Hubris Kills Businesses. Humility Saves Them. There are loads of failure modes for companies big and small, but they usually come down to one thing: hubris.

By Steve Tobak

Opinions expressed by Entrepreneur contributors are their own.

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Every week I talk to founders and small business owners who never should have been running a business in the first place. While that is an observation – my professional opinion – it's based solely on the facts. And they're not pretty.

In every case, one or more of the following situations were in play:

  • Close to bankruptcy, they didn't seek help until they'd run out of runway (cash and time) to save the company.
  • They invested and lost small fortunes, sometimes all they had, and had little if anything to fall back on.
  • Neither they nor anyone in a management position had any sort of business background or acumen.
  • Their strategies were flawed from the start and, when confronted with clear evidence of that, were resistant to advice and change.

Even with the outcome staring them right in the face, these entrepreneurs usually don't see themselves – their lack of knowledge and experience – as the problem. And yet, that is the problem. That's the only real problem. And it's so easy to remedy it isn't funny.

There are loads of failure modes for companies big and small, but they usually come down to one thing: hubris. Their leaders lack humility. And it's ironically that same lack of humility that keeps them from realizing just what an enormous problem that is. It keeps them in denial of their own limitations.

Hubris kills businesses; humility saves them. If you don't learn that, and sooner rather than later, you will never be successful over the long haul. And that goes for your career, as well.

The common wisdom of the day is to focus on your strengths, not your weaknesses. Wrong. That only works if you have the talent or experience to succeed in your career or business and don't have critical limitations that will hold you back. Unfortunately, I don't know anyone who fits that description, and that includes hundreds of executives and business leaders.

Related: How to Take Control of Your Career … Now!

In case you're wondering, "hubris" means excessive self-confidence while "humility" means not thinking you're better than others. In a more practical sense, I see "hubris" as the state of not knowing what you don't know. "Humility," on the other hand, is the understanding that you're nothing special.

Another way to look at this is through the lens of Laurence J. Peter, the man who came up with the management theory that bears his name, the Peter Principle. The idea is that employees will always be promoted until they reach their level of incompetence, at which point they remain, often indefinitely.

Interestingly enough, the principle extends quite well to entrepreneurship and risk-taking. It's human nature to take something that works and attempt to scale and extend its use. And those who push the envelope will do that … until it stops working. In other words, they hit a wall. And if they lack the humility to take a step back, objectively assess the situation, and do something differently, they will never break through that wall.

The same observation has been made many times by many great business leaders.

In his breakout book, Only the Paranoid Survive, former Intel CEO Andy Grove said, "Success leads to its own demise." Said another way, success is its own worst enemy. But humility solves the problem.

Just last week I watched an interview with Charles Koch. The long-time CEO of Koch Industries – the nation's second-biggest private company, with sales of $115 billion and 100,000 employees – has written a book called Good Profit that hammers home the importance of humility in leadership.

Related: Want to Succeed? Stop Trying to Be Happy All the Time

In the interview, Koch talked about the first words his father – company founder Fred Koch – said to him before turning over the CEO reins, "I hope your first deal is a loser," the elder Koch said to his son. "Otherwise you'll think you're a lot smarter than you are."

"But he had tremendous values – tremendous integrity, humility, work ethic – and terrific thirst for knowledge," Koch said of his father.

Koch went on to warn of the trap of overconfidence. "Hubris, arrogance is just one step ahead of loss of integrity," he said. "Because if you think you're better than other people, you know more, then you're going to think as many leaders have that the rules don't apply to them. So they lose their integrity."

And while Koch is big on taking risks and failing on the road to success, he again warned about the risk of the flipside, overconfidence: "That's one of my big principles. Success is one of the worst enemies of success, because success tends to breed complacency and lack of humility," he said.

Overconfidence is actually indicative of a general lack of self-awareness. I recently posted an excerpt from my new book, Real Leaders Don't Follow: Being Extraordinary in the Age of the Entrepreneur, called "Want to Succeed? Stop Trying to Be Happy All the Time." In response, a young gamer with a YouTube channel tweeted this:

Fair enough. I also thought I knew it all when I was his age. You can get away with that sort of mentality when you're young, have no responsibilities, and have nothing to lose. So he gets a pass. But business owners don't. You and I don't. And the biggest mistake any of us can make – in our careers and in our businesses – is failing to realize how little we actually know.

Related: In Business, Does Size Matter?

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Steve Tobak

Author of Real Leaders Don't Follow

Steve Tobak is a management consultant, columnist, former senior executive, and author of Real Leaders Don’t Follow: Being Extraordinary in the Age of the Entrepreneur (Entrepreneur Press, October 2015). Tobak runs Silicon Valley-based Invisor Consulting and blogs at stevetobak.com, where you can contact him and learn more.

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