Charismatic leaders can be intoxicating, but Jensen Huang’s downfall exposes the peril of concentrating power, writes Dr Poornima Luthra

Many companies fall into the trap of placing excessive power and control in the hands of a few or even just one person. As we’ve seen with the recent scandal of the CEO of Nvidia, Jensen Huang, who resigned today, this can be a dangerous strategy in a crisis. His affair with an alleged Chinese spy has led to company-wide reputational damage and consequent fall in share prices.

While ‘charismatic’ leaders can seem intoxicating – admired, respected and sometimes loved – this is a very dangerous hierarchy. When power is concentrated in one person there is a risk that their actions can negatively affect everyone else involved in a business, from employees to stakeholders. Huang’s predicament is a prime example, with a 30-year tenure as CEO, the ear of Donald Trump and a reputation for being workaholic who expects incredibly high standards from staff, his fall from grace is all the more damning.

Collective leadership shines in times of crisis

There is no denying the brand building prowess of a recognisable ‘face’, but strategic decisions should not depend on that individual alone. Collective and relational leadership offers far more resilience in the event of a crisis, with greater potential for maintaining trust and a general sense of ‘business as usual’. A key concern for investors going forward is that Nvidia has no clear succession plan for replacing Jensen Huang.

When I talk about ‘relational leadership’, I’m describing a democratic, team-based structure that creates a healthier culture, avoids cult-like devotion (and delusion) and generally ensures a business is more able to weather storms. Trust and relationships are central, arguably making ‘bad behaviour’ less appealing when there is a greater sense of shared goals and responsibilities. Building relationships also gives people space to excel and be themselves, while taking on a range of viewpoints that are so key to long-lasting success.

This trust is not just an internal sentiment; it is what ideally gets put out into the world to attract would-be customers. As Nvidia’s situation clearly demonstrates, trust can easily be undermined when the reputation of a business rests with an individual. Ultimately, leadership resilience is a fundamental aspect of good board governance and ensuring business continuity in the face of crisis. Many businesses think they might benefit from a single hero or charismatic leader, yet time and time again we see how this model exposes the organisation to immense risk.

Nvidia’s silver lining

Nvidia’s silver lining is the way their share holdings are structured. Unlike the likes of Mark Zuckerberg and Elon Musk, who have final say on board decisions thanks to significant ownership percentages in multiple types of stock, Nvidia’s shareholdings are built on a single class voting structure. That means there is only one type of stock for any investor in the company, including Huang, affording him no protections from actions of the board.

The lesson we can take from Nvidia is that the strength of an organisation should not depend on the popularity of the person at its head, but by the relationships and collective leadership that keep it sustained.

Relational Leadership: How Trust, Collaboration, and Human Connection Drive High-Performance Organisations