It’s 11:30 on a Tuesday morning. The board has spent three months searching for a replacement for the outgoing CEO. Six bad quarters, the market has punished the stock 22%, and the trade press is starting to talk about a “strategic crisis.” In the room, someone utters the sentence that will change the company’s fate: “We need someone with vision, with courage, someone who isn’t afraid to make bold decisions.” Everyone nods. Three months later, the board proudly announces the hire of a charismatic, brilliant CEO with a powerful narrative about the future. Two years later, the company is worse off than before.
Why do boards make this mistake so consistently that it almost seems programmed?
Crisis doesn’t reveal leaders: it manufactures them
There is a robust body of research —from Max Weber in 1922 to Padilla, Hogan and Kaiser’s Toxic Triangle model (2007)— showing that narcissistic leaders don’t emerge at random. They emerge when three factors coincide: a crisis perceived as existential, weakened institutions unable to process it, and an anxious audience that needs a simple explanation. In those moments, narcissistic charisma isn’t a flaw to avoid: it’s exactly what followers are looking for. In politics the examples abound: Hitler, Mussolini and, closer to home, Chávez.
The trap for boards is that they replicate this logic at the micro scale. When the company goes through a strategic crisis, rational controls loosen. Prudence gets confused with cowardice. The question stops being “who has the best analytical ability to understand this business?” and becomes “who has the conviction to get us out of here?” And in that silent shift, the board abandons its fiduciary duty without noticing.
The most expensive bias in corporate governance
Charles O’Reilly and Jennifer Chatman (2020) documented it precisely: boards systematically confuse confidence with competence. Narcissistic CEOs secure better compensation and worse organizational performance over long horizons. Chatterjee and Hambrick had already shown in 2007 that these companies exhibit greater volatility, more large acquisitions and extreme outcomes (brilliant or catastrophic), with no middle ground. What’s striking is that the board rarely learns. When the “savior” fails, the conclusion is usually that we need another savior, not that the whole model is miscalibrated.
In Latin America, the problem is amplified by three structural factors. Concentrated family ownership rewards strong personalities who know how to “manage the owner.” Weak regulatory frameworks reduce the reputational cost of failure. And the region’s deeply hierarchical business culture confuses leadership with top-down authority. The result is that the messianic CEO is not only chosen more often, but faces fewer checks once installed.
What a calm board does differently
Experience suggests that effective boards do three counterintuitive things in moments of crisis. First, they deliberately lower the temperature of the process: they extend the search rather than rush it, aware that urgency is the best friend of a bad appointment. Second, they distrust heroic narratives: when a candidate seems to have all the answers, they assume it’s because he doesn’t understand all the questions. Third, they prioritize predictable competence over extraordinary charisma: analytical ability, epistemic humility, a track record of “boring” but correct decisions.
It’s worth asking, in your board’s next meeting, whether the last big appointment was made on fiduciary criteria or emotional ones. How many of the critical decisions of the last five years were made because someone projected certainty, rather than because the evidence supported it? And the most uncomfortable question: if tomorrow you faced a serious crisis, are you sure your board would resist the temptation of the strongman?
The paradox of corporate governance is that the best CEOs rarely seem indispensable. The worst, often do.
P.S. Historians have a disturbing pattern: the great corporate catastrophes were almost never caused by mediocre CEOs. They were caused by brilliant CEOs whom no one dared to contradict. Ask yourself whether your board would be the exception.