Drew |
November 21st, 2010
Industry Expertise ≠ Leadership Expertise
Boards and stakeholders often get tied up in the “industry experience” conundrum when seeking to engage an interim leader. The truth is it really doesn’t matter if he/she knows the ins and outs about your widget. The fact is business is business . . .the key is finding a leader who can grasp the big picture, change, motivate and inspire while making the tough decisions.
Some recent examples of leadership expertise outweighing industry expertise:
• Whiteacre leading GM – knew nothing about the car industry
• Sokul tapped by Buffet to turn around NetJets – came from the energy sector
The most important question any board or stakeholder should ask of any potential interim CEO is, “How many times have you held the role of the final decision maker with accountability for the strategic, operational, financial and legal affairs of an organization, subject only to the board for approval?” Serving as a member of the leadership team doesn’t count. Acting as a surrogate to a CEO doesn’t count. Being a partner in a firm advising the CEO doesn’t count.
The ONLY thing that counts is a tested leader who has been there and done that multiple times with quantifiable results.
Drew |
November 21st, 2010
Once the decision has been made that leadership change is necessary the next question is “Who do we call?” Typically legal counsel or accounting firms are familiar with financial consulting firms or interim leadership firms. But stakeholders need to be aware that many consulting firms prefer to have their employee in the interim CEO role who can then leverage-up and engage their firm or group as “financial consultants” to the interim CEO. This occurs over and over again.
As one notable example, Enron hired Steve Cooper of Zolpho-Cooper as its interim CEO. Then Zolpho-Cooper was hired to assist as many of its employees were added to the engagement. Mr. Cooper was paid handsomely for his role and his firm was also paid significantly for its assistance. Without comment as to the eventual results, is this a conflict of interest? You decide. Is it possible to honestly separate your interests from that of your firm when you are in essence serving two masters? And, shouldn’t the interim CEO bring a totally unbiased and clean slate to the board room, operations and the negotiation table?
From my perspective as both an operator and from being on both sides of the table, the reality is that financial analysis can be a never-ending, leveraged revenue generator for consulting firms that comes at a considerable cost to an already cash poor company. Moreover, it can paralyze management as they wait for the latest and greatest numbers while opportunities for real operational change, decisive action and results are stalled. In my opinion, only an interim CEO without ties to a financial consulting firm can avoid this pitfall.
Drew |
November 21st, 2010
This question is fundamental as shareholders, boards and stakeholders struggle to find solutions and address management issues that may have led, or are leading, a company into operational and financial crisis. There are no easy answers; however, an interim leader (with either turnaround or business reorganization experience) can make a significant difference in correcting management lapses and breathing new energy into a struggling enterprise.
Here are a few examples of when a change at the top is necessary:
• The CEO has lost the trust of his board and shareholders.
• The CEO is unwilling (which often includes his management team) to let go or change a strategy or paradigm in the face of mounting losses.
• A strong management team doesn’t exist that can lead and perform under duress.
• In the face of crisis, the CEO has lost the ability to make timely and accurate decisions, e.g. “the deer in the headlights” effect.
• The CEO is an industry task expert but does not have the ability to lead, motivate, and hold others accountable.
• The CEO is just the wrong person, with the wrong skills, at a wrong time.
“Failing organizations are usually over-managed and under-led.” Warren G. Bennis
Drew |
November 21st, 2010
“Queen Victoria had two great prime ministers, William Gladstone and Benjamin Disraeli. Someone once observed that when you had dinner with Gladstone, you came away thinking he was the wittiest, most intelligent, most charming person you had ever met. When you dined with Disraeli, you were sure you were the wittiest, most intelligent, most charming person ever.”
Warren G. Bennis is an American scholar, organizational consultant and author, widely regarded as a pioneer of the contemporary field of Leadership studies.