Trouble Begins And Ends With The CEO

In the old days, a big company CEO was far behind the firing line. When things went bad, there were people to be blamed and asked to leave. But today, it's a different story. The buck stops at the office of the CEO.

In recent times, hundreds of chief executives unwillingly have left their jobs. Among them were some big names from big companies having trouble. They didn't last very many months on the job. Take a look: Richard McGinn (36 months at Lucent), John McDonough (35 months at Newell Rubbermaid), Dale Morrison (33 months at Campbell Soup), Michael Howley (17 months at Gillette), Durk Jager (17 months at Procter & Gamble) and Lloyd Ward (15 months at Maytag). And I didn't even mention the likes of Worldcom or Enron.

This kind of turnover is unprecedented. After all, Jack Welch survived the disastrous "factory of the future" fiasco that sank without a trace in the sea of technical snafus and erroneous projections of customer demand. The late Roberto Goizueta of Coca-Cola survived the New Coke disaster--the poster product of bad ideas. Today, those executive would have been toast, as there appears to be zero forgiveness for mistakes.

First, The Bad News

There are no superheroes, and top executives have to realize that the impossible is impossible.

Jack Welch types are an anomaly, as today's new CEO has no chance to match Welch's longevity. That's because a CEO probably faces no more difficult a task than attempting to transform a core business threatened by a new technology. George Fisher and others have tried that at Kodak, and it doesn't appear that they will find much happiness in the digital age. And if CEO's get trapped in the great expectations of future growth, they will most probably fail.

What's at the heart of all this is that many big-company CEOs are barely in control of their company's fate, much less their own. There is a growing legion of competitors coming at you from every corner of the globe, and technologies are ever-changing. The pace of change is faster, making it increasingly difficult for CEOs to digest the flood of information out there and make the right choices.

Now For The Good News

But it can be done.

The trick to surviving is simply knowing where you're going. No one (the board, your managers or your employees) can follow you if you don't know where you're headed.

Many years ago in a book called The Peter Principle, authors Laurence Peter and Raymond Hull made this observation: "Most hierarchies are nowadays so cumbered with rules and traditions, and so bound in by public laws, that even high employees do not have to lead anyone anywhere, in the sense of pointing out the direction and setting the pace. They simply follow precedents, obey regulations and move at the head of the crowd. Such employees lead only in the sense that the carved wooden figurehead leads the ship."

It's About Perceptions

If there's one lesson to take out of my posts it is: Success or failure is all about perceptual problems and opportunities in the marketplace. And it's all about understanding that the mind of the customer is where you win and lose.

You can't be swayed by your executives' wonderful presentations on how your company can better make your product, leverage your distribution or get your sales force into the marketplace. You have to stay focused on the mind of the prospect. Minds are difficult--if not impossible--to change. And if your executives say it can be done, don't necessarily believe them. The more you understand the minds of your customers, the less likely it is that you will get into trouble.

I once asked one of the ex-CEOs from General Motors if he ever questioned the proliferation of models, which eventually destroyed the meaning of the company's brands (he was a financial man with little background in marketing).

The question caused him to stop and ponder for a few seconds. His response: "No, but I do recall thinking that it was getting a little confusing." His concern was absolutely correct, but he failed to act on his instincts. His assumption was that his executives knew what they were doing. This turned out to be a false assumption. But it took a number of years for this mistake to be felt at General Motors. Today, thanks to intense competition, mistakes are felt in a matter of months, not years. That's why marketing is too important to be turned over to an underling. To survive, a CEO has to assume the final responsibility of what gets taken to the marketplace. After all, your job is on the line.

It's About Thinking Long-Term

Let's just say you've focused on your competitors and figured out their strengths and weaknesses. You have searched out that one attribute or differentiating idea that will work in the mental battleground.
Then you have focused all of your efforts on developing a coherent strategy to exploit that idea. And you have been willing to make the changes inside the organization to exploit the opportunities on the outside.

Now you must be willing to let that strategy develop. Marketing moves take time to develop so you must--even in the face of pressure from Wall Street, the board and even your employees--be willing to stay the course. Nothing demonstrates this better than Lotus Development, the company that invented the spreadsheet for the PC.

As you remember, Lotus was overrun by Microsoft and its version of the spreadsheet, Excel for Windows. Since Microsoft invented Windows and Lotus was late with their version of a Windows spreadsheet, Lotus was in deep trouble. Jim Manzi, then the CEO, decided to shift the battlefield. To him, the future of the brand had to be "Groupware," as Lotus had in its early stages a product called "Notes," which was the first successful Groupware program. (Groupware is software designed for groups or networks, as opposed to software designed for individual PCs.) So Groupware became the focus, and Jim Manzi began the process of building and supporting the Notes/Groupware business. It took an enormous effort over a five-year period, but it resulted in IBM buying the company for $3.5 billion. A bold, long-term effort bailed them out of a problem that could have been fatal.

The Beginning And The End

If one theme runs through our times, it is that CEOs often make bad decisions that eventually lead to big trouble. They either do things that cause problems or don't do things that could have avoided problems. And when danger looms, the CEO is probably the only person that can effectively take the company out of harms way. He or she is indeed the captain of the ship. And every CEO should have a plaque on the wall that simply reads, "Remember the Titanic ."

Comments

[Eli Portnoy (The Brand Man Speaks!)]

Really loved this CEO piece by Jack.
My own short CEO story.

I once had a financial client for whom I was conducting some market research. We learned alot about the entity's customers..more than they ever had spent the time to know in the past..and one key conclusion was that the entity had no brand identity and was in need of a brand strategy to get back on track, bond with its customers and create a pathway to its future.

The CEO took me to lunch just before we were to sign the contract.

He clearly was uncomfortable and he said,
"You know Eli what you are recommending will likely make a huge difference for our customers and employees. (The good news). However, I have decided NOT to retire later this year and exploration into who we are and where we could be going as a company will likely cause friction that could cost me money and create anxiety and work I just don't need now. Sorry, but the project is dead". (Gulp, the bad news).

Yes, "the buck stops here" are the words of a CEO...but those could be the worst, most dangerous four words a company encouraged its CEO to speak.