I worked with an organization several years ago to develop a leadership coaching program. When I asked my client what the problem was, he said, “It is okay to be a jerk as long as you’re hitting your numbers.”

The organization’s sales leaders were operating in an alienating manner, but this behavior was excused because they were meeting their goals. When those sales dipped, they didn’t have trusted confidants to point out industry and competitive shifts that led to the decrease.

I liken this to the feedback some people receive regarding the things they say and the way they say them. It’s one thing to be right, and quite another to be rude about it. For a leader, being right is driving successful business results. Saying those things in the right way demonstrates the humility necessary to build relationships. Both factors must be present for individuals to attain leadership excellence.

Now consider NBA basketball star LeBron James. In the 2010 offseason, James signed as a free agent with the Miami Heat and faced a storm of criticism as the result. Why was he vilified when so many players in the sports world today opt to go the free agent route? It all goes back to what you say, and how you say it.

LeBron could have chosen a team to sign with and demonstrated professional courtesy to the other teams under consideration by informing them of this move in advance of holding a press conference. Instead, he strung teams along, including Cleveland, and announced his decision in a highly publicized and criticized ESPN live special entitled “The Decision.” LeBron and his Miami Heat teammates then hosted what appeared to be a post-championship celebration in their home arena before the season had even begun. Rather than a confident showman focused on the new goal ahead, many fans and media members saw arrogance and over-the-top flamboyance. The most notorious moment came when LeBron discussed his new team winning multiple championships as if it was a foregone conclusion.

LeBron was now firmly cast as a bad guy, yet even in this new role and on a new team he came up short yet again in the NBA championship series. The sports media criticized LeBron for not performing up to the level expected during crunch time moments of the 4th quarter. Unlike the last time he lost the big game, he was not given a pass.

This is the essence of leadership derailment. Derailing behaviors tend to emerge as coping mechanisms when we face stress or adversity. Over time these behaviors erode relationships. In the grand scheme of things, our positive achievements may outweigh our derailing moments in terms of sheer number. Regardless, the magnitude and weight of those derailing actions when we are at our worst tend to overshadow much of the good work we have done. 
LeBron was likely coping with stress and adversity. He had always lived and played basketball in Ohio up to that point, and last season was clearly a time of stressful decisions and transitions. His charisma, showmanship, and confidence allowed him to harness his talents and become an MVP. These same characteristics became strengths overused and the negative moments are quickly becoming the first thing that comes to mind when thinking of LeBron. The 2012 season appeared to be the year of a humble King James until a recent altercation with a fan during a game has further perpetuated his bad guy image.

On my way to the airport this week, I heard a sports talk radio personality characterize LeBron as a good guy who tends to say or do things in big moments that rub people the wrong way or bring into question his ability to deliver in the clutch. These derailing moments will likely permeate his legacy and overshadow his multitude of great on-the-court achievements unless he is able to win multiple championships. Like those sales leaders I worked with years ago, it’s okay to be a jerk as long as you are hitting your numbers; however, true greatness is likely achieved through equal doses of driving results and demonstrating humility. 

I’m a big movie buff. Since I have young children I rarely get a chance to go the movie theaters anymore to see a film that doesn’t star Woody, Buzz, Lightning McQueen, or a princess of some type. In my 5+ years of fatherhood, Netflix has become a savior in terms of feeding my movie addiction. For me and 20 million other subscribers, seeing that a new movie is available for streaming online or getting that red envelope in the mail is one of life’s simple joys.

The joy of being a Netflix customer was mightily shaken last July when customers received a brisk, impersonal email informing them that the video subscription service pricing would be increased by as much as 60% per month unless subscribers decided to substantially limit the services they were receiving. In essence, customers were abruptly told that they would no longer be able to enjoy both the streaming movies and DVD-by-mail features. They would be required to choose one type of service otherwise incur the price hike to retain both options.

Netflix customers were outraged by this imposed price increase and/or elimination of service options. This outrage was not only communicated via blogs and Facebook posts. Many customers have truly put their money where their mouth is by canceling their subscriptions. The company’s stock price is now 42% lower than it was in July before the price hike announcement. An organization that by all accounts changed the video rental industry and was experiencing a fantastic upward trajectory envied by the business world has taken a serious turn for the worse. How did this happen?

The recent events at Netflix appear to be yet another unfortunate example of leadership derailment. The company’s decision to increase prices and the manner in which they communicated the changes to customers has been perceived by many as a bold and arrogant move. In September, Netflix CEO Reed Hastings issued a statement apologizing to customers. However, it is possible that some may view his apology as too little, too late. Even after the initial customer backlash, Netflix at first confidently defended their decision and even announced in August that they expected to gain 400,000 subscribers by the end of September. Recently, Netflix has projected that it will have actually lost 600,000 customers by the end of September. In other bad news, Starz, a key movie content partner for Netflix, ended its partnership with the organization. The company has decided to rebrand their DVD-by-mail service as a separate company called Qwikster. The effectiveness of this strategy is being questioned by many and could further stoke the flames of the fire started earlier this summer.

Two months after the initial controversy, Reed Hastings’ blog post apology stated that the July announcement “lacked respect and humility” and indicated that he should have personally communicated in more detail the reasons for the changes. He went on to say, “In hindsight, I slid into arrogance based upon past success.” Hastings ends his statement by saying that he and his team will work hard to regain customers’ trust. Interestingly enough, his actions and choice of terminology strongly parallel the leadership derailment research findings of Hogan Assessment Systems.

High potential leaders assessed by Hogan tend to be seen as confident, assertive, ambitious, and visionary. Some of these very characteristics are likely present in the senior leadership team at Netflix and surely contributed significantly to the company’s hugely successful rise. However, during stress or heavy workloads, when leaders aren’t paying attention, or during times of change, this confident style may emerge as counterproductive behaviors viewed by others as arrogant, lacking humility, setting unrealistic expectations, and ignoring negative feedback. In his own words, Hastings acknowledged a very similar behavioral pattern. Furthermore, derailing behaviors related to arrogance often lead to the inability of leaders to be seen as trustworthy and sincere, hence Hastings’ comment that Netflix is now committed to regaining customer trust.

Leaders that allow their natural confidence to descend into arrogance rarely admit when they are wrong, learn from mistakes, or take responsibility when things go wrong. This recent statement by the CEO appears to potentially demonstrate a realization that a mistake was made and a willingness to take ownership of the misstep…however the pricing increase was not rescinded and only the poor communication of the policy change was addressed. Will the apology and Qwikster rebranding strategy be effective in retaining customers and attracting new subscribers? Can Netflix and its leaders get back on track after derailing so drastically? Stay tuned!