What makes a great CEO? Why do many star at one company yet fail at another? Why do some lose the magic as the company expands? The answer, of course, is different situations require different types of CEOs. To help identify the multiple characteristics of executives in this leading role, here are eight 'CEO types' and when to cast each one.
By Bill Baker
As a long-time resident of Los Angeles, I have been inadvertently infected by that Hollywood bug that seems to be omnipresent in sunny Southern California. Perhaps it’s the weather. Perhaps it’s the culture (or the lack thereof, as many would argue). Perhaps it’s the background radiation from the studios. Or perhaps we have too much time to think while stuck in the parking lot we call “the 405.” Whatever the reason, we just can’t help ourselves. It’s the “typecasting” bug, the one where we seem to bundle several qualities into a single category.
Almost everyone from Main Street to Wall Street, from a back street alley to Silicon Valley and all points in between just can’t seem to stop saying things like “that’s a great story,” “he’s a rock star,” “this is the next blah, blah, blah” and so on. We have all been guilty at one time or another of using the Hollywood vernacular. So I wondered if typecasting could be applied in the business world.
Being the annoyingly inquisitive type, I always ask questions or seek answers that are not self-evident and one of those is: What makes a great CEO? Equally important is why many CEOs do a great job at one company yet fail miserably at another. Or why do some CEOs lose the magic as the company expands. Is it the CEO? The company? The market? The circumstances? For example, I am a CEO but does that mean I can run a large enterprise? No, and that’s precisely the point. It is all about the type of CEO as it relates to the company’s position or trajectory that is at the core of all this. As a result, I came up with a framework for “CEOs types.” Because I spent most of my career in technology the examples reflect that. They are as follows (in line with a company’s evolutionary path):
This category includes most startup CEOs, many of whom have built huge companies and/or created major industries. They include the usual suspects: Bill Gates, Steve Jobs, Larry Ellison, Carlos Slim, Michael Dell, Jeff Bezos, Andy Grove, The Google Boys (affectionately), Marc Benioff, Mark Zuckerberg, and George Conrades — not a founder of Akamai but nonetheless took what was only a technology and build it into a global leader in CDNs — to mention a few.
We could call them ‘The Hall of Fame of Builders.’ They not only built great products that changed the way we work, they also built great companies that became the dominant players in global markets. As a builder I understand these guys much better than all other types. They are driven, almost obsessed. None have done it for the money or the fame or the legacy they have left and each has endured challenges that most would never dream of encountering.
For the builders, it’s a calling more than a job, it goes beyond reason and logic. Builders sacrifice things they don’t even have a right to; personal happiness, family time, wedding anniversaries, attending kids’ soccer games, calling mom regularly and so on. And it is deeply emotional, at least in the beginning. It is a relentless drive that keeps the engine running full throttle at all times.
Many books have been written, but one of the best I have read is Hard Drive: Bill Gates and the Making of the Microsoft Empire by James Wallace and Jim Erickson. Love ’em or hate ’em, each one of thes guys changed our lives forever.
In many instances builders can evolve into growers, but this is a very different category. Growers are not entrepreneurs who start companies but seasoned corporate executives who have been honing their skills just waiting for that one opportunity where they can stamp their mark on the business world.
One of the best examples is John Chambers. John came to Cisco fairly early in their trajectory as a sales executive and quickly rose to take charge. He turned a predominately manufacturing-focused company into a global networking powerhouse and for a very brief moment elevated Cisco to be the most valued company in the world (in terms of market cap). Not bad for a former sales executive that came out of Wang, a failed computer company.
Other notable CEOs that have firmly established themselves as great growers include Eric Schmidt (Google), Meg Whitman (eBay) and the management legend himself Jack Welch (GE). Not only did they successfully grow their respective enterprises to become the dominant market leaders, they transformed both the companies and the industries they served.
Inevitably, a company gets to a point where the growth slows down, it becomes stagnant and, as the shareholders get impatient, it takes a familiar path towards change in leadership.
There are numerous examples where caretakers/custodians have become CEOs: Steve Ballmer (Microsoft), Jeffery Imelt (GE), Bob Iger (Disney). Their mission is best articulated by Captain Kirk: “Steady as she goes,” which basically means ‘Just don’t screw up!’
For the most part these CEO types tend to be operations or inbound focused and look to increase shareholder value by reducing costs as opposed to expanding into new markets. Almost always they come from inside the company having been groomed to one day take over as CEOs. Some do a better job than others, but these types rarely end up as growers. My sense is Tim Cook (Apple) is also part of this group, a supply-chain guru that is an excellent operator but not necessarily a grower. I say that because; had Steve Jobs not passed away much too soon Cook would still be Apple’s COO. Enough said.
Fixers typically come in after caretakers/custodians and try to reinvigorate a formerly vibrant-turned-stagnant enterprise. Unfortunately, most companies make the mistake and hire a fixer from within, which is no different than just having yet another caretaker/custodian.
Intel continues to make that mistake. Paul Otellini (former CEO of Intel) was an Intel insider and followed Craig Barrett, himself a caretaker/custodian. Unfortunately, I think Intel made the same mistake once again by promoting yet another insider (Brian Krzanich) to the CEO position. As did Microsoft. I sincerely hope that Satya Nadella fixes things in Redmond; however, my observation is that a Fixer needs to be an outsider and no better example in recent memory than Lou Gerstner (IBM).
If successful, Marissa Mayer (Yahoo) could turn out to be an accomplished fixer. More often than not they get confused with surgeons (the next type outlined below) and even though there are overlaps they are not the same. As noted above, typically fixers follow caretakers/custodians and are usually a stalling enterprise’s last opportunity to get things right.
Fundamentally, fixers need to be superb strategists because that is the core issue — loss of vision, which is almost exclusively followed by confusing strategy. And more often than not fixers don’t always implement massive layoffs, they work on crystalizing the long-term strategic direction. Mark Hurd, had he stayed at HP, could have been a great fixer but we will never really know the answer to that. However, if the problems cannot be fixed, it’s time to call in the next type — surgeons.
As the name implies, surgeons are usually brought in to ‘cut-the-fat-but-keep-the-muscle’, which is easier said than done. I call them surgeons because, fundamentally, they use a knife as their main tool. Typically, surgeons are either former CFOs, COOs or GMs that only look at spreadsheets and cut off what they feel is either a losing proposition or a non-productive asset in terms of profits. These types are operatives that perfect their skills at places like GE, GM, Proctor & Gamble, 3M, Bain & Co., etc.
Think Mitt Romney and you get the picture; no passion, no emotion, no inspiring ‘let’s-kill-the-competition’ speeches. They come in, shake your hand, look you in the eye, tell you what needs to be cut and just do it. Bottom line, they are needed and, for the most part, get the job done, but if they don’t it is time for the next type to come in and save the day.
This is a special group and pretty rare for it requires entrepreneurial DNA, which is not common in the corporate management ranks even within companies that were founded by builders. The key difference between a savior and a fixer is that the latter has time but a savior has zero time; the enterprise is either doomed (due to numerous successors who mismanaged its fortunes) or about to become history.
Hard as I tried I could not think of a better example than Steve Jobs v2.0. Without his intervention today we would be talking about Apple the way we currently refer to BlackBerry, a company that is on life support at best. Unlike fixers who focus on the strategy saviors intuitively know that the FIRST thing that needs fixing is the company’s culture/vision. Some Fixers also work on culture/vision but Saviors do it as a pre-requisite for everything else because they know that if the employees don’t drink the cool-aid, it’s over.
Not my first choice of title for these types, and will not spend a lot of time elaborating on them because they don’t deserve any glorification other than stating that their giga-sized egos have caused much pain. They include Bernie Ebbers (MCI), Dennis Kozlowski (Tyco), Ken Lay/Jeffrey Skilling (Enron) to mention a few. Good news is that, in the end, they traded one pin-striped clothing for another, the latter complements of us, the taxpayers.
This is the rarest and one that no one aspires to become. Think about it, as kids we dream of being fire fighters, police officers, athletes, movie stars or business executives but no one has ever said, “Hey, I am going to be a mortician.” Unfortunately, just like people, companies also die and they need to be properly buried. Can’t provide any more info other than they primarily serve the preferred shareholders’ interests and do a job that shows zero appreciation. They tend to follow the selfies and the end result is not their fault.
So why should we care? We should care a lot about what type of CEO is running a particular company especially if we work for or are investors in that company. Time and time again I have seen boards make wrong decisions. They retain top search firms that “specialize” in such placements, provide them with the qualifications and vet numerous “highly qualified” candidates until the final selection is revealed. Unfortunately, those search firms are nothing more than just data bases and have zero analytical skills.
What type of CEO a company needs has everything to do with where the company is in terms of its trajectory. Hiring a grower (Meg Whitman) when the company actually needs a Fixer (as the case is with HP) is absolutely the wrong move. In fact, Groupon missed one hell of an opportunity by not giving Whitman the keys to the kingdom; they would have been much further along and a lot more relevant under her guidance as an accomplished grower.
CEOs have the responsibility to call it quits before they are asked to resign and cite “personal reasons” for their departure (author’s note: no corporate communique is more superficial than that one, even Hollywood cringes when it hears it). Then there are CEOs that need to move onto much bigger challenges where their brand, expertise, accomplishments and leadership skills could serve a much greater purpose, which brings me to the aforementioned John Chambers.
In my not so humble opinion “JC Superstar” is one of the best growers in modern corporate history; however, when a company’s growth is tied to a country’s GDP I don’t need Cramer to tell me there is very little upside! Seriously, it’s time for John to consider a much bigger opportunity — the U.S. Presidency itself. Personally, I don’t think it would hurt to have someone in DC that actually understands P&L and has access to the world’s business and political leaders as well.
Bottom line is that corporate America can learn a great deal from Hollywood, which has been typecasting for a long time. You don’t see Stallone as a romantic lead, do you? They don’t always get it right (George Lazenby as 007?) but they get it right more often than corporate America does. So rather than hiring headhunters, corporate boards should hire Hollywood talent agents instead. And as much as I would like to expand on this I have to run, Ari Emanuel is on the other line and he is looking for a “name.” Let’s do lunch soon, have your people call my people.
A native of Macedonia, Bill Baker is a self-described battle-tested entrepreneur as well as an experienced, early-stage executive that personifies the “think different” concept. Bill continues to connect the dots between broadband/mobile technologies and new/emerging media markets. For more info click here.