The right executive for the job

Succession planning is a difficult job, for the CEO as much as the Board, especially if it is a public company. The CEO, by definition, is the generalist of the crowd. S/he is brought in because his skills match the top leadership needs of the company at the time.

But a really successful CEO is usually defined by his bringing the best specialists with some general knowledge in as his direct reports. For example, the CFO will be the one with the best grasp of driving a profit, managing capital markets, and keeping the cash flowing. The CMO will be the one with the best ability to position the brand, perhaps repair it, and grow market share. The General Counsel is the one with the best skills as deal maker, regulator manager and whatever else is needed on the legal and regulatory front.

Once that CEO succeeds, and decides to move on, it often appears to the Board that there is a solid stable of execs waiting in the wing to succeed the incumbent. The challenge becomes picking the right one.

In two cases – one pending, one historical – the challenges of picking correctly became abundantly clear.

One of my favourite bĂȘte noires, Continental Airlines, was in the tank and on the verge of bankruptcy in the mid 90s. Gordon Bethune turned it around; his book, From Worst to First, is a great read. Like all good CEOs, he hired the best specialist talent he could find. One of those, his General Counsel, put together the United merger deal and is now the CEO. He appears at the beginning of every safety video, looking very formal, almost lawyerly, and talking about things like “on board product.” Given the tough regulatory environment, and the Board’s perceived need for a merger deal, he may have been the correct choice. But from the customer perspective, there is general agreement among them (and the flight crews) that this is a man who does not get his customers or, equally importantly, his employees. Not all lawyers are bad CEOs, but a lawyer is never going to be the face of or advocate for the emotional needs of the flying public.

Intel’s chief, Paul Otellini, is on the verge of retirement. Intel’s board has not yet named his successor. Word on the street is that there are four leading candidates. One of them is an Israeli, who, people say, is unlikely to get it if only because of his heavily accented English. Although one person with whom I spoke was offended, I think that the CEO of a significant public American company is the face and voice of that company, and needs to be able to present it well. If he were really interested, he would take language training, but the very fact that the executive engineer doesn’t see the need indicates either lack of interest or lack of understanding of the public face value, and should not get the job.

The leading candidate appears to be the CFO. That Intel’s board would even consider a CFO at a time like this is, to my mind, astounding. Intel missed the boat on mobile, big time. Although its chips remain dominant in laptops and desktops and servers, they are almost nowhere to be found in the massive mobile sector. Designs based on ARM Holdings and variants dominate. Intel is nowhere in iPhone, iPad, Nexus, Samsung or anywhere near them. Intel openly admits it may have erred in focusing on sheer power vs power efficiency. It has hired teams to focus on bringing its engineering and architectural designs closer to market demand. But at the core, Intel’s failing is one of market and product. It doesn’t need better gross margins, its margins are just fine. It doesn’t need access to new capital, it has plenty in the bank. It needs product and market vision.

I have enjoyed Intel’s products for many years, and view it as an American success story. If it wants to be a force in ten years, it better get a leader for its products, not its P&L.

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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