24 July 2015

What do you do with a Former CEO?

One of the big issues faced by CEO successors is the subsequent role of their predecessor.  All too often, these former CEO's, once replaced, take their place at the Board table, as the defacto boss of their new successor.

Let me lay this out clearly:

  • CEO gets replaced, often because the board demanded change that the CEO couldn't deliver.
  • New CEO comes in the role to replace former CEO with a clear change agenda.
  • Former CEO retains role on the board.
  • New CEO is scrutinized and judged by the person whom he replaced

You can probably see what's wrong with this picture.  Assuming this continues through multiple successions, this can become an even bigger mess, one that Twitter is currently encountering. There, three former CEOs constitute a sizable portion of the board.  As the company searches for its next chief, Dick Costolo will slip in along side Jack Dorsey and Evan Williams, all predecessors in the role.  In fact, Dorsey is playing an interim role as CEO while the search progresses.

Can this really work?  Would you want to take on this role as CEO with your three immediate successors looking over your shoulder and questioning every move?

Spencer Stuart, who owns this headhunter role, has remained mum on the topic.  But surely, any self respecting candidate would require a reconstituted board as a precondition to accepting this role.  Perhaps, that is what Spencer Stuart is hoping.

10 July 2015

Ka Pao!


CNN just announced that Ellen Pao been replaced as the interim CEO of Reddit.  Certainly she did little to ingratiate herself with the loyal Reddit community.  Certainly she was tone deaf when she fired long-time and very popular Victoria Taylor. And perhaps her reputation was muddied by her recent legal escapades that have antagonized the venture community in Silicon Valley.  Probably most important is that Reddit just wasn't ready for someone like Ellen, as an interim or otherwise.  She will be replaced by the company's founder Steve Huffman.

05 July 2015

The CEO Takes Flight @ Triumph Group

Triumph Group CEO Steps Down, Replaced By Company Founder

Richard C. Ill Replaces Jeffry D. Frisby as CEO




09 June 2015

All in the Family

Less than one out of three family businesses survive into the second generation.  Of those, about forty percent make it beyond.  So it's somewhat unique to find a third generation family business
Lori, Caryn, and Shelly Hirshleifer
thoughtfully preparing for a transition.  But that is exactly what Hirshleifers is about to do.  Founded over one hundred years ago in Manhasset, NY this luxury retailer has thrived.  While they are not yet sure if it will be family members that take the retailer forward, and although it is still several years from their retirement, the sisters are contemplating what is next.


17 May 2015

Fashioning a CEO Succession

Diane von Furstenberg
Diane von Furstenberg finally found her successor.  Tomorrow Paola Riva takes over as the first CEO other than Diane to run her fashion empire.  But why did it take her so long and is he the right guy?

Ms. Furstenberg describes her attraction to Mr. Riva.  "When I asked - why do you want to do this?" she inquired.  Apparently he responded: "First, because I love you, the person.  Second, because the potential of your brand is unbelievable.  And third, because you are a private company."

Perhaps the fashion industry is different than most, but proclaiming your love for the founder probably is tricky position to stake out for a successor CEO.  The first time he decides to make a change that Diane is not in favor of, the love affair will end.

While I am not in the business of predicting the future, my bet is that this will turn out to be a disastrous succession.  Diane selected someone she is comfortable with.  The industry is changing drastically and this business will need to undergo some drastic changes.  Success will require leaving the past behind.  Is Mr. Riva ready?

09 April 2015

Zynga's Founder Rebound

Mark Pincus has joined the growing list of founders returning to the helm replacing Don Mattrick originally hired in 2013 to replace Pincus.

As is often the case with a failed transition, the abrupt change in leadership was noted to be a setback for the company, according to a New York Times article of 8 April 2015.  In an interview, Mr. Pincus said that Mattrick was not fired, but the two agreed that it was time for Mr. Pincus to return.  Do you think Mattrick actually had a choice in this decision?

Although not visible in the office the past few years, Pincus apparently has seagulled in a bit leaving his mark, "occasionally emailing staff with his thoughts" according to the Times article.  Certainly this was not helpful for Don during his short time there.

The company's finances worsened under Mattrick.  Revenue is down from its high in 2012 resulting in a more than $200 million loss last year.  Apparently, employee turnover has also been rampant.  Interestingly, it appears that Mattrick was not a metrics guy, something that Pincus is much more focused on.

It certainly sounds like we can chalk this up to founder transition misfire.

03 April 2015

Founder's Family Joins Fray to Make Employee Uncomfortable

Julie Horvath
We've all read about how difficult it is for a woman to navigate the Silicon Valley good-ole-boy culture.  So it won't surprise you to see Julie Horvath, since gone from GitHub, describe in detail how she was impacted. But it wasn't just with the founder, or even the employees of GitHub that Julie had her issues. Apparently, according to the Business Insider, she was also harassed and even threatened by the wife of one of the co-founders of GitHub.  According to their reports, the founder's wife interrogated Horvath and suggested that she take certain actions that were antagonistic to Horvath.  In an interview published in TechCrunch, she stated her allegations about the founder's wife, who was not identified:

... the wife went on to claim that she was responsible for hires at GitHub, and asked Horvath to explain to her what she was working on. The wife also claimed to employ “spies” inside of GitHub, and claimed to be able to, again according to Horvath, read GitHub employees’ private chat-room logs, which only employees are supposed to have access to.

Apparently now, that Co-founder has been put on leave and according to a post of the GitHub blog, the co-founder's wife has been banned from the company's offices.

Horvath left the company in the midst of this episode.  She claimed an unrequited love professed by another male GitHub employee caused her code to be ripped from certain projects.  But her complaints about this episode seem to exacerbate her HR issues internally.  This combination of inappropriate behavior as well as family involvement caused an environment in which Horvath grew uncomfortable.  

The company said it is hiring an experienced HR resource to avoid this type of issue in the future.

Horvath left to Start Passion Projects, a initiative intended to strengthen the support network for women who may be experiencing similar things.

03 March 2015

Lululemon founder to leave board

Chip Wilson is finally quitting the board of directors of the yoga wear retailer.  We think its about time!
"I now believe the company has returned to the core values that made it great," he said in a statement.Wilson, who founded Lululemon in 1998, withdrew from day-to-day management in early 2012, and said in December 2013 he was stepping down as chairman. But he stayed on as a director.  
Conveniently, Wilson boomeranged back to take a conveniently took on more active role in operations in spring 2013, after Lululemon issued a high-profile recall of its signature yoga pants following complaints they were too see-through. The recall led to the departures of top executives and a public relations headache. In December 2013, the company named a new chief executive officer, Laurent Potdevin. As is often the case with founders who have stayed too close too long, problems were compounded when Wilson said fabric in some pants was not holding up because "some women's bodies just actually don't work" for Lululemon's clothing. Backpedalling, Wilson later said he was "sad for the repercussions of his actions." Tensions remained, with Wilson lashing out last June, saying the new chairman and another director were too focused on short-term growth.
"We believe Mr. Wilson's departure solidifies stability of the leadershipteam going forward, and lessens tension behind decision making and voting power," Stifel equity analyst Jim Duffy said in a research note.
"Since the Advent announcement in late summer, infighting seems to have calmed, likely in an effort to turn around public perception of the brand," said Duffy.


25 January 2015

Is Starbucks really effecting a Try Before You Buy

This morning's article about Starbucks morphing into a tech company includes an interesting approach to hiring Kevin Johnson, former CEO of Juniper Networks.  Sure sounds like Starbucks is bucking the trend of Apple Pay and trying to establish themselves as an intermediary in the electronic payment world.  I'm not so sure I believe this is a good move on Starbucks behalf.  Coffee house business, yes?  Fast food emporium, probably. Electronic payments business, sounds like a weird product line extension?  Maybe Oracle will sell them Java?  That might make some sense since  Oracle has done little to take it forward.  Not giving it much more attention than a coffee klatch.
Kevin Johnson, former CEO of Juniper Networks

What I do think is a good idea is the approach to hiring Kevin as COO and trying out how this works before installing him as CEO.  Starbucks tried the caffinated approach to replacing Howard Schultz before and the jolt was too much for the company to digest. Now approaching this transition as a try before your buy, may be just the recipe for Starbucks next new offering.

02 January 2015

Several High Profile Founder Oustings Reviewed




It's always interesting press when a high profile founder is removed from his or her role.  A recent Inc. Magazine story,  7 Founders Pushed Out of Their Companies, profiled some of the more notorious transitions.There are numerous details behind the scenes that might paint a more complete story of what really happened.  Most of us only know the headlines.  The story is subheadlined:  Why a Founder Gets Ousted, but does little to tell us much about the circumstances.  In every case there is an intriguing sub-story that often doesn't get told due to agreements among the parties or the investors' desire to avoid bad publicity.  Wouldn't it be interesting to hear what really happened?