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of Harrah’s Entertainment, commented that the higher you rise in an organization, the more people are going to tell you that you are right. This leads to an absence of critical thought and makes it difficul for senior leaders to get the truth—a problem both for the company and its leaders, as you can’t address problems if you don’t know about them. Loveman tried to overcome this problem by regularly and publicly admitting the mistakes he made so that others would be encouraged to admit where they had messed up too. He also placed a lot of emphasis on the process by which decisions got made—particularly, the use of data and analytics—and almost no emphasis on who was making the decision. Gary was conscious of the tendency for people in power to become deeply self-righteous and believe their own hype. This problem is difficult to overcome as it plays into our natural tendency to want to think highly of ourselves, but Loveman tried to overcome this tendency by seeking the opinions of outsiders with no stake in Harrah’s and by encouraging open debate and critical self-reflection within the company.

Loveman’s success at Harrah’s and his position as a leading executive in the gaming industry insulated him, to some extent, from coup attempts. But no one in a position of power is completely immune from palace revolts. Patricia Seeman, a Swiss executive coach and adviser to numerous high-ranking executives, particularly in the financial services industry, told me that in the typical senior management team, all the people reporting to the CEO believe they could hold the CEO position, many think they could do better than the incumbent, and most direct reports aspire to their boss’s job. Some people are going to be willing to take their turn and hope that they will be chosen when the incumbent steps down, but others will be more proactive in their efforts to move up. Therefore, for CEOs to survive in their jobs, they need to be able to discern who is undermining them and be tough enough to remove those people before they themselves lose the power struggle. What’s true for CEOs is also true for other senior-level executives with ambitious subordinates.

Ross Johnson, formerly CEO of Nabisco, is justly famous for his role in the first huge leveraged buyout, the RJR Nabisco transaction described so well in the book Barbarians at the Gate.14 But where Johnson really excelled was maneuvering himself into CEO jobs and eliminating rivals who naively trusted him. When Johnson engineered the merger of Standard Brands, where he was CEO, into Nabisco, the huge cookie and cracker manufacturer, he was ostensibly in the number two role and faced numerous internal Nabisco rivals. One was Dick Owens, Nabisco’s chief financial officer—at the time of the merger promoted to the title of executive vice president and appointed to the board of directors. “Whatever Owens wanted, Johnson got him. He approved a steady stream of Owens’s requests for new aides…. In Johnson’s warm embrace, Owens’s financial fiefdom grew greatly.” That is, until Johnson went to the CEO and told him that Owens had built too large and too centralized a financial empire. Owens was then replaced for a time by Johnson himself.15

Next, Johnson gracefully pushed the CEO aside, doing it with flattery and kindness. Johnson had Nabisco endow a chair in accounting at Pace University in the name of the CEO, Robert Schaeberle. He ensured that the board named the new Nabisco research center building after the CEO. Soon, Johnson was the CEO of Nabisco. As Johnson’s allies realized, “a man who had his name on a building…might as well be dead.”16

When you are in power, you should probably trust no single person in your organization too much, unless you are certain of their loyalty and that they are not after your job. The constant vigilance required by those in power—to ensure they are hearing the truth and to maintain their position vis-à-vis rivals—is yet another cost of occupying a job that many others want.

COST 5: POWER AS AN ADDICTIVE DRUG

Nick Binkley, a guitar-playing, song-writing