Five Lessons From A Rash Of Untimely CEO Departures
More than a dozen prominent CEOs have ushered out of the executive suite in recent weeks. Yale SOM’s Jeffrey Sonnenfeld writes that their sudden departures offer lessons on how to survive—or at least make a graceful exit.
This commentary originally appeared in Chief Executive.
This summer launched with a series of back-to-back surprise leadership exits at more than a dozen firms, including Petrobras, Qualcomm WPP, Air France-KLM, JC Penney, Xerox, Campbell Soup, Mattel, Samsonite, Athenahealth, Gamestop, and ServiceMaster. While a recent Equilar study reported a median tenure for S&P 500 CEOs of five years in 2017, many of these leaders didn’t even survive two years—and all had a sudden exit.
These unplanned transitions offer lessons to sitting CEOs at a time of waning tenures:
Build a Resilient Board
Fearful of their own fragile reputations, board directors often crumble in the face of outside attacks. Examples abound. Just days after the Athenahealth board rejected a low-priced bid from an aggressive activist investor firm, a suspicious chain of nasty and misleading—if not outright malicious—reports surfaced about the personal life of CEO Jonathan Bush. This activist firm seemed to employ a similar mudslinging approach to drive Klaus Kleinfeld out of the CEO spot at Arconic. Brazilian state oil company Petrobras sacrificed Pedro Parente to break a nine-day truckers strike over oil prices, while Qualcomm’s board unwisely drove visionary chairman Paul Jacobs from the board, wrongly fearful of a conflict as he transparently prepared a bid for a buyout of the firm.
Accomplish Your Mission—Fast
Having failed to revive Mattel’s legacy Barbie, American Girl, Fisher Price, and Hot Wheels brands, Google alum Margo Georgiadis left the CEO spot after just over a year. Marvin Ellison recently abandoned JCPenney, apologizing on his way out the door for disappointing 2018 Q1 results and slow progress in consolidating operations and building branded store departments and omnichannel retailing.
Vet Your Opportunities
Departing CEOs should take care not to jump from the proverbial frying pan straight into the flames. After being fired by Citigroup in 1998, Jamie Dimon patiently reviewed great opportunities before taking the CEO position at the troubled Bank One, which he then fixed and sold into JPMorgan. Home Depot veteran Ellison recently jumped from JCPenney to No. 2 home improvement retailer Lowe’s. Ellison accepted the Lowe’s position on the eve of an expected healthy growth in revenues and earnings Q1 report that is still dampened by the poor spring weather for home building and remodeling. He follows a predecessor who was in office for 13 years. With the coming summer months of great weather after Memorial Day, this could have been great timing for benchmarking expectations.
Watch for the Rebound
After great star power as CTO of Sun Microsystems, Eric Schmidt left the foundering local network software company Novell in seeming disgrace, then staged a successful return to the frontiers of technology and innovation. Schmidt brilliantly led Google for 17 years of unprecedented growth, effectively erasing the shadow with of his Novell setback. The right move can be a perfect deus ex machina—the plot device where a rescue chariot appears from sky to save a Greek hero from certain demise.
Exit with Dignity
Beware of the board’s lawyers scripting your public exit message. No one believes that a healthy CEO in the prime of life is quitting for more quality time for unspecified new opportunities. Pfizer’s department CEO Jeff Kindler lost out in a board political battle which was wrongly and damagingly explained as due to “Kindler’s exhaustion.” Bush managed to step down from Athenahealth without succumbing to the blame game, stating, “It’s easy for me to see that the very things that made me useful to our company and cause in these past 21 years, are now exactly the things that are in our way.”