A Leadership Position

Not always a replaceable cog in the machine

Please feel free to repost, or restack, as I think it is past time for this to be discussed around the dining table, boardroom, or virtual water cooler.

When, in 1983, Steve Jobs hired John Sculley to run Apple, the decision was made because it was felt that a person who had successfully run a campaign to improve Pepsi-Cola’s position versus Coca-Cola could also market Apple products amidst increasing competition. This was reasonable, and rational, on paper. But Apple, and its products, are not fashioned around something that anyone can do or produce. While “the power to be your best” wasn’t a bad campaign idea it could have been used by other competitors without much of a change.

1984

There was a successful collaboration between Steve Jobs and John Sculley for a while with the peak being the iconic “1984” Apple commercial. But the approaches were just too different between the non-tech Sculley and the tech visionary Jobs and Sculley forced Jobs away from Apple in 1985. Jobs headed off to found NeXT where he wanted to re-create a new Apple from scratch using his experience at Apple. Technically, he was very successful with the NeXT cube used as the software and hardware base for Tim Berners-Lee initial work on the World Wide Web. Commercially, it was not as successful as the journey towards perfection tends to be a costly process. NeXT eventually folded and its modified UNIX® (the ancestor of Linux®) became the basis of Apple’s OS X operating system.

Beyond Apple

So, is this a newsletter/blog about Apple? No, though the Apple/Sculley/Jobs situation is a great example. The board of Apple wanted Jobs to bring in an experienced executive to run the company. That might have worked for another company but not for Apple.

This same attitude persists, through today. Boards of directors will compete against each other for the best-known, or highest “ranked”, executive. They treat them as cogs for a machine. If they can run a company making widgets at that place then they can do the same here. Maybe. If they are paid $200 million at Company A then they are surely worth it and they might come over here if we offer them $300 million and an espresso machine. It sounds silly and it is silly and it is a large part of the reason why the ratio of pay between CEOs and line workers is totally out-of-control nowadays within the USA.

Roles of a CEO

A CEO basically has three roles. One of these is to be the figurehead, or icon, for the company. While the need for a figurehead is true for all companies, it is particularly true for companies that are trying to improve market perception of the product or brand. In this situation, perhaps pay can be justified as though they were a celebrity (sports, music, acting, …). Of course, I’m not at all certain that celebrities should be paid so much but the case can be made that, in some cases, the CEO is to be treated as a celebrity. Steve Jobs, Lee Iacocca, Mark Zuckerberg, Warren Buffett, and more can be considered in this category. One of the first within US history was probably Henry Ford.

While it is true that a small percentage of CEOs can be seen, and “justifiably” paid, like a celebrity or icon, the great majority do not qualify for such and should be paid much less. All of them, however, do function as the “head” of the company. Sometimes they are actively visible and sometimes they work behind the scenes.

The second role is as an internal leader for the company. This is important (as Apple discovered within their fiasco). Even if the employees are not treated great, the employees need to feel like their efforts matter to the company. Decisions must be made and communicated in a constructive fashion. The CEO has the “last buck” stopping at their desk and it is vital they are aware, communicate, and take responsibility.

Any leader can make bad decisions but good leaders recognize, acknowledge, and take responsibility for those bad decisions and redirect before harm occurs. Great leaders work with others whose skills, and expertise, compliment their own skills such that they make very good decisions most of the time. Bad leaders either fail to make timely decisions or make decisions without paying any attention to feedback or outside information. Terrible leaders not only mostly make poor decisions but surround themselves with sycophants (or “yes people”) who will reinforce the tendency to make poor decisions.

The third role is in the area of networking. This is important for understanding what is happening in the market within which the company’s products are competing. It is also important for making others in the industry aware of what the CEO’s company is doing. New product ideas (and features) occur as a result of networking as well as internal feedback. Public collaboration (cabals and price fixing need not apply) may be of mutual advantage. To know, and be known, within the industry — THAT is the question.

Can a great soft drink CEO be a great tech CEO?

In the case of Apple/Sculley, the answer was no. Is such a situation always a bad decision? I don’t have enough knowledge and experience to give a definitive answer but my basic feelings are that it CAN work for certain market segments. It is very difficult in the tech industry. In the processed food industry, it is likely very easy.

If a company has an icon in the driver’s seat then that icon needs to know the product(s) of the company forward, backward, historically, and sideways. Or they have to present themselves as knowing such. If the company does not have an icon in charge, then that CEO can perform, or delegate, the other roles, as long as they have good supporting team members.

What about company employees other than the CEO?

People filling certain roles can be critical within a company’s long-term plans and ability to support existing products. They can be considered to be mini-CEOs and, within their subdomain within the company, can be treated, and analyzed, in the same ways as the CEO. The head of a product division, for example, may be known within the industry for that product as well as having in-depth knowledge of the product, and people working on that product. This is certainly a definite advantage for the company.

Analysis of needs

When a CEO is placed, or replaced, within a company there is a need to analyze just what roles is the person to fulfill. Although not titled a CEO, when Ronald Reagan was chosen by his party to be the Presidential candidate, it was to fill the first role of a CEO. He was to represent and be the figurehead of the company (USA). The second and third roles of leadership and networking were left to others behind the scenes and not in the spotlight.

If the board believes that an icon is needed for the company then, by all means, compete with other companies for that iconic/celebrity position. But, make sure that either the person is capable of filling the other roles or make it clear to them that they will not be controlling such duties. It may be necessary to fill an additional position at the same time to formally (or informally behind the scenes) handle the other duties.

What if an icon is not truly needed? It isn’t needed for most CEO-level positions. The board (or other group of searchers) must find someone who can be adequate at the figurehead position but who excels in the roles of leadership and networking. Pay them well, in accordance with company performance, but don’t treat them as a celebrity. They are a working stiff who is expected to do their job well and produce results.

Conclusion

There are broadly known icons within business. They are stars and celebrities. But most are not such icons and should not be paid as celebrities. They are working stiffs expected to do their duties well and who should be well, but not extravagantly well, paid and treated. By paying attention to needs and matching such to a candidate’s abilities, good long-term choices can be made.