As scandals at Enron, WorldCom and other U.S. corporations have shown, corporate America is desperately in need of new — and honest — leadership.
One of the most befuddling traits of the Internet economy has been the tendency for companies to recycle executives, no matter how poorly or questionably they have performed, shelling out big bucks in the process. It seems that failure at one company gives an executive the crediblity to lead another company and command even more money, particularly if said executive was vocal in his or her opinions, whether they were on track or far off.
But in the face of scandal and economic failure, companies are taking a harder look at which types of individuals make the best corporate leaders.
“The same things that make a great CEO in business make a great CEO in e-business,” Giga Information Group analyst Andrew Bartels told the E-Commerce Times. Candidates for the top spot should be able to understand the importance of marketing and customer service and should have top-notch management skills, he said.
In addition, he noted, a stint at a catalog company can help prepare a CEO for e-business. Such firms usually understand the business model and tend to focus on fulfillment, which is key to an e-business venture’s success.
The trend is definitely away from the flashy, charismatic young turks who once dominated the corporate landscape but rarely made good on their promises and vision.
“You want a CEO who has vision but [also] a strong basis in reality,” Mike Goodman, an analyst with the Yankee Group, told the E-Commerce Times. “You can’t operate out in the nether world and expect to develop a company. You’ll end up with a dot-bomb.”
Indeed, dot-coms may have injected American business with much-needed vision, innovation and excitement, but they also created a lot of hype and relatively few practical applications.
Overcoming Dot-Com Stigma
In the waning days of dot-com mania, e-businesses began scrambling to put together senior management teams that reeked of experience and brought some gray-haired sensibility to the table.
According to Bartels, a great CEO should be capable of “implementing and following through.” In addition, he or she should be “reliable and focused.”
The desirability of those qualities may be one reason why there is growing respect forSam Palmisano, chairman and CEO of IBM. Palmisano has been roundly praised for building on the legacies of former Big Blue chief Lou Gerstner and other steady but growth-oriented IBM executives, providing a sense of continuity that is vital to a business’ survival.
For all of his blustering, Oracle CEO Larry Ellison also gets high marks for bluntly assessing the marketplace that his company plays in. And Apple’s Steve Jobs is seen as an innovative visionary with well-developed business acumen that has helped lift Apple out of the pit of despair during the mercurial leader’s second tenure. “Every company needs a visionary, but [Jobs] has to do so realistically,” Goodman noted.
Crawling from the Wreckage
Some of today’s CEOs may have to focus more closely on their vision for disentangling their companies from scandals and poor financials.
Bland but earnest John W. Sidgmore has taken the helm at WorldCom — a clear attempt by the board of directors to send a strong signal to investors and customers that the telecommunications giant is under the guidance of a firmer hand bent on cleaning up the mess left by former CEO Bernard J. Ebbers and former chief financial officer Scott Sullivan.
In another shakeup, former USA Interactive executive Jon Miller has stepped in to take the place of Bob Pittman at AOL. UBS Warburg analyst Chris Dixon called Miller the perfect choice because “he gets the power of the Internet, yet he can view it within the context of traditional media.” As a result, Miller could bridge frayed relations between AOL and Time Warner, home to CNN, Warner Bros. and Time magazine.
Down with Yes-Men
But a leader cannot be expected to singlehandedly turn a company around or keep it afloat. He or she must be able to choose a team of reliable, trustworthy, innovative managers to carry out a business plan, according to Bartels.
And those team members should not be chosen because they will blindly enforce a CEO’s vision. “They should be able to say, ‘Hey, this is not going to fly, it’s a bad idea,'” the Yankee Group’s Goodman said, noting that the corporate landscape has been littered with too many yes-men. “That is part of the reason that executives can play fast and loose with the rules,” he added.