority criteria he was genuinely confident Kimberly-Clark could satisfy, drive, and disrupt.
Steve Jobs, surprisingly, had the same kind of humility that offered Smith advantages. It helped him overcome many of the disadvantages of his narcissistic tendencies. After his humbling exile from Apple and triumphant return a little more than a decade later, Jobs became famous for his “One More Thing” demos where he was the center of attention. Even during his first stint as CEO, he never let a good idea go to waste, even when it wasn’t his own. You might expect that from a leader who compared himself to Picasso when asked how he could justify ripping off Xerox with the Macintosh: “Good artists copy, great artists steal.” Steve Jobs was a Mercenary executive, but a Missionary leader.
Narcissism must be defeated for an executive and their company to succeed in the long run. Steve Jobs showed us, in his second run as CEO of Apple, that humility can — and must — be learned to succeed long-term. Learning how to be humble is a lesson that applies to every business leader, large or small.
This electrifying combination of teachability and the confidence to act when evidence proves bold moves are needed is what really sets humility apart as a leadership trait. More interesting still is how this combination can inspire a workforce to accelerate the progress of innovations to market faster than competitors can catch up or keep up.
Management research shows there are a few signs to look for when evaluating the HQ of a CEO, including:
earning a reasonable salary compared to their employees;
not seeking to be the center of attention; and,
striving to avoid layoffs and pay cuts unless there’s an existential threat to the business.
Herb Kelleher, co-founder and longtime CEO of Southwest Airlines, exemplifies the humble leader in many of the statements he made or others made about him:
“I always turned down pay increases, bonus increases, to set a good example for all of our people.”
“(Herb) doesn’t go to events; prefers to stay under the radar but writes personal notes of appreciation.”
“We’ve never had a furlough. We could have made more money if we’d furloughed people during numerous events over the last 40 years, but we never have. We didn’t think it was the right thing to do.”
“You can’t really be disciplined in what you do unless you are humble and open-minded. Humility breeds open-mindedness — and really, what we try to do is establish a clear and simple set of values that we understand. That simplifies things; that expedites things. It enables the extreme discipline I mentioned in describing our strategy.”
Kelleher’s management style is more often known as servant leadership. The style can be boiled down to the advantages of having a workforce motivated by excellence and love for customers and each other. His statement about the centrality of love for the servant leader explains concisely the advantages of high HQ: “A company is stronger if it is bound by love rather than by fear.”4
Warren Buffet has served as CEO of Berkshire Hathaway for half a century and built a net worth of $144.9 billion as of September 2024.5 That wealth comes in part from his shrewd, Mercenary investment instincts balanced with a Missionary focus on long-term gains from investing in enduringly profitable operators. These traits are balanced by an inner sense of which businesses will be successful as a part of his operating portfolio and a strategic rationale for the world they live in. This includes dozens of wholly-owned Berkshire subsidiaries, but it also includes significant positions in other public companies, such as Apple, Coca-Cola, and American Express.
Buffet has had his share of humbling investment mistakes, some of which cost investors millions.6 But owning up to those mistakes has forged a strong bond of belonging with Berkshire investors built on trust. Buffet’s shareholders trust his instincts because his long-term track record is evidence of the superiority of his investment ideas. Berkshire investors understand that even the best money managers in history can underperform from time to time. But selecting IGCs that have truly long-term growth potential — and sacrificing those which lack it — is the key to sustained investment success.
Shareholders also trust Buffett because of his humble lifestyle. He still lives in the home he purchased in 1958 for $31,500. He pledged 99 percent of his wealth — and challenged other billionaires to donate at least half of their wealth — to charitable causes.7
Missionary investors understand profit as a byproduct of creating unique value for customers through operational excellence. The Mercenary investor wants a return on their capital as the purpose of the business itself — a philosophy also known as “maximizing shareholder value.” Operational excellence and creating value for customers is occasionally the way to produce that return, but certainly not the only way, or even the best way, much of the time.
Since 1973, the annual Berkshire Hathaway shareholder meeting has acted as a way to galvanize this mindset into a culture of success. Buffet and his longtime business partner, the late Charlie Munger, were so proud of the companies in their portfolio that they invited any Berkshire investor to visit Omaha to see them all on display each year.8
Humility doesn’t always have to be a virtue. Sometimes, it’s a weapon. As we’ll explore in the next chapter, the advantages for the Missionary and Mercenary grow narrower as we progress through the Supercycle.
But first, ask yourself: Do you use humility for the good of others or to benefit yourself?
Which mindset is strongest in you?
“[Remarkable leaders] are driven by some cause that compels them to find the courage and take certain risks and work damn hard at it. Sometimes the choice is lonely, which is another reason it takes courage. You have to have courage to do the right thing.” — Simon Sinek9
Being a humble leader means you do not suffer from the need for external validation like narcissists do. Your Missionary puts others first and relies on the opinion of a higher power for self-esteem. But your Mercenary is just as free of the opinions of others — they’re more often in the way of reaching your objective. Let’s find out which of these aspects of humility you’ll need to work on most and which you’re already gifted with naturally.
The principal enemy of humility is narcissism. Narcissists find it impossible to learn from mistakes because it’s impossible for them to admit they’ve made any. Your Missionary might wish someone was less arrogant than they truly are so they’ll be easier to get along with. But your Mercenary will use an enemy’s narcissism for more practical purposes.
Your Mercenary’s exploitation of an enemy’s toxic arrogance can be almost as effective as your Missionary’s use of humility to befriend an ally.
Narcissists are characterized by a few easily recognizable traits:
delusions of grandeur;
exaggerated abilities;
dreams of unlimited power, success, and beauty;
belief in their own uniqueness, entitlement to recognition, and special treatment, especially by others with talent; and,
a stunning lack of empathy, only exceeded by their thirst for admiration.10
As human beings, we all suffer from varying degrees of egotistical frailties that make us vulnerable to manipulation. But recognizing these traits as soon as possible equips you to handle a narcissist appropriately from your very first encounter. Since your Missionary assumes the best of everyone, your Mercenary will need to be on the lookout.
Conveniently, narcissists reveal themselves first by exploiting others wherever they are given an opportunity. It’s tempting to assume all Mercenary traits are narcissistic in this way, but exploitation isn’t the Mercenary’s gift. Your Mercenary is usually better at identifying a narcissistic personality than your Missionary because their pragmatism isn’t as offended by its presence. Your Mercenary is merely protecting your interests from exploitation by others and might even be curious about how to use the weaknesses of a nearby narcissist to your advantage.
To a Mercenary, there’s nothing wrong with feigning humility if pretending makes winning more likely. We see this a lot in the business world whenever virtue signaling is being rewarded. The Missionary ideal of putting others first and oneself last is seductive to those who might not have experience with manipulation of that sort.
But this doesn’t just happen in the corporate space. It’s also everywhere in social media, where creators will push out whatever content gets the most views and likes. Social media gurus suggest creators let trend analytics determine their content production agenda, offering tools that can help creators exploit trending topics. In the Mercenary pursuit of growing an audience, creators subvert their own higher calling to drive clicks with content tailored to appeal to specific viewers.11
Conflicts aren’t always negative. Sometimes, conflicts with others are part of the necessary debate over options that appeal to the differing opinions of various stakeholders. Other times, however, conflict is ego-driven. This is a sign you might be dealing with someone toxic. There’s seldom a positive outcome unless you reorganize the team around another person with similar talents, unencumbered by their arrogance.
We use the term friction to describe what happens in these cases where conflict is necessary to make choices. As you will learn in Chapter 9: Actionable, all healthy relationships have some degree of productive friction in them. This positive friction must be carefully navigated to avoid harm, but it is necessary for assumptions to be challenged and proven for growth to result.
Narcissists, however, have a way of causing negative friction that elevates their status at the expense of everyone around them, destroying goodwill rather than building it up. This isn’t always a fatal flaw in a teammate, but often, a deeply ingrained tendency toward negative friction requires professional help to overcome. Psychotherapeutic treatment of narcissistic personality disorder can take up to a decade,12 and even the most patient management team would rather get rid of the narcissist than reform them.
Narcissists also can’t champion others the way long-term success demands (see Chapter 10: Champion) because they find the sacrifices that must be made abhorrent and distasteful. Making sacrifices is what lesser people do! Narcissists believe they deserve to have it all and do not want to make those sacrifices because doing so would force them to feel and confront their inadequacies.
Giving a narcissist what they want feeds their deep desire to be validated and in control. Subsequently, compliance convinces the narcissist to repeat whatever self-centered behavior worked for them. Direct confrontation typically doesn’t work, either, because they seldom confess to being narcissistic.
Although reinforcing boundaries and expectations can help control the chaos a narcissist might cause, their toxic arrogance can grow so great that the only way forward is ending the relationship. Even if a career-ending disaster is avoided, the costs to the organization are just too high to tolerate an unrepentant narcissist. Even a high-performer who’s pledged to reform their rough edges can continue problematic behaviors until the costs are high enough that they simply must go. If they stay, you run the risk they’ll drive off other high-performers who won’t tolerate them. This path must be handled with care in both personal or business circumstances.13,14
Narcissists tend to prey on Missionaries until a Mercenary steps in. Our recommendations blend your Missionary and Mercenary mindsets. Your Missionary might be patient, loving, and willing to teach the narcissist, seeing their humanity and wanting them to recover. But your Mercenary will not tolerate the narcissist’s games more than once and is willing to cut them from the team to ensure their own goals are met.
As a result of the Mercenary advantage in dealing with arrogant teammates, it’s tempting to despair that only Mercenaries can succeed in modern corporations today. But authentic Missionary leaders create lasting enterprises that can outlive them without losing sight of the higher calling they’ve committed to serve.
Missionaries must have their Mercenary on the lookout for the unhumble and arrogant, or risk letting them destroy everything the team is working towards. Instead, let your Mercenary either use the friction they create to make progress more quickly or cut them off entirely, even when your Missionary can’t or won’t.
Which comes more naturally to you? To be the Mercenary who causes heads to roll at the first sign of narcissism? Or, to be the Missionary who puts everyone else ahead of your own self-interest?
Memoirs
Like most kids, we loved to test our boundaries with our parents. When we overstepped those boundaries and Mom sensed we needed to be taken down a notch or two, she’d let us know. Even after we’d grown to tower over her physically, she wouldn’t hesitate to scold us with, “You’re getting a little too big for your britches!” or, “I brought you into this world, and I can take you out.”
But the bone-chilling, blood-curdling sentence we feared most came only when we’d sass back at our father: “Don’t you speak to my husband that way.”
We can still hear her voice decades later. In hindsight, we certainly caused her extra stress with our childish back-talk, but we’re thankful that she’d never hesitate to deliver a dose of humility by confronting reality and calling us out. Had she not corrected us, we might not have chosen the path we did.
Her attitude shaped Arik’s early, conscious mission to act as an “agent of humility,” which today serves as the cornerstone for Aurora’s mindset. Our prime directive is to strengthen a client’s competitiveness any way we can, even if it might be uncomfortable at times to confront the present realities affecting their future.
Our father, however, was just as influential in instilling a spirit of humility in us by putting others’ interests first. After his first heart attack in the mid-1980s nearly killed him, he spent most of his time studying Bible scriptures and exploring his relationship with God. Through the servant-focused way he modeled a life well-lived for his boys, we knew everything would be okay no matter what happened to him.
On February 1, 1999 — the day he died — Mom and Dad prepared to go to buy Arik a birthday present. Arik had a funny feeling he might never see our father alive again, and he almost stopped them from going. Dad’s lesson about trusting in a higher power taught us all would be well no matter what the future held.
And, Arik let him go.
Suffering a heart attack behind the wheel, our dad never made it home. His last selfless act before he died was to pull the car over to a safe place on the shoulder of the road to protect our mom, who was riding in the front seat next to him.
Now, just as our dad modeled a humble life to us, we try our best to model the same in our own lives with our children. We want them to understand that, because we understand the higher calling we’ve been given, nothing can harm us, even death. Today, rather than departing from friends by saying “goodbye” or “see you later,” Arik often says, “I’ll see you at the Resurrection, if not before.”
You needn’t be religious to enjoy the benefits of an inner drive to be humble. How do you, as a professional, strive to be included among the authentically humble leaders in your organization, your industry, and your place in the world?
We’ve seen that humility is a long-run competitive advantage. But it can also help you stand out from the crowd in the present.
In 2005, we were one of a handful of competitive intelligence firms approached by a national retail giant seeking help to design a reputation intelligence program. We were upfront in saying that we didn’t understand why they were coming to us for help. They had a vast public relations and marketing communications apparatus to realign, not a straightforward CI problem like we typically helped clients tackle.
When the executive who approached us talked with our competing peers, the overwhelming response from the competition was that reputation management intelligence was a piece of cake. One even claimed it was 20 percent of their business. This assertion was laughably untrue — at the time, reputation management had not yet become a trend in marketing best practices, and it was the first such engagement we’d encountered.
The client ended up coming back to us, saying we were the only firm that hadn’t made a dubious claim about the project being simple or easy. Arik stressed to the executive that reputation management was, in fact, not a piece of cake. It would be a big challenge, and Arik told her Aurora didn’t have the expertise to do it properly without help from a specialist. When she asked Arik if he was saying he wasn’t qualified, Arik clarified that no one in the CI business was qualified to do the job they were asking us to do in the absence of a subject matter expert. Arik told her that he would only consider accepting the assignment on the condition that he could recruit an expert to help.
We won the assignment based on Arik’s honest and humble representation of Aurora’s actual skill set and expertise. This new client served as the first of many reputation management collaborations Aurora would come to specialize in. But we were only able to develop this specialization after having confronted our initial lack of qualifications to serve this client’s specific needs.
When have you discovered an unknown opportunity after confronting a shortcoming of your own?
“Today, you’re going to learn how to drive this car.” — Robert W. Johnson, January 1, 1988
I was just 13 and a half — not even close to the legal driving age — but that made no difference to Dad. He explained that, because of his heart condition, it was important that I learn to drive. There might come a day when I would need to save his life by driving him to the VA Hospital in Minneapolis. His poor heart health had made him uninsurable and the VA was the only place he could go. He drove me out by the town beach pavilion where he knew the parking lot would be empty that time of year. He got out and walked around to my side, implying I was to take over driving.
Our car was a manual transmission with a stick shift and a clutch. Once I’d mastered the parking lot, I jerked us around town and, after a lot of gear grinding, I eventually got the hang of it.
Looking back on that New Year’s Day, I have a clearer understanding of why Dad had such a need to get me in the driver’s seat. Although he might have needed me to drive someday — years before I was old enough — as a parent, his obligation was to teach me this necessity in a controlled setting. Using this low-stress scenario, Dad helped me overcome any fears I might have had about driving him to the VA Hospital in big city traffic.
Some years later, after I had gotten my driver’s license, this exact need arose as he required an emergency pacemaker to be implanted to keep his heart in rhythm. And I was more prepared to chauffeur him thanks to his foresight getting me ready.
— Derek
Involuntarily humbled (and grateful for it)
In much of our work at Aurora, humility is an act of will. We choose to put the interests of our clients ahead of our own and the interests of our people ahead of our leadership. Thanks to Mom and Dad’s School of Hard Knocks, we know it’s the best way. Although we occasionally humble ourselves on purpose, more often, humility is thrust upon us in ways every bit as valuable.
The best example of this type of involuntary humbling happened in 2020 with the COVID-19 pandemic. Although we’d been through several economic recessions in the 25 years prior, the business challenges related to the pandemic were new and unusual, to say the least. Reconsidering the new realities of our business meant making tough choices about which activities and assets to keep, shut down, or recalibrate.
With the inevitability of social distancing on the horizon, it became clear by mid-February that our spring conference season would be over before it started. Just as we entered the final stages of preparation for RECONVERGE — our crown jewel event of the year and interactive learning community — it was obvious those plans would screech to a halt.
Shutting down the business we’d come to rely on as our most intimate connection with clients was not an easy decision. Did it need to be done? No doubt. At the time, we had no understanding of how we’d recover the benefits we enjoyed with RECONVERGE. But we knew it couldn’t continue as it was. That world was gone, perhaps for good. But sometimes, humility is having the confidence to know that the solution will reveal itself when the time is right.
RECONVERGE had previously offered us another encounter with involuntary humility in 2014. We had to write a check for $30,499 to the Millennium Hotel in downtown Minneapolis after canceling a conference we’d contracted to hold there.
As the conference side of RECONVERGE grew, we had grown more ambitious and overconfident in our ability to attract paying attendees. In reality, just four people had signed up when we decided to pull the plug on what would have been an underwhelming turnout. Even if a sudden registration wave changed our circumstances, we knew it would have been more harmful to Aurora’s treasured business relationships to continue with a handful of people and host a disappointing event. So, we canceled it.
But our contract with the hotel was clear. We owed them $30,499, whether we had an event or not. The experience reminded us how much overconfidence can cost. But it held us accountable for the promises we’d made.
In 2005, we realized that we had a major gap in Aurora’s capabilities portfolio. We lacked software for intelligence clients who might not need our research and analysis services, but who needed to manage their own workflow of insights with their internal stakeholders. There was no way the Johnson Brothers were about to author a platform to do that. We knew that we needed to pull in someone with the highest level of trust, commitment, and work ethic to match or exceed our own.
Derek’s close friend, Greg Ervin, would be the point person to get the system off the ground. Next, we found a first client who could subsidize the costs of prototyping the system for them. For the first few months, Greg was humbled a lot himself, wondering what in the world he’d gotten himself into. But it soon became clear that he was the perfect person to take on the challenge. He had the skills and attitude to lead the technology side of the business and continuously learn what we’d need to succeed.
Now, two decades later, Greg continues to serve as Aurora’s Chief Technology Officer and head of engineering. That longevity is because Greg knows what we’re really like behind the curtain. He understands that we authentically live out the values we preach and that we’re not afraid to admit when we still have a lot to learn. Thanks to his humility and leadership, Aurora’s software side consistently thrives, even through the uncertainty of conditions like a pandemic.
Because we understand how important humility is, we take every opportunity to inform leaders how to hone and use it to their advantage. In 2018, we made humility a central topic of that spring’s RECONVERGE Intelligence Leadership Symposium. Over the course of the conference, we explored how intelligence analysis can make business leaders teachable again and awaken a culture of humility within their organizations. To conclude the week’s lessons, we emphasized the critical need for empathy with other stakeholders — allies as well as enemies — in their macro-environment through a technique called business wargaming.15
A wargame simulates the potential response of friends and foes alike who might win or lose based on the success of your plans. It starts with a question that proposes a range of answers leading to actions, only one of which can be optimal in producing the most desirable results. This is the essence of the IGC.
Throughout Section 3: Simulation, you’ll see why humility is the prerequisite to simulating these likely responses and navigating the scenarios your actions might generate while there’s still time to affect the outcomes.
Questions to Activate Humility
The antidote to the culture of narcissism so abundant in modern society today is the Missionary’s priority of putting others ahead of ourselves. But your Mercenary needs to be on the lookout to neutralize unhumble and arrogant adversaries.
Learning anything new depends on recognizing a need or opportunity for improvement. For organizations burdened by a culture of entitlement, it’s almost impossible to humble people enough to prioritize such improvements over shorter-term financial results. How will you neutralize the effects of arrogance making your team so much less teachable than they need to be? How will you encourage teammates and stakeholders alike to put the focus on others rather than themselves?
The saying “we are greater than me” means that no one individual will ever have a high-enough resolution point of view than we will by synthesizing the perspectives of other observers. How will a culture of humility create a competitive advantage for your plans to succeed?
This diversity of perspectives is where real competitive advantage comes from.
The Missionary mindset uses humility to be more teachable than their enemies, but the Mercenary guards against the hidden effects of having a fox in the hen house. Teachability will always be advantageous wherever evidence might be lacking. Are there members of your team to whom you can’t teach anything they don’t already know? If so, how will you neutralize the effects of their arrogance on your plans?
Do you remember the emperor and his inability to confront the reality of his nakedness?
The humble child modeled for the entire kingdom what teachability looks like. Like the emperor who should have listened to the child, think of a personal or professional encounter where you wished you had listened more closely to one of your stakeholders or teammates. With your client, coworker, family member, or friend, how might humility have led you to act differently and prevent an embarrassing mistake?
Although you can’t fix those past errors, you can learn to appreciate the perspectives of others and use them to your collective advantage. Making mistakes is inevitable, but forgiving yourself for not being all-knowledgeable enables you to learn from those mistakes and avoid similar circumstances in the future. Admitting a mistake, at least to oneself, is the cornerstone of humility. Learning from your mistakes and sharing those lessons with others will highlight how life has taught you to put others first.
This is what becoming teachable means.
Your Mercenary will get distracted by their overwhelming drive to win but will be able to recognize those traits in others and imagine how nefarious their actions could become, if left unchecked. Your Missionary, on the other hand, reminds you of the values that make winning worthwhile in the first place. How will you find the balance between mindsets to save your IGC and those who are backing you?
Sometimes, you’ll be surrounded by stakeholders who won’t heed your advice or help you achieve optimality for your organization. Perhaps they simply don’t understand how they benefit from your IGC, and they’ll instead seek out short-term success for themselves.
As you’ll learn in the next chapter, we’d all prefer the Missionary’s humility to drive our collaboration with others. But the arrogant among us tend to render themselves so willfully helpless that we have no choice but to notch another arrow from the Mercenary’s quiver — guile.
Guile is seldom considered a virtue. But we’ll demonstrate how essential it is to protect everything you care about from hostile forces jealous of your success.
Transition from Section 2: Optimality
In Section 1: Discovery, we introduced you to the phase of the Insights-to-Action Supercycle where under-certainty, stochasm, and control define the boundaries of your macro-environment. The yield of this kind of strategic intelligence is the inventory of contingency control factors — which nobody controls — that you’ll need to cope with and survive regardless of your future plans.
Section 2: Optimality focused on developing the optimality of your offer as a carefully calculated response to growth opportunities in market segments you find attractive. Doing so enables winning to become a choice rather than a chance. Optimality has required you to dig deeper into the concepts of disruption, superiority, and humility to ensure you and your teammates will be able to understand the forces of innovation, creative destruction, and strategy. The yield of this market intelligence is the inventory of dominion control factors, from which only you will choose how to achieve optimal results.
As we proceed into Section 3: Simulation, you’ll encounter human intelligence concepts related to competitive intelligence. Your goal will be to understand the influence control factors of other stakeholders who might win or lose when you succeed, as well as how they will help or hinder you. These other stakeholders will focus on their own contingency and dominion factors, largely ignoring how you influence them to choose differently. Your influence is limited mainly by the degree to which these other stakeholders recognize your interests and whether they align with their own.
Your IGC is the map by which these influence factors can be navigated. In the next three chapters, you’ll discover how wargames and other simulation techniques can get you inside the heads of your friends and foes to influence their choices more intentionally.
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