We all know the Peter Principle—the idea that people in hierarchical organisations rise to their level of incompetence. It explains why a brilliant software engineer becomes a terrible team lead, or why the top-performing salesperson flounders as a sales director. In these cases, organisations are trying to reward talent, but they get the promotion wrong.

But what if the problem runs deeper? What if our entire business culture has evolved not just to tolerate incompetence, but to reward and even select for it?

Enter the Business Idiot

Writer Ed Zitron calls this the era of the Business Idiot—a systemic shift where leadership roles are no longer given to the most competent, but to those most fluent in corporate theatre. Unlike the Peter Principle, which assumes organisations are at least aiming for competence, the Business Idiot phenomenon suggests something more troubling: that competence has been quietly erased as a criterion for leadership.

Today’s executive might jump from industry to industry with little understanding of the actual work being done. Armed with an MBA, a mastery of buzzwords, and a LinkedIn page full of “strategic transformations,” they rarely use their company’s products or understand their customers. Many are proudly detached from the core operations—and yet, they wield immense influence over employees, products, and markets.

How we got here

This isn’t accidental. It’s the logical outcome of decades of neoliberal ideology that prioritises shareholder value above all else. Since Milton Friedman’s 1970 declaration that a company’s only responsibility is to increase profits, we’ve seen a shift in what qualifies as “good leadership.”

In this shareholder-first model, the ideal executive isn’t someone who knows the business inside-out. It’s someone who can talk up growth in earnings calls, please the board, and look “visionary” while avoiding messy operational details.

Management as theatre

Modern management has become a form of performance. The Business Idiot doesn’t solve problems—they oversee those who do, often without understanding what the job actually involves. The work is seen as beneath them. Their real skill lies in narrative: crafting the right slide decks, spinning the right strategy story, making just enough change to appear decisive without touching anything too complex.

This mindset is contagious. Business Idiots hire people who mirror their style. They reward visibility over substance, networking over knowledge, and the appearance of action over real outcomes. Competent managers who stay close to the work are overlooked or squeezed out.

We’ve all seen it:

 

  • CEOs who pivot based on whatever trend caught their eye that week.

  • Middle managers who treat meetings as status rituals.

  • Executives who roll out sweeping changes without consulting those doing the actual work.

Why this matters now

This helps explain the deep frustration many of us feel with modern institutions. Why do once-great software products become bloated and unusable? Why do companies make baffling strategic decisions that alienate their customers? Why does everything feel optimised for optics, not outcomes?

Often, the root cause is leadership that’s disconnected from the reality of its own business.

That disconnection becomes dangerous in periods of rapid change—like now. As artificial intelligence sweeps through industry, many executives are making massive bets on tools they barely understand. Why? Because AI promises their ultimate fantasy: growth without labour. Management without workers. Efficiency without friction. But the risks are enormous when those at the top don’t grasp the basic functioning of their own organisations.

Breaking the cycle

The first step is recognising what’s really going on. The Peter Principle describes individual overpromotion. The Business Idiot phenomenon points to systemic dysfunction.

We need to start asking harder questions:

  • Why are we designing leadership pipelines that value style over substance?

  • Why are the people closest to the work often the least empowered to shape it?

  • Why do our incentives reward those who sound effective rather than those who are?

Solving this won’t be easy. It means redefining what leadership looks like. It means creating structures that reward depth, not distance. And it means confronting the uncomfortable truth that many of our institutions are being led by people who neither understand nor care about the work they’re supposed to be stewarding.

Until we do, we’ll continue to suffer the consequences of their willful ignorance—and so will the customers, workers, and shareholders they claim to serve.