How Many Losers Make A Winner?
It is impossible to assess the value lost to corporations by the forced departure (whether done subtly or directly) of key executives because of inside politics—particularly the politics of CEO succession. Under Jack Welch, GE groomed a number of able executives—each terrifically gifted in his own right. Jeff Immelt became CEO on Welch’s departure. The other two surviving candidates left. And so the company’s great investment in the departing individuals was lost.
The visible departure of executives at the naming of a CEO may be a small part of the real loss that has occurred in the ascendance of single winner. Often an ambitious rising star knocks off rivals years before making it to the top post. This is generally not accomplished by the individual, alone, but by factions allied with one or another pretender to the corner office. It often involves manipulation or withholding of information—or maneuvering the target into an untenable business situation.
There are many ways executives can compromise long-term shareholder value. Included among these is management of the company for short-term stock performance in ways that benefit the CEO’s own compensation package. But perhaps even a larger value-killer is the fratricide that can occur in the race to the top.
There is a long history of self-serving behavior that compromises the larger organization. You wouldn’t want to have been a rising star in Stalin’s USSR, for example. Your ability to survive would have been inversely proportional to your ability to lead others. Papa Joe would have had you knocked off had you shown the slightest ability to induce others to think independently. This point is made by the Polish journalist Ryszard Kapuscinski in his book “Travels with Herodotus,” in which he tells the story of Periander, who assumed the throne of Corinth on the death of his father—in the seventh century BC.
Periander wanted to learn how to maintain control of his newly inherited kingdom, so he dispatched one of his aides to an older, experienced tyrant to request some how-to advice. “Dictatorship for Dummies,” if you will. The aged tyrant said nothing to the aide, but took him on a tour through his cornfields. As he walked along, the experienced dictator seized every cornstalk that stood above the others and broke off its head. He persisted in this despite ruining the best of his crop. When the aide returned to Periander and described this strange behavior, Periander got the point immediately. How he put it to use need not be described here.
No question that the makeup of an executive leadership team must undergo adjustments in accordance with the needs of the organization and the ability of individuals to contribute. And, in this gentle modern age, any blood on the corporate carpet is only figurative. But the blood metaphor has a reality to it in representing undeserved pain, not only of able executives who have found themselves on the wrong side of a power struggle, but of investors who continue to believe in the company’s focus on building and preserving value.
