Hacker News Reader

Comment by kibwen | Hacker News Reader

There's an equally valid hypothesis that a "good" CEO is just one that keeps their hands off the levers of power, doesn't rock the boat or fuck anything up, and quietly lets a good company perform; whereas a bad CEO is one who, due to ego and self-aggrandizement, can't help but impose themselves via meddling and prevent a good company from performing. By that measure, you might as well save yourself the executive compensation and potential for disaster by just not having a CEO at all, despite what the executive class would have you believe. The aristocracy of old also argued that their titles were earned and that society could not function without them.

View on HN

Warren Buffet has always said that he likes to invest in businesses that are so great that even an idiot can run them (because often an idiot will be running them).

Any company that is thrashing around, constantly changing priorities, executive turnover, lots of layoffs is obviously being poorly run, yet this is typically exactly what happens when a new CEO is bought in to fix whatever was ailing before: the almost inevitable new-CEO plan: fire executives, bring in past cronies, have a few layoffs (because he's a tough guy, making those tough decisions), and change company priorities. Rinse and repeat - in a few years there'll be a new CEO coming in and doing the same again.

> a "good" CEO is just one that keeps their hands off the levers of power, doesn't rock the boat or fuck anything up, and quietly lets a good company perform

How can you tell if a company is good? Because trillions of dollars are spent by banks, private equity, hedge funds, and others truing to figure out if a company is "good."

> By that measure, you might as well save yourself the executive compensation and potential for disaster by just not having a CEO at all

Sure, but somebody is still making the decisions the CEO would have otherwise made. Maybe it's a good thing that the power isn't concentrated in one person; I'd be open to that. But you now have to trust that each department head is making good decisions. That's fine if they were already making good decisions, hit it's disastrous if they weren't.

And in truth it's a paradox. The better a company is (generally correlated to an empowered workforce with a sense of agency and purpose), the harder it is to extract profit for the capitalist class.

Which helps explain the "need" for CEOs to meddle.

> But you now have to trust that each department head is making good decisions.

There is a lot of evidence that corporate mergers destroy value.

What if... they were disintermediated by markets instead of being one company?

There are tons of reasons why companies exist (the whole Theory of the Firm line of research), but the information asymmetry barriers are constantly coming down.

Nah.

We know what good looks like in financial results and reputation. It's really not that complicated.

The rest of that bullshit isn't about evaluating a working company, it's about gamblers gambling on non-companies before they become real companies.

Sure, a college student can tell you if a company is making or losing money. But there are ample examples of "good" companies crashing because they didn't react to shifts in the market, which requires projecting into the future.

Blockbuster was good until it wasn't. Sears was good until it wasn't. Barnes and Noble was good, then it fell apart, and now it's good again. The lesson to learn is that by the time your financials say things are taking a turn, you're a year to multiple years late to start fixing the problem.

Yes, sometimes a healthy company will eventually have their business undermined by some future technology.

Except that's not what we were discussing.

There are plenty of anecdotal examples of co-CEOs not working very well.

yeah just sit there, keep a steady hand, and project confidence

There are a lot of well-functioning organizations for which that’s exactly what’s needed.

Leaders should be paid for outcomes not activities.

Outcomes of leadership are hard to measure.

If you pay by success of the company, noone is going to want to do a 5 year corporate turnaround.

Reply on news.ycombinator.com