Why do organizations fail? That is a question that business school professors use to provoke students to investigate reasons why companies did not fulfill expectations. One reason that noted author and global consultant Ram Charan gives, and has written extensively about it, is a failure of execution. Companies dream big, but the rest of the organization never embraces that dream and it fails.

While execution is a prime reason, I believe there is another, perhaps deeper, reason—one that is more encompassing: ego. Put more bluntly, outsized ego.

Let's look at two examples. Former Secretary of Defense Donald Rumsfeld used his power and sense of entitlement to manage the war in Iraq. Under his tenure dissent was quashed, generals were cowed and strategic changes were never implemented. As result, he was forced out in November 2006 after the Republicans lost control of Congress. Meanwhile, the war rages on.

Similarly Citigroup, one of the world's leading financial institutions, has lurched from crisis to crisis. As reported by Fortune magazine, some problems were provoked by the missteps of its CEOs, from Walter Wriston through John Reed and Sandy Weill. Each of these CEOs was a talented senior manager, but each overreached and stretched for a goal too far. As a result, Citigroup suffered.

Rumsfeld and the Citi CEOs put their egos in front of more prudent management. While ego is necessary to good leadership, it should not be the basis for it. Senior leaders are always under pressure to perform. Sometimes the pressure to act overrides rationality.

Taking time to reflect before making critical decisions may avoid some egregious decisions and mistakes. So before acting, ask yourself the three following questions:

Why am I doing this? Leaders want to put their stamp on the organization. They want to make their leadership felt. This is fine, but sometimes this pressure can lead them to make decisions that are more about themselves than about the company. They are more eager to see their name on the cover of a business periodical than to practice sound management. The late president of Turkmenistan, Saparmurat Niyazov, ordered that the months of the calendar be renamed in honor of him and his family. Out-of-control ego can be expensive and so it is wise to ask why before acting. Doing something for the sake of your ego is unacceptable.

What will be the outcomes? Pushing for growth or to make a new acquisition can stretch the company beyond its capacity to deliver. It can cripple the company's ability to remain competitive. Therefore, senior leaders need to think about whether the goal or the outcome is achievable as well as sustainable. From time to time we learn of companies stretching themselves to achieve jumps in market share. Everything becomes geared to volume rather than to profits; extra resources are applied to drive the market share skyward. While share may rise, the cost in marketing dollars—as well as extra resources and manpower—is often too high to justify the increase in volume.