Downsizing the CEO

The April 25, 2005 cover of Business Week magazine showed a pea-sized CEO sitting in a large, high-backed executive chair. The message was one of lost power: where once CEOs had supersized powers, now they wane greatly in their ability to run the company, thanks to Andersen, Enron and the others.

But just because a few bad people exploited the power they had, does that mean the good CEOs can’t keep leading the way they always have? Apparently it does, because the climate of executive leadership has shifted from one of vision and leadership to one of legalistic ass-covering.

The Business Week article does a good job of explaining this climate, if you’re more interested.

I suppose when the pendulum swings one way, it tends to go too far before coming back. That’s just something about human nature. And now, thanks to crooks like Skilling, the climate of corporate watchdogism is spreading to cover not only those whose deeds are nefarious, but also those who make one big, bad decision (like Fiorina at HP), as well as those who slowly run their companies into mediocrity (like Eisner at Disney).

Fiorina and Eisner surely aren’t criminals, but they should be treated as such along with everyone else, according the New Law of Corporate Governance.  Because of the few criminal and strategic debacles, we can no longer trust the many to responsibly lead, and we’ve cut them off at the knees. (Just look at that mealy man sitting in the big chair).

If I’m Jeffrey Immelt or Warren Buffet, I’m about as mad at Skilling as I am at that kid in grade school whose behavior ruined the field trip for the whole class. And I’m even madder if I’m Buffett, because one lousy stink of impropriety from one of my business leaders (AIG investigation) makes me look bad, no matter how clean I’ve been for all these years, and no matter that I’m the second richest man in the world driving an ultra modest Lincoln Town Car.

One of Berkshire Hathaway’s companies is Borsheim’s, the largest single-store independent jeweler in the nation. Says Borsheim’s Susan Jaques: “It takes 37 years to build your reputation, and you can lose it in 37 seconds." Susan thinks about this “every time she is about to make an important decision.”

So I say this: what kind of a world do we live in where a few bad apples can spoil the whole bunch, even when the whole bunch is the aggregate of visionaries that have made America the wealthiest, healthiest, most benevolent, most democratic country in the world? (Yeah you could argue this; Sweden is a nice place).

The incredible miracle of modern civilization didn’t happen without the conquerors, and without the visionaries and ramroding leaders who also knew how to motivate and galvanize a nation. Yes the stories of history are replete with scandal, bribery, exploitation and misuse of power. But in combating the misuse, we better be careful not to squelch the very flame that’s made us what we are. Least of all not as some knee-jerk distain for the CEO based on jealousy or a bunch of people who got shafted out of their retirement fund.

In a former blog I wrote that Vision is not a Group Activity, and it was about the sometimes need for strong unilateral leadership. In many companies, CEOs are hired for their vision, unique leadership skills, experience, industry expertise, drive and many other reasons. We need our business leaders to have – and keep – these traits inasmuch as we need the President of the U.S. to have and keep them.

No one hires a CEO or votes in a President because they’re looking for managementship and consensual deliberation. Yet this is the trend we’ve now set in motion: the effective dilution of decision-making through the new system of checks and balances. That’s ok if you’re not at war, except last time I checked business was war.

I don’t definitively and ultimately know all the ins and outs of running a major corporation, even though many consulting firm CEO’s in my position will tell you they do. Truth is, they don’t have all the answers either. No one has all the answers, as we’re all just moving along in business together toward some ideal state.

What I do know is that rallying, motivating, focusing and rewarding, say, 100,000 employees is not a job for committees and boards and consensual deliberation. If we make it such, we’ll someday find ourselves behind some country, like India or China, in many industries and aspects of business success.