CEOs today face far greater challenges than just perfecting the art of outperforming bottomline target estimates quarter after quarter. From keeping activist shareholders at bay, to satisfying consumers who demand innovation at the blink of an eye, today’s Chief Executives have their hands full. Not surprisingly, many of these highly-regarded strategists stumble. Prof. Sydney Finkelstein, Steven Roth Professor of Management, Tuck School of Business, writes on why such business leaders fail
2012 has been an eventful year as far as business is concerned. The global economy was stuck somewhere in between managing a full blow financial crisis on one hand and dealing with its after-effects on the other. However, this year did give CEOs an opportunity to reconsider changes that had been impacting their businesses and reinvent in response. And I would say that this is one area where business leaders have faced a great deal of trouble.
For many CEOs, adapting to change – especially dramatic and technological change – is disturbing. Companies like Motorola, Research in Motion and Kodak had to deal with big changes in the recent past mostly due to technological shifts in the economy and their respective industries. What they’d been doing effortlessly in the past stopped working. And unfortunately, they continued doing what made them successful in the first place. Business model innovation is a tricky proposition because even from a psychological point-of-view, it’s difficult to stop doing something for which one has been amply rewarded – and consistently so – in the past. However, the repercussions of not adapting are evident. Motorola was acquired by Google (not for a great line-up of products but more so for the patents), Kodak filed for bankruptcy and Research in Motion is struggling to sustain operations.
Nevertheless, there have been two chief executives in particular who, despite their short tenures, have demonstrated phenomenal leadership and a strong strategic outlook. Marissa Ann Mayer of Yahoo! and Tim Cook of Apple definitely stand out this year.
If you consider Meyer, she’s really given Yahoo!! a shot in the arm. She’s given the company a sense of purpose and if you ask employees and shareholders at Yahoo! today, they’ll tell you that they have much more confidence in the future direction of the company. In recent past, she has proved herself a leader at one of the most successful Internet businesses of our times – Google. And currently, that shows in her understanding of strategy. There is clear consensus now that Yahoo! is a media company – something which previous CEOs could not clearly establish. Further, Meyer has started unlocking some value that lay dormant in Yahoo!’s assets.
On the other hand we have Tim Cook, who has put up a commendable performance at Jobs’ exit. He launched the iPad Mini (despite Steve Jobs’ belief that the market wouldn’t like a small tablet) demonstrating that he is ready to adapt and change. He also had the courage and honesty to accept that Apple Maps was a mess. Some critics have been blaming him for the loss in the stock value of the company. But I don’t see how he’s responsible for any of that. Agreed that Apple didn’t launch a freakishly great product, but the iPhone 5 still sold record units. Apple’s market capitalisation is a case study in itself. To justify such high valuations, you literally need to reinvent the world. And I think Cook has done a fairly decent job till now. He deserves a little more time to demonstrate something even better.
2012 has been an eventful year as far as business is concerned. The global economy was stuck somewhere in between managing a full blow financial crisis on one hand and dealing with its after-effects on the other. However, this year did give CEOs an opportunity to reconsider changes that had been impacting their businesses and reinvent in response. And I would say that this is one area where business leaders have faced a great deal of trouble.
For many CEOs, adapting to change – especially dramatic and technological change – is disturbing. Companies like Motorola, Research in Motion and Kodak had to deal with big changes in the recent past mostly due to technological shifts in the economy and their respective industries. What they’d been doing effortlessly in the past stopped working. And unfortunately, they continued doing what made them successful in the first place. Business model innovation is a tricky proposition because even from a psychological point-of-view, it’s difficult to stop doing something for which one has been amply rewarded – and consistently so – in the past. However, the repercussions of not adapting are evident. Motorola was acquired by Google (not for a great line-up of products but more so for the patents), Kodak filed for bankruptcy and Research in Motion is struggling to sustain operations.
Nevertheless, there have been two chief executives in particular who, despite their short tenures, have demonstrated phenomenal leadership and a strong strategic outlook. Marissa Ann Mayer of Yahoo! and Tim Cook of Apple definitely stand out this year.
If you consider Meyer, she’s really given Yahoo!! a shot in the arm. She’s given the company a sense of purpose and if you ask employees and shareholders at Yahoo! today, they’ll tell you that they have much more confidence in the future direction of the company. In recent past, she has proved herself a leader at one of the most successful Internet businesses of our times – Google. And currently, that shows in her understanding of strategy. There is clear consensus now that Yahoo! is a media company – something which previous CEOs could not clearly establish. Further, Meyer has started unlocking some value that lay dormant in Yahoo!’s assets.
On the other hand we have Tim Cook, who has put up a commendable performance at Jobs’ exit. He launched the iPad Mini (despite Steve Jobs’ belief that the market wouldn’t like a small tablet) demonstrating that he is ready to adapt and change. He also had the courage and honesty to accept that Apple Maps was a mess. Some critics have been blaming him for the loss in the stock value of the company. But I don’t see how he’s responsible for any of that. Agreed that Apple didn’t launch a freakishly great product, but the iPhone 5 still sold record units. Apple’s market capitalisation is a case study in itself. To justify such high valuations, you literally need to reinvent the world. And I think Cook has done a fairly decent job till now. He deserves a little more time to demonstrate something even better.
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