CEOs who stumble
An interesting article appeared in Fortune at the end of May. Patty Sellers interviewed former CEOs of once-beloved brands’ JetBlue, Starbucks and Motorola on why they lost their jobs and what they would have done differently. All of these men’s reputations were singed by their stumbles but it should be said that they also faced incredibly difficult challenges that persist to this day. JetBlue is dealing with the rising price of oil, Starbucks is closing stores left and right as its performance continues to weaken and Motorola’s cell phone unit is still struggling. Neeleman was JetBlue’s founder whereas in the case of Starbucks, its founder Howard Schultz is back. For whatever their reasons for being dethroned, listening to what they would have done differently to keep their reputations in tact is interesting. Sellers’ title for the article is apt: Lessons of the fall.
David Neeleman (JetBlue) – “I realize it now that I’m a board member, looking at the company through this little hole once a quarter at a four-hour meeting – board members don’t know that much about the company. They really don’t. I would’ve been much more engaged with the board. ..I didn’t have time to update the board on everything. If you don’t, somebody else will. You have to be able to give them an accurate picture of what’s going on, or they develop their own perceptions and start creating their own stories. And then they make their decisions. How do you keep these people up to date and give them the whole picture.”
Ed Zander (Motorola) – “I go back and the big thing was people. I didn’t’ move fast enough on some people.”
Jim Donald (Starbucks) – “My worst decision was not investing earlier in international. The international markets don’t have as quick returns as the U.S. But if I’d known the U.S. economy was going to crash, I would have invested earlier.”
The reasons for their falls are common – not communicating one’s own narrative enough, making bets on the wrong people and slowly reacting to market warning signs. Reputations rise and fall on the first two over and over again. In all the work I have done over the years on building CEO reputation and managing CEO transitions, consistent communications and picking the right people are almost always at the top. The latter reason for stumbling – predicting market shifts — is often easy to detect but hard to act soon enough. Take a look at the sub prime mortgage failures that have brought down entire sectors and impacted global economies. The signs were there but few responded in time.
Reputation management at the top can be tricky business.