Kodak’s CEO tells 17,000 employees that the only option for the 131-year-old company is to file for Chapter 11 bankruptcy protection. The company had 64,000 employees in 2003.
Research In Motion fires its co-CEOs after the maker of BlackBerry loses $30 billion in market capitalization.
Sony, Panasonic and Sharp – the trifecta of the Japanese consumer electronic industry – lost a combined $17 billion in 2011.
Are the CEOs of these once great companies total idiots?
Before going too far, let’s add some local flavor to the stew. What the heck happened to the likes of some of these local boys?
- Joseph Schlitz Brewing Company.
- Allis-Chalmers Manufacturing Company.
- Schuster’s Department Stores.
- Strong Funds.
- Midwest Express Airlines.
- M&I Marshall & Ilsley Bank.
- (Please insert your favorite corporate debacle here.)
Were the CEOs idiots? How did these fabulous business blunders occur? We may never know exactly. But here are a few suggestions.
In the end, what was Midwest Express anyway? A high-end, “Best Care in the Air” corporate travel airline or a no-frills, discount alternative to a bus? Customers were confused. Employees were confused. Vendors confused. Shareholders? Confused and left holding the lost luggage.
In an effort to cost cut its way to prosperity, Schlitz, “the beer that made Milwaukee famous,” changed its brewing process and started using cheaper ingredients. Not only did the reformulation change the flavor and consistency of the beer, the new Schlitz had a shelf life of about a day and half. Customers noticed.
“We were making so much money, we just couldn’t quit.” Those pesky housing bubbles in Arizona and Florida were the problem. What a nice, conservative Midwestern company from Milwaukee was doing in high-risk, high-reward ventures way outside its market area is another question. But for crying out loud, M&I was a bank!
Kodak is an easy target here. An electrical engineer at Kodak literally invented digital image capture technology in the mid-1970s. How did the six Kodak CEOs since the ’70s screw it up so badly?
Those four examples are certainly not all encompassing. And there is almost always more than one reason for the failure.
How to improve the odds? Some suggestions:
My guess is the CEOs of some of these failed companies would have been better served with a strong board of directors that knew when and how to challenge the strategic thinking of the CEO.
Absent a board, some CEO peer groups, like TEC, are designed to “question the answers” of the CEO. One of my TEC members employs a designated “BS detector,” from outside the company, during the strategic planning process to help the group avoid delusional thinking.
People get things done. Weak management teams don’t. Failure to put the right people in the right jobs is bad. Failure to deal with people problems – fast – is worse. Jim Collins’ bus analogy of the right people in the right seats is well-known. It should be pointed out, however, that CEOs need to get the wrong people out of the seats and off the bus before the new folks can get on.
CEOs usually have an inner sense about weak people on their teams. They sometimes refuse to see it and deal with it in a timely fashion.
There is a real nice company down in Racine that does not allow its people to say stuff like, “I didn’t make a plan because of (fill in the blank).” Or, “I failed to fulfill my commitment due to (some circumstance beyond my control).” Realistic commitments that are made are kept. No excuses. One TEC member CEO eliminated the words “hope” and “luck” from his company’s corporate lexicon, as well.
TEC resource specialist Adam Hartung suggests analyzing the mega trends eight years out.
He recommends the intentional creation of “white space” disconnected from the business for innovative thinking. Get people outside the box. Then, have them think.
Truth be told, even the CEOs who really mess up aren’t idiots. CEOs are people. They make mistakes. They fail sometimes. Some learn and get better. Some don’t. But as long as we have human beings running corporations, there will be room for improvement.
