CEO Success

 

The two articles I found most telling about Carly Fiorina’s departure from HP are Worst. CEO. Ever. and Carly Fiorina and management.

High tech organizations require a vision (from the CEO), a budget, and room for innovation. Maybe I missed it, but Fiorina didn’t provide any vision, except for cost-cutting. When will senior managers understand — to make money, you increase revenue, not cut costs? Cost-cutting is a Wall-Street pacifier, not a corporate vision. And there are certainly times cost-cutting is necessary. But innovation requires a collaborative environment where people with a wide variety of backgrounds can work together to create new products. (See Frans Johansson‘s The Medici Effect for why this works.) Certainly, people need a budget (of money and time), so they know the boundaries in in which they can work.

Looking in from the outside, it seems as if there was little or no room for collaboration. How can people do their best work, especially if that work involves working across the organization if everyone’s in competition with everyone else to keep their jobs? Putting employees in competition with each other increases the number of decisions made to maximize personal success — and increases the number of decisions made the decrease organizational success.

Too many celebrity CEOs believe they are doing a great job when they cut costs (frequently people) so that Wall Street reacts well. All too often, short-term stock price gains comes at the expense of the long-term growth of the company.

CEO success is about creating a strategy, bounding the problem in terms of time and money, so that people can create new products that increase revenue. Opening markets, finding new customers, creating an environment that generates new product ideas — those are all hallmarks of a successful CEO. Anyone can cut costs. Too few senior managers know how to create an environment for success.

2 Replies to “CEO Success”

  1. I agree. The compaq deal killed HP. They were trying to compete on commodities instead of creating insanely great products. About the only thing left that worth using from HP is their printers and network gear. If I want a commodity server, I’ll go to Dell. If I want support, I’ll go to IBM.

  2. You bring up a good point… CEOs nowadays are making decisions with short term Wall Street gains (read more bonuses) in mind. I think they are aware that those moves might not be good for the company (and the employees) in the long term but do not care. Because they know that most of them will not be there for too long anyways! More and more it seems that satisfying the shareholders conflicts with employee satisfaction – that is what separates the great companies from mediocre ones.

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