Many companies aren’t prepared to replace underperforming CEOs
gsb.stanford.edu
gsb.stanford.edu
However, having been on a team that prepares board materials and also having presented to a company board, I can tell you that the information they receive is extremely carefully managed in a way that allows responsibility to seem to flow downwards rather than upwards. What you see as an IC or as a manager or ever director is extremely different from the cause and effects a board sees in a monthly or quarterly update. Hence they often come to different conclusions than the people in the trenches would. That said, I’m sure this is true for any large organizational unit (government, military, corporations, nonprofits, etc).
That said, I've seen some board members try this out by offering to help/chat with some under-performing teams that they have expertise working with and asking light questions/giving advice... but having been on the receiving end of a conversation like that, it often feels like there is a lot of politics going -- you don't know if someone genuinely wants to be helpful, is vetting your capabilities and fit for the role (based on the trickle-down responsibility), or is trying to do independent fact finding (trickling it back up).
To guarantee that the board would lose their shirts if they make decisions completely opposite to reality, thus motivating a more thorough investigation of what they see and hear.
There was another post on HN a few weeks back with an article that looked into it and the numbers were really staggering.
https://www.strangeloopcanon.com/p/some-things-to-learn-from...
and the HN discussion is
https://news.ycombinator.com/item?id=32710002
(but I am not MichaelZuo and it's possible that I've got the wrong thing).
Excluding external board members, by definition.
The powerful really love rigging stuff in their favor huh
???
You say that like there's anybody that doesn't. The powerful just have more scope to actually do so.
What seems to happen often is blurried lines: the ceo founder is majority shareholder, the board is his family, friends and paid lawyers, the shareholders are asleep at the wheel as long as some profits rain in, the regulator finds no law broken.
Tesla is a model of bad governance, to the point the harshest sanction a regulator could levy against their chairman/ceo for manipulating the stock price, a capital sin, is to make him only CEO, while not removing his family members from the board... a systemic european bank is the model of good governance: you can see epic ceo vs board fights, shareholder revolutions etc etc.
You mention Europe but for instance in France it has been a corporate tradition too have both merged and separation has statistically lead to a significant underperformance.
FYI it is called the agency vs stewardship theories and currently it seems like a academically the stewardship is slightly favored.
Such structures should ultimately be up to the shareholders.
I like the structure of bee colonies.
The queen controls the temperament, the workers control the queen and adjust the rate of growth or contraction. Periodically workers replace her with one her of daughters (via regicide).
I'm not sure what the takeaway here is though, as I don't like the idea of a monarchy or of communism.
Let’s dig into this.
- Queen stops producing workers and is replaced by workers (regicide) or replaced by beekeepers (ie. shareholders)
- Bees due to disease or other calamity don’t provide enough honey for their shareholders and they lose their hive and possibly life more than likely
I’d prefer not to lose my life if I don’t produce at work if workers or shareholders aren’t happy
I think there might actually be some interesting things to consider if a hive-like approach was used for a business, but I'm not sure your assessment really gets to the heart of it.
In some ways, it's kind of like a co-op.
Certainly a fun idea to play with
First, its not like bees get to negotiate their salaries and seek employment elsewhere.
Secondly, at scale you have to consider large beekeeping operations or even small ones which all have…shareholders.
So either the co-op needs to take into consideration societal and personal needs (ie. crime, health, housing) or your comparison needs to be rooted in basic economics (ie. supply, demand, labor markets).
Which is what the OP meant by “monarchy or communism” because fundamentally bee societies are more akin to government than business.
BUT, lets ask the bees what they think. I’m sure they’d prefer modern Westernized human employment over a labor camp like existence ;)
They switch hives by accident, the beekeeper can cause it (to beef up a weak colony or by accident) and sometimes they do it intentionally, the males in particular.
I'm not sure why you jump to this extreme. Being removed from your job sounds about right.
Everything I Need to Know in Life, I Learned from Mobster Movies
It is characteristic of all committee discussions and decisions, that every members has a vivid recollection of them, and that every members recollection of them differs violently from every other members recollection, consequently we accept the convention that the official decisions are those, and only those which have been officially recorded in the minutes by the officials, from which it emerges with an elegant inevitability, that any decision that has been officially reached will have been officially recorded in the minutes by the officials, and any decision which is not recorded in the minutes is not officially reached, even if one or more members believe they can recollect it, so in this particular case if the decision had been officially reached, it would have been officially recorded in the minutes, by the officials and it isn't, so it wasn't.
The Plan
In the beginning, there was a plan, And then came the assumptions, And the assumptions were without form, And the plan without substance,
And the darkness was upon the face of the workers, And they spoke among themselves saying, "It is a crock of shit and it stinks."
And the workers went unto their Supervisors and said, "It is a pile of dung, and we cannot live with the smell."
And the Supervisors went unto their Managers saying, "It is a container of excrement, and it is very strong, Such that none may abide by it."
And the Managers went unto their Directors saying, "It is a vessel of fertilizer, and none may abide by its strength."
And the Directors spoke among themselves saying to one another, "It contains that which aids plants growth, and it is very strong."
And the Directors went to the Vice Presidents saying unto them, "It promotes growth, and it is very powerful."
And the Vice Presidents went to the President, saying unto him, "This new plan will actively promote the growth and vigor Of the company With very powerful effects."
And the President looked upon the Plan And saw that it was good, And the Plan became Policy.
And this, my friend, is how shit happens.
There are virtually no processes for anything which makes him untouchable. Whenever he fucks up, some PM or low level manager is fired due to their "low performance".
Is there anything non C-levels can do about it? Honestly I don't think so, all you can do is avoid the guy as much as possible and assume it's not the kind of company where you want to spend 5+ years.
The USA "ideals" taught in school say that democracy and democratic republics are the best forms of government.... yet (almost) all our companies are autocratic dictatorships.
And, the gist also has very strong vibes of Ronald Wright's misattributed John Steinbeck's quote:
“John Steinbeck once said that socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”
https://www.goodreads.com/quotes/328134-john-steinbeck-once-...
We elect the head of the executive branch. The rest of it is basically run like a bunch of corporations. We certainly don't elect the people who work at the IRS, for example.
This is similar to democratic governments. In no democracy will voters elect the Minister of Energy or Transport or Defense or Labor or the foreign secretary. This is chosen by the elected officials.
shareholders don't have all equal vote. Employees have no vote. Its closer to aristocracy if anything
Do you think US Steel should get to vote on what Ford Motor Company does? That just seems totally backwards.
If you think it shouldn't be a democracy, thats fine, but is just an opinion and not a factual claim.
You are, ofcrouse entitled to your opinion. Classically company consists of employees just like your body is made uo of organs. When you damage them by treating them badly, you damage the company.
In neoliberal idea employees are disposable and company is not harmed when you harm them. Company is a separate entity that lives by itself, like a holy spirit, maybe it posseses the stock market on the 'brand value', i don't know.
The current stunt by Elon musk will show who is right, if Twitter does well when he is done destroying the talent pool, then you are right. If the company combusts, then you are wrong.
More often, ICs don't get all the information. It's not about having a clue as much as information asymmetry. All those meetings should imply as much, anyway.
Eventually everyone under him in mass went to his boss and HR and told them flat out he needed to go. And the company did nothing for 18 months. And then just pruned him and the whole division of 25 experienced RF chip designers.
1. Co-founder likes to make stuff, build stuff, sell stuff, raise money, etc. but does not like, or care for leading 50+ people. Typically he (always he) keeps the title, a small team of senior or very dedicated people, and do whatever he is actually good at. At the same time, a newly appointed, experienced VP does the actual management of the larger team, while nominally reporting to the CxO. This is a good way to avoid drama while the reality of the situation dawns on the co-founder: his report is doing all the grown-up work. You don’t like that work. It’s CxO type of work… so you shouldn't squat the title any longer. It takes a while, though.
The benefits: the VP has ample time and an incentive to prove they can handle the weirdness of a board, and get promoted to SVP, or CxO when their role gets more obvious. They are easier to replace if they underperform or don’t indulge in the CxO delusion long enough. It’s unfair, but it works and most people end up finding what they need in time.
2. Someone was CyO at the previous company, and was able to coast long enough while that first project crashed and burn. Before it did, that someone was hunted to be a new company to be CyO because… well, they look like they know what they are doing. No one at the new company knows what a good CyO does. So they can continue coasting. And it can hurt so many great people who need support.
I’ve seem both at the same time, and it’s painful to see so many people miss what is the problem.
“But so-and-so it’s really CxO!
— Who cares? VP of x is doing great work
— They fight with CyO all the time
— Yeah, because CyO is incompetent and does nothing…”
Titles don’t really matter: if someone has an inflated one, it shouldn’t make them too dangerous. Lack of feedback does: the CxO gets asked to work on special projects and is happy. The CyO is not told to get his shit together, and everyone suffers.
Changing that up requires a radical redesign of how companies are legally constrained in the US or a cultural change that causes an expectation of worker ownership so that they get a say. For examples look at Germany requiring a representative of the workers on company boards
It's actually a pretty good model, and I wonder why it isn't used for other municipal assets.
ESOPs were invented as a way for owners to cash out. Not really an altruistic thing that works well imho.
The SOLE difference between a non-employee owned company and an employee owned company is who the shareholders are.
Source: personal experience working at multiple employee owned companies
My mind went to DAOs where employees all allocated governance tokens and anyone can propose a new idea and others can use their tokens to vote.
In your model, what happens when you get outvoted?
Statements like this are always so interesting to me online from the "there's two sides to every story" perspective.
Why not devil's advocate it and try to walk through life maybe not thinking in blanket statements? How can somebody who ruins everything be successful at all in life?
Maybe I just have more to learn...
And as a corollary, flat out stealing ideas/code/whatever. If it's still just a startup, no one (that matters) may have every done a thorough search yet to be sure that the technology provided by the founders is original. Or course it won't survive scrutiny from the press or due diligence from a potential buyer or anything.
A friend of mine worked with a startup where there were three founders and they were all notorious for taking unearned credit. I think at least one was a pathological liar. As time when on, the true origins of everything they "contributed" came out. Depending on how good they were at bs'ing and raising money at least, a couple were were fired quickly and the last one took years to get rid of (a big enough fraud scandal finally went public).
Once in power, it is in fact really easy to stay in power.
As someone who has been with large multi-nationals for a very long time let me give you some examples.
1) "failing up".
Sometimes you cant deal with your manager or the situation except to make them look good, and eventually they get promoted up and out of your way.
2) "Protected class"
Think "nepotism". Let's say that "B" doesn't do well, but he is very close to the "CxO". who in their right mind would fire "B"? We call this a "CLM" - Career limiting move.
Alternatively, lets say I hired my best friend.. How wiling am I to fire them?
If you are the owner/founder, it is really hard to get rid of them no matter what they do (Go read up on WeWorks).
Eventually they land somewhere and it doesn't take long to figure out the deal and then they start working on a strategy on how to move them somewhere else.
Obviously the person i responded to hasn't spent much time with a large org to see this first hand.
This may sound risky. But:
1. If you succeed, you may dramatically improve your working environment.
2. If you fail in a way that damages your job, you probably should have been looking for a way out of there anyway, because he's going to continue to make that a crummy place to work.
Note well: You probably shouldn't try this until you're ready to leave, both emotionally and financially, because you may get fired on the spot.
Occasionally, there will be some useful insights mixed in, but that is rare. I'd suggest rather than trying to make the case independently, find a trusted party, tell them that you have concerns about X, and let them drive the conversation. You may pique their interest, or give them a chance to validate concerns they already have.
Labor unions and strikes.
I eagerly await your examples.
- More money
- Better job security
Like the one taking place here right now
"On October 30, 2022, the Canadian Union of Public Employees (CUPE), issued a strike notice, after the Government of Ontario refused their demands for an 11.7% salary increase alongside other requests for improved working conditions."
They are not after any "change" to how things are done, just a massive 11.7% pay hike every year for the next 4 years.
Again, any example of a strike which was to force the replacement of a C-Level?
Point being strikes typically hit C-levels indirectly, not directly. A short term loss and display of collective power which could be avoided with foresight. Individuals are more often targeted through boycotting.
How about this "strike"?
"The 2019 General Motors strike began September 15, 2019, with the walkout of 48,000 United Automobile Workers from some 50 plants in the United States. Demands by workers included increased job security, gateway for temporary workers to become permanent, better pay and retaining healthcare benefits."
what was the impact to the C-level? how did them demanding job security and better pay relate to them at all?
There is pretty much NO case of union action ever attempting to impact directly or indirectly a C-Level person.
They strike for Benefits, money, job security and that is about it.
That's not necessarily common, especially the larger the company gets.
Otherwise trying to do something about it can quickly turn into a "ok, clearly these two people can't work together, I as CEO don't really know this particular person, I do know this C-level person, I think the easiest thing to do here is to remove the one of them that I haven't been working closely with." And then something would only actually happen if, say, there's a pattern over multiple years of several VP Engs (or similar high-profile people) all having the same issues with the same C-level.
One of the privileges of ownership is being able to fuck yourself over by destroying your own stuff, after all.
But it is folly to report wrong-doing to the company. Just leave. The business will almost always close ranks to the superior.
There was a story I read recently, the head of personnel was a woman. A woman employee reported some kind of harassment to her. The company started giving the complaining women bad reviews, whereas before they were good. And they fired her. This was a woman who let another woman know. That woman human resources person took the side of the company.
I myself have been subject to a lot of situations where I was extremely uncomfortable to the point of where I wanted to throw up and leave. I'm a man. All of the people that made me feel this way were women. Talking about porn, their periods, sex life - you name it. And it was so many, not just one woman.
If I complained, they would have to fire 1/2 the female work force at the office. Do you think that there is any way in fluck that they would do this? No is the answer. And I eventually left. Easier to do that than stay there. I don't have the time to be bogged down by crap, I don't want to go to court for 10 years asking for some kind of payout for harassment.
My pet theory is that grossly-paid C-suite executive jobs are like this. Plenty of middle-managers could do as well as the average CEO. But there's only so much room at the top of the hierarchy, and we need to pay them hundreds of millions of dollars.
I would posit that the CEO-to-government ratio acts, in a roundabout way, as a profit-to-pushback ratio. As a CEO, it may not be worth facing the board's reaction to spending two million dollars just so that you get an extra hundred thousand dollars.
I’ve worked with several CEOs and countless senior executives, both at very large companies and small, who had varying degrees of competency. I don’t think this is generally true. Being successful at that job entails a specialized skill set that is rarely evident in middle management. What you are “managing” at the most senior levels of large organizations is very different than as a middle manager, it becomes an entirely different kind of role. The vast majority of people aren’t even able to competently run a small company or startup, never mind a large enterprise.
I think very few people are really cut out for that role. It is a case where demand exceeds supply, which drives up prices. There are many mediocre people in those roles because supply is so scarce.
There are a few CEOs that seem to truly make a difference, and maybe those would be worth the money, but for the most part companies are grossly overpaying for people who are mediocre to terrible at the job and will deploy the golden parachute in a couple of years to go fail at a different company.
I think that there are a lot of people that are cut out to be CEO, but most of them are already working as CEO - of a small business, or household, or one-man consultancy. There are very few people that are cut out to be CEO of the particular big corporation that is hiring for CEO. If you take the Ribbonfarm essay at face value, the quality that qualifies a person to be CEO is that their natural personality is in total alignment with the direction that the organization needs to go, and so they can merely be themselves, loudly and brashly, and they will attract followers that take the organization in that direction. There are just a handful of people, oftentimes one or none, whose natural personality is perfectly aligned with where the board wants to take the company. When you find that one, you should pay top dollar to get and retain them, because you may not find another.
There are mechanisms in the existing system to fight high CEO pay, EG activist investors will get involved with companies and occasionally force CEOs out or cut their pay.
I hear it's a hard job that's deserving all of that money. True, I don't want to talk and lie to customers all day. I just want to build things. Does the CEO want to build things? It's probably a different skill set they're not interested in. I could do it though, just like any job.
With some practice and a guiding team I can do literally anything. Even better if I don't have to worry about production bugs over the weekend. Even better if I know if I get fired tomorrow, I could retire and be set the rest of my life. Or use my golden privileged network + stamp of success to start back up whenever I want.
Not that they "do" even customer relations type of work. That's what their staff is for. They just have to be the face that reads the prompts.
I constantly see a lot of humble bragging, of course, immediately followed by pictures from ultra luxury places or a second vacation home in an extremely expensive place.
From what I see, it's just someone who has a few zoom meetings every day where they're essentially host at a party. Their team does all the actual work going into any of it. They pick the drinks and the scenery, note all the guests' allergies and even call in the catering. Host just shoes up for a little bit.
Then they take a long lunch, and come back an hour before everybody leaves for work. "Taking off already? Ha ha, I miss those days where I could do nothing all day too and then head out early. Have a good one."
Write a blog entry and then it's time to hurry off and talk to meet the interior decorator for lunch and vacation planning committee. Of course this all counts as work because the host NEEDS somewhere to entertain the guests.
When they have a bad day and have to do layoffs, for example, they can't even truly take accountability then. It's just wrapped up as an learning experience, or "the rest of the company needs this to not lose even more jobs."
Maybe they even describe how they failed, but you can just tell it's just words. They don't truly believe that in the heart. Like a child lying about being sorry.
It's probably better than the worst of them who say, "Actually, you deserve this. If only you'd worked harder." Or is that the best of them because they're finally honest? I truly believe that's the real feeling behind any humility-appearing outward-facing apology.
(Wouldn't you cut your salary before layoffs, for example, if you truly felt real sorrow? Even if it you could cut it just enough to save 1 more person. Let alone taking a humble standard salary and saving a few. The opposite of this action would be receiving a large bonus that year. Something we see and hear happening in actuality almost every time.)
I imagine with the various golden parachute clauses and valuable social connections with other companies (I'd wager there's some skeletons in closets being held hostage too), it's too damned expensive to let a CEO go for anything less than a scandal.
Are you counting CEO's that retired (ergo possibly forced out nicely) to spend time with family or whatever?
My sample size is not huge (a dozen or so), but only one CEO departure. Take it as you wish.
In one case, the board member said that the only material about the company they were ever given was carefully constructed/managed by the CEO/executive team and was not detailed enough to support any critical analysis of executive team decisions.
In all cases, the board members seemed to feel that they were there merely for "helpful advice" rather than "proactive intervention" and the only decision that was clearly in their domain was "replace the CEO", which is pretty grand step.
The directors I have known were all quite competent, sincere people, but knew that their continued presence on the board was predicated on being just a sounding board for the CEO and/or Chairman.
In addition, I was told that, in the US, conflict of interest and other legal liability for directors is now so intricate and severe, that it was no longer possible to hire directors that were competent in the field and not yet fully retired (so hiring directors in the 45-65 age range is impossible, a bit of a problem for high tech!) For those among us who think that steep liability for directors is a good thing, I have a question: would you take that job, when you are just paid a fixed, modest sum for board appearances (perhaps $50-100k/year, total)?
In any case, I don't know how to get "responsibility" and "authority" tightly connected at the top of any modern company. (The only exception I know of is when the company is still run by the founders)
If anyone has ideas, I would love to hear them.
https://www.govinfo.gov/content/pkg/CPRT-107SPRT80393/pdf/CPRT-107SPRT80393.pdf
edit: Thinking more about this, I think that the difficulty recruiting directors with related competence came from a fear of Sarbanes-Oxley laws and “imputed” conflict of interest complaints for the prospective director. In practice, SOX could be really difficult.
What kind of person would you look for and what would you pay them?
Would you try to find the most intelligent person, with the best driving skills, who is willing to work for the least pay?
Suppose you were interviewing that person, and s/he told you that you were an idiot for hiring the previous driver, who, despite impeccable references, disappeared with a truckload of cash after a week.
Are you convinced that you should hire the low bidder with the best skills?
obviously the solution is what organized crime came up with. tie performance to heartbeat of loved ones.
for accountability to work it needs motivationability
important to know whether the job is impossible or not, because if it is you will only ever get desperate unlucky less-than-useful idiots.
and also very big issue is the strength of the causal relationship between quarterly earnings and "job performance" ... hiring miracle workers, like GE did, who will massage the numbers, whatever it takes, will look nice initially, but then the long winter sets in and it turns out it was all theater. (that's when the mob connections come in handy, for exercising that accountability ... and of course these bonus clawbacks are happening, but probably due to the aforementioned causal inference problem they don't do much)
For the new CEOs I've seen, "they've been there before" seems to receive WAY more weight than it ought to. Often they're people who just keep failing up.
You can take the Civil War as a useful analogy. Neither Grant nor Sherman had really "been there before" the war, and their resumes were decidedly unimpressive. Somehow the test of actually doing it won out over their lack of formal qualifications.
I really like companies where the board isn't friendly to the CEO, and their meetings start with a vote on, "Shall the CEO be retained?" If there's a "No", then the floor opens for a discussion of CEO performance.
Fire a CEO? Suddenly everyone is going to assume something is really wrong with the company.
This can work both ways. New management can be a really big boost.
In otherwords, sometimes it's better to keep the existing CEO even if the performance isn't spectacular because turfing them out makes the market think things are worse than the company is letting on.
So if you do replace a CEO, it's usually accompanied by a deliberate change in strategy and very carefully planned out.
Typically known as "capitalists", the bourgeoisie, the 1%, etc.
How many are they again?
I doubt there are millions of them on the US.
It makes sense that certain types of people would wind up on a lot of boards very quickly.
[1] https://en.m.wikipedia.org/wiki/Interlocking_directorate
The college dropout got lucky with a money printing machine. Not screwing that up, and purchasing every competitor is pretty easy. Now the business is hard.
When they hire, fire, negotiate wages and so forth a primary concern is exchanging favours. Why would a board member say no to granting a $100M payment package when it is a step on the way to getting a similar deal themselves some day?
Boards would hire the CEOs that set the next one up for success.
Kinda like how term limits for the us president doesn’t usually result in that type of behavior since it would screw over their party.
It's something we should believe, balls to bone.
So why have we still got dictators in our private markets when we won't tolerate them in our ballot boxes?
My guesses :
- it really is about the wealthy and the elites. Only cataclysms seem to seperate the wealthy from their grasp on power - the end of WW2 led to the birth of pretty much all modern democracies, and the death of the USSR found the rest.
- There is a lot of baby in modern capitalism, but also a fair amount of bathwater. We could throw out one and keep the other if we are careful. I honestly don't think that "I own all the voting shares so FU" is a great way to organise Facebook's billions, and a lot of people tend to agree. However why stop at dualmclass voting shares. Why is the AGM vote on director remuneration non-binding? Why don't employees get to vote for their boss? Vote on the yearly budget? I think if we chose the C-suite like we choose our parliament we might read the manifesto a little more closely.
- Imagine a world where UBI magically worked and we all chose to work based on not can we make rent this week but "is this group of people actually any good and able to deliver the thing that's needed?" How often would we chnage jobs? How large a company is too large?
I don't have any real answers - I barely can articulate the questions. But Where we are today is incredible compared to the past ten thousand years of human history. But how we organise our selves today, how we react as a species to the coming storms will determine if there is another ten thousand years or not. And I am damn sure that billionaires and hero leaders are not the solution we need.
(#) From a middle class man raised and educated in a modern democracy
"There is a natural tendency for people with big egos and big motors who get to be CEOs who like to do big things and to become bigger spending other people's money. Normally, when big deals come along [for approval] management has already made the deal anyway, they have investment bankers there that will go through a little ritual - I've never seen one come in and do a presentation which says it's a dumb idea! They know what the answer is supposed to be, and it becomes a little game."
https://corpgov.law.harvard.edu/2022/10/06/the-activism-vuln...
other than calendars full of meetings, I don't know what any manager does. as a technical person my entire career, the only things that my managers have ever done is to have regular meetings where we talk about non-work stuff, or they tell me that I am in trouble and/or fired.
the only thing that I know that they actually do is make technical decisions based on non-technical criteria, which makes for a very bad decision, in my experience.
I worked for a lawyer once who hired me to make technical decisions, and then made them himself anyway. "why are we spending so much money on rewriteable CD's?" well, you made an executive call and mandated that we archive documents to CD using uncompressed TIFF. so we get about 10 pages per disc. I told you not to do that but you said you knew what you were doing.
then it becomes my problem to fix while the lawyer screws off to some foreign beach.
If your manager is making technical decisions for you, something might be wrong!
The board picked out the CEO in the first place. They decided it was worth spending millions on them. And they likely approved of the CEO's plans whe it was discussed.
I'm a bit surprised this article only mentions replacing the CEO. It takes for granted that companies are top-down organisations
Some companies perform well without even a CEO, as featured in _Capitalism: A Love Story_ from Michael Moore, and several press cases, like a national teabag brand close to my place.
Also, in every company that I saw, improvements were made by applying ideas from the lowest levels of management (like automating boring tasks), and neither HR nor CEO level.
I don't get why we need CEOs, if it's not to tweet and to have friends to get contracts.
<serious question, i'm not an investor>
Why won't investors experiences with other models of management, when the CEO is underperforming ?
When is the particular CEO underperforming, and when is the model underperforming ?
<serious question, i'm not an investor/>
For such a markup, it would make more sense to have some kind of delimiter to more easily match tags e.g. <flame-on> ... </flame-off>, where the second term is a reserved keyword that defines the scope.
That said, I think that <flame-comment></flame-comment> where the tags are matching would make more sense since they would probably be more compatible with existing markup languages.
No wonder it’s so easy to spot - they still listen to The Rolling Stones
In Big Tech, most high level management was just there first. They started when that business unit started, and have been there for 20 years. An old stable business unit promoting a low level go getter way up the chain is basically unheard of
It's just company performance, IMO.
Today OKRs have Narcissists running the asylum because they're always going to convince management that their glass is 70% full whereas yours is 30% empty.
It's much easier to be a bad CEO in a good market than it is to be a good CEO in a bad market.
...and then he retires...
how long would it take for you to be able to tell that his not-terrible-but-kinda-lousy replacement is actually not doing a good job?
The first CEO set things up so that they'd run well; the leaders he put in place will be there for years; the deals he made will be good for a while (and all the new guy has to do is re-up them when he gets the chance).
So for, say, 5-10 years, the new guy get slapped on the back and handed a fat bonus every year for Doing Such A Great Job CEOing...when he's barely doing anything.
But then the situation starts to change. The companies they had deals with start to get bought out, or maybe they just stop existing. The good managers and other leaders the original CEO put in place start retiring or getting hired for bigger and better things.
The new guy stops being able to coast. But obviously his leadership has been great this whole time, and he hasn't changed anything, so how could it possibly be his fault...?
Our society and our industry are chronically unable to measure actual excellence, let alone reward it.
Others don't.
But, for me, I wouldn't define "a nice life" with having to deal with that much stress as having so many things outside of my control.
The only analogue we have now is SpaceX imo. Tesla, if they crack self driving, maybe.
Apart from the time he ran it into the ground.
Musk isn't up there, Jobs isn't up there. You need a multi-decade record of strong capital allocation decisions, Musk barely has five years. Jobs had a record of making mistake after mistake for decades until the IPhone. Musk, by his own admission, made huge errors and would likely have gone bankrupt in 2017.
Of those alive today: Buffett, Malone, and a handful of smaller-scale people (i.e. Leonard, Stiritz, and some firms with strong culture like 3G, potentially Costco). In most cases though, CEOs need to be saved from themselves. Tech CEOs are also some of the absolute worst...I can't think of any with very strong records (Leonard is one, but the scale is relatively small). You find far strong management teams, on average, outside tech (industrials is one area, you have quite a few companies that not only have good CEOs but very good succession). The incentives are just totally wrong in tech: you get rewarded for failing, so you end up with lots of incompetent CEOs (Pichai being one of the worst, Google generally is just a terrible shit-show).
" Steve Jobs and Bill Gates’ rivalrous friendship is the stuff of tech lore. The most poignant moment of that fraught relationship happened 20 years ago. In August of 1997, Gates stepped in and saved Apple, which, at the time, was on the brink of bankruptcy.
“Bill, thank you. The world’s a better place,” Jobs told Gates after the Microsoft exec agreed to make a $150 million investment in Apple. "
So was it working brilliantly when it was 90 days from bankruptcy and was thrown a lifeline by Gates?
Jobs was lucky with the iPhone...
Wasn’t an investment of any value either, it’s the message that mattered.
That’s total fantasy.
If someone is really really good, it can look like they’re not doing much for anyone who doesn’t know what to look for, for the same reason a ships captain who is looking like they aren’t doing anything is usually a really really good one.
The folks who directly interact with them often are well aware of this, but in a large org that may only be a couple percent of the organization.
Because they set the right culture to get things done smoothly, they’ve hired and trained the right leaders to make sure the right decisions get made (and oversee them appropriately), they chart a course that produces the right outcomes without a lot of drama, they delegate what they need to, but not things they should not, have problems dealt with proactively before they cause major issues, etc.
If you see a ships captain running around looking busy all the time, or even worse, dealing with major issues all the time, that’s a terrible captain.
Same with a business unit leader.
Paying attention to what needs to be paid attention to for all that to work correctly, and integrating that into the correct action is extremely difficult.
Especially under stress, and with constant distractions, which that level in Tech has a huge amount of.
It is very difficult to find someone who can do it, and they command a premium because of it. Hands on experience with the tech and people over a long period of time is a huge help, but just being around awhile is no guarantee of success. The filter is very harsh.
Lack of someone who does it effectively, or if they lose their ability to be effective, gets really obvious really quick, and has major consequences for the organization.
Again this comes from experience at two FAANGs. Most high level business leaders started 20 years ago. You can present whatever type of logic you want, the data doesnt support the logic.
At every step, it’s a filtering function.
Of the hundreds who were there at the beginning, who has kept up and continued to grow, without screwing it up?
Who learned the new skills, who figured out the limiting factors and discarded them, vs who didn’t?
Personally, my ratio at the time I left for personal reasons was around 1 in 600ish, depending on how you counted.
I’ve known others that were higher, and a few that were lower.
It’s always less risky for the company to keep someone who continues to work, rather than roll the dice on an unknown quantity, of course, but the filtering mechanism is still harsh, and most don’t pass it.
Anyone who isn’t effective is a drag on progress, and unless someone has too large of an ownership stake to push out, it’s rare those with the larger stakes will tolerate expensive old friends for long.
Is it difficult because people like this are rare, or because so few people are ever considered for these positions?
The number of potential candidates is usually pretty small, after all the filtering, because of this.
Because those people are rare.
In my personal experience, perhaps 1 in 1000 have the mental fortitude and raw capabilities for it, but then they need the experience and knowledge in the space for any of that to matter, so the pool of course gets smaller. Even fewer have the personal life circumstances to allow it (aka the right kind of support structures, the right kind of stability).
There are also a lot of folks faking it.
It’s unusual for even a dozen candidates, to make the short list.
For then owner, everything is on them. They’re the owner. They pick the CEO. They can lose their money.
For the CEO, everything is on them as well, but the worst that can happen is they get sued or fired. They pick the people who are responsible for sales, costs, etc.
Any failure in these areas is very simple to attribute to the executive in question because it all flows into their area of responsibility.
The problem of a diverse shareholding base supervising a company has not been solved. If you are an unhappy shareholder, you don't push for change...you just sell and move on to the next one.
Within tech, there is also a cultural issue because so many of these companies end up with VC-led boards or VC-selected managers who are, to be frank, quite terrible (that is the problem with 20 year management teams...the problems of a large company are different to those of a smaller one). Growth at any cost always ends badly. Interestingly, I think some of the companies that went through the late 90s ended up internalizing that...telecoms did, some of older chip companies, unf most companies will always end up learning this lesson too late.