27 December 2006

A very bad Transition

A good friend of mine in Austin, TX, Hank Jones (Henry W. Jones, III Esq.) who is an industry pundit and expert on Open Source issues, sent me information on a founder transition that really went awry. According to allegations filed by the company in the Superior Court in Orange County, California, Medsphere apparently twice tried to find a CEO to take over from two founder brothers ( Why CEOs Fail?). The first ended abruptly less than a year into the new CEO's tenure when the brothers forced the Board's hand. A second CEO was recruited with even more egregious consequences. According to the company's amended complaint, the two founder brothers got so angry at the direction the new second CEO put in place (only three short months after he took over), they clandestinely published the source code for the company's proprietary software as open source. That certainly put a crimp in the new CEO's plans (see his letter regarding the company's open source stance). Wow! Talk about a bad transition! Boards everywhere should be paying close attention to how dire the consequences of a bad transition can be and what an awkward position they can be put in when founders join together to counter a new CEO.

2-Feb-07 --> The story continues to develop.

1 comment:

  1. Anonymous10:59 PM

    So here we have a messy "he said, she said" legal case. But the posting is based entirely on what one side said and doesn't include the other side.

    If the founders think the new CEO is a bozo, are they interfering with the transition? Or is the new CEO a bozo? When John Sculley stripped Steve Jobs of his responsibilities in 1985, who was right? Which executive would have been better for Apple to keep?