For Managers, Ignorance Isn't Bliss

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If that's what she did, it was a huge mistake; nothing can undermine one's position of authority more quickly. "Effective leaders are rarely 'permissive,'" Drucker asserted. "But when things go wrong—and they always do—they do not blame others."

At the same time she was pointing fingers, Cruz is said to have discouraged dissent, another cardinal sin in Drucker's eyes. "Decisions of the kind the executive has to make are not made well by acclamation," he advised. "They are made well only if based on the clash of conflicting views, the dialogue between different points of view, the choice between different judgments. The first rule in decision-making is that one does not make a decision unless there is disagreement."

Performance Review

What's fascinating to me is how someone as bright and accomplished as Cruz could behave in this manner. Surely she must have known that those around her believed her style to be terribly toxic and that, in the end, it might even prove her undoing. Then again, maybe not. In September, an article in Harvard Management Update examined just how difficult it can be for the most talented employees, especially those at a senior level, to absorb honest feedback about their performance. It's not simply that they don't want to see their weaknesses; they've almost been preconditioned not to see them.

"Because they have rarely failed," the piece quotes Chris Argyris of Monitor Group as saying, "they have never learned how to learn from failure." Instead, they're apt to "screen out criticism and put the 'blame' on anyone and everyone but themselves. In short, their ability to learn shuts down precisely at the moment they need it most."

Beard recounts that in 2004, Cruz received a performance review from her then-boss, Vikram Pandit, which "included some negatives." Cruz, who resented Pandit, disputed the evaluation and even went so far as to protest the findings to a member of the board.

In the short term, it worked. Pandit left Morgan Stanley for Citigroup (C), and Cruz continued to rise through the ranks. Ignorance as bliss, however, can only last so long.

Rick Wartzman is the director of the Drucker Institute at Claremont Graduate University and an Irvine senior fellow at the New America Foundation. He writes The Drucker Difference every other week for businessweek.com/managing/.