Leaders: You're Only as Good as Your Last Screw-Up

Last Updated Sep 13, 2010 11:32 PM EDT

Screw UpEver sit there and listen to a CEO or some other mucky muck spout off about all the brilliant things he's done? I have. Lots of times. In addition to being nauseating, most of it's probably a load of BS.

You see, people who do brilliant things, who are truly successful and have the track record to prove it, rarely talk that way. That's because experience has given them a grounded sense of themselves.

But everyone screws up, right? If that's the case, then why do these two types of leaders behave so differently? That's because some leaders know they're only as good as their last screw-up, while others don't. Here's why.

Take former IBM senior vice president Robert Moffat, for example. The guy climbed the corporate ladder at IBM for 31 years, becoming a potential successor to CEO Sam Palmisano. Then he blabs all kinds of confidential inside information to Danielle Chiesi, a hedge fund consultant he was having an intimate relationship with, knowing full well she was up to no-good. Now his career is over and he's going to prison for six months.

When Moffat was sentenced yesterday, he said this to the judge, according to Bloomberg, "Your honor, I made a terrible mistake in judgment which will haunt me for the rest of my life," his voice breaking with emotion and wiping tears from his eyes. "What I did was wrong. I alone am responsible for my conduct."

Now, I don't know what type of executive Moffat used to be, but I guarantee that, going forward, he'll know he's only as good as his last screw-up.

Contrast that with former AMD CEO Hector Ruiz, who did pretty much the same thing as Moffat, except that Ruiz got caught in the original FBI snare and agreed to cooperate with the investigation to avoid being charged.

But breaching his fiduciary duty and leaking material inside information wasn't the first time Ruiz screwed up. At the end of 2007, a year when AMD racked up over $3 billion in losses, Ruiz said, "We blew it and we're very humbled by it and we learned from it and we're not going to do it again." Do you think he meant it? Apparently not. AMD lost $3 billion the following year, as well.

And during that two year stint when AMD lost over $6 billion and the company's stock lost about 90 percent of its value, Ruiz was one of the highest paid CEOs in the semiconductor industry. And now, he gets to walk on the insider trading deal, as well.

The main difference between these two executives is the feedback they got along the way. One was punished for his screw-up; the other was rewarded. That's pretty much how it goes with leaders. To some extent, we make them what they are. So if you ever wonder how so many leaders can screw up again and again and still behave as if the ground they walk on is paved with gold, now you know.