When Did CEOs Become Celebrities?
When A. G. Lafleyretired as CEO of Proctor & Gamble in 2009, Fortune Magazine noted he was beginning a "gilded semi-retirement" hailed as an "in-demand guru on corporate strategy." Since taking over leadership in 2000, he had built the company into a consumer powerhouse and a hotbed of innovation in new products, marketing, sales and rigorous costumer focus. Business writers praised what appeared to be a carefully executed hand-off to the new CEO Robert McDonald, a highly qualified corporate insider.
Things didn't go as planned. By 2013, sales were below expectations, P&G market share was down, and critics complained about slack financial performance. McDonald, who now heads the Veterans Affairs Administration, resigned under pressure and P&G brought Lafley back.According to James Surowiecki and other analysts, Lafley's efforts have been OK.
And that raises the question of why highly successful leaders may not be able to repeat earlier achievements.In the New Yorker story "Comeback Conundrum," Surowiecki writes that such inconsistent performances challenge the common conception of the "corporate savior," from whom heroic skill and capacities are expected. In an interesting earlier article, Surowiecki blamed ascent of the flamboyant 1980s chief executive of Chrysler, Lee Iacocca,for a dramatic change in American attitudes toward CEOs. In earlier eras, CEOs were viewed as competent buttoned-down organization men, Surowiecki writes. But Iacocca's marketing savvy, individuality and tough-guy image had mass appeal. He became a celebrity. The media called him a mogul, his autobiography became a best seller, and there was talk of his running for president.
Lackluster CEO comeback performances aren't always the fault of the CEO, Surowiecki writes, and while top leadership is vital, success depends on many elements beyond any individual's control: demographic shifts, changing consumer tastes, and the state of the economy as well as expectations about leadership.
Leaders well suited for one period may be ill equipped for the next. Surowiecki cites Henry Ford as a classic example. He was brilliant at efficiency, but less astute on customer appeal. He apparently did say people could buy his Model T in any color "as long as it's black."
Lafley earned his reputation as a visionary during a booming economic period when his expansions and acquisitions were highly successful. Upon his return, he began sweeping cost cuts, reorganization, and planned to shed more than half of P&G's brands to get out of some unprofitable business areas. A Strategy+ Business piece Lafley wrote in 2008 describe some of the early successes of his first tenure that he had to dismantle in his second. Surowiecki writes that despite Lafley's experience and capabilities, P&G faces the same problems now it did when he returned.
Surowiecki quotes Dartmouth Management Professor Sydney Finkelstein as saying it's a sign of trouble when firms rehire a former CEO. Further, the professor notes, luck plays a bigger part in success than most of us like to admit. He adds that companies that most perfectly fir their current environments are the most vulnerable when conditions change, whoever is in charge. David Taylor, a P&G veteran, has been designated the new CEO will take over in November. Read the New Yorker story here.