What You Can Learn From The Best And Worst CEOs Of 2013
CEO is not an easy job, and as with any job, some people do it better than others. So, what makes the best CEOs tick? How about the worst? Sydney Finkelstein, strategy professor at Dartmouth, has compiled his list of the best and worst CEOs of 2013.
How does he pick the CEOs to make the list? Finkelstein, who has also authored Why Smart Executives Fail, ranks CEOs based on several years of financial performance for the top 1,000 U.S. companies as well as major and emerging companies based elsewhere, particularly Japan, China, Brazil, Korea and Europe. In addition, Finkelstein looks beyond changes in market cap, profitability and other financial indicators to the answers of two questions regarding how a CEO responds to a challenge:
1. Was the CEO culpable, in that he or she knew, or should have known, what was going wrong yet was unable to right the ship?
2. Did the CEO’s actions, or inactions, provide evidence of a significant breach in corporate governance or strategic leadership?
Achievement, Successful Turnarounds, Foresight
Filtering the world’s CEOs in this way is what led Bezos to the very top of the list. Among other positive attributes, Finkelstein cites Bezos’ long-term focus, rare among public-company executives in thrall to quarterly numbers, as well as his ability to fill Amazon’s talent pipeline with MBAs as the keys to his success. (Not to mention scoring its Cyber Monday PR coup with the drone-delivery concept.) “Jeff Bezos is the new Steve Jobs of business,” Finkelstein declares.
Other top execs include Akio Toyoda, who has guided Toyota to record profits after overcoming some major challenges, including the recall due to certain models' sudden acceleration and the major disruption to its supply chain as a result of the tsunami. Toyoda is now re-tooling the carmaker’s design process while trimming management layers and still manages to test-drive every new car himself.
Finkelstein likes Pony Ma, head of China’s gaming, shopping and micro-blogging titan Tencent, and John Idol, who spent $100 million in 2003 to buy luxury goods purveyor Michael Kors, now valued by the stock market at $16 billion. Reed Hastings of Netflix gets the nod for moving past his 2011 customer-alienating misstep and transforming the mail-order movie rental company into a streaming entertainment leader and creator of hit shows such as House of Cards, Arrested Development and Orange is the New Black.
Mistakes, Missteps, Epic Failures
Now for Finkelstein's failing grades. First in line: Brazil’s Eike Batista, who over-sold prospects for an oil strike so excessively that shares of OGX and OSX stock lost 95 percent of their value when it became apparent the hydrocarbons would not be easily recovered. Batista, one of the world's wealthiest men at the beginning of 2013, lost 99 percent of his own wealth through the venture. Finkelstein notes that self-sacrifice isn’t enough to overcome the fact that Batista made his bet—and convinced others to join in—without significant oil industry experience.
That brings up us back to Ron Johnson. Essentially, Finkelstein faults the former Apple executive for failing to grasp the seemingly obvious fact that the two companies, Apple and JC Penney, appealed to very different customers for very different reasons. Johnson tried to apply what worked so well with Apple’s hip, high-end stores to the middle-market department stores, and failed miserably.
Making matters worse, Johnson failed to test the plan before rolling it out, and plunged in with no attempt to hedge his bet. His April 2013 firing after 17 months wasn’t enough to prevent double-digit same-store sales declines, $4 billion in lost revenues and $500 million in quarterly losses. Whether the 111-year-old enterprise will survive remains doubtful.
BlackBerry’s Thorsten Heins earns a thumbs-down for sticking doggedly to a strategy that everyone, except for himself, could see wasn’t working. At the same time, he resisted capitalizing on the company’s biggest strength—its BBM messaging platform—and released it as a separate app. Heins was fired in November 2013, but his 22 months in the corner office cost the company billions in losses, forced thousands of layoffs and may prove a death knell.
Another CEO noted for exceptionally poor performance was Eddie Lampert, who bought Sears and tried to manage the retailer as if it were a hedge fund. But cutting costs, selling assets and stock buybacks couldn’t overcome ineptitude at merchandising and managing people. If 27 straight quarters of sales declines weren’t enough, Finkelstein could also point to Sears’ $7 billion in debt and only $600 million in cash.
Final entry on the worst CEO list belongs to Steve Ballmer, who hasn’t done such a bad job as Bill Gates’ successor that Microsoft’s survival is in doubt. But, given Microsoft’s strengths, his stewardship has been a major disappointment. Essentially, when Ballmer resigned in August, Microsoft was still doing the things that Gates did to make it great—selling Windows OS and Microsoft Office apps—while doing little to keep it successful in a changing world—competing effectively in search, phone and mobile. Then there’s the approximately $300 billion loss in market cap during Ballmer’s tenure. That may not be entirely his fault, but it’s still enough to put any CEO in the doghouse.
What do you think of this list? Who would you consider to be among the best and worst CEOs of the year? Sound off in the comments section below.
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