6th November 2018 BUSINESS STANDARDWriting about CEO departures in his book, The Hero’s Farewell, Prof Jeffrey Sonnenfeld described the end of an illustrious career as a plunge into the abyss of insignificance, a kind of mortality.
6th November 2018 BUSINESS STANDARD
*The writer is a corporate advisor and Distinguished Professor of IIT Kharagpur. His new book, “CRASH: lessons from the rise and exit of business leaders” will be published by Penguin India in December, 2018.
Writing about CEO departures in his book, The Hero’s Farewell, Prof Jeffrey Sonnenfeld described the end of an illustrious career as a plunge into the abyss of insignificance, a kind of mortality.
Does a successor have to clean up the predecessor’s mistakes? Yes, for sure. It is good to remember that the mess, if any, has probably been contributed to by several predecessors, not one single person—think of bank NPAs as an example.
No predecessor can leave a clean slate for the successor that is part of enterprise and entrepreneurship. This has been admitted by Dara Khushrowshahi, the CEO who took over from Uber founder, Travis Kalanick. “My predecessor made mistakes. I am going to make mistakes as well. The fact is that I have inherited a fabulous company with fabulous people,” he said in a recent interview. It does not look likely that Khushrowshahi will have a light load for quite a long time to come.
Jeff Immelt struggled with GE for almost two decades. The board replaced him five months before his term was to end. His successor, John Flannery, got just a year. Debates rage about how old the problems are, and the legendary Jack Welch’s actions are now being reopened. The company had executed initiatives for the future including entry into businesses like broadcasting, financial services and healthcare. GE made several acquisitions for which it paid top dollar, according to some critics. Importantly, like with most acquisitions, GE failed to deliver value to the GE shareholder. The acquisition of the power company, Alstom, impressed deal makers, but did nothing after being acquired. Building businesses is a long-term game requiring consistency of purpose. Somewhere down the years, GE leaders are thought to have become obsessed with their personal legacy and how they wished to be remembered. It happens in India as well!
The challenge is to clean up quietly, professionally and without blame. The clean-up has to be done, but doing it discreetly is desirable but not essential. It is better to clean up visibly early on in the successor’s tenure! Mistakes are like stocks in a warehouse. There will always be opening stocks, fresh mistakes and closing stock. The incumbent CEO must be convinced about the opportunity he or she has to do the job at hand; the outgoing CEO’s mistakes should not prevent
him or her from leading a successful team. The outgoing CEO may be a hero or a demi-god, as was the case in GE. Here are some practical suggestions to consider.