How a CEO can kill a company in 5 easy steps

Columnist Rob Enderle writes that he has witnessed first-hand executives repeating the same company-killing mistakes over and over.

1 2 Page 2
Page 2 of 2

This is one of the reasons why, after an acquisition, either the acquisition fails or the company takes an unexpected sales hit. They try to force the new products into the existing sales staff who either have no desire to sell them or is so excited about the new revenue sources they don’t sell the products they were selling and they aren’t yet very good at selling the new products.  

4. Not identifying and protecting the key company assets

In every company, there are a few human and intellectual property assets that sustain its existence.   This ranges from keystone products to people who are unique in terms of skills and impact that the firm either can’t live without. It is the rare new CEO who even tries to figure out what these things are, which is one of the reasons why so many turnaround CEOs fail. They sell off the key asset in order to make a fast-tactical financial gain, don’t act to retain the key asset, or make changes massively reducing their value. Often, they just take the asset and related revenue for granted and treat it like a cash cow until the value goes away and then they wonder where the related revenue went.  

And, by the way, retention packages run out and it amazes me that firms often have no plan for when they do and then are surprised that the folks that were only hanging on until they received the related benefit leave.  

5. Having no trained replacement

I get why this happens with CEO hired guns but not why it also happens with founders. With hired guns they are simply there to do a job and it is up to the board to assure succession. With boards generally focused either tactically or on the annual party the board meeting has become they shouldn’t be a surprise they don’t have their act together when a CEO leaves. However, founders and those that just painstakingly turned a company around actually care that the firm survives them.

Despite this, I could count on one hand with most fingers left over, the number of CEOs I’ve seen mentor a replacement. The CEOs are paid millions supposedly because they are so unique, yet they seem to act like another warm body could easily do their job even though everything we see suggests that isn’t at all the case.  

Even suggesting they mentor someone will often be met with looks suggesting the idea is a foolish one. But yet, having met with many of these folks after they’ve stepped down, not doing so is noted as one of their biggest regrets largely because the firm they once nurtured is on life support.

Darwin award for companies that repeat mistakes over and over, and over…

I often wonder if there is a Darwin award for companies as I’ve seen so many repeating these same five major mistakes. Misusing compensation, not understanding how salespeople work and think, not having a clue or protecting their critical corporate assets, and not prioritizing a plan that will assure their firm survives them (this last is a problem shared with boards). I’d suggest a class, but I’d want to title it in a way that the folks I’d want to attend would likely think was derogatory.

In any case, I hope my list of five ways a CEO can kill a company gives you some insight into firms that you might want to avoid working for, buying from or investing in.

Related:

Copyright © 2017 IDG Communications, Inc.

1 2 Page 2
Page 2 of 2
Download CIO's Winter 2021 digital issue: Supercharging IT innovation