Maine fell for the trap of the charming outsider

Maine oysterman Graham Platner suspended his Senate campaign amid a hurricane of revelations, culminating in a sexual assault allegation credible enough that his own national political party abandoned him within hours. Before the scandals, his appeal, blue-collar affect, and progressive policy positions had catapulted him to stardom. Platner's meteoric rise and fall is a lesson in the potential dangers of charismatic, unfiltered outsiders that's just as relevant in business as in politics.

Platner launched his campaign for the US Senate last August in a now-famous campaign video. Despite — or because of — a scant record, his campaign drove the sitting governor out of the race and he easily captured the nomination. The scandals started even before his win. First, there was the chest tattoo, then the ugly social media posts written under a pseudonym, and the reporting on his treatment of women. These weren't enough to sink his campaign until this week’s allegations, which Platner denies but triggered a complete collapse in party support.

Now, Maine Democrats are scrambling to find a replacement. They did this to themselves, boosting him to the nomination before anyone examined with any depth his record, beliefs, or character. The scrutiny that should have come first arrived last. But Maine's Democrats aren't the only people who pick leaders based on charisma and vibes. In 2011 the board of retailer JC Penney Co., prodded by activist investor Bill Ackman, decided that Ron Johnson, who had built Target Corp.'s cachet and then Apple Inc.'s gleaming stores, could save the company. Ackman called him “the Steve Jobs of the retail industry.”

Penney's market value rose $1.2 billion the day he was named, and the market, Ackman said, was wrong: “He’s worth way more than that.” Johnson said his ideas were largely intuitive. He looked at Penney and Apple and saw two companies that were, in his word, "identical."

They were not. He scrapped the coupons and sales that Penney's shoppers loved and ignored market research. Sales plunged. The stock lost more than half its value over his final year, and 17 months after he arrived the board let him go. Ackman later called Johnson’s strategy very close to a disaster.

That isn't atypical. Harvard Business School’s Rakesh Khurana studied CEO successions at more than 850 large companies and found that boards, chasing charisma and marquee pedigree over fit and demonstrated skill, badly underrate how risky an outside hire is, precisely because you cannot evaluate a stranger the way you can someone you have watched for years. They pay a fortune, demand miracles, and often watch the savior wreck the company.

Boards pick charismatic outsiders for a reason. Jamie Dimon was fired from Citigroup Inc., but carried JPMorgan Chase & Co. through the 2008 global financial crisis. Alan Mulally arrived at Ford Motor Co. in 2006 from Boeing Co. and performed one of the greatest turnarounds in history. And even Johnson was a dazzling success when he leapt from Target to Apple.

I have written two books about this basic problem in leader selection. A process that thoroughly evaluates a candidate does two things, and only one on purpose. It screens out the people who would blow it up, but it also sands off the ones who would do brilliant things that the system can't foresee. That's why the filtered leaders picked by the system are so safe and interchangeable, while the unfiltered leaders who do what no one else can are sometimes disastrous and sometimes geniuses.

Unfortunately, the traits that make an outsider appealing are often the same ones that make an outsider dangerous. Start with charisma, or the power to move people past the point where argument could carry them. It makes a leader with good ideas better and one with bad ideas far more dangerous, and it works less on the merits than on the bond between a leader and their followers.

You might not find President Donald Trump appealing, but no one who has stood at a Trump rally can miss the current running between him and the crowd. The trouble is that charisma is a yellow light we read as a green light. It disarms the very scrutiny it should trigger. Platner had it, and, by all accounts, so did Theranos Inc. founder Elizabeth Holmes.