Are Executives Disposable?

June 16th, 2011

In a world where Steve Jobs is king of the hill CEO-wise, it’s common to believe that one person may be indispensable to a company. When that person departs, everything falls apart in their wake. How can it be otherwise?

Yet many large multinational corporations have survived and flourished after the departures — or death — of one or more of their founders. But one of the most important jobs of a corporate leader is to devise a proper succession plan, knowing nothing is forever. It’s not the same as, say, a popular TV show, where the program often lives or dies by its star, particularly if that star has the title role. You know, for example, that “House” would have no future when actor Hugh Laurie decides it’s time to say goodbye, and don’t get me started about Charlie Sheen and his sitcom, since a replacement has been selected.

Perhaps a properly managed corporation is closer in concept to the “Law & Order” TV shows, where, at least for the original and now cancelled version, performers came and went and yet the show went on. That hasn’t been quite as true with the spin-offs.

In any case, when Apple hired retail executive Ron Johnson to help establish a chain of retail stores, the skeptics couldn’t see it. Hadn’t Gateway tried that scheme with no success whatever? Of course, over a decade later, we know that the Apple Store is one of the great success stories in retail history. Before coming to Apple, Johnson had worked at other chains, including Target, where he made the stores move upscale with more fashionable merchandise. With him long gone, in fact, Target is now struggling once again to find its identity.

So after earning millions from Apple, possessing more money than any one person or even a large family could possibly need for a long lifetime, Johnson will attempt to remake the moribund J.C. Penney chain. These days, department stores are largely indistinguishable, with few exceptions. I mean, I can walk into a Dillards, and then a Macy’s, and hardly know I’m actually in a different store. Will J.C. Penney truly stand out from the crowd after receiving the Ron Johnson treatment?

And unlike Apple, he won’t have a charismatic, mercurial CEO to answer to. He will be the CEO, and, for better or worse, will be responsible for how J.C. Penney fares in the retail marketplace. I suppose this is the sort of challenge few executives could pass up, assuming they are given the talent and tools to make magic happen.

But the Apple Stores are not going to suddenly flounder without Johnson’s day-to-day influence. Certainly Steve Jobs has always played a huge part in how the chain was created and developed, and there are loads of talented employees with retail backgrounds that direct the worldwide operations. Assuming Johnson was the proper manager, he helped recruit a staff of people who shared his vision and, upon his departure, would continue to do what’s best to grow the chain and keep the stores prosperous.

Sure, I suppose things might take a turn for the worse, but I’m skeptical. I’d be far more concerned about what happens to Apple when Steve Jobs finally decides to get out of the rat race for good — for whatever reason — and even then, he is clearly smart enough to have done his best to make sure his successors will continue to run Apple in accordance with his vision.

You’ll notice, also, that Apple’s stock price wasn’t seriously hurt by the news of Johnson’s departure, whereas J.C. Penney’s stock went up. I can’t think of anyone who commenced to moan about the fate of the poor Apple Store chain without Johnson around. So long as Steve Jobs and other executives continue to micromanage every little thing, including cable sizes and other fine details, there should be no worries.

Looking at other companies, even if, as some people hope, Steve Ballmer leaves the CEO post at Microsoft, that inefficient, committee-ridden corporate dinosaur isn’t necessarily going to change that much, at least in the beginning. Change you can believe in would depend highly on the abilities of Ballmer’s successor to make the proper personnel changes, and somehow move the corporate battleship in a direction where the past can be appropriately left behind without endangering profitability.

The situation might be quite different over at RIM, whose co-CEOs not only couldn’t decide how to divide their duties into different jobs, but clearly have an inability to coherently express a proper vision for the company. Sure, they have done quite a few things right, witness the fact that the BlackBerry was synonymous with the word “smartphone” until the iPhone arrived and played spoiler.

It’s also true that RIM appears to be in trouble, with flattening sales, and, so far at least, a failed tablet strategy. Maybe that’s the company where an executive shakeup is sorely needed.

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2 Responses to “Are Executives Disposable?”

  1. tom b says:

    Execs are not interchangeable and can have a HUGE effect on a company. Having said that, the reason Johnson is leaving might be different from stated– this is often the case with news releases. Perhaps Jobs wanted to make a change in the Stores and Johnson did not. I’ll bet on Steve over Johnson. That said, I wish him luck in his new job selling shoes. And success is not a sure thing. Rubenstein, Schmidt and others that have left to “pursue other interests”, or, In Schmidt’s case, in disgrace, have had less than stellar careers after leaving. Schmidt arguable lead Google down an ill-advised rabbit hole; Rubenstein, a failed (WebOS) phone venture.

  2. Karl says:

    To me Johnson seems like a very smart person and looks like he is looking for a challenge. I think he can turn around JCPenneys. And if he does turn it around, I would certainly put him on a similar level of Steve Jobs coming back and turning Apple around.

    True… CEOs aren’t interchangeable but I find it hard to cite Schmidt and Rubenstein as unsuccessful. Google certainly isn’t in danger of closing it’s door anytime soon and has a growing mobile platform. And while the WebOS hasn’t gained traction Rubenstein certainly made it successful enough for HP to buy it. We should all be so unsuccessful in our careers.

    I guess it all depends on how you message success.

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