CEO Matter

May 27, 2009

CEO Matter

“Do CEOs Matter?” asked Harris Collingwood in The Atlantic. The article begins with a discussion about the anticipated return of Steve Jobs to Apple in June and the impact on Apple’s share price during the past year’s ups and downs regarding his health prospects. Steve Job’s mortality raises the timely question about the value of CEOs in today’s world. Do they matter at all? Collingwood refers to several academic studies and concludes that CEOs do not matter as much as we think and can have as large a negative effect on business performance as a positive one.

 

Since I have spent quite a while in the CEO reputation area and authored a book, CEO Capital,  on how CEOs build reputation to achieve business success, I have seen equal proportions of studies that downplay the CEO’s impact on financial performance as those that show a sizeable return on a company’s destiny. As the article rightly points out…not all industries are the same — the CEO effect is marginal in some industries where strong government regulation prevails. Does that say alot for all those TARP-supported companies we are now watching. All in all, I firmly believe that CEOs can play a profound role in a company’s future by making the right decisions that shape its long-term growth. We are certainly seeing our new president shape the reputation and future horizon of America Inc.

 

The article highlights a quote from GE’s CEO Jeff Immelt and apparently confirmed by his predecessor Jack Welch.  Immelt told a gathering sponsored by the Financial Times that in the 1990s, “anyone could have run GE and done well…Not only could anyone have run GE in the 1990s, [a] dog could have run GE. A German shepherd could have run GE.”  Somehow I don’t quite think that is the case but they must know. CEOs may have indeed mattered less in the 90s but there is no doubt in my mind that they matter more now as our world has turned more global, more complex, more imitable, and more transparent. We are being short-sighted if we do not think that the right leader can make a difference most of the time. Not everyone is Steve Jobs but I would not want to work in a world led by mediocre business leaders.

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Leslie Gaines-Ross
Leslie Gaines-Ross
lesliegainesross@gmail.com

As Weber Shandwick’s Chief Reputation Strategist, I focus on the ever changing world of reputation. For the past 25 years, I have relentlessly observed, researched and commented on the rise and fall of corporate and CEO reputations.

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